SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934
(Amendment No.------)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
MONITREND MUTUAL FUND
---------------------
(Name of Registrant as Specified in its Charter)
MONITREND MUTUAL FUND
---------------------
(Name of person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box): (Not Applicable)
[ ] $125 per Excange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(j)(2)
or Item 22(a) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:(1).
4) Proposed maximum aggregate value of transaction:
(1) Set forth the amount on which the filing fee is calculated and state how
it was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
IMPORTANT NOTICE -- PLEASE READ IMMEDIATELY
-------------------------------------------
MONITREND MUTUAL FUND
1299 Ocean Avenue, Suite 210
Santa Monica, CA 90401
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 13, 1996
------------------------------
TO THE SHAREHOLDERS OF MONITREND MUTUAL FUND:
The purpose of this Notice is to tell you that a Special Meeting of
Shareholders of MONITREND MUTUAL FUND (the "Trust") will be:
PLACE: held at 1299 Ocean Avenue, Suite 210, Santa Monica, California.
TIME: on Friday, the 13th day of December, 1996, at 8:30 A.M. local time.
PURPOSES: for the following purposes:
1. With respect to the shareholders of all of the Monitrend Mutual Funds
(i.e. the PIA Adjustable Rate Fund, the Gaming & Leisure Fund, the Growth &
Income Fund, the Government Income Fund, the Gold Fund, the Technology Fund and
the Growth Fund), to elect five (5) trustees to serve an indefinite term until
their respective successors are chosen and have qualified (Proposal No. 1);
2.(a) With respect to the shareholders of the PIA Adjustable Rate Fund, to
consider and act upon proposals to approve:
(i) a change in the investment objective of the PIA Adjustable Rate
Fund (Proposal No. 2(a)(i));
(ii) a change in the investment restrictions of the PIA Adjustable Rate
Fund to permit it to purchase and sell futures contracts on debt securities
and purchase and write put and call options on debt securities and futures
contracts on debt securities (Proposal No. 2(a)(ii));
2.(b) With respect to the shareholders of the Gaming & Leisure Fund, to
consider and act upon proposals to approve:
(i) a change in the investment objective of the Gaming & Leisure Fund
and related change in its investment restrictions to require it to
concentrate its investments in the group of industries constituting the
biotechnology sector (Proposal No. 2(b)(i));
(ii) a change in the investment restrictions of the Gaming & Leisure
Fund to permit it to effect short sales (Proposal No. 2(b)(ii));
(iii) a change in the investment restrictions of the Gaming & Leisure
Fund to permit it to purchase restricted securities (Proposal No. 2(b)(iii));
(iv) a change in the investment restrictions of the Gaming & Leisure
Fund to permit it to purchase foreign securities and currencies (Proposal No.
2(b)(iv));
(v) a change in the investment restrictions of the Gaming & Leisure
Fund to permit it to lend its portfolio securities (Proposal No. 2(b)(v));
2.(c) With respect to the shareholders of the Growth & Income Fund, to
consider and act upon proposals to approve:
(i) a change in the investment restrictions of the Growth & Income
Fund to permit it to effect short sales (Proposal No. 2(c)(i));
(ii) a change in the investment restrictions of the Growth & Income
Fund to permit it to purchase restricted securities (Proposal No. 2(c)(ii));
(iii) a change in the investment restrictions of the Growth & Income
Fund to permit it to purchase and write put and call options and purchase and
sell futures contracts on stock indices and debt securities (Proposal No.
2(c)(iii));
(iv) a change in the subclassification of the Growth & Income Fund from
that of a "diversified company" to that of a "non-diversified company"
(Proposal No. 2(c)(iv));
2.(d) With respect to the shareholders of the Government Income Fund to
consider and act upon a proposal to approve a change in the investment
restrictions of the Government Income Fund to permit it to purchase foreign
securities and currencies (Proposal No. 2(d));
2.(e) With respect to the shareholders of the Gold Fund, to consider and act
upon proposals to approve:
(i) a change in the investment restrictions of the Gold Fund to permit
it to purchase restricted securities (Proposal No. 2(e)(i));
(ii) a change in the investment restrictions of the Gold Fund to permit
it to purchase gold, silver, platinum and palladium (Proposal No. 2(e)(ii));
3. With respect to the shareholders of each of the PIA Adjustable Rate
Fund, the Gaming & Leisure Fund, the Growth & Income Fund, the Government Income
Fund, the Gold Fund, the Technology Fund and the Growth Fund to act upon a
proposal to approve new Investment Advisory Agreements between the Trust and the
respective proposed investment advisers of the Monitrend Mutual Funds (i.e. the
PIA Adjustable Rate Fund - Pacific Income Advisers, Inc., the Gaming & Leisure
Fund - Murphy Investment Management, Inc., the Growth & Income Fund - Murphy
Investment Management, Inc., the Government Income Fund - Pacific Income
Advisers, Inc., the Gold Fund - Orrell and Company, Inc., the Technology Fund -
Murphy Investment Management, Inc. and the Growth Fund - Pacific Income
Advisers, Inc.) applicable to the respective Monitrend Mutual Funds (Proposal
Nos. 3(a), 3(b), 3(c), 3(d), 3(e), 3(f) and 3(g));
4. With respect to the shareholders of the Government Income Fund to act
upon a proposal to approve a new Sub-Advisory Agreement between PIA and Camborne
Advisors, Inc. applicable only to the Government Income Fund (Proposal No. 4).
5. To transact such other business as may properly come before the meeting
or any adjournments thereof.
WHO CAN
VOTE: Only shareholders of record of the Trust at the close of business on
September 17, 1996, the record date for this meeting, shall be entitled to
notice of and to vote at the meeting or any adjournments thereof. The number of
shares of each Fund of the Trust held by you on our records on the record date
determines the number of shares you may vote at the meeting with respect to
matters to be voted on by a particular Fund.
IF YOU DO NOT EXPECT TO ATTEND THE MEETING, WE URGE YOU TO COMPLETE, SIGN,
DATE AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING STAMPED ENVELOPE.
SENDING IN YOUR PROXY WILL NOT PREVENT YOU FROM PERSONALLY VOTING YOUR SHARES AT
THE MEETING SINCE YOU MAY REVOKE YOUR PROXY BY ADVISING THE SECRETARY OF THE
TRUST IN WRITING (BY SUBSEQUENT PROXY OR OTHERWISE) OF SUCH REVOCATION AT ANY
TIME BEFORE IT IS VOTED. TO AVOID UNNECESSARY EXPENSE TO THE TRUST, WE ASK YOUR
------------------------------------------------------
COOPERATION IN RETURNING YOUR PROXY NO MATTER HOW LARGE OR SMALL YOUR HOLDINGS
- ------------------------------------------------------------------------------
MAY BE.
- ------
By Order of the Board of Trustees
Santa Monica, California KATHIE HILTON
November 21, 1996 Secretary
MONITREND MUTUAL FUND
1299 OCEAN AVENUE, SUITE 210
SANTA MONICA, CALIFORNIA 90401
-----------------------
PROXY STATEMENT
INTRODUCTION
The enclosed proxy is being solicited by and on behalf of the Board of
Trustees of Monitrend Mutual Fund (the "Trust") for use at the Special Meeting
of Shareholders to be held at 1299 Ocean Avenue, Suite 210, Santa Monica,
California, on Friday the 13th day of December, 1996 at 8:30 A.M. and at any
adjournments thereof (the "Meeting"), for the purposes set forth in the Notice
of Special Meeting of Shareholders (the first page of this document). The
Meeting could be adjourned if a quorum does not exist or the Meeting is
disrupted by fire or other emergency. For purposes of any adjournment, proxies
will be voted "FOR" adjournment unless otherwise directed. A shareholder may
otherwise direct by writing anywhere on the enclosed proxy that the shareholder
will vote against any adjournments. The purpose of this Proxy Statement (the
remainder of this document) is to provide you with information on which you may
base the choices, if any, you make on the enclosed proxy.
Whether you expect to be personally present at the Meeting or not, please
complete, sign, date and return the accompanying form of proxy, which authorizes
the persons named (or their substitutes) to vote your shares. Timely executed
proxies will be voted as you instruct. If no choice is indicated, proxies will
be voted for the nominees set forth in this Proxy Statement and for the
proposals set forth in the Notice of Special Meeting of Shareholders. Any
shareholder giving a proxy has the power to revoke it at any time before it is
exercised by giving notice thereof to the Trust in writing (by subsequent proxy
or otherwise), but if not so revoked, the shares represented by the proxy will
be voted at the Meeting. Presence at the Meeting of a shareholder who has
signed a proxy does not in itself revoke a proxy.
Proxies will be solicited by mail; they may also be solicited by telephone,
telegraph and personal interviews. The cost of solicitation, including
preparing, assembling and mailing the proxy material will be borne by the Trust.
Brokerage firms, banks and others may be requested to forward this Notice and
Proxy Statement to the beneficial owners of the Trust's shares so that the
owners may authorize the voting of these shares. The Trust will pay these firms
for their out-of-pocket expenses for doing so.
The Notice of Special Meeting of Shareholders, this Proxy Statement and the
accompanying form of proxy are first being mailed to shareholders of the Trust
beginning on or about November 21, 1996.
The Trust has seven separate portfolios (the "Funds"), each of which has its
own objective or objectives, assets, liabilities and net asset value per share.
The Funds are (a) the PIA Adjustable Rate Government Securities Series (the "PIA
Adjustable Rate Fund"); (b) the Gaming & Leisure Series (the "Gaming & Leisure
Fund"); (c) the Growth & Income Series (the "Growth & Income Fund"); (d) the
PIA-Monitrend Government Income Series (the "Government Income Fund"); (e) the
Gold Series (the "Gold Fund"); (f) the Technology Series (the "Technology
Fund"); and (g) the Growth Series (the "Growth Fund").
The following proposals will be presented to the shareholders at the Meeting:
Proposal No. 1 Election of Trustees
Proposal No. 2(a)(i) Approval of Change of Investment Objective of the PIA
Adjustable Rate Fund
Proposal No. 2(a)(ii) Approval of Change of Investment Restrictions of the
PIA Adjustable Rate Fund to Permit it to Purchase and
Sell Futures Contracts on Debt Securities and Purchase
and Write Put and Call Options on Debt Securities and
Futures Contracts on Debt Securities
Proposal No. 2(b)(i) Approval of Change of Investment Objective of the
Gaming & Leisure Fund and Related Change in its
Investment Restrictions to Require it to Concentrate
its Investments in the Group of Industries Constituting
the Biotechnology Sector
Proposal No. 2(b)(ii) Approval of Change of Investment Restrictions of the
Gaming & Leisure Fund to Permit it to Effect Short
Sales
Proposal No. 2(b)(iii) Approval of Change of Investment Restrictions of Gaming
& Leisure Fund to Permit it to Purchase Restricted
Securities
Proposal No. 2(b)(iv) Approval of Change of Investment Restrictions of Gaming
& Leisure Fund to Permit it to Invest in Foreign
Securities and Currencies
Proposal No. 2(b)(v) Approval of Change of Investment Restrictions of the
Gaming & Leisure Fund to Permit it to Lend its
Portfolio Securities
Proposal No. 2(c)(i) Approval of Change of Investment Restrictions of the
Growth & Income Fund to Permit it to Effect Short Sales
Proposal No. 2(c)(ii) Approval of Change of Investment Restrictions of the
Growth & Income Fund to Permit it to Purchase
Restricted Securities
Proposal No. 2(c)(iii) Approval of Change of Investment Restrictions of the
Growth & Income Fund to Permit it to Purchase and Write
Put and Call Options and Purchase and Sell Futures
Contracts on Stock Indices and Debt Securities
Proposal No. 2(c)(iv) Approval of a Change in the Subclassification of the
Growth & Income Fund from that of a "Diversified
Company" to that of a "Non-diversified Company"
Proposal No. 2(d) Approval of Change of Investment Restrictions of the
Government Income Fund to Permit it to Purchase Foreign
Securities and Currencies
Proposal No. 2(e)(i) Approval of Change of Investment Restrictions of the
Gold Fund to Permit it to Purchase Restricted
Securities
Proposal No. 2(e)(ii) Approval of Change of Investment Restrictions of the
Gold Fund to Permit it to Purchase Gold, Silver,
Platinum and Palladium
Proposal No. 3(a) Approval of Investment Advisory Agreement for PIA
Adjustable Rate Fund
Proposal No. 3(b) Approval of Investment Advisory Agreement for Gaming &
Leisure Fund
Proposal No. 3(c) Approval of Investment Advisory Agreement for Growth &
Income Fund
Proposal No. 3(d) Approval of Investment Advisory Agreement for
Government Income Fund
Proposal No. 3(e) Approval of Investment Advisory Agreement for Gold Fund
Proposal No. 3(f) Approval of Investment Advisory Agreement for
Technology Fund
Proposal No. 3(g) Approval of Investment Advisory Agreement for
Growth Fund
Proposal No. 4 Approval of Sub-Advisory Agreement for Government Income Fund
The record holder of each outstanding share of a Fund is entitled to one vote
on all matters submitted to shareholders of that Fund. The table below sets
forth the Proposals for which shareholders of each Fund are being
solicited:
<TABLE>
<CAPTION>
PROPOSAL PIA ADJUSTABLE GAMING & GROWTH & GOVERNMENT GOLD TECHNOLOGY GROWTH
NO. RATE FUND LEISURE FUND INCOME FUND INCOME FUND FUND FUND FUND
-------- --------------- ------------- ------------ ------------ ----- ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 YES YES YES YES YES YES YES
2(a)(i) YES No No No No No No
2(a)(ii) YES No No No No No No
2(b)(i) No YES No No No No No
2(b)(ii) No YES No No No No No
2(b)(iii) No YES No No No No No
2(b)(iv) No YES No No No No No
2(b)(v) No YES No No No No No
2(c)(i) No No YES No No No No
2(c)(ii) No No YES No No No No
2(c)(iii) No No YES No No No No
2(c)(iv) No No YES No No No No
2(d) No No No YES No No No
2(e)(i) No No No No YES No No
2(e)(ii) No No No No YES No No
3(a) YES No No No No No No
3(b) No YES No No No No No
3(c) No No YES No No No No
3(d) No No No YES No No No
3(e) No No No No YES No No
3(f) No No No No No YES No
3(g) No No No No No No YES
4 No No No YES No No No
</TABLE>
See "Vote Required" under each Proposal for information as to the required
vote on each Proposal.
