<PAGE>
As filed with the Securities and Exchange Commission on April 17, 1996
Securities Act registration no. 33-1398
Investment Company Act file no. 811-4466
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 15
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 17
----------------------------
MONETTA FUND, INC.
(Registrant)
1776-A South Naperville Road, Suite 207
Wheaton, Illinois 60187-8133
Telephone number: 708/462-9800
----------------------------
Robert S. Bacarella Janet D. Olsen
Monetta Fund, Inc. Bell, Boyd & Lloyd
1776-A South Naperville Road, #207 Three First National Plaza, #3300
Wheaton, Illinois 60187-8133 Chicago, Illinois 60602
(Agents for service)
----------------------------
Amending Parts A, B and C and filing exhibits.
It is proposed that this filing will become effective:
immediately upon filing pursuant to rule 485(b)
X On April 17, 1996 pursuant to rule 485(b)
60 days after filing pursuant to rule 485(a)(1)
on ___________________ pursuant to rule 485(a)(1)
75 days after filing pursuant to rule 485(a)(2)
on _______________ pursuant to rule 485(a)(2)
<TABLE>
<CAPTION>
================================================================================================
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
Being Registered Being Registered Price Per Unit Offering Price Registration Fee
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares of Beneficial Net Asset
Interest, No Par Value at Time
Value 2,028,606/1/ of Sale $31,483,978/2/ $100
================================================================================================
</TABLE>
Registrant has elected to register an indefinite number of its shares of common
stock pursuant to Rule 24f-2. Registrant filed its Rule 24f-2 Notice for the
fiscal year ended December 31, 1995 on February 22, 1996.
- -----------------------
/1/ Based upon a net asset value of $15.52 on April 15, 1996.
/2/ This calculation is made pursuant to Rule 24e-2 under the Investment
Company Act of 1940. The actual aggregate redemption price of shares
redeemed during the Registrant's fiscal year ended December 31, 1995 was
$113,701,649 (7,054,186 shares), of which $82,507,662 was used for
reductions pursuant to paragraph (c) of Rule 24f-2 in Registrant's Rule
24f-2 Notice for such period. The aggregate redemption price of redeemed
shares used for reductions in this amendment pursuant to 24e-2(a) is
$31,193,987.
Page 1 of ____ pages (including exhibits)
The index of exhibits is on page _____.
<PAGE>
MONETTA FUND, INC.
Cross-reference sheet pursuant to rule 495(a) of Regulation C
<TABLE>
<CAPTION>
Item Location or caption*
-------- --------------------------------
Part A
------
<S> <C>
1(a) & (b) Front Cover
2(a) Fund Expenses
(b)-(c) Not Applicable
3(a) Financial Highlights
(b) Not Applicable
(c) Investment Return
4(a)(i) General Information
(a)(ii)&(b) Investment Objectives and Policies; Risks and
Investment Considerations; Investment Restrictions
(c) Investment Objectives and Policies; Risks and
Investment Considerations
5(a) Management of the Funds
(b) Management of the Funds; Rear Cover; Fund Expenses
(c) Management of the Funds
(d) Not Applicable
(e) Rear Cover
(f) Management of the Funds; Fund Expenses
(g) Management of the Funds
5A The required information is included in registrant's
annual report to shareholders
6(a) General Information
(b)-(d) Not Applicable
(e) General Information
(f)-(g) Dividends, Distributions and Federal Taxes
7 How to Purchase Fund Shares
(a) Not Applicable
(b) How to Purchase Fund Shares; Determination of Net
Asset Value
(c) How to Purchase Fund Shares; Individual Retirement
Accounts
(d) Front Cover; How to Purchase Fund Shares; Individual
Retirement Accounts
(e)-(f) Not Applicable
8(a) How to Redeem Fund Shares
(b) How to Purchase Fund Shares; How to Redeem Fund Shares
(c)-(d) How to Redeem Fund Shares
9 Not Applicable
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Item Location or caption*