Only shareholders of record of the Funds at the close of business on
September 17, 1996 will be entitled to notice of and to vote at the Meeting. On
that date, there were 422,029 issued and outstanding shares of the PIA
Adjustable Rate Fund, 42,277 issued and outstanding shares of the Gaming &
Leisure Fund, 71,900 issued and outstanding shares of the Growth & Income Fund,
99,073 issued and outstanding shares of the Government Income Fund, 171,994
issued and outstanding shares of the Gold Fund, 40,790 issued and outstanding
shares of the Technology Fund and 37,247 issued and outstanding shares of the
Growth Fund.
THE TRUST WILL FURNISH, WITHOUT CHARGE, ITS ANNUAL REPORT FOR THE FISCAL YEAR
ENDED NOVEMBER 30, 1995 AND SEMI-ANNUAL REPORT FOR THE SIX MONTHS ENDED MAY 31,
1996 TO ANY SHAREHOLDER UPON REQUEST. REQUESTS FOR SUCH REPORTS SHOULD BE
DIRECTED TO KATHIE HILTON AT 1299 OCEAN AVENUE, SUITE 210, SANTA MONICA, CA
90401 OR BY CALLING 1-800-251-1970.
At September 17, 1996, the persons owning of record or beneficially 5% or
more of the outstanding securities of any Fund were:
TITLE NAME AND ADDRESS OF AMOUNT OF BENEFICIAL PERCENT
OF CLASS BENEFICIAL OWNER OWNERSHIP OF CLASS
-------- ------------------- ------------------- --------
PIA Adjustable Ahmet O. Alfi 105,032 shares 24.88%
Rate Fund 11 West Del Mar Blvd.
Pasadena, CA 91105
Imperial Trust Company, Custodian 86,488 shares 20.49%
Hunsaker & Associates Retirement Trust
201 North Figueroa Street, #610
Los Angeles, CA 90012
Pacific Income Advisers, Inc. 55,568 shares 13.17%
1299 Ocean Avenue #210
Santa Monica, CA 90401
The Aldeen Charitable Remainder 44,029 shares 10.43%
Unitrust No. 1
2042 Ashington Drive
Glendale, CA 91206
The Aldeen Charitable Remainder 44,029 shares 10.43%
Unitrust No. 2
2042 Ashington Drive
Glendale, CA 91206
Donaldson, Lufkin & Jenrette 26,487 shares*<F1> 6.28%
Securities Corporation*<F1>
P. O. Box 2052
Jersey City, NJ 07303
Gaming & John Michael Murphy 7,041 shares 16.66%
Leisure Fund P. O. Box 308
Half Moon Bay, CA 94019
Growth & Donaldson, Lufkin & Jenrette 12,935 shares*<F1> 17.99%
Income Fund Securities Corporation*<F1>
P. O. Box 2052
Jersey City, NJ 07303
Government Pacific Income Advisers, Inc. 33,870 shares 34.19%
Income Fund 1299 Ocean Avenue #210
Santa Monica, CA 90401
Dora Elena Walker, Trustee of 15,660 shares 15.81%
the Hortense Daniel Living
Trust dated October 1, 1988
9431 Friendly Woods Lane
Whittier, CA 90605
Donaldson, Lufkin & Jenrette 6,067 shares*<F1> 6.12%
Securities Corporation*<F1>
P. O. Box 2052
Jersey City, NJ 07303
Richard K. Moore and 5,566 shares 5.62%
Dorothy A. Moore
8 Lorraine Avenue
Binghamton, NY 13905
Gold Fund Donaldson, Lufkin & Jenrette 41,055 shares*<F1> 23.87%
Securities Corporation*<F1>
P. O. Box 2052
Jersey City, NJ 07303
Zyrel Fox 31,461 shares 18.30%
240 Greenwich Avenue
Greenwich, CT 06830
Technology Fund Everett A. Turner 4,841 shares 11.87%
114 Quail Hollow
Martinez, CA 94553
Alain B. Schreiber, M.D. 2,620 shares 6.42%
P. O. Box 5005-26
Rancho Santa Fe, CA 92067
Timothy J. Brosz 2,435 shares 5.97%
2525 N. Sheffield #1D
Chicago, IL 60614
Franklin C. Geiger, Trustee 2,189 shares 5.34%
Franklin C. Geiger Revocable Trust
28 Moloaa Street
Honolulu, HA 98625
Growth Fund Pacific Income Advisers, Inc. 8,082 shares 21.70%
1299 Ocean Avenue #210
Santa Monica, CA 90401
Angelo Alberici and Rosemarie Alberici 2,859 shares 7.68%
4138 Maider Road
Clay, NY 13041
Pershing Securities Division 2,300 shares*<F1> 6.17%
of Donaldson, Lufkin & Jenrette
Securities Corporation*<F1>
One Pershing Plaza
Jersey City, NJ 07399
* <F1>The shares owned by Donaldson, Lufkin & Jenrette Securities Corporation
and the Pershing Securities Division of Donaldson, Lufkin & Jenrette Securities
Corporation are owned of record only.
No other person owns of record or beneficially 5% or more of the outstanding
securities of any Fund. By virtue of its stock ownership, Pacific Income
Advisers, Inc. is deemed to "control" the Government Income Fund, as that term
is defined in the 1940 Act. (Pacific Income Advisers, Inc. is controlled by
Joseph Lloyd McAdams, Jr. and Heather U. Baines.) Pacific Income Advisers, Inc.
does not control the Trust.
The nominees for trustee and the officers of the Trust beneficially own the
following securities of the Funds:
TITLE NAME OF AMOUNT OF BENEFICIAL PERCENT
OF CLASS BENEFICIAL OWNER OWNERSHIP OF CLASS
-------- ---------------- ------------------- --------
PIA Adjustable Heather U. Baines (1)<F3> 63,023 shares(1)<F3>14.93% (1)
<F3>
Rate Fund Joseph Lloyd McAdams, Jr.(1)<F3>60,568 shares(1) 14.35% (1)
<F3>
Ann Louise Marinaccio 994 shares *<F2>
Gaming & John Michael Murphy 7,041 shares 16.66%
Leisure Fund
Government Joseph Lloyd McAdams, Jr.(2)<F4>34,952 shares(2)<F4>35.28% (2)
<F4>
Income Fund Heather U. Baines(2)<F4> 33,870 shares(2)<F4>34.19% (2)
<F4>
*<F2>Less than 1%
(1)<F3>Includes 55,568 shares owned by Pacific Income Advisers, Inc., which is
controlled by Joseph Lloyd McAdams, Jr. and Heather U. Baines. Mr. McAdams and
Ms. Baines are deemed to beneficially own the same 55,568 shares.
(2)<F4>Includes 33,870 shares owned by Pacific Income Advisers, Inc., which is
controlled by Joseph Lloyd McAdams, Jr. and Heather U. Baines. Mr. McAdams and
Ms. Baines are deemed to beneficially own the same 33,870 shares.
1. PROPOSAL TO ELECT FIVE TRUSTEES
Five Trustees are to be elected at the Meeting to serve an indefinite term
until their respective successors are chosen and qualified. The table set forth
below identifies the five nominees for election as trustees of the Trust and
provides information given as of September 17, 1996 as to the age, principal
occupation and background for the last five years. Of the nominees only Mr.
McAdams and Ms. Felix are members of the present Board of Trustees. They became
trustees in 1996.
Each nominee has consented to being named in this Proxy Statement and to
serve if elected. We have no reason to believe that any of the nominees will be
unable to serve as trustee. However in such event, the persons named as proxies
will have discretionary authority to select and vote for substituted nominees.
It is the intention of the persons named in the enclosed proxy to vote the
shares represented by the proxies FOR the election of the nominees named below,
unless shareholders specify that their vote be withheld as to all nominees or
individual nominees. Our Board of Trustees recommends a vote FOR all nominees.
Trustees will be elected by a plurality of the votes of the shareholders of
all of the funds cast at the Meeting (assuming a quorum is present). "Plurality"
means that the individuals receiving the largest number of votes are elected as
trustees, up to the maximum number of trustees to be chosen at the Meeting.
Consequently, any shares not voted at the Meeting, whether due to abstentions,
broker non-votes or otherwise, will have no impact on the election of trustees.
NAME OF NOMINEE POSITION WITH PRINCIPAL OCCUPATION
AND AGE FUND DURING PAST 5 YEARS
- --------------- ------------- --------------------
Joseph Lloyd McAdams, Jr.* Chairman and Trustee Chairman of Pacific Income
51 <F5> Advisers, Inc.;
Chairman, Chief Executive
Officer and President of
Syndicated Capital, Inc.
Beatrice P. Felix Trustee Real estate sales agent for
37 Roland Lane Realty since
1994; real estate sales agent
for Prudential Realty from
1991-1994.
Ann Louise Marinaccio Nominee for Trustee Sales associate for Saks Fifth
57 Avenue, Short Hills,
New Jersey.
John Michael Murphy*<F5> Nominee for Trustee President of Murphy Investment
54 Management, Inc.;
President of Murenove, Inc., a
newsletter publisher.
Robert I. Weisberg Nominee for Trustee President of Fremont Medical
50 Financial Services,
Inc. and Executive Vice
President of Fremont Financial
Corporation, Santa Monica,
California since January 1,
1996; President of Pro-Care
Financial Group, Inc.,
Larkspur, California from
1994-1995; President of Towers
Financial Corporation, New
York, New York, 1993-1994;
President of Fleet Credit
Corporation, Providence, Rhode
Island, 1985-1993.
*<F5>Interested person as defined in Investment Company Act of 1940.
Mr. McAdams is deemed to be an "interested person" of the Trust because he is
an officer of the Trust, Pacific Income Advisers, Inc., the current investment
adviser to the PIA Adjustable Rate Fund and to the Government Income Fund, and
Syndicated Capital, Inc., the principal underwriter of shares of the Funds. Mr.
Murphy is deemed to be an "interested person" of the Trust because he is an
officer of Murphy Investment Management, Inc., the current sub-adviser to the
Technology Fund.
None of the nominees serve as directors of public companies, except for Mr.
McAdams and Ms. Felix who serve as trustees of the Trust and Mr. Weisberg who is
a director of Environmental Power Company, Portsmouth, New Hampshire.
The officers of the Trust are Joseph Lloyd McAdams, Jr., Heather U. Baines,
54, President and Treasurer, and Kathie Hilton, 49, Secretary. All of such
persons serve for an indefinite term and became officers in 1996. For the last
five years, Ms. Baines has been President and Chief Executive Officer of Pacific
Income Advisers, Inc. Since 1994 Kathie Hilton has been an administrative
assistant for Pacific Income Advisers, Inc. Prior to that time, she was the
owner of Grizzly Products, a seafood distributor.
The Trust does not compensate any of its officers or trustees for their
services to the Trust, except those trustees who are not "interested persons" of
the Trust. The Trust's standard method of compensating the trustees who are not
"interested persons" of the Trust is to pay each such trustee an annual retainer
of $2,000 and a fee of $500 for each meeting of the Board of Trustees attended.
Total fees paid by the Trust to such persons were $8,000 for the fiscal year
ended November 30, 1995. None of the nominees served as trustees during the
fiscal year ended November 30, 1995. The Trust does not provide pension or
retirement benefits to its trustees and officers.
The table below sets forth the compensation paid to the trustees and
executive officers during the fiscal year ended November 30, 1995:
<TABLE>
<CAPTION>
PENSIONS & TOTAL
RETIREMENT ESTIMATED COMPENSATION
AGGREGATE BENEFITS ACCRUED ANNUAL BENEFITS FROM
COMPENSATION AS PART OF UPON TRUST PAID
NAME OF PERSON, POSITION FROM TRUST FUND EXPENSES RETIREMENT TO TRUSTEES
- ------------------------ ------------ ---------------- --------------- -----------
<S> <C> <C> <C> <C>
Stephen E. Cole, Trustee $4,000 0 0 $4,000
Michael A. Licameli, Trustee, 0 0 0 0
Secretary and Treasurer
Howard Mann, Trustee $4,000 0 0 $4,000
Phillip R. Verrill, Trustee and 0 0 0 0
President
</TABLE>
The Board of Trustees met four times during the fiscal year ended November
30, 1995. None of the nominees served as trustees during such fiscal year. The
Board of Trustees has no audit, nominating or similar committees.
2.(a)(i) PROPOSAL TO CHANGE THE INVESTMENT OBJECTIVE OF THE PIA ADJUSTABLE RATE
FUND
Our Board of Trustees has approved a change of the investment objective of
the PIA Adjustable Rate Fund so that it will be "to provide investors with a
high level of current income, consistent with low volatility of principal
through investing in short-term, adjustable rate and floating rate securities
issued or guaranteed by the U.S. Government, its agencies or instrumentalities."
The current investment objective of the PIA Adjustable Rate Fund 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 securities
issued or guaranteed by the U.S. Government, its agencies or instrumentalities."
The proposed investment objective, like the current investment objective, is a
fundamental policy of the PIA Adjustable Rate Fund. The PIA Adjustable Rate
Fund will continue to invest at least 65% of its total assets in U.S. Government
securities. However whereas presently 65% of the PIA Adjustable Rate Fund's
portfolio will under normal circumstances consist of adjustable rate and
floating rate U.S. Government securities, in the future at least 65% of the PIA
Adjustable Rate Fund's portfolio under normal circumstances would consist of
short-term U.S. Government securities or adjustable rate and floating rate U.S.
Government Securities. The PIA Adjustable Rate Fund will maintain a
dollar-weighted maturity of not more than three years determined in
accordance with Securities and Exchange Commission guidelines. Such
guidelines provide that in calculating dollar-weighted maturity, floating
rate and variable rate securities may have maturities based on their
interest rate readjustment dates and not their final maturities.
The proposed change of investment objective will not
change any of the investment restrictions of the PIA Adjustable Rate Fund or add
to or subtract from the permitted investments of the PIA Adjustable Rate Fund.