-------- --------------------------------
Part B (Supplemental Information Statement)
-------------------------------------------
<S> <C>
10(a) & (b) Front Cover
11 Table of Contents
12 Not Applicable
13(a)-(c) Investment Objectives and Policies; Risks and Investment
Considerations; Investment Restrictions
(d) Portfolio Transactions
14(a) Directors/Trustees and Officers
(b) Investment Adviser
(c) Not Applicable
15(a) & (b) Not Applicable
(c) Directors/Trustees and Officers
16(a)-(b) Investment Adviser
(c)-(g) Not Applicable
(h) Custodian; Independent Auditors
(i) Not Applicable
17(a)-(d) Portfolio Transactions; Investment Adviser
(e) Not Applicable
18(a) & (b) Not Applicable
19(a)-(c) Purchasing and Redeeming Shares
20 Tax Status
21(a)-(c) Not Applicable
22(a) Not Applicable
(b) Performance Information
23 Other Fund Information
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Item Location or caption/*/
-------- ----------------------------
Part C (other information)
--------------------------
<S> <C>
24 Financial statements and exhibits
25 Persons controlled by or under common control with
registrant
26 Number of holders of securities
27 Indemnification
28 Business and other connections of investment advisor
29 Principal underwriters
30 Location of accounts and records
31 Management services
32 Undertakings
- --------------------------------
</TABLE>
/*/ References are to captions within the part of the registration statement
to which the particular item relates except as otherwise indicated.
<PAGE>
PROSPECTUS
April 17, 1996
Monetta
NO SALES LOAD FUNDS
NO REDEMPTION FEE
- --------------------------------------------------------------------------------
1776-A SOUTH NAPERVILLE ROAD, SUITE 207 . WHEATON, IL 60187 . 1-800-MONETTA
- --------------------------------------------------------------------------------
. MONETTA FUND, INC.
. MONETTA MID-CAP EQUITY FUND
. MONETTA LARGE-CAP EQUITY FUND
Each seeks long-term capital growth by investing in common stocks believed to
have above average growth potential. The Funds differ from each other with
respect to the (i) market capitalizations of the companies in which they invest
and (ii) relative importance placed on investing for current income.
. MONETTA BALANCED FUND
Seeks a favorable total rate of return through capital appreciation and current
income consistent with preservation of capital, derived from investing in a
portfolio of equity and fixed income securities.
. MONETTA INTERMEDIATE BOND FUND
Seeks high current income consistent with the preservation of capital by
investing primarily in marketable debt securities.
. MONETTA GOVERNMENT MONEY MARKET FUND
Seeks maximum current income consistent with safety of capital and maintenance
of liquidity. The Fund invests in U. S. Government Securities maturing in
thirteen months or less from the date of purchase and repurchase agreements for
U. S. Government Securities. U. S. Government Securities include securities
issued or guaranteed by the U. S. Government or by its agencies or
instrumentalities.
GOVERNMENT MONEY MARKET FUND IS A "NO-LOAD" MONEY MARKET FUND AND ATTEMPTS TO
MAINTAIN ITS NET ASSET VALUE AT $1.00 PER SHARE. SHARES OF THIS FUND ARE NOT
INSURED OR GUARANTEED BY THE U. S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT
MONETTA GOVERNMENT MONEY MARKET FUND WILL BE ABLE TO MAINTAIN A STABLE $1.00 PER
SHARE NET ASSET VALUE.
Monetta Mid-Cap Equity Fund ("Mid-Cap Fund"), Monetta Large-Cap Equity Fund
("Large-Cap Fund"), Monetta Balanced Fund ("Balanced Fund"), Monetta
Intermediate Bond Fund ("Intermediate Bond Fund") and Monetta Government Money
Market Fund ("Government Money Market Fund") are series of Monetta Trust (the
"Trust"). Monetta Fund, Inc. ("Monetta Fund") and each of the Trust series are
collectively referred to as the "Funds." Each Fund is a "no-load" fund. There
are no sales or redemption charges, and the Funds have no 12b-1 plans.