If the change of investment objective is approved, the name of the PIA
Adjustable Rate Fund will be changed from the "PIA Adjustable Rate Government
Securities Fund" to the "PIA Short-Term Government Securities Fund."
Our Board of Trustees believes that the proposed change of investment
objective will provide the PIA Adjustable Rate Fund's investment adviser greater
flexibility in selecting investments that provide a high level of current
income, consistent with low volatility of principal. Short-term securities have
a remaining term to maturity of three years or less. Such investments are
expected to be somewhat more volatile than adjustable rate or floating rate
securities. When interest rates rise, the value of fixed rate obligations can
be expected to decline. In contrast as interest rates on adjustable or floating
rate obligations reset, yields on adjustable or floating rate obligations will
gradually align themselves to reflect changes in market interest rates, causing
their market value to fluctuate less dramatically than fixed rate obligations.
Conversely when interest rates decline, the value of fixed rate obligations can
be expected to increase more than the value of adjustable rate or fixed rate
obligations.
Substantially all of the adjustable rate and floating rate U.S. Government
securities in which the PIA Adjustable Rate Fund has invested are securities
that represent an interest in or are collateralized by mortgages (i.e. Mortgage-
Backed Securities). By increasing the percentage of its portfolio that can be
invested in short-term U.S. Government securities, the PIA Adjustable Rate Fund
will be able to invest substantially more of its assets in securities that have
more predictable principal and interest payments than Mortgage-Backed
Securities. By doing so the PIA Adjustable Rate Fund will be less exposed to
prepayment risk. Prepayment risk is the likelihood that, during periods of
falling interest rates, securities will be prepaid requiring the PIA Adjustable
Rate Fund to invest the proceeds at generally lower interest rates.
2.(a)(ii) PROPOSAL TO CHANGE THE INVESTMENT RESTRICTIONS OF THE PIA ADJUSTABLE
RATE FUND TO PERMIT IT TO PURCHASE AND SELL FUTURES CONTRACTS ON DEBT SECURITIES
AND PURCHASE AND WRITE PUT AND CALL OPTIONS ON DEBT SECURITIES AND FUTURES
CONTRACTS ON DEBT SECURITIES
Our Board of Trustees has approved a change of the investment restrictions of
the PIA Adjustable Rate Fund to permit it to purchase and sell futures contracts
on debt securities ("Debt Futures") and purchase and write put and call options
on debt securities and Debt Futures. Currently the PIA Adjustable Rate Fund is
prohibited from doing so. The current investment restriction states:
[The PIA Adjustable Rate Fund may not] buy or sell commodities or commodity
contracts [including futures contracts and related options]...
The proposed investment restriction, which will also be a fundamental policy of
the PIA Adjustable Rate Fund, states:
The PIA Adjustable Rate Fund may not buy or sell commodities or commodity
contracts except futures contracts on debt securities ("Debt Futures") and may
not write or purchase put and call options except put and call options on debt
securities and Debt Futures.
If the proposed change is approved, the PIA Adjustable Rate Fund would utilize
such instruments for hedging and not for speculative purposes. Hedging may
involve an attempt to protect against declines or possible declines in the
market value of the PIA Adjustable Rate Fund's portfolio or may involve an
attempt to establish a position in the securities market as a substitute for
purchase of individual securities. In the latter situation, the PIA Adjustable
Rate Fund would, in the normal course, purchase securities and terminate the
hedging position, although under unusual market conditions, such hedging
positions may be terminated without a corresponding purchase of securities.
A Debt Future obligates the seller to deliver (and the purchaser to take
delivery of) a specific type of debt security at a specific future date for a
fixed price. When the PIA Adjustable Rate Fund purchases or sells a Debt
Future, it will cover its position. To cover its position, it will maintain in
a segregated account cash or other liquid securities in an amount that when
added to any amounts deposited with the future commission merchant as margin,
will be equal to the market value of the Debt Future.
A put option gives the purchaser of the option the right to sell, and the
writer of the option the obligation to buy, the underlying debt security or Debt
Future at any time during the option period. A call option gives the purchaser
of the option the right to buy, and the writer of the option the obligation to
sell, the underlying debt security or Debt Future at any time during the option
period. The purchaser of a put or call option pays a premium to the writer. If
price movements in the underlying debt security or Debt Future are such that
exercise of an option would not be profitable for the PIA Adjustable Rate Fund,
loss of the premium paid may be offset by an increase in the value of the PIA
Adjustable Rate Fund's securities or a decrease in the cost of acquisition of
securities by the PIA Adjustable Rate Fund.
The writer of an option will receive a premium for writing the option, which,
with respect to a covered call option, increases the return on the underlying
debt security or Debt Future if the option expires unexercised or is closed out
at a profit. By writing a call option, the writer limits its opportunity to
profit from any increase in the market value of the underlying security or Debt
Future above the exercise price of the option, but continues to bear the risk of
a decline in the value of the underlying debt security or Debt Future. The PIA
Adjustable Rate Fund will not write put options except in closing transactions.
All call options written by the PIA Adjustable Rate Fund will be "covered." For
a call to be covered either the PIA Adjustable Rate Fund (i) owns the underlying
debt security or Debt Future or has an absolute and immediate right to acquire
the debt security or Debt Future without payment of additional cash
consideration, or for an additional consideration as set forth in (ii), upon
conversion or exchange of other securities held in its portfolio; or (ii)
maintains in a segregated account cash or other liquid securities adequate to
purchase the debt security or Debt Future, in each case until the PIA Adjustable
Rate Fund enters into a closing purchase transaction.
When the PIA Adjustable Rate Fund wishes to terminate its obligation with
respect to a Debt Future, it will enter into an offsetting contract position.
Similarly when the PIA Adjustable Rate Fund wishes to terminate its obligation
with respect to an option it has written, it may effect a "closing purchase
transaction." It accomplishes this by buying an option of the same series as the
option previously written by it. When the PIA Adjustable Rate Fund is the
holder of an option, it may liquidate its position by effecting a "closing sale
transaction." It accomplishes this by selling an option of the same series as
the option previously purchased by it. There is no guarantee that either a
closing purchase or a closing sale transaction can be effected. If any call or
put option is not exercised or sold, the option will become worthless on its
expiration date.
Participation in the options or futures markets by the PIA Adjustable Rate
Fund involves investment risks and transactions costs to which it would not be
subject absent the use of these hedging instruments. In particular the loss
from investing in Debt Futures is potentially unlimited. Risks inherent in the
use of hedging instruments include: (i) adverse changes in the value of such
instruments; (ii) imperfect correlation between the price of options and Debt
Futures and movement in the price of the underlying debt securities or Debt
Futures; (iii) the fact that the skills needed to use these strategies are
different from those needed to select portfolio securities; (iv) the possible
absence of a liquid secondary market for any particular instrument at any time;
and (v) possible need to defer closing out certain positions to avoid adverse
tax consequences. Our Board of Trustees believes that although the use of
hedging instruments involves risk, use of such hedging instruments can be of
assistance in achieving the PIA Adjustable Rate Fund's investment objective.
VOTE REQUIRED
Only shareholders of the PIA Adjustable Rate Fund may vote on the proposals
to change the PIA Adjustable Rate Fund's investment objective and investment
restrictions. Shareholders will vote separately on each proposal (i.e. they may
vote in favor of one or both proposals and against or abstain with respect to
one or both proposals). The affirmative vote of the holders of a "majority" (as
defined in the 1940 Act) of the outstanding shares of the PIA Adjustable Rate
Fund is required for the approval of each proposal. Under the 1940 Act, the
vote of the holders of a "majority" of the outstanding shares of the PIA
Adjustable Rate Fund means the vote of the holders of the lesser of (a) 67% or
more of its shares present at the Meeting or represented by proxy if the holders
of more than 50% of its shares are so present or represented; or (b) more than
50% of its outstanding shares. Abstention and broker non-votes will not be
counted for or against either proposal but will be counted as votes present for
purposes of determining whether or not more than 50% of the outstanding shares
are present or represented at the Meeting. Abstentions and broker non-votes
have the same effect as a vote against a proposal. If one or both proposals are
approved, the changes will go into effect on the effective date of the next
Post-Effective Amendment to the Trust's Registration Statement under the 1933
Act and the 1940 Act incorporating the changes. The effective date of such
Post-Effective Amendment is anticipated to be January 31, 1997. If one or both
of the changes are not approved at the Meeting, the changes not approved will
not be implemented.
2.(b)(i) PROPOSAL TO CHANGE THE INVESTMENT OBJECTIVE OF THE GAMING & LEISURE
FUND AND ITS INVESTMENT RESTRICTIONS TO REQUIRE IT TO CONCENTRATE ITS
INVESTMENTS IN THE GROUP OF INDUSTRIES CONSTITUTING THE BIOTECHNOLOGY SECTOR
Our Board of Trustees has approved a change of the investment objective of
the Gaming & Leisure Fund so that it will be "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 biotechnology." The current investment objective of the
Gaming & Leisure Fund is "long-term growth of capital through investing
primarily in equity securities of companies engaged in activities related to the
gaming and leisure industries." The proposed investment objective, like the
current investment objective, is a fundamental policy of the Gaming & Leisure
Fund. In connection with the approval of the change of investment objective,
our Board of Trustees has approved a change of the investment restrictions of
the Gaming & Leisure Fund to require it to concentrate its investments in the
group of industries constituting the biotechnology sector. The current
investment restriction states:
The Gaming & Leisure Fund must have 25% or more of its total assets invested
in securities of issuers in the gaming and leisure industries.
The proposed investment restriction, which will also be a fundamental policy of
the Gaming & Leisure Fund, states:
The Gaming & Leisure Fund must have 25% or more of its total assets invested
in securities in the group of industries constituting the biotechnology sector.
The term "biotechnology" includes drug development, production and distribution;
agricultural and industrial biotechnology; genetic sequencing and mapping; drug
delivery; biotechnology-based services and other advances resulting from
research and development programs in the medical, animal and life sciences. If
the change of investment objective and investment restriction is approved, under
normal circumstances at least 65%, but at all times 25%, of the Gaming & Leisure
Fund's assets will be invested in equity securities of companies in the
biotechnology sector. Additionally if the change of investment objective and
investment restriction is approved, the name of the Gaming & Leisure Fund will
be changed to the "Murphy Biotechnology Fund."
The current investment objective of the Gaming & Leisure Fund is that of
providing investors long-term growth of capital through investing primarily in
equity securities of companies engaged in activities related to the gaming and
leisure industries. Presently 65% of the Gaming & Leisure Fund's assets under
normal circumstances are invested in equity securities of companies engaged in
activities related to the gaming and leisure sector.
Our Board of Trustees believes that the proposed change of investment
objective will make it easier for the Gaming & Leisure Fund's investment adviser
to provide the Fund's investors with long-term appreciation. Our Board of
Trustees believes that the biotechnology sector has greater potential for
growth, in the long-term, than the gaming and leisure sector. However
securities of companies in both sectors have unpredictable earnings. Products
offered by the companies in both sectors are subject to risks of obsolescence
and intense competition. Companies in both sectors are subject to extensive
government regulation. Additionally companies in the biotechnology sector are
affected by the enforcement of patent, trademark and other intellectual property
laws. Securities of companies in both sectors generally exhibit greater
volatility than the overall market. Finally companies in both sectors may be of
small or medium capitalization. Securities of such companies may be subject to
more abrupt or erratic market movements than those of larger, more established
companies and may be subject to liquidity risk.
If the proposed change in investment objective is approved, there will be a
substantially complete turnover of the investment portfolio of the Gaming &
Leisure Fund which should be completed in a few weeks following the effective
date of the change. Based on the current market values of the securities held
by the Gaming & Leisure Fund, such a complete turnover would result in a net
realized loss for the Gaming & Leisure Fund.
The proposed change of investment objective will not change any of the
investment restrictions of the Gaming & Leisure Fund (other than the investment
restriction concerning concentration of investments) or add to or subtract from
the permitted investments of the Gaming & Leisure Fund. However our Board of
Trustees separately has approved three changes to the investment restrictions of
the Gaming & Leisure Fund which are described below.
2.(b)(ii) PROPOSAL TO CHANGE THE INVESTMENT RESTRICTIONS OF THE GAMING & LEISURE
FUND TO PERMIT IT TO EFFECT SHORT SALES
Our Board of Trustees has approved a change of the investment restrictions of
the Gaming & Leisure Fund to permit it to effect short sales of securities. The
Gaming & Leisure Fund currently is prohibited from effecting short sales of
securities, other than short sales 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.) The proposed change would
permit the Gaming & Leisure Fund to effect short sales which are not against the
box. The current investment restriction states:
[The Gaming & Leisure Fund may not] 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 the [Gaming & Leisure Fund's]
net assets (taken at current value) is held as collateral for such sales at any
one time.
The proposed investment restriction, which will also be a fundamental policy of
the Gaming & Leisure Fund, states:
The Gaming & Leisure Fund may sell securities short to the extent permitted
by the Investment Company Act of 1940.
A "short sale" is made by selling a security the Gaming & Leisure Fund does
not own. Whenever the Gaming & Leisure Fund effects a short sale, it will put
in a segregated account cash or other liquid assets 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 Gaming & Leisure Fund replaces the security it
borrowed to effect the short sale, it must maintain daily the segregated account
at such a level that 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. Initially no more than 25% of the value of the Gaming & Leisure
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. However this
limitation may be increased without shareholder approval.
Our Board of Trustees believes that the proposed change in the investment
restrictions of the Gaming & Leisure Fund will provide the Gaming & Leisure
Fund's investment adviser the potential to achieve the investment objective of
the Gaming & Leisure Fund in declining equity markets as well as in rising
equity markets and the potential to profit from the volatility of the securities
in which the Gaming & Leisure Fund may invest. The investment performance of
the Gaming & Leisure Fund will suffer if a stock for which the Gaming & Leisure
Fund has effected a short sale appreciates in value. Additionally the Gaming &
Leisure Fund may be required to close out a short position earlier than it had
intended if the securities lender requires it to deliver the securities it
borrowed at the commencement of the short sale and the Gaming & Leisure Fund is
unable to borrow such securities from other securities lenders.
2.(b)(iii) PROPOSAL TO CHANGE THE INVESTMENT RESTRICTIONS OF THE GAMING &
LEISURE FUND TO PERMIT IT TO PURCHASE RESTRICTED SECURITIES
Our Board of Trustees has approved a change of the investment restrictions of
the Gaming & Leisure Fund to permit it to purchase restricted securities. The
Gaming & Leisure Fund is currently prohibited from purchasing such securities.
The current investment restriction states:
[The Gaming & Leisure Fund may not] purchase any security restricted as to
disposition under federal securities laws.
The proposed investment restriction, which will also be a fundamental policy of
the Gaming & Leisure Fund, states:
Subject to Securities and Exchange Commission limitations on investments in
illiquid securities, the Gaming & Leisure Fund may purchase securities
restricted as to disposition under federal securities laws without limitation.
Restricted securities may only be sold in privately negotiated or other
transactions exempt from registration under the Securities Act of 1933 or in a
public offering with respect to which a registration statement is in effect
under the Securities Act. Restricted securities may be considered to be
illiquid securities and subject to the limitation that not more than 15% of its
net assets be invested in illiquid securities. Our Board of Trustees is
responsible for determining if a security is illiquid, although day-to-day
decisions on liquidity may be made by the investment adviser. When registration
is required, the Gaming & Leisure Fund may be obligated to pay all or part of
the registration expenses and considerable time may elapse between the decision
to sell and the sale date. If during such period, adverse market conditions
were to develop, the Gaming & Leisure Fund might obtain a less favorable price
than that which prevailed when it decided to sell. Our Board of Trustees
believes that although investing in restricted securities involves risk as
described above, investing in such securities has the potential to yield capital
appreciation.
2.(b)(iv) PROPOSAL TO CHANGE THE INVESTMENT RESTRICTIONS OF THE GAMING & LEISURE
FUND TO PERMIT IT TO PURCHASE FOREIGN SECURITIES AND CURRENCIES
Our Board of Trustees has approved a change of the investment restrictions of
the Gaming & Leisure Fund to permit it to purchase foreign securities and
currencies. The Gaming & Leisure Fund currently is prohibited from purchasing
such securities and currencies. The current investment restriction states:
[The Gaming & Leisure Fund may not] purchase foreign securities or
currencies.
The proposed investment restriction, which will also be a fundamental policy of
the Gaming & Leisure Fund, states:
The Gaming & Leisure Fund may purchase foreign securities and currencies.
Our Board of Trustees believes that changing this investment restriction will
provide greater investment opportunities for the Gaming & Leisure Fund.
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 in foreign securities may be
affected by changes in currency rates and in exchange control regulations. For
example, securities denominated in foreign currencies can be expected to
increase in value when the U.S. dollar is decreasing in value against such
currencies. Conversely such securities can be expected to decline in value when
the U.S. dollar is increasing in value against such currencies. The Gaming &
Leisure Fund may incur transaction costs in exchanging 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 Gaming & Leisure Fund does not intend to invest in foreign
debt securities.
2.(b)(v) PROPOSAL TO CHANGE THE INVESTMENT RESTRICTIONS OF THE GAMING & LEISURE
FUND TO PERMIT IT TO LEND ITS PORTFOLIO SECURITIES
Our Board of Trustees has approved a change of the investment restrictions of
the Gaming & Leisure Fund to permit it to lend its portfolio securities. The
Gaming & Leisure Fund currently is prohibited from lending its portfolio
securities. The current investment restriction states:
[The Gaming & Leisure Fund may not] make loans...
The proposed investment restriction, which will also be a fundamental policy of
the Gaming & Leisure Fund, states:
The Gaming & Leisure Fund may not make loans except through ... the loaning
of its portfolio securities provided that the value of the securities loaned may
not exceed 25% of the value of the Gaming & Leisure Fund's total assets.
Our Board of Trustees believes that changing this investment restriction will
permit the Gaming & Leisure Fund to increase its income.
All such loans, which may be on a short or long-term basis, must be to
brokers, dealers and financial institutions. All such loans must be
collateralized in accordance with applicable regulatory guidelines (the
"Guidelines") and after any loan, the value of the securities loaned may not
exceed 25% of the value of the Gaming & Leisure Fund's 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 Gaming & Leisure Fund if the demand meets the terms of the
letter. Such terms and the issuing bank would have to be satisfactory to the
Gaming & Leisure Fund. Any loan might be secured by any one or more of the
three types of collateral.
The Gaming & Leisure Fund 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 Gaming & Leisure 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 permit the Gaming & Leisure Fund to
terminate the loan and reacquire the loaned securities on three days' notice.
VOTE REQUIRED
Only shareholders of the Gaming & Leisure Fund may vote on the proposals to
change the Gaming & Leisure Fund's investment objective and investment
restrictions. Shareholders will vote separately on each proposal (i.e. they may
vote in favor of one or more proposals and against or abstain with respect to
one or more proposals). The affirmative vote of the holders of a "majority" (as
defined in the 1940 Act) of the outstanding shares of the Gaming & Leisure Fund
is required for the approval of each proposal. Under the 1940 Act, the vote of
the holders of a "majority" of the outstanding shares of the Gaming & Leisure
Fund means the vote of the holders of the lesser of (a) 67% or more of its
shares present at the Meeting or represented by proxy if the holders of more
than 50% of its shares are so present or represented; or (b) more than 50% of
its outstanding shares. Abstention and broker non-votes will not be counted for
or against any proposal but will be counted as votes present for purposes of
determining whether or not more than 50% of the outstanding shares are present
or represented at the Meeting. Abstentions and broker non-votes have the same
effect as a vote against a proposal. If one or more proposals are approved, the
changes will go into effect on the effective date of the next Post-Effective
Amendment to the Trust's Registration Statement under the 1933 Act and the 1940
Act incorporating the changes. The effective date of such Post-Effective
Amendment is anticipated to be January 31, 1997. If one or more of the changes
are not approved at the Meeting, the changes not approved will not be
implemented.
2.(c)(i) PROPOSAL TO CHANGE THE INVESTMENT RESTRICTIONS OF THE GROWTH & INCOME
FUND TO PERMIT IT TO EFFECT SHORT SALES
Our Board of Trustees has approved a change of the investment restrictions of
the Growth & Income Fund to permit it to effect short sales of securities. The
Growth & Income Fund currently is prohibited from effecting short sales of
securities, other than short sales which are "against the box." The current
investment restriction states:
[The Growth & Income Fund may not] 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 the [Growth & Income Fund's] net assets
(taken at current value) is held as collateral for such sales at any one time.
The proposed investment restriction, which will also be a fundamental policy of
the Growth & Income Fund, states:
The Growth & Income Fund may sell securities short to the extent permitted by
the Investment Company Act of 1940.
See Proposal 2.(b)(ii) for a discussion of the characteristics of, and risks
associated with, short sales.
The investment objective of the Growth & Income Fund is to maximize total
return through a combination of capital appreciation and income. Currently the
investment adviser to the Growth & Income Fund attempts to achieve the
investment objective by primarily investing in stocks comprising the S&P 500
Index. As discussed later in Proposal 3.(c), the shareholders of the Growth &
Income Fund are being asked to approve a new investment advisory agreement with
Murphy Investment Management, Inc. If such investment advisory agreement is
approved by the shareholders of the Growth & Income Fund, Murphy Investment
Management, Inc. will become the investment adviser to the Growth & Income Fund.
Murphy Investment Management, Inc. intends to attempt to achieve the investment
objective of the Growth & Income Fund by investing, under normal circumstances,
at least 65% of the Growth & Income Fund's assets in convertible securities of
issuers that Murphy Investment Management, Inc. believes can produce products or
services that provide or benefit from advances in technology. In connection
therewith the name of the Growth & Income Fund would be changed to "Murphy New
World Convertibles Fund." See Proposal 3.(c) for a discussion of the risks
associated with investing in such securities.
Our Board of Trustees believes that the proposed change in this investment
restriction of the Growth & Income Fund will provide the Growth & Income Fund's
investment adviser the potential to achieve the investment objective of the
Growth & Income Fund in declining equity markets as well as in rising equity
markets and the potential to profit from the volatility of the securities in
which the Growth & Income Fund will invest.
2.(c)(ii) PROPOSAL TO CHANGE THE INVESTMENT RESTRICTIONS OF THE GROWTH & INCOME
FUND TO PERMIT IT TO PURCHASE RESTRICTED SECURITIES
Our Board of Trustees has approved a change of the investment restrictions of
the Growth & Income Fund to permit it to purchase restricted securities. The
Growth & Income Fund currently is prohibited from purchasing restricted
securities. The current investment restriction states:
[The Growth & Income Fund may not] purchase any security restricted as to
disposition under federal securities laws.
The proposed investment restriction, which will also be a fundamental policy of
the Growth & Income Fund, states:
Subject to Securities and Exchange Commission limitations on investments in
illiquid securities, the Growth & Income Fund may purchase securities restricted
as to disposition under federal securities laws without limitation.
See Proposal 2.(b)(iii) for a discussion of the characteristics of, and risks
associated with, restricted securities. Our Board of Trustees believes that
although investing in restricted securities involves risk, investing in such
securities has the potential to yield capital appreciation.
2.(c)(iii) PROPOSAL TO CHANGE THE INVESTMENT RESTRICTIONS OF THE GROWTH &
INCOME FUND TO PERMIT IT TO PURCHASE AND WRITE PUT AND CALL OPTIONS AND PURCHASE
AND SELL FUTURES CONTRACTS ON STOCK INDICES AND DEBT SECURITIES
Our Board of Trustees has approved a change of the investment restrictions of
the Growth & Income Fund to permit it to purchase and write put and call options
and purchase and sell futures contracts on stock indices and debt securities.
Currently the Growth & Income Fund is prohibited from doing so. The current
investment restriction states:
[The Growth & Income Fund may not] buy or sell commodities or commodity
contracts [including futures contracts and related options]...
The proposed investment restriction, which will also be a fundamental policy of
the Growth & Income Fund, states:
The Growth & Income Fund may not buy or sell commodities or commodity
contracts except futures contracts on stock indices or debt securities. The
Growth & Income Fund may write or purchase put and call options.
If the proposed change is approved, the Growth & Income Fund would utilize such
instruments for hedging and not for speculative purposes. Hedging may involve
an attempt to protect against declines or possible declines in the market value
of the Growth & Income Fund's portfolio or may involve an attempt to establish a
position in the securities market as a substitute for purchase of individual
securities. In the latter situation, the Growth & Income Fund would, in the
normal course, purchase securities and terminate the hedging position, although
under unusual market conditions, such hedging positions may be terminated
without a corresponding purchase of securities.
A stock index futures contract obligates the seller to deliver (and the
purchaser to take delivery of) an amount of cash equal to a specific dollar
amount times the difference between the value of a specific stock index at the
closing of the last trading day of the contract and the price at which the
agreement is made. When the Growth & Income Fund purchases or sells a stock
index futures contract, it will cover its position. To cover its position, it
will maintain in a segregated account cash or other liquid securities in an
amount that when added to any amounts deposited with the futures commission
merchant as margin, will be equal to the market value of the stock index futures
contract. See Proposal 2.(a)(ii) for a discussion of the characteristics of,
and risks associated with, futures contracts on debt securities ("Debt
Futures").
A put option gives the purchaser of the option the right to sell, and the
writer of the option the obligation to buy, the underlying security, stock index
or stock index futures contract at any time during the option period. A call
option gives the purchaser of the option the right to buy, and the writer of the
option the obligation to sell, the underlying security, stock index or stock
index futures contract at any time during the option period. The purchaser of a
put or call option pays a premium to the writer. If price movements in the
underlying security, stock index or stock index futures contract are such that
exercise of an option would not be profitable for the Growth & Income Fund, loss
of the premium paid may be offset by an increase in the value of the Growth &
Income Fund's securities or a decrease in the cost of acquisition of securities
by the Growth & Income Fund.
The writer of an option will receive a premium for writing the option, which,
with respect to a covered call option, increases the return on the underlying
security, stock index or stock index futures contract if the option expires
unexercised or is closed out at a profit. By writing a call option, the writer
limits its opportunity to profit from any increase in the market value of the
underlying security, stock index or stock index futures contract above the
exercise price of the option, but continues to bear the risk of a decline in the
value of the underlying security, stock index or stock index futures contract.
The Growth & Income Fund will not write put options except in closing
transactions. All call options written by the Growth & Income Fund will be
"covered." For a call to be covered either the Growth & Income Fund (i) owns the
underlying security or stock index futures contract or has an absolute and
immediate right to acquire the security or stock index futures contract without
payment of additional cash consideration, or for an additional consideration as
set forth in (ii), upon conversion or exchange of other securities held in its
portfolio; or (ii) maintains in a segregated account cash or other liquid
securities adequate to purchase the security or stock index futures contract, in
each case until the Growth & Income Fund enters into a closing purchase
transaction.
Options on stock indexes gives the holder the right to receive an amount of
cash upon exercise of the option. Receipt of this cash amount will depend upon
the closing level of the stock index upon which the option is based being
greater than (in the case of a call) or less than (in the case of a put) the
exercise price of the option. The amount of cash received, if any, will be the
difference between the closing price of the index and the exercise price of the
option, multiplied by a specified dollar multiple. The writer (seller) of the
option is obligated, in return for the premiums received from the purchaser of
the option, to make delivery of this amount to the purchaser. Unlike the
options on securities but like stock index futures, all settlements of index
options transactions are in cash.
When the Growth & Income Fund wishes to terminate its obligation with respect
to a Debt Future or stock index futures contract, it will enter into an
offsetting contract position. Similarly when the Growth & Income Fund wishes to
terminate its obligation with respect to an option it has written, it may effect
a "closing purchase transaction." It accomplishes this by buying an option of
the same series as the option previously written by it. When the Growth &
Income Fund is the holder of an option, it may liquidate its position by
effecting a "closing sale transaction." It accomplishes this by selling an
option of the same series as the option previously purchased by it. There is no
guarantee that either a closing purchase or a closing sale transaction can be
effected. If any call or put option is not exercised or sold, the option will
become worthless on its expiration date.
Participation in the options or futures markets by the Growth & Income Fund
involves investment risks and transactions costs to which it would not be
subject absent the use of these hedging instruments. In particular the loss
from investing in stock index futures and Debt Futures is potentially unlimited.