MINIMUM INVESTMENT:
Initial Purchase $1,000
Subsequent Investments $50
Your initial investment may be divided among the Funds, but an investment in any
single Fund may not be less than $250.
PLANS AVAILABLE:
Automatic Investment Plan
Individual Retirement Account
SEP-IRA
Profit Sharing
401(k)
403(b)
This Prospectus sets forth concisely the information about the Funds that a
prospective investor should know before investing. An investor should read this
Prospectus and retain it for future reference. A Statement of Additional
Information about the Funds (which bears the same date as this Prospectus and
together with any supplement to it is incorporated by reference) has been filed
with the Securities and Exchange Commission. That statement is available without
charge by writing or calling the Funds at the address and telephone number
printed above.
================================================================================
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
SUMMARY
Mid-Cap Fund, Large-Cap Fund, Balanced Fund, Intermediate Bond Fund and
Government Money Market Fund are series of the Trust. Monetta Fund, Inc.
("Monetta Fund") and each of the Trust series are collectively referred to as
the "Funds." Each Fund is a "no-load" fund. There are no sales or redemption
charges, and the Funds have no 12b-1 plans.
INVESTMENT OBJECTIVES
MONETTA FUND, MID-CAP FUND AND LARGE-CAP FUND each seek long-term capital growth
by investing in common stocks believed to have above average growth potential.
The Funds differ from each other with respect to the (i) market capitalizations
of the companies in which they invest and (ii) relative importance placed on
investing for current income.
MONETTA FUND generally invests in smaller and medium-sized companies with
market capitalizations ranging from $50 million to $1 billion. Monetta Fund's
primary investment objective is to provide shareholders with capital
appreciation by investing at least 70% of the Fund's assets in equity
securities. A secondary objective of the Fund is to seek to provide its
shareholders with income by investing in dividend-paying equity securities or
fixed income securities.
MID-CAP FUND typically invests in medium-sized companies with market
capitalizations of $1 billion to $5 billion. Under normal market conditions, the
Fund invests at least 90% of its total assets in equity securities.
LARGE-CAP FUND typically invests in large companies with market
capitalizations in excess of $5 billion. Under normal market conditions, the
Fund invests at least 90% of its total assets in equity securities.
BALANCED FUND seeks a favorable total rate of return through capital
appreciation and current income consistent with preservation of capital, derived
from investing in a portfolio of equity and fixed income.
INTERMEDIATE BOND FUND seeks high current income, consistent with the
preservation of capital, by investing primarily in marketable debt securities.
GOVERNMENT MONEY MARKET FUND seeks maximum current income consistent with safety
of capital and maintenance of liquidity. The Fund invests in securities issued
or guaranteed by the U. S. Government or by its agencies or instrumentalities
("U. S. Government Securities") maturing in thirteen months or less from the
date of purchase and repurchase agreements for U. S. Government Securities
regardless of the maturities of such securities.
There can be no assurance that any Fund will achieve its investment objective.
page 2
<PAGE>
INVESTMENT RISKS
All investments, including those in mutual funds, have risks. No investment is
suitable for all investors. Monetta Fund, Mid-Cap Fund and Large-Cap Fund are
designed for long-term investors who can accept the fluctuations in portfolio
value and other risks associated with seeking long-term capital growth through
investments in common stocks. Balanced Fund is designed for long-term investors
who can accept asset value fluctuations from interest rate changes and credit
risks associated with fixed income investments, and other risks associated with
investments in common stocks. Intermediate Bond Fund is designed for investors
who seek high income with less net asset value fluctuation from interest rate
changes than with a longer-term fund but more net asset value fluctuation than
with a shorter-term fund, and who can accept the credit and other risks
associated with securities that are high and upper-medium quality. Government
Money Market Fund is designed for investors who seek income with minimum risk
(including the risk of principal loss) other than the risk of changes in yield
caused by fluctuations in prevailing levels of interest rates. Because
Government Money Market Fund may invest in U. S. Government Securities that are
not backed by the full faith and credit of the U. S. Treasury, investment in
that Fund might involve risks that are different in some respects from an
investment in a fund that invests only in securities that are backed by the full
faith and credit of the U. S. Treasury. See "Risks and Investment
Considerations" for a more complete description of the risks of investing in
each of the Funds.