Risks inherent in the use of hedging instruments include: (i) adverse changes
in the value of such instruments; (ii) imperfect correlation between the price
of options, stock index futures and Debt Futures and movement in the price of
the underlying securities, index, stock index futures or Debt Futures; (iii) the
fact that the skills needed to use these strategies are different from those
needed to select portfolio securities; (iv) the possible absence of a liquid
secondary market for any particular instrument at any time; and (v) possible
need to defer closing out certain positions to avoid adverse tax consequences.
Our Board of Trustees believes that although the use of hedging instruments
involves risk, use of such hedging instruments can be of assistance in achieving
the Growth & Income Fund's investment objective.
2.(c)(iv) PROPOSAL TO CHANGE THE SUBCLASSIFICATION OF THE GROWTH & INCOME FUND
FROM THAT OF A "DIVERSIFIED COMPANY" TO THAT OF A "NON-DIVERSIFIED COMPANY".
Our Board of Trustees has approved a change of the subclassification of the
Growth & Income Fund from that of a "diversified company" to that of a "non-
diversified company" under the 1940 Act. Under the 1940 Act, a "diversified
company" must have at least 75% of its total assets represented by cash and cash
items (including receivables), Government securities, securities of other
investment companies, and other securities for the purposes of the
diversification calculation limited in respect of any one issuer to an amount
not greater in value than 5% of the total assets of the investment company and
to not more than 10% of the outstanding voting securities of such issuer. Each
of the Funds is considered a separate "company" for purposes of
subclassification as a "diversified company" or "non-diversified company." Under
the 1940 Act a company's subclassification as a "diversified company" or "non-
diversified company" is a fundamental policy.
Although as a "non-diversified company", the Growth & Income Fund would not
be required to satisfy such standard, the Growth & Income Fund would still
intend to meet a similar diversification test under the Internal Revenue Code of
1986 (the "Code"). This diversification test is similar to that described in
the preceding paragraph except the test applies to 50% rather than 75% of the
Growth & Income Fund's assets. Notwithstanding the change in subclassification,
the Growth & Income Fund will not purchase more than 10% of the outstanding
voting securities of any issuer as the Growth & Income Fund is precluded from
doing so by its investment restrictions. A "non-diversified" portfolio is
expected to be more volatile than a diversified portfolio.
VOTE REQUIRED
Only shareholders of the Growth & Income Fund may vote on the proposals to
change the Growth & Income Fund's investment restrictions and subclassification.
Shareholders will vote separately on each proposal (i.e. they may vote in favor
of one or more proposals and against or abstain with respect to one or more
proposals). The affirmative vote of the holders of a "majority" (as defined in
the 1940 Act) of the outstanding shares of the Growth & Income Fund is required
for the approval of each proposal. Under the 1940 Act, the vote of the holders
of a "majority" of the outstanding shares of the Growth & Income Fund means the
vote of the holders of the lesser of (a) 67% or more of its shares present at
the Meeting or represented by proxy if the holders of more than 50% of its
shares are so present or represented; or (b) more than 50% of its outstanding
shares. Abstention and broker non-votes will not be counted for or against any
proposal but will be counted as votes present for purposes of determining
whether or not more than 50% of the outstanding shares are present or
represented at the Meeting. Abstentions and broker non-votes have the same
effect as a vote against a proposal. If one or more proposals are approved, the
changes will go into effect on the effective date of the next Post-Effective
Amendment to the Trust's Registration Statement under the 1933 Act and the 1940
Act incorporating the changes. The effective date of such Post-Effective
Amendment is anticipated to be January 31, 1997. If one or more of the changes
are not approved at the Meeting, the changes not approved will not be
implemented.
2.(d) PROPOSAL TO CHANGE THE INVESTMENT RESTRICTIONS OF THE GOVERNMENT
INCOME FUND TO PERMIT IT TO PURCHASE FOREIGN SECURITIES AND CURRENCIES
Our Board of Trustees has approved a change of the investment restrictions of
the Government Income to permit it to purchase foreign securities and
currencies. The Government Income Fund currently is prohibited from purchasing
such securities and currencies. The current investment restriction states:
[The Government & Income Fund may not] purchase foreign securities or
currencies.
The proposed investment restriction, which will also be a fundamental policy of
the Government Income Fund, states:
The Government Income Fund may purchase foreign securities and currencies.
See Proposal 2.(b)(iv) for a discussion of the characteristics of, and risks
associated with, investing in foreign securities. Our Board of Trustees
believes that although investing in foreign securities involves risk, investing
in such securities can be of assistance in achieving the Government Income
Fund's investment objective.
If this change is approved, the Government Income Fund will continue to
invest 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 (which may
be subject to repurchase agreements). Additionally, as in the case with other
non-U.S. Government securities purchased by the Government Income Fund, any
foreign securities must be rated A or better by S&P or Moody's. The Government
Income Fund currently intends to invest in securities issued by foreign
governments or by any of their agencies or instrumentalities and not in
securities issued by foreign corporations. However at a later date the
Government Income Fund may invest in securities of foreign corporations.
VOTE REQUIRED
Only shareholders of the Government Income Fund may vote on the proposals to
change the Government Income Fund's investment restrictions. The affirmative
vote of the holders of a "majority" (as defined in the 1940 Act) of the
outstanding shares of the Government Income Fund is required for approval of the
Proposal. Under the 1940 Act, the vote of the holders of a "majority" of the
outstanding shares of the Government Income Fund means the vote of the holders
of the lesser of (a) 67% or more of its shares present at the Meeting or
represented by proxy if the holders of more than 50% of its shares are so
present or represented; or (b) more than 50% of its outstanding shares.
Abstention and broker non-votes will not be counted for or against the proposal
but will be counted as votes present or represented at the Meeting. Abstentions
and broker non-votes have the same effect as a vote against the proposal. If so
approved, the change in the Government Income Fund's investment restrictions
will go into effect on the effective date of the next Post-Effective Amendment
to the Trust's Registration Statement under the 1933 Act and the 1940 Act
incorporating the change in investment restrictions. The effective date of such
Post-Effective Amendment is anticipated to be January 31, 1997. If the proposal
is not approved at the Meeting, the change in investment restrictions will not
be implemented.
2.(e)(i) PROPOSAL TO CHANGE THE INVESTMENT RESTRICTIONS OF THE GOLD FUND TO
PERMIT IT TO PURCHASE RESTRICTED SECURITIES
Our Board of Trustees has approved a change of the investment restrictions of
the Gold Fund to permit it to purchase restricted securities. The Gold Fund
currently is prohibited from purchasing restricted securities. The current
investment restriction states:
[The Gold Fund may not] purchase any security restricted as to disposition
under federal securities laws.
The proposed investment restriction, which will also be a fundamental policy of
the Gold Fund, states:
Subject to Securities and Exchange Commission limitations on investments in
illiquid securities, the Gold Fund may purchase securities restricted as to
disposition under federal securities laws without limitation.
See Proposal 2.(b)(iii) for a discussion of the characteristics of, and risks
associated with, restricted securities. Our Board of Trustees believes that
although investing in restricted securities involves risk, investing in such
securities has the potential to yield capital appreciation.
2.(e)(ii) PROPOSAL TO CHANGE THE INVESTMENT RESTRICTIONS OF THE GOLD FUND TO
PERMIT IT TO PURCHASE GOLD, SILVER, PLATINUM AND PALLADIUM
Our Board of Trustees has approved a change of the investment restrictions of
the Gold Fund to permit it to purchase gold, silver, platinum and palladium.
The current investment restriction states:
[The Gold Fund may not] buy or sell commodities or commodity contracts except
futures and related options...
The proposed investment restriction, which will also be a fundamental policy of
the Gold Fund, states:
[The Gold Fund may not] buy or sell commodities or commodity contracts except
futures and related options and gold, silver, platinum and palladium bullion,...
The Gold Fund is currently prohibited from purchasing any commodities or
commodity contracts. If the change in investment restrictions is approved, the
Gold Fund may purchase gold, sliver, platinum and palladium bullion. The Gold
Fund may also purchase such metals in the form of coins, if there is an actively
quoted market for the coins. Coins will only be purchased for their metallic
value and not for their currency or numismatic value. Our Board of Trustees
believes that although investing in gold, silver, platinum and palladium
involves risk as described below, investing in such assets has the potential to
yield capital appreciation.
Investments in gold, silver, platinum and palladium bullion do not generate
income and will subject the Gold Fund to taxes and insurance, and shipping and
storage costs. The sole source of return to the Gold Fund from such investments
would be gains realized on sales, and a negative return would be realized if
such investments are sold at a loss. The Gold Fund intends to qualify as a
regulated investment company under the Internal Revenue Code of 1986 (the
"Code") so that the Gold Fund will not be subject to Federal income taxes on its
taxable income to the extent distributed to shareholders. The Gold Fund's
investment in gold, silver, platinum and palladium bullion may result in its
failure to meet certain of the income or asset tests prescribed by the Code. To
reduce this risk, the Gold Fund's investment adviser will endeavor to manage the
Gold Fund's portfolio so that (i) less than 10% of the Gold Fund's gross income
each year will be derived from its investments in gold, silver, platinum and
palladium bullion and (ii) less than 50% of the value of the Gold Fund's assets,
at the end of each quarter, will be invested in gold, silver, platinum and
palladium bullion. Additionally no more than 35% of the Gold Fund's total
assets will be invested in silver, platinum and palladium bullion.
VOTE REQUIRED
Only shareholders of the Gold Fund may vote on the proposals to change the
Gold Fund's investment restrictions. Shareholders will vote separately on each
proposal (i.e. they may vote in favor of one or both proposals and against or
abstain with respect to one or both proposals). The affirmative vote of the
holders of a "majority" (as defined in the 1940 Act) of the outstanding shares
of the Gold Fund is required for the approval of each proposal. Under the 1940
Act, the vote of the holders of a "majority" of the outstanding shares of the
Gold Fund means the vote of the holders of the lesser of (a) 67% or more of its
shares present at the Meeting or represented by proxy if the holders of more
than 50% of its share are so present or represented; or (b) more than 50% of its
outstanding shares. Abstention and broker non-votes will not be counted for or
against either proposal but will be counted as votes present for purposes of
determining whether or not more than 50% of the outstanding shares are present
at the Meeting. Abstentions and broker non-votes have the same effect as a vote
against a proposal. If one or both proposals are approved, the changes will go
into effect on the effective date of the next Post-Effective Amendment to the
Trust's Registration Statement under the 1933 Act and the 1940 Act incorporating
the changes. The effective date of such Post-Effective Amendment is anticipated
to be January 31, 1997. If one or both of the changes are not approved at the
Meeting, the changes not approved will not be implemented.
3. PROPOSAL TO APPROVE NEW INVESTMENT ADVISORY AGREEMENTS
INTRODUCTION
The Trust presently has investment advisory, sub-advisory and/or management
agreements applicable to each of the Funds pursuant to which investment advisory
and management services are provided to the Funds. These agreements vary among
the Funds as to the services provided by the various service providers and as to
the various service providers. However with respect to each Fund, the combined
services provided are similar. In an effort to simplify the Trust's investment
advisory and management structure, our Board of Trustees has approved new
investment advisory agreements applicable to each Fund. Each of the new
investment advisory agreements has substantially similar terms except for the
investment advisory fee payable pursuant to the agreement. Our Board of
Trustees has approved one sub-advisory agreement applicable only to the
Government Income Fund. However the Government Income Fund is not a party to
such agreement and pays no fees to the sub-adviser thereto. The Trust will not
enter into any management agreements. The fees paid by each Fund under the new
investment advisory agreements will be equal to, or less than, the fees paid by
that Fund under the investment advisory, sub-advisory and/or management
agreements currently in effect.
The Board of Trustees on September 17, 1996 voted to terminate the Trust's
investment advisory, sub-advisory and management agreements with Monitrend
Investment Management, Inc. Such termination will take effect when the new
investment advisory agreements become effective. Until such time Monitrend
Investment Management, Inc. will continue to serve as investment adviser, sub-
adviser or manager under the aforementioned agreements. Currently Monitrend
Investment Management, Inc. has entered into investment advisory agreements with
the Trust applicable to the Gaming & Leisure Fund, Gold Fund, Technology Fund
and Growth Fund, a sub-advisory agreement applicable to the Growth & Income Fund
and management agreements applicable to the PIA Adjustable Rate Fund and the
Government Income Fund. The Board of Trustees terminated such agreements
because Monitrend Investment Management, Inc. was unable to fulfill its
obligations to reimburse the Funds to the extent necessary to permit the Funds
to maintain the expense limitations set forth in the Trust's current prospectus.
(The obligations of Monitrend Investment Management, Inc. with respect to (i)
the Gaming & Leisure Fund, the Growth & Income Fund and the Technology Fund were
subsequently paid by Murphy Investment Management, Inc.; (ii) with respect to
the Government Income Fund and the Growth Fund by Pacific Income Advisers, Inc.;
and (iii) with respect to the Gold Fund by Orrell and Company, Inc.
Murphy Investment Management, Inc., Pacific Income Advisers, Inc. and
Orell and Company, Inc. will continue to fulfill such obligation of
Monitrend Investment Management, Inc. through the date of the Meeting. Monitrend
Investment Management, Inc. had no such obligations with respect to the PIA
Adjustable Rate Fund.)
The terms of the new investment advisory agreements are discussed below and
the terms of the new sub-advisory agreement are discussed in the discussion
under the caption "PROPOSAL TO APPROVE NEW SUB-ADVISORY AGREEMENT FOR GOVERNMENT
INCOME FUND". The Trust will not enter into any investment advisory agreement
applicable to a Fund until it has been approved by that Fund's shareholders.
See "Vote Required". Consequently the approval of each new investment advisory
agreement constitutes a separate proposal. The differences between the current
agreements and the new agreements are also discussed below.
DESCRIPTION OF THE NEW INVESTMENT ADVISORY AGREEMENT
Duties of Investment Adviser. Under the new investment advisory agreements,
----------------------------
the investment adviser thereto is responsible for decisions to buy and sell
securities, broker-dealer selection and negotiation of brokerage commission
rates. Their activities are subject to the control of our Board of Trustees.