DIVIDENDS AND CAPITAL GAINS
Monetta Fund, Mid-Cap Fund and Large-Cap Fund each pay income dividends, if any,
at least annually; Balanced Fund pays income dividends, if any, quarterly; and
Intermediate Bond Fund and Government Money Market Fund pay income dividends
monthly. Capital gains, if any, are distributed by each Fund at least annually.
Distributions are automatically reinvested in additional shares of that Fund at
net asset value unless payment in cash is requested. See "Dividends,
Distributions and Federal Taxes."
PURCHASES AND REDEMPTIONS
The minimum initial investment in the Monetta Funds is $1,000, which may be
allocated among the Funds so long as at least $250 is invested in each Fund in
which you choose to invest. The minimum initial investment for Uniform
Gifts/Transfers to Minors Act ("UGMA") accounts, Automatic Investment Plan
accounts and individual retirement accounts is $250. Additional investments in
ANY Fund must be at least $50. Each Fund has a minimum account balance of $250.
MONETTA FUND SHAREHOLDERS AS OF AUGUST 31, 1995, HOWEVER, WILL BE ALLOWED TO
MAINTAIN A MINIMUM ACCOUNT BALANCE OF $100 IN THAT FUND.
There are no sales charges. See "How to Purchase Shares." Shares will be
redeemed at current net asset value. There are no redemption charges. See "How
to Redeem Shares."
ADVISER AND FEES
Monetta Financial Services, Inc. (the "Adviser") is investment adviser to the
Funds. For a description of the Adviser and the advisory fees paid by the Funds,
see "Management of the Funds."
page 3
<PAGE>
FUND EXPENSES
The purpose of the table below is to assist you in understanding the various
costs and expenses that you will bear directly or indirectly in an investment in
a Fund.
<TABLE>
<CAPTION>
Intermediate Government
Monetta Mid-Cap Large-Cap Balanced Bond Money
Fund Fund Fund Fund Fund Market Fund
---- ---- ---- ---- ---- -----------
<S> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales load on purchases NONE NONE NONE NONE NONE NONE
Maximum sales load on reinvested dividends NONE NONE NONE NONE NONE NONE
Deferred sales load NONE NONE NONE NONE NONE NONE
Redemption fee (a) NONE NONE NONE NONE NONE NONE
Telephone exchange fee $5.00 $5.00 $5.00 $5.00 $5.00 $5.00
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management fees (b) 1.00% 1.00% 1.00% .65% .60% .35%
12b-1 fees NONE NONE NONE NONE NONE NONE
Other Expenses .36% .25% .30%* .30%* .27%(c) .24%(c)
----- ----- ----- ---- ------- -------
Total fund operating expenses 1.36% 1.25% 1.30% .95% .87%(c) .59%(c)
----- ----- ----- ---- ------- -------
*Estimates.
</TABLE>
===============================================================================
(a) If you request payment of redemption proceeds by wire, you must pay the
cost of the wire (currently $10.00).
(b) The Adviser pays all of the ordinary operating expenses of each Fund,
except the fees and expenses of the Funds transfer agent and custodian, and
of the non-interested board members. Ordinary operating expenses do not
include taxes or interest, if any, or costs relating to purchases and sales
of portfolio securities, including brokerage commissions. See "Management
of the Funds."
(c) In 1995, the Adviser voluntarily waived part or all of its management fee
for both the Intermediate Bond Fund and Government Money Market Funds.
Additionally, the Adviser absorbed some of the custodial fees for the
Government Money Market Fund. As a result, the "Total Fund Operating
Expenses" actually paid by the Intermediate Bond Fund in 1995 were .27% of
Average Net Assets. The "Total Fund Operating Expenses" actually paid by
the Government Money Market Fund were .07% of Average Net Assets in 1995.