Compensation of the Investment Adviser. Under the new investment advisory
--------------------------------------
agreements, the investment adviser thereto is paid a fee computed daily and
payable monthly, at an annual rate expressed as a percentage of the applicable
Fund's average daily net assets. The applicable fee rates are as follows:
FUND FEE RATE AVERAGE DAILY NET ASSETS
---- -------- ------------------------
PIA Adjustable Rate Fund 0.20% All asset levels
Gaming & Leisure Fund 1.00% All asset levels
Growth & Income Fund 0.625% 0 to $150 million
0.50% $150 million to $250 million
0.375% Over $250 million
Government Income Fund 0.40% All asset levels
Gold Fund 1.00% 0 to $50 million
0.875% $50 million to $75 million
0.75% $75 million to $100 million
0.625% $100 million to $150 million
0.50% $150 million to $250 million
0.375% Over $250 million
Technology Fund 1.00% All asset levels
Growth Fund 1.00% 0 to $50 million
0.875% $50 million to $75 million
0.75% $75 million to $100 million
0.625% $100 million to $150 million
0.50% $150 million to $250 million
0.375% Over $250 million
Under the new investment advisory agreements, the investment adviser thereto
is responsible for reimbursing the applicable Fund to the extent necessary to
permit the Fund to maintain the expense limitations set forth in the Trust's
current prospectus. Expense reimbursement obligations are calculated daily and
paid monthly, at an annual rate expressed as a percentage of the applicable
Fund's average daily net assets. The applicable expense limitations are as
follows:
FUND EXPENSE LIMITATION
---- ------------------
PIA Adjustable Rate Fund 0.30%
Gaming & Leisure Fund 2.44%
Growth & Income Fund 2.44%
Government Income Fund 1.10%
Gold Fund 2.44%
Technology Fund 2.44%
Growth Fund 2.44%
Brokerage Allocation. Under the new investment advisory agreements, the
--------------------
investment adviser's primary consideration in effecting a securities transaction
is execution at the most favorable securities price. In selecting a broker-
dealer to execute each particular transaction, the investment adviser will take
the following into consideration: the best net price available; the
reliability, integrity and financial condition of the broker-dealer; 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 Funds on
a continuing basis. Accordingly, the price to a 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, the
investment adviser shall not be deemed to have acted unlawfully or to have
breached any duty created by the new investment advisory agreement or otherwise
solely by reason of its having caused a Fund to pay a broker or dealer that
provides brokerage or research services to the investment adviser 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 investment adviser determines 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 investment adviser's overall responsibilities
with respect to the Trust or other accounts for which the investment adviser has
investment discretion. The investment adviser is authorized to consider sales
of shares of the Trust 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 terms "broker" and "broker-dealer"
include futures commission merchants. 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 Trust in the
valuation of its investments.
The investment adviser may allocate brokerage transactions to Syndicated
Capital, Inc., an affiliate of Pacific Income Advisers that is wholly-owned by
Joseph Lloyd McAdams, Jr., but only if it reasonably believes the commissions
and transaction quality are comparable to that available from other qualified
brokers. The Trust will not deal with Syndicated Capital, Inc. as principal.
Duration and Termination. The new investment advisory agreement will
------------------------
continue from year to year, unless terminated as discussed below, but only so
long as such continuance is specifically approved at least annually by the Board
of Trustees, including the vote of a majority of the Trustees, who are not
parties to the investment advisory agreement or "interested persons" (as defined
in the 1940 Act) of any such party (the "disinterested Trustees") cast in person
at a meeting called for the purpose of voting on such approval, or by a vote of
a majority of our disinterested Trustees and the vote of the holders of a
"majority" (as defined in the 1940 Act) of the applicable Fund's shareholders.
The new investment advisory agreements may be terminated by the investment
adviser thereto at any time without penalty upon giving the Trust sixty days'
written notice (which notice may be waived by the Trust) and may be terminated
by the Trust at any time without penalty upon giving the investment adviser
thereto sixty days' written notice (which notice may be waived by the investment
adviser), provided that such termination by the Trust shall be approved by the
vote of a majority of all of the Trustees in office at the time or by the vote
of the holders of a "majority" (as defined in the 1940 Act) of the voting
securities of the applicable Fund at the time outstanding and entitled to vote.
The new investment advisory agreements automatically terminate in the event of
its "assignment" (as defined in the 1940 Act).
DESCRIPTION OF INVESTMENT ADVISERS
The proposed investment advisers to the Funds are as follows:
FUND INVESTMENT ADVISER
---- ------------------
PIA Adjustable Rate Fund Pacific Income Advisers, Inc.
Gaming & Leisure Fund Murphy Investment Management, Inc.
Growth & Income Fund Murphy Investment Management, Inc.
Government Income Fund Pacific Income Advisers, Inc.
Gold Fund Orrell and Company, Inc.
Technology Fund Murphy Investment Management, Inc.
Growth Fund Pacific Income Advisers, Inc.
Pacific Income Advisers, Inc. ("PIA") is currently the investment adviser to
the PIA Adjustable Rate Fund and the Government Income Fund. PIA is also the
sub-adviser to the Intermediate Fixed Income Portfolio of the Paine Webber
Managed Account Services Portfolio Trust. The Intermediate Fixed Income
Portfolio currently has approximately $50,000,000 in net assets and PIA receives
an annual sub-advisory fee equal to 0.20% of the average daily net assets of the
Portfolio. PIA has not agreed to waive or otherwise reduce its compensation
under that sub-advisory agreement. Joseph Lloyd McAdams, Jr., the Chairman and
a trustee of the Trust, is Chairman and Chief Investment Officer of PIA. Ms.
Heather Baines, the President of the Trust, is President and Chief Executive
Officer of PIA. Together Mr. McAdams and Ms. Baines own all of the outstanding
stock of PIA. PIA presently manages approximately $2.5 billion for
institutional and individual clients. The address of PIA is 1299 Ocean Avenue,
Suite 210, Santa Monica, CA 90401.
Murphy Investment Management, Inc. ("Murphy") (formerly known as Negative
Beta Associates, Inc.) is currently the sub-adviser to the Technology Fund. John
Michael Murphy, a nominee for the Board of Trustees, is the President of Murphy.
Together Mr. Murphy and Ms. Gaye Elizabeth Morgenthaler own all of the
outstanding stock of Murphy. Murphy presently manages approximately $6 million
for institutional and individual clients. The address of Murphy is 2830 North
Carbillo Highway, Half Moon Bay, CA 94019.
Orrell and Company, Inc. ("Orrell") currently is not an investment adviser to
an investment company and has no prior experience in managing the investment
portfolio of a registered investment company. Gregory M. Orrell is the
President and sole shareholder of Orrell. Orrell presently manages on a
nondiscretionary basis approximately $25 million for institutional and
individual clients. The address of Orrell is 120 Montgomery Street, Suite 1230,
San Francisco, CA 94104.
A. PROPOSAL TO APPROVE NEW INVESTMENT ADVISORY AGREEMENT (PIA ADJUSTABLE RATE
FUND)
There are no material differences between the current investment advisory
agreement between the Trust and PIA with respect to the PIA Adjustable Rate Fund
and the new investment advisory agreement. Currently there is in effect a
management agreement between PIA and Monitrend Investment Management, Inc. with
respect to the PIA Adjustable Rate Fund. Pursuant to this management agreement
Monitrend Investment Management, Inc. provides PIA with statistical and other
factual information, advice regarding economic factors and trends, and advice as
to occasional transactions in specific securities but does not generally furnish
advice and/or make recommendations regarding the purchase or sale of securities.
Additionally Monitrend Investment Management, Inc. provides the PIA Adjustable
Rate Fund with transaction processing and portfolio monitoring services.
Pursuant to this management agreement, Monitrend Investment Management, Inc. is
compensated by PIA and not the PIA Adjustable Rate Fund.
Our Board of Trustees in recommending that the shareholders of the PIA
Adjustable Rate Fund approve the new investment advisory agreement with PIA
considered the following factors assigning equal weight to each of the three
factors and requiring that each factor be present:
1. As investment adviser to the PIA Adjustable Rate Fund has achieved
the stated investment objective of the PIA Adjustable Rate Fund.
2. There were no material differences between the new investment
advisory agreement and the current investment advisory agreement.
3. PIA has demonstrated the capacity to serve as investment adviser
to the PIA Adjustable Rate Fund without the assistance of Monitrend
Investment Management, Inc.
B. PROPOSAL TO APPROVE NEW INVESTMENT ADVISORY AGREEMENT (GAMING & LEISURE
FUND)
There are no material differences between the current investment advisory
agreement between the Trust and Monitrend Investment Management, Inc. with
respect to the Gaming & Leisure Fund and the new investment advisory agreement.
Our Board of Trustees in recommending that the shareholders of the Gaming &
Leisure Fund approve the new investment advisory agreement with Murphy
considered the following factors assigning equal weight to each of the three
factors and requiring that each factor be present:
1. Murphy's financial condition is such that it could fulfill its
commitments to the Gaming & Leisure Fund under the new investment
advisory agreement.
2. There were no material differences between the new investment
advisory agreement and the current investment advisory agreement.
3. Murphy has demonstrated its abilities as investment adviser while
serving as sub-adviser to the Technology Fund.
C. PROPOSAL TO APPROVE NEW INVESTMENT ADVISORY AGREEMENT (GROWTH & INCOME
FUND)
There currently is an investment advisory agreement between the Trust and
MidCap Associates, Inc. with respect to the Growth & Income Fund and a sub-
advisory agreement between the Trust and Monitrend Investment Management, Inc.
with respect to the Growth & Income Fund. The combined services provided by
MidCap Associates, Inc. and Monitrend Investment Management, Inc. under these
agreements is substantially identical to those to be provided by Murphy under
the new investment advisory agreement. Similarly the combined fees paid to
MidCap Associates, Inc. and Monitrend Investment Management, Inc. under these
agreements are identical to those to be paid to Murphy under the new investment
advisory agreement. The expense reimbursement commitment of Monitrend
Investment Management, Inc. under the sub-advisory agreement is identical to
that of Murphy under the new investment advisory agreement. (MidCap Associates,
Inc. made no expense reimbursement commitment.) The duration and termination
provisions of the agreements with MidCap Associates, Inc. and Monitrend
Investment Management, Inc. are identical to those in the new investment
advisory agreement with Murphy.
As indicated in the discussion under Proposal 2.(c)(i) Murphy intends to
achieve the investment objective of the Growth & Income Fund by investing, under
normal circumstances, at least 65% of the Growth & Income Fund's assets in
convertible securities of issuers that Murphy believes can produce products or
services that provide a benefit from advances in technology. In connection
therewith the name of the Growth & Income Fund would be changed to "Murphy New
World Convertibles Fund."
Convertible securities include corporate bonds, debentures, notes or
preferred stocks that can be converted into (that is, exchanged for) common
stock or other equity securities of the same or a different issuer, and other
securities, such as warrants, that also provide an opportunity for equity
participation. These securities are generally convertible at either a stated
price or a stated rate (that is, for a specific number of shares of common stock
or of another security). Because of this conversion feature, the price of the
convertible security will normally vary in some proportion to changes in the
price of the underlying common stock. A convertible security will normally also
provide a higher yield than the underlying common stock. This higher yield may
tend to cushion the convertible security against declines in the price of the
underlying common stock.
In seeking to achieve the Growth & Income Fund's investment objective, Murphy
may invest in convertible securities rated as low as C by Standard & Poor's
Corporation ("S&P") or Moody's Investors Service, Inc. ("Moody's"). Securities
rated less than BBB by S&P and Baa by Moody's (commonly referred to as "junk
bonds") are considered to be predominantly speculative and may be in default.
Such ratings reflect a greater possibility that adverse changes in the financial
condition of the issuer, or in general economic conditions, or both, or an
unanticipated rise in interest rates, may impair the ability of the issuer to
make payments of interest and principal. The inability (or perceived inability)
of issuers to make timely payments of interest and principal would likely made
the values of securities held by the Growth & Income Fund more volatile and
could limit the Growth & Income Fund's ability to sell its securities at prices
approximating the values the Growth & Income Fund had placed on such securities.
In the absence of a liquid trading market for securities held by it, the Growth
& Income Fund at times may be unable to establish the fair value of such
securities. Finally the rating assigned to a security by Moody's or S&P does
not reflect an assessment of the volatility of the security's market value or of
the liquidity of an investment in the security.
Murphy will seek to minimize the risks of investing in lower-rated securities
through careful investment analysis. When the Growth & Income Fund invests in
securities in the lower rating categories, the achievement of its investment
objective is more dependent on Murphy's investment analysis than would be the
case if the Growth & Income Fund were investing in securities in the higher
rating categories.
Our Board of Trustees in recommending that the shareholders of the Growth &
Income Fund approve the new investment advisory agreement with Murphy considered
the following factors assigning equal weight to each of the three factors and
requiring that each factor be present:
1. Murphy's financial condition is such that it could fulfill its
commitments to the Growth & Income Fund under the new investment
advisory agreement.
2. There were no material differences between the new investment
advisory agreement and the current investment advisory/sub-advisory
agreements.
3. Murphy has demonstrated its abilities as investment adviser while
serving as sub-adviser to the Technology Fund.
D. PROPOSAL TO APPROVE NEW INVESTMENT ADVISORY AGREEMENT (GOVERNMENT INCOME
FUND)
There currently is an investment advisory agreement between the Trust and PIA
with respect to the Government Income Fund and a management agreement between
the Trust and Monitrend Investment Management, Inc. with respect to the
Government Income Fund. The combined services provided by PIA and Monitrend
Investment Management, Inc. under these agreements is substantially identical to
those to be provided by PIA under the new investment advisory agreement.
Similarly the combined fees paid to PIA and Monitrend Investment Management,
Inc. under these agreements are identical to those to be paid to PIA under the
new investment advisory agreement. The expense reimbursement commitment of
Monitrend Investment Management, Inc. under the management agreement is
identical to that of PIA under the new investment advisory agreement. (PIA made
no expense reimbursement commitment under the current investment advisory
agreement.) The duration and termination provisions of the agreements with PIA
and Monitrend Investment Management, Inc. are identical to those in the new
investment advisory agreement with PIA.