As of the date of the Prospectus, the waiver of management fees for the
Government Money Market Fund continue in effect, subject to review and
possible termination by the Adviser at the beginning of each quarter. The
Adviser has agreed to limit each Fund's total operating expenses to the
most restrictive limit imposed by any state in which shares of the Fund are
offered for sale. The Funds believe that the most restrictive current limit
is 2.5% of the first $30 million of average net assets, 2% of the next $70
million and 1.5% of assets in excess of $100 million.
EXAMPLE
You would pay the following expenses on a $1,000 investment, assuming (i) a 5%
annual return as required by the Securities and Exchange Commission for purposes
of this example; (ii) the percentage amounts listed under Annual Fund Operating
Expenses above remain the same in each of the periods; (iii) all income,
dividends and capital gain distributions are reinvested in additional shares of
the Funds; and (iv) redemption at the end of each period:
<TABLE>
<CAPTION>
One Three Five Ten
Year Years Years Years
---- ----- ----- -----
<S> <C> <C> <C> <C>
Monetta Fund, Inc. $14 $44 $76 $167
Monetta Mid-Cap Equity Fund 13 40 70 154
Monetta Large-Cap Equity Fund 14 42 n/a n/a
Monetta Balanced Fund 10 31 n/a n/a
Monetta Intermediate Bond Fund 9 28 49 109
Monetta Government Money Market Fund 6 19 34 75
</TABLE>
This example is not necessarily indicative of past or future expenses, and
actual expenses may be greater or lesser than those shown. Although information
such as that shown above is useful in reviewing the Funds' projected expenses
and in providing some basis for comparison with other investment alternatives,
it should not be used for comparison with other investments using different
assumptions or time periods.
Because Large-Cap Fund and Balanced Fund are new, the above amounts are
estimates and are projected only for the first three years of operations. See
"Management of the Funds."
page 4
<PAGE>
FINANCIAL HIGHLIGHTS
The following information for a share outstanding throughout each period has
been audited by KPMG Peat Marwick LLP, independent auditors for Monetta Fund.
The audited financial statements of Monetta Fund and the reports thereon are
contained in its 1995 annual report to shareholders, which may be obtained upon
request at no charge.
MONETTA FUND
<TABLE>
<CAPTION>
5/6/86
Through
1995 1994 1993 1992 1991 1990 1989 1988 1987 12/31/86
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of period $14.515 $15.539 $15.992 $15.731 $10.963 $10.441 $ 9.933 $9.649 $9.670 $10.000
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) .029 (.026) (.028) .006 .081 .103 .219 .106 .113 .115
Net realized and unrealized gain
(loss) on investments 4.075 (.938) .105 .855 6.037 1.106 1.274 2.158 .016 (.335)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations: 4.104 (.964) .077 .861 6.118 1.209 1.493 2.264 .129 (.220)
Less:
Distributions from net
investment income (.028) 0 0 (.006) (.081) (.103) (.219) (.106) (.150) (.110)
Distributions in excess of net
investment income (3.000) (.060) (.475) (.594) (1.208) (.584) (.766) (1.874) 0 0
Distributions from net realized
gains on securities 0 0 (.055) 0 (.061) 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (3.028) (.060) (.530) (.600) (1.350) (.687) (.985) (1.980) (.150) (.110)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at end of
period $15.591 $14.515 $15.539 $15.992 $15.731 $10.963 $10.441 $9.933 $9.649 $ 9.670
Total return 28.0% (6.21)% 0.49% 5.49% 55.90% 11.37% 15.20% 23.07% 1.54% (2.20)%
Ratio to average net assets
(annualized):
Expenses* 1.36% 1.35% 1.38% 1.45% 1.42% 1.50% 1.57%* 1.50% 2.31% 1.27%
Net investment income* 0.18% (0.15)% (0.19)% 0.16% 0.93% 1.09% 2.18%* 0.96% 1.33% 2.45%
Portfolio turnover 272.0% 191.27% 226.85% 126.60% 153.80% 206.51% 258.42% 170.43% 333.47% 80.02%
Net assets (in millions) $362.7 $364.9 $524.3 $408.0 $57.1 $6.1 $3.5 $2.6 $2.1 $1.9
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*If certain expenses had not been assumed by the investment advisor in 1989, the
ratios of expenses and net investment income to average net assets would have
been 1.83% and 1.92%, respectively.
The per share ratios are calculated using the weighted average number of shares
outstanding during the period.
page 5
<PAGE>
FINANCIAL HIGHLIGHTS
The following information for a share outstanding throughout each period has
been audited by KPMG Peat Marwick LLP, independent auditors for each series of
the Trust. The audited financial statements of Mid-Cap Fund, Large-Cap Fund,
Balanced Fund, Intermediate Bond Fund and Government Money Market Fund and the
reports thereon are contained in the Trust's 1995 annual report to shareholders,
which may be obtained upon request at no charge.
Monetta Trust
<TABLE>
<CAPTION>
MID-CAP LARGE-CAP
EQUITY EQUITY
FUND FUND
--------------------------------- ------
Year Year 3/1/93 9/1/95
Ended Ended Through Through
12/31/95 12/31/94 12/31/93 12/31/95
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value at
beginning of period* $12.199 $12.537 $10.000 $10.000
- -------------------------------------------------------------------------------
Net investment income 0.059 0.071 0.006 0.005
Net realized and unrealized
gain (loss) on investments 2.874 0.193 3.531 0.570
- -------------------------------------------------------------------------------
Total from investment operations 2.933 0.264 3.537 0.575
Less:
Distributions from net investment
income (0.050) (0.069) (0.006) (0.004)
Distributions in excess of net
investment income (2.990) (0.533) (0.994) 0
Distributions from net realized
gains on securities (0.130) 0 0 0
- -------------------------------------------------------------------------------
Total distributions (3.170) (0.602) (1.000) (0.004)
- -------------------------------------------------------------------------------
Net asset value at end of period $11.962 $12.199 $12.537 $10.571
- -------------------------------------------------------------------------------
Total return* 24.54% 2.17% 35.40% 5.74%
Ratios to average net assets:
Expenses** 1.25% 1.30% 1.12% 0.69%
Net investment income** 0.44% 0.57% 0.07% 0.05%
Portfolio turnover 254.35% 209.97% 128.12% 38.20%
Net assets (in thousands) $14,216 $11,736 $9,841 $1,072
- -------------------------------------------------------------------------------
</TABLE>
*Ratios and total return for the year of inception are calculated from the date
of inception to the end of the period.
**If certain investment advisory fees and charges of the Trust's custodian and
transfer agent had not been assumed by the investment advisor, the ratios of
expenses and net income to average net assets would be as follows: for the
Intermediate Bond Fund, expenses would have been 0.75%, 0.88% and 0.75% for
1995, 1994 and 1993 respectively. For the Government Money Market Fund, expenses
would have been 0.59%, 0.66% and 0.69%, for 1995, 1994 and 1993 respectively.
For the Intermediate Bond Fund, net investment income would have been 5.46%,
5.34% and 3.66% for 1995, 1994 and 1993 respectively. For the Government Money
Market Fund, the investment income would have been 5.17%, 3.39% and 1.66% for
1995, 1994 and 1993 respectively.
The per share ratios are calculated using the weighted average number of shares
outstanding during the period.