As discussed later in Proposal 4, PIA intends to retain Camborne Advisors,
Inc. ("Camborne") pursuant to a sub-advisory agreement to assist it in providing
investment advisory services to the Government Income Fund. Although this sub-
advisory agreement is subject to the approval of the shareholders of the
Government Income Fund, the sub-advisory agreement is between PIA and Camborne.
This sub-advisory agreement does not relieve PIA of any of its obligations to
the Government Income Fund or impose any obligations on the Government Income
Fund that are in addition to those provided for in the new investment advisory
agreement.
Our Board of Trustees in recommending that the shareholders of the Government
Income Fund approve the new investment advisory agreement with PIA considered
the following factors assigning equal weight to each of the three factors and
requiring that each factor be present:
1. PIA's financial condition is such that it could fulfill its
commitments to the Government Income Fund under the new investment
advisory agreement.
2. There were no material differences between the new investment
advisory agreement and the current investment advisory/management
agreements.
3. PIA as investment adviser to the Government Income Fund has
achieved the stated investment objective of the Government Income Fund.
E. PROPOSAL TO APPROVE NEW INVESTMENT ADVISORY AGREEMENT (GOLD FUND)
There are no material differences between the current investment advisory
agreement between the Trust and Monitrend Investment Management, Inc. with
respect to the Gold Fund and the new investment advisory agreement. Our Board
of Trustees in recommending that the shareholders of the Gold Fund approve the
new investment advisory agreement with Orrell considered the following factors
assigning equal weight to each of the three factors and requiring that each
factor be present:
1. Orrell's financial condition is such that it could fulfill its
commitment to the Gold Fund under the new investment advisory agreement.
2. There were no material differences between the new investment
advisory agreement and the current investment advisory agreement.
3. Orrell had demonstrated its abilities as investment adviser in
managing assets for individual and institutional clients.
F. PROPOSAL TO APPROVE NEW INVESTMENT ADVISORY AGREEMENT (TECHNOLOGY FUND)
There are no material differences between the current investment advisory
agreement between the Trust and Monitrend Investment Management, Inc. with
respect to the Technology Fund and the new investment advisory agreement.
Currently there is a sub-advisory agreement between Monitrend Investment
Management, Inc. and Murphy pursuant to which Murphy provides portfolio
management services to the Technology Fund and is compensated by Monitrend
Investment Management, Inc. for doing so. Murphy will provide these services to
the Technology Fund pursuant to the new investment advisory agreement. Our
Board of Trustees in recommending that the shareholders of the Technology Fund
approve the new investment advisory agreement with Murphy considered the
following factors assigning equal weight to each of the three factors and
requiring that each factor be present:
1. Murphy's financial condition is such that it could fulfill its
commitments to the Technology Fund under the new investment advisory
agreement.
2. There were no material differences between the new investment
advisory agreement and the current investment advisory agreement.
3. Murphy has demonstrated its abilities as investment adviser while
serving as sub-adviser to the Technology Fund.
G. PROPOSAL TO APPROVE NEW INVESTMENT ADVISORY AGREEMENT (GROWTH FUND)
There are no material differences between the current investment advisory
agreement between the Trust and Monitrend Investment Management, Inc. with
respect to the Growth Fund and the new investment advisory agreement. Currently
there is a sub-advisory agreement between Monitrend Investment Management, Inc.
and Robert L. Bender, Inc. pursuant to which Robert L. Bender, Inc. provides
portfolio management services to the Growth Fund and is compensated by Monitrend
Investment Management, Inc. for doing so. The services currently being provided
by Robert L. Bender, Inc. will be provided by PIA pursuant to the new investment
advisory agreement.
Our Board of Trustees in recommending that the shareholders of the Growth
Fund approve the new investment advisory agreement with PIA considered the
following factors assigning equal weight to each of the three factors and
requiring that each factor be present:
1. PIA's financial condition is such that it could fulfill its
commitments to the Growth Fund under the new investment advisory
agreement.
2. There were no material differences between the new investment
advisory agreement and the current investment advisory agreement.
3. PIA has demonstrated its abilities as an investment adviser in
managing equity accounts aggregating $300 million for individual and
institutional clients.
VOTE REQUIRED
The favorable vote of the holders of a "majority" (as defined in the 1940
Act) of the outstanding shares of each Fund is required for approval of the new
investment advisory agreement applicable to that Fund. Under the 1940 Act, the
vote of the holders of a "majority" of the outstanding shares of a Fund means
the vote of the holders of the lesser of (a) 67% or more of its shares present
at the Meeting or represented by proxy if the holders of 50% or more of its
shares are so present or represented; or (b) more than 50% of its outstanding
shares. Abstentions and broker non-votes will not be counted for or against the
Proposal but will be counted as votes present for purposes of determining
whether or not more than 50% of the outstanding shares are present or
represented at the Meeting. Abstentions and broker non-votes have the same
effect as a vote against the Proposal. If new investment advisory agreements
are not approved at the Meeting, the Board of Trustees will consider the
submission of the same or a revised agreement to the shareholders of the Fund
not approving the agreement.
4. PROPOSAL TO APPROVE SUB-ADVISORY AGREEMENT FOR GOVERNMENT INCOME FUND
INTRODUCTION
Our Board of Trustees on September 17, 1996 approved a sub-advisory agreement
between PIA and Camborne with respect to the Government Income Fund. The Trust
is not a party to such agreement. This sub-advisory agreement does not relieve
PIA of any of its obligations to the Government Income Fund or impose any
obligations on the Government Income Fund that are in addition to those provided
in the new investment advisory agreement with PIA discussed above.
DESCRIPTION OF THE SUB-ADVISORY AGREEMENT
Duties of Camborne. Pursuant to the sub-advisory agreement, Camborne will
------------------
furnish regular advice to PIA regarding those economic and market factors which
influence the decision of PIA as to the securities and hedging instruments to be
purchased and sold for the Government Income Fund. Camborne will also from time
to time provide advice as to transactions in specific securities. Although
Camborne will provide investment advice to PIA, PIA will make the final decision
as to the securities and hedging instruments to be purchased and sold for the
Government Income Fund.
Compensation of Camborne. Pursuant to the sub-advisory agreement, PIA will
------------------------
pay Camborne a fee computed daily and payable monthly at an annual rate of 0.20%
of the Government Income Fund's average daily net assets.
As indicated in the discussion under "Description of the New Investment
Advisory Agreement", PIA is responsible for reimbursing the Government Income
Fund to the extent necessary to permit the Government Income Fund to maintain
the expense limitation of the Government Income Fund set forth in the Trust's
current prospectus (1.10%). Pursuant to the sub-advisory agreement Camborne
will reimburse PIA if PIA is required to make reimbursements to the Government
Income Fund.
Duration and Termination. The sub-advisory agreement will continue from year
------------------------
to year, unless terminated as discussed below, but only so long as such
continuance is specifically approved at least annually by the Board of Trustees,
including the vote of a majority of the disinterested Trustees cast in person at
a meeting called for the purpose of voting on such approval, or by a vote of a
majority of our disinterested Trustees and the vote of the holders of a
"majority" (as defined in the 1940 Act) of the Government Income Fund's
shareholders.
The sub-advisory agreement may be terminated by each of Camborne, PIA and the
Trust at any time without penalty upon giving 60 days' written notice (which
notice may be waived) provided that such termination by the Trust shall be
approved by the vote of a majority of all of the Trustees in office at the time
or by the vote of the holders of a "majority" (as defined in the 1940 Act) of
the voting securities of the Government Income Fund at the time outstanding and
entitled to vote. The sub-advisory agreement automatically terminates in the
event of its "assignment" (as defined in the 1940 Act).
DESCRIPTION OF CAMBORNE
Camborne is a privately held Nevada corporation which is wholly-owned by
Camborne Investment Corporation. John S. Stricklin, 3878 Oak Lawn, Suite 200,
Dallas, Texas 75231, Ronald F. Bruce, 10670 N. Central Expressway, Suite 410,
Dallas, Texas 75231, and Ronald F. Akin, 10670 N. Central Expressway, Suite 405,
Dallas, Texas 75231, each own 10% or more of the voting securities of Camborne
Investment Corporation. Camborne is a newly formed investment advisory firm
with no prior experience in managing the investment portfolio of a registered
investment company. The address of Camborne is 10670 N. Central Expressway,
Suite 501, Dallas, Texas 75231.
Our Board of Trustees in recommending that the shareholders of the Government
Income Fund approve the sub-advisory agreement considered the following factors
assigning equal weight to each of the three factors and requiring that each
factor be present:
1. Camborne financial resources would be an additional source of
funds to pay any expense reimbursement obligations of PIA.
2. Investment advice provided by Camborne could be used by PIA in
serving as investment adviser to the Government & Income Fund.
3. The investment advisory fees paid by the Government & Income Fund
would not be increased since PIA is responsible for compensating
Camborne.
VOTE REQUIRED
The favorable vote of the holders of a "majority" (as defined in the 1940
Act) of the outstanding shares of the Government Income Fund is required for the
approval of the sub-advisory agreement. Under the 1940 Act, the vote of the
holders of a "majority" of the outstanding shares of the Government Income Fund
means the vote of the holders of the lesser of (a) 67% or more of its shares
present at the Meeting or represented by proxy if the holders of 50% or more of
its shares are so present or represented; or (b) more than 50% of its
outstanding shares. Abstentions and broker non-votes will not be counted for or
against the Proposal but will be counted as votes present for purposes of
determining whether or not more than 50% of the outstanding shares are present
or represented at the Meeting. Abstentions and broker non-votes have the same
effect as a vote against the Proposal. If the sub-advisory agreement is not
approved at the Meeting, Camborne will not be retained by PIA as sub-
adviser. If the sub-advisory agreement is approved at the Meeting, the
name of the Government Income Fund will be changed to "Camborne
Government Income Fund."
PRINCIPAL UNDERWRITER AND ADMINISTRATOR
The Trust's principal underwriter is Syndicated Capital, Inc., 1299 Ocean
Avenue, Suite 210, Santa Monica, CA 90401. The Trust's administrator is
American Data Services, Inc., 24 West Carver Street, Huntington, NY 11743.
RECEIPT OF SHAREHOLDER PROPOSALS
Under the proxy rules of the Securities and Exchange Commission, shareholder
proposals meeting tests contained in those rules may, under certain conditions,
be included in the Trust's proxy materials for a particular meeting of
shareholders. One of these conditions relates to the timely receipt by the
Trust of any such proposal. Since the Trust does not have regular annual
meetings of shareholders, under these rules, proposals submitted for inclusion
in the proxy materials for a particular meeting must be received by the Trust a
reasonable time before the solicitation of proxies for the meeting is made. The
fact that the Trust receives a shareholder proposal in a timely manner does not
insure its inclusion in the Trust's proxy materials since there are other
requirements in the proxy rules relating to such inclusion.
OTHER MATTERS
We do not know of any other matters that may come before the Meeting. If any
other matters properly come before the Meeting, it is the intention of the
persons acting pursuant to the enclosed form of proxy to vote the shares
represented by said proxies in accordance with their best judgment with respect
to such matters. By signing and returning your proxy card, you give the persons
named to vote your shares discretionary authority as to any such matter or
matters.
By Order of the Board of Trustees
KATHIE HILTON
Secretary
Santa Monica, California
November 21, 1996
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS TO BE HELD DECEMBER 13, 1996
MONITREND MUTUAL FUND (GAMING & LEISURE FUND SHARES)
The undersigned constitutes and appoints Joseph Lloyd McAdams, Jr. and
Heather U. Baines, and each of them, each with full power to act without the
other, and each with full power of substitution, the true and lawful proxies of
the undersigned, to represent and vote, as designated below, all shares of the
Gaming & Leisure Fund that the undersigned is entitled to vote at the Special
Meeting of Shareholders of Monitrend Mutual Fund to be held at 1299 Ocean
Avenue, Suite 210, Santa Monica, California 90401, on Friday the 13th day of
December, 1996 at 8:30 A.M., local time, and at any adjournments
thereof.
1. Election of Trustees
- -- FOR all nominees listed below (except -- WITHHOLD authority to vote
as marked to the contrary below) for all nominees listed
below
JOSEPH LLOYD MCADAMS, JR., BEATRICE FELIX, ANN LOUISE MARINACCIO,
JOHN MICHAEL MURPHY, ROBERT I. WEISBERG
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
-------------------------------------------------------------------
2(b)(i).Proposal to approve a change in the investment objective of the Gaming &
Leisure Fund and related change in its investment restrictions to require it to
concentrate its investments in the group of industries constituting the
biotechnology sector.
-- FOR -- AGAINST -- ABSTAIN
2(b)(ii).Proposal to approve a change in the investment restrictions of the
Gaming & Leisure Fund to permit it to effect short sales.
-- FOR -- AGAINST -- ABSTAIN
2(b)(iii).Proposal to approve a change in the investment restrictions of the
Gaming & Leisure Fund to permit it to purchase restricted securities.
-- FOR -- AGAINST -- ABSTAIN
2(b)(iv).Proposal to approve a change in the investment restrictions of the
Gaming & Leisure Fund to permit it to purchase foreign securities and
currencies.
-- FOR -- AGAINST -- ABSTAIN
2(b)(v).Proposal to approve a change in the investment restrictions of the
Gaming & Leisure Fund to permit it to lend its portfolio securities.
-- FOR -- AGAINST -- ABSTAIN
3(b).Proposal to approve a new investment advisory agreement between Monitrend
Mutual Fund and Murphy Investment Management, Inc. with respect to the Gaming &
Leisure Fund.
-- FOR -- AGAINST -- ABSTAIN
4. Not Applicable
5. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
The Board of Trustees recommends a vote FOR proposals, 1, 2(b)(i), 2(b)(ii),
2(b)(iii), 2(b)(iv), 2(b)(v) and 3(b).
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1, 2(b)(i), 2(b)(ii), 2(b)(iii), 2(b)(iv), 2(b)(v) and 3(b).
The undersigned acknowledges receipt of the Notice of said Special Meeting and
the accompanying Proxy Statement.
Dated: -----------------------------------------------, 1996
Signed: ----------------------------------------------------
- ------------------------------------------------------------
(Please print name)
NOTE: Please sign exactly as your name appears on your account. Joint owners
should sign personally. When signing as attorney, executor, administrator,
trustee or guardian, give full title as such.