page 6
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE GOVERNMENT
BALANCED BOND MONEY MARKET
FUND FUND FUND
-------- ------------------------------------ ----------------------------------
9/1/95 Year Year 3/5/93 Year Year 3/1/93
Through Ended Ended Through Ended Ended Through
12/31/95 12/31/95 12/31/94 12/31/93 12/31/95 12/31/94 12/31/93
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$10.000 $9.624 $10.345 $10.000 $1.000 $1.000 $1.000
- -------------------------------------------------------------------------------------
0.009 0.655 0.589 0.357 0.059 0.040 0.023
0.602 0.740 (0.690) 0.447 0 0 0
- -------------------------------------------------------------------------------------
0.611 1.395 (0.101) 0.804 0.059 0.040 0.023
(0.004) (0.655) (0.580) (0.357) (0.059) (0.040) (0.023)
(0.002) (0.120) (0.040) (0.102) 0 0 0
0 0 0 0 0 0 0
- -------------------------------------------------------------------------------------
(0.006) (0.775) (0.620) (0.459) (0.059) (0.040) (0.023)
- -------------------------------------------------------------------------------------
$10.605 $10.244 $9.624 $10.345 $1.000 $1.000 $1.000
- -------------------------------------------------------------------------------------
6.16% 14.84% (1.04)% 8.17% 5.87% 4.04% 2.21%
0.91% 0.27% 0.28% 0.28% 0.07% 0.00% 0.03%
0.08% 5.94% 5.94% 4.13% 5.69% 4.04% 2.32%
54.78% 75.07% 94.48% 32.26% N/A N/A N/A
$410 $3,589 $3,010 $2,959 $4,393 $3,315 $1,859
- -------------------------------------------------------------------------------------
</TABLE>
page 7
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The Funds' investment objectives differ principally in the types of securities
selected for investment and the relative importance each Fund places on growth
potential, current income and preservation of capital as considerations in
selecting investments.
. MONETTA FUND, MID-CAP FUND AND LARGE-CAP FUND
Monetta Fund, Mid-Cap Fund and Large-Cap Fund each seek long-term capital growth
by investing in common stocks believed to have above average growth potential.
The Funds differ from each other with respect to the (i) market capitalizations
of the companies in which they invest and (ii) relative importance placed on
investing for current income.
Each Fund's investment approach emphasizes a competitive return in rising
markets and preservation of capital in declining markets in an attempt to
generate long-term capital growth over a complete business cycle (approximately
3 to 5 years) when compared to the broader stock market indices. The Adviser's
emphasis will be on common stocks with improving earnings per share growth, a
history of growth and sound management, and a strong balance sheet. The Adviser
may also invest up to 20% of Monetta Fund's assets and 25% of the assets of Mid-
Cap Fund and Large-Cap Fund's assets in securities not meeting the above
criteria but believed by the Adviser to be undervalued based on a company's
current price-earnings ratio relative to its estimated earnings growth rate. No
Fund intends to invest more than 5% of its assets in derivative securities
(options and futures).
The securities in which each Fund invests will be listed on a national
securities exchange or traded on an over-the-counter market.
Monetta Fund, Mid-Cap Fund, Large-Cap Fund and Balanced Fund (in its investments
in equity securities, as discussed below) each pursue a selling discipline to
preserve capital gains and limit losses. At the time a security is purchased,
the Adviser determines approximate prices (on both the upside and the downside)
at which a given security will be sold, if such prices are reached. A security
will generally be sold if it appreciates or depreciates to the sell points, it
becomes less attractive compared to a new stock idea, or company fundamentals
deteriorate with little perceived prospect for improvement within a reasonable
time frame. The actual timing of the sale of a security may be affected by
liquidity constraints or other factors affecting the market for that security.
This selling discipline may result in higher than average portfolio turnover.
MONETTA FUND'S primary investment objective is to provide its shareholders with
capital appreciation by investing at least 70% of the Fund's assets in equity
securities believed to have growth potential. A secondary objective of Monetta
Fund is to provide its shareholders with income, in part by investing the
balance of the Fund's assets in dividend paying equity securities or in long-
term (greater than one year) debt securities. The Fund's investments in long-
term debt securities will consist of United States Treasury Notes and Treasury
Bonds of various maturities and investment grade securities rated at least A or
better by either Moody's Investor Services, Inc. ("Moody's") or Standard and
Poor's Corporation ("S&P"). A complete description of the ratings is contained
in an appendix to the Statement of Additional Information.