THIS PROXY IS SOLICITED ON BEHALF OF TRUSTEES OF MONITREND MUTUAL FUND.
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS TO BE HELD DECEMBER 13, 1996
MONITREND MUTUAL FUND (GOLD FUND SHARES)
The undersigned constitutes and appoints Joseph Lloyd McAdams, Jr. and
Heather U. Baines, and each of them, each with full power to act without the
other, and each with full power of substitution, the true and lawful proxies of
the undersigned, to represent and vote, as designated below, all shares of the
Gold Fund that the undersigned is entitled to vote at the Special Meeting of
Shareholders of Monitrend Mutual Fund to be held at 1299 Ocean Avenue, Suite
210, Santa Monica, California 90401, on Friday the 13th day of December, 1996 at
8:30 A.M., local time, and at any adjournments thereof.
1. Election of Trustees
- -- FOR all nominees listed below (except -- WITHHOLD authority to vote
as marked to the contrary below) for all nominees listed
below
JOSEPH LLOYD MCADAMS, JR., BEATRICE FELIX, ANN LOUISE MARINACCIO,
JOHN MICHAEL MURPHY, ROBERT I. WEISBERG
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
---------------------------------------------------------------
2(e)(i).Proposal to approve a change in the investment restrictions of the Gold
Fund to permit it to purchase restricted securities.
-- FOR -- AGAINST -- ABSTAIN
2(e)(ii).Proposal to approve a change in the investment restrictions of the Gold
Fund to permit it to purchase gold, silver, platinum and palladium.
-- FOR -- AGAINST -- ABSTAIN
3(e). Proposal to approve a new investment advisory agreement between
Monitrend Mutual Fund and Orrell and Company, Inc. with respect to the Gold
Fund.
-- FOR -- AGAINST -- ABSTAIN
4. Not Applicable
5. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
The Board of Trustees recommends a vote FOR proposals, 1, 2(e)(i), 2(e)(ii) and
3(e).
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1, 2(e)(i), 2(e)(ii) and 3(e).
The undersigned acknowledges receipt of the Notice of said Special Meeting and
the accompanying Proxy Statement.
Dated: -----------------------------------------------, 1996
Signed: ----------------------------------------------------
- ------------------------------------------------------------
(Please print name)
NOTE: Please sign exactly as your name appears on your account. Joint owners
should sign personally. When signing as attorney, executor, administrator,
trustee or guardian, give full title as such.
THIS PROXY IS SOLICITED ON BEHALF OF TRUSTEES OF MONITREND MUTUAL FUND.
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS TO BE HELD DECEMBER 13, 1996
MONITREND MUTUAL FUND (GROWTH FUND SHARES)
The undersigned constitutes and appoints Joseph Lloyd McAdams, Jr. and
Heather U. Baines, and each of them, each with full power to act without the
other, and each with full power of substitution, the true and lawful proxies of
the undersigned, to represent and vote, as designated below, all shares of the
Growth Fund that the undersigned is entitled to vote at the Special Meeting of
Shareholders of Monitrend Mutual Fund to be held at 1299 Ocean Avenue, Suite
210, Santa Monica, California 90401, on Friday the 13th day of December, 1996 at
8:30 A.M., local time, and at any adjournments thereof.
1. Election of Trustees
- -- FOR all nominees listed below (except -- WITHHOLD authority to vote
as marked to the contrary below) for all nominees listed
below
JOSEPH LLOYD MCADAMS, JR., BEATRICE FELIX, ANN LOUISE MARINACCIO,
JOHN MICHAEL MURPHY, ROBERT I. WEISBERG
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
-------------------------------------------------------------
2. Not Applicable.
3(g). Proposal to approve a new investment advisory agreement between
Monitrend Mutual Fund and Pacific Income Advisers, Inc. with respect to the
Growth Fund.
-- FOR -- AGAINST -- ABSTAIN
4. Not Applicable.
5. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
The Board of Trustees recommends a vote FOR proposals, 1 and 3(g).
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1 and 3(g).
The undersigned acknowledges receipt of the Notice of said Special Meeting and
the accompanying Proxy Statement.
Dated: -----------------------------------------------, 1996
Signed: ----------------------------------------------------
- ------------------------------------------------------------
(Please print name)
NOTE: Please sign exactly as your name appears on your account. Joint owners
should sign personally. When signing as attorney, executor, administrator,
trustee or guardian, give full title as such.
THIS PROXY IS SOLICITED ON BEHALF OF TRUSTEES OF MONITREND MUTUAL FUND.
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS TO BE HELD DECEMBER 13, 1996
MONITREND MUTUAL FUND (GROWTH & INCOME FUND SHARES)
The undersigned constitutes and appoints Joseph Lloyd McAdams, Jr. and
Heather U. Baines, and each of them, each with full power to act without the
other, and each with full power of substitution, the true and lawful proxies of
the undersigned, to represent and vote, as designated below, all shares of the
Growth & Income Fund that the undersigned is entitled to vote at the Special
Meeting of Shareholders of Monitrend Mutual Fund to be held at 1299 Ocean
Avenue, Suite 210, Santa Monica, California 90401, on Friday the 13th day of
December, 1996 at 8:30 A.M., local time, and at any adjournments
thereof.
1. Election of Trustees
- -- FOR all nominees listed below (except -- WITHHOLD authority to vote
as marked to the contrary below) for all nominees listed
below
JOSEPH LLOYD MCADAMS, JR., BEATRICE FELIX, ANN LOUISE MARINACCIO,
JOHN MICHAEL MURPHY, ROBERT I. WEISBERG
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
-----------------------------------------------------------------
2(c)(i).Proposal to approve a change in the investment restrictions of the
Growth & Income Fund to permit it to effect short sales.
-- FOR -- AGAINST -- ABSTAIN
2(c)(ii).Proposal to approve a change in the investment restrictions of the
Growth & Income Fund to permit it to purchase restricted securities.
-- FOR -- AGAINST -- ABSTAIN
2(c)(iii).Proposal to approve a change in the investment restrictions of the
Growth & Income Fund to permit it to purchase and write put and call options and
purchase and sell futures contracts on stock indices and debt securities.
-- FOR -- AGAINST -- ABSTAIN
2(c)(iv).Proposal to approve a change in the subclassification of the Growth &
Income Fund from that of a "Diversified Company" to that of a "Non-diversified
Company."
--FOR -- AGAINST -- ABSTAIN
3(c). Proposal to approve a new investment advisory agreement between
Monitrend Mutual Fund and Murphy Investment Management, Inc. with respect to the
Growth & Income Fund.
-- FOR -- AGAINST -- ABSTAIN
4. Not Applicable
5. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
The Board of Trustees recommends a vote FOR proposals, 1, 2(c)(i), 2(c)(ii),
2(c)(iii), 2(c)(iv) and 3(c).
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1, 2(c)(i), 2(c)(ii), 2(c)(iii), 2(c)(iv) and 3(c).
The undersigned acknowledges receipt of the Notice of said Special Meeting and
the accompanying Proxy Statement.
Dated: -----------------------------------------------, 1996
Signed: ----------------------------------------------------
- ------------------------------------------------------------
(Please print name)
NOTE: Please sign exactly as your name appears on your account. Joint owners
should sign personally. When signing as attorney, executor, administrator,
trustee or guardian, give full title as such.
THIS PROXY IS SOLICITED ON BEHALF OF TRUSTEES OF MONITREND MUTUAL FUND.
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS TO BE HELD DECEMBER 13, 1996
MONITREND MUTUAL FUND (PIA ADJUSTABLE RATE GOVERNMENT SECURITIES FUND SHARES)
The undersigned constitutes and appoints Joseph Lloyd McAdams, Jr. and
Heather U. Baines, and each of them, each with full power to act without the
other, and each with full power of substitution, the true and lawful proxies of
the undersigned, to represent and vote, as designated below, all shares of the
PIA Adjustable Rate Government Securities Fund that the undersigned is entitled
to vote at the Special Meeting of Shareholders of Monitrend Mutual Fund to be
held at 1299 Ocean Avenue, Suite 210, Santa Monica, California 90401, on Friday
the 13th day of December, 1996 at 8:30 A.M., local time, and at any adjournments
thereof.
1. Election of Trustees
- -- FOR all nominees listed below (except -- WITHHOLD authority to vote
as marked to the contrary below) for all nominees listed
below
JOSEPH LLOYD MCADAMS, JR., BEATRICE FELIX, ANN LOUISE MARINACCIO,
JOHN MICHAEL MURPHY, ROBERT I. WEISBERG
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
----------------------------------------------------------------
2(a)(i).Proposal to approve a change in the investment objective of the PIA
Adjustable Rate Government Securities Fund.
-- FOR -- AGAINST -- ABSTAIN
2(a)(ii).Proposal to approve a change in the investment restrictions of the PIA
Adjustable Rate Fund to permit it to purchase and sell futures contracts on debt
securities and purchase and write put and call options on debt securities and
futures contracts on debt securities.
-- FOR -- AGAINST -- ABSTAIN
3(a). Proposal to approve a new investment advisory agreement between
Monitrend Mutual Fund and Pacific Income Advisers, Inc. with respect to the PIA
Adjustable Rate Government Securities Fund.
-- FOR -- AGAINST -- ABSTAIN
4. Not Applicable
5. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
The Board of Trustees recommends a vote FOR proposals, 1, 2(a)(i), 2(a)(ii) and
3(a).
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1, 2(a)(i), 2(a)(ii) and 3(a).
The undersigned acknowledges receipt of the Notice of said Special Meeting and
the accompanying Proxy Statement.
Dated: -----------------------------------------------, 1996
Signed: ----------------------------------------------------
- ------------------------------------------------------------
(Please print name)
NOTE: Please sign exactly as your name appears on your account. Joint owners
should sign personally. When signing as attorney, executor, administrator,
trustee or guardian, give full title as such.
THIS PROXY IS SOLICITED ON BEHALF OF TRUSTEES OF MONITREND MUTUAL FUND.
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS TO BE HELD DECEMBER 13, 1996
MONITREND MUTUAL FUND (PIA-MONITREND GOVERNMENT INCOME FUND
SHARES)
The undersigned constitutes and appoints Joseph Lloyd McAdams, Jr. and
Heather U. Baines, and each of them, each with full power to act without the
other, and each with full power of substitution, the true and lawful proxies of
the undersigned, to represent and vote, as designated below, all shares of the
PIA-Monitrend Government Income Fund that the undersigned is entitled to vote at
the Special Meeting of Shareholders of Monitrend Mutual Fund to be held at 1299
Ocean Avenue, Suite 210, Santa Monica, California 90401, on Friday the 13th day
of December, 1996 at 8:30 A.M., local time, and at any adjournments thereof.
1. Election of Trustees
- -- FOR all nominees listed below (except -- WITHHOLD authority to vote
as marked to the contrary below) for all nominees listed
below
JOSEPH LLOYD MCADAMS, JR., BEATRICE FELIX, ANN LOUISE MARINACCIO,
JOHN MICHAEL MURPHY, ROBERT I. WEISBERG
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
---------------------------------------------------------------
2(d). Proposal to approve a change in the investment restrictions of the PIA-
Monitrend Government Income Fund to permit it to purchase foreign securities and
currencies.
-- FOR -- AGAINST -- ABSTAIN
3(d). Proposal to approve a new investment advisory agreement between
Monitrend Mutual Fund and Pacific Income Advisers, Inc. with respect to the PIA-
Monitrend Government Income Fund.
--FOR -- AGAINST -- ABSTAIN
4. Not Applicable
5. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
The Board of Trustees recommends a vote FOR proposals, 1, 2(d) and 3(d).
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1, 2(d) and 3(d).
The undersigned acknowledges receipt of the Notice of said Special Meeting and
the accompanying Proxy Statement.
Dated: -----------------------------------------------, 1996
Signed: ----------------------------------------------------
- ------------------------------------------------------------
(Please print name)
NOTE: Please sign exactly as your name appears on your account. Joint owners
should sign personally. When signing as attorney, executor, administrator,
trustee or guardian, give full title as such.
THIS PROXY IS SOLICITED ON BEHALF OF TRUSTEES OF MONITREND MUTUAL FUND.
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS TO BE HELD DECEMBER 13, 1996
MONITREND MUTUAL FUND (TECHNOLOGY FUND SHARES)
The undersigned constitutes and appoints Joseph Lloyd McAdams, Jr. and
Heather U. Baines, and each of them, each with full power to act without the
other, and each with full power of substitution, the true and lawful proxies of
the undersigned, to represent and vote, as designated below, all shares of the
Technology Fund that the undersigned is entitled to vote at the Special Meeting
of Shareholders of Monitrend Mutual Fund to be held at 1299 Ocean Avenue, Suite
210, Santa Monica, California 90401, on Friday the 13th day of December, 1996 at
8:30 A.M., local time, and at any adjournments thereof.
1. Election of Trustees
- -- FOR all nominees listed below (except -- WITHHOLD authority to vote
as marked to the contrary below) for all nominees listed
below
JOSEPH LLOYD MCADAMS, JR., BEATRICE FELIX, ANN LOUISE MARINACCIO,
JOHN MICHAEL MURPHY, ROBERT I. WEISBERG
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
--------------------------------------------------------------------
2. Not Applicable.
3(f). Proposal to approve a new investment advisory agreement between
Monitrend Mutual Fund and Murphy Investment Management, Inc. with respect to the
Technology Fund.
-- FOR -- AGAINST -- ABSTAIN
4. Not Applicable
5. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
The Board of Trustees recommends a vote FOR proposals, 1 and 3(f).
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1 and 3(f).
The undersigned acknowledges receipt of the Notice of said Special Meeting and
the accompanying Proxy Statement.
Dated: -----------------------------------------------, 1996
Signed: ----------------------------------------------------
- ------------------------------------------------------------
(Please print name)
NOTE: Please sign exactly as your name appears on your account. Joint owners
should sign personally. When signing as attorney, executor, administrator,
trustee or guardian, give full title as such.
THIS PROXY IS SOLICITED ON BEHALF OF TRUSTEES OF MONITREND MUTUAL FUND.