Monetta Fund generally invests in smaller and medium-sized companies with
aggregate market capitalizations ranging from $50 million to $1 billion. See
"Risks and Investment Considerations--Equity Securities."
page 8
<PAGE>
MID-CAP FUND typically invests in medium-sized companies with market
capitalizations of $1 billion to $5 billion ("mid-cap companies"). See "Risks
and Investment Considerations--Equity Securities." Under normal market
conditions, the Fund invests at least 90% of its total assets in equities, and
65% of its total assets in common stocks of mid-cap companies.
LARGE-CAP FUND typically invests in large companies with market capitalizations
in excess of $5 billion ("large-cap companies"). Under normal market conditions,
at least 90% of the Fund's total assets invested in equities, and 65% of the
Fund's total assets will be invested in common stocks of large-cap
companies.
. BALANCED FUND
BALANCED FUND seeks a favorable total rate of return through capital
appreciation and current income consistent with preservation of capital, derived
from investing in a portfolio of equity and fixed income securities.
The investment approach for Balanced Fund combines the equity growth strategy
used for Monetta Fund, Mid-Cap Fund and Large-Cap Fund and the income strategy
employed by Intermediate Bond Fund, as discussed below.
The Fund may emphasize fixed income securities or equity securities or hold
equal amounts of both, depending upon the Adviser's analysis of market,
financial and economic conditions. Under normal circumstances, the Fund will
invest at least 80% of its total assets in fixed income and equity securities.
At least 25% of the Fund's assets invested in fixed income securities will
consist of corporate bonds and debentures rated A or better and securities
issued or guaranteed as to principal and interest by the U.S. Government and its
agencies and instrumentalities. The Fund does not presently intend to invest
more than 10% of its assets in securities rated below investment grade (commonly
called "junk bonds") or, if unrated, determined by the Adviser to be of
comparable credit quality. See "Risks and Investment Considerations--Debt
Securities."
. INTERMEDIATE BOND FUND
INTERMEDIATE BOND FUND seeks a high level of current income, consistent with the
preservation of capital, by investing primarily in marketable debt securities.
Under normal market conditions, Intermediate Bond Fund invests at least 70% of
the value of its total assets (taken at market value at the time of investment)
in the following:
(1) Marketable straight-debt securities of domestic issuers, and of foreign
issuers payable in U. S. dollars, rated at the time of purchase within the three
highest grades assigned by Moody's or by S&P;
(2) Securities issued or guaranteed by the U. S. Government or by its agencies
or instrumentalities;
(3) Commercial paper rated Prime-1 by Moody's or A-1 by S&P at time of purchase,
or, if unrated, issued or guaranteed by a corporation with any outstanding debt
rated A or better by Moody's or by S&P;
(4) Variable rate demand notes, if unrated, determined by the Adviser to be of
credit quality comparable to the commercial paper in which the Fund may invest;
or
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<PAGE>
(5) Bank obligations, including repurchase agreements*, of banks having total
assets in excess of $500 million.
Under normal market condition, the Fund invests at least 65% of its total assets
in bonds and debentures, and at least 75% of its assets in securities with an
average life of less than 15 years, and expects that the dollar-weighted average
life of its portfolio will be between 3 and 10 years. Average life is the
weighted average period over which the Adviser expects the principal to be paid,
and differs from stated maturity in that it includes the estimated effect of
maturity-shortening devices, such as calls, refundings or redemption provisions
of which the Adviser believes it is probable that the issuer will take
advantage. With respect to GNMA securities and other mortgage-backed securities,
average life is likely to be substantially less than the stated maturity of the
mortgages in the underlying pools. With respect to obligations with call
provisions, average life is typically the next call date on which the Adviser
believes it is probable that the obligation will be called. Securities without
prepayment or call provisions generally have an average life equal to their
stated maturity. During periods of rising interest rates, the average life of
mortgage-backed securities and callable obligations may increase substantially
because they are not likely to be prepaid, which may result in greater net asset
value fluctuation.
The Fund also may invest in other debt securities (including those convertible
into or carrying warrants to purchase common stocks or other equity interests,
and privately placed debt securities), preferred stocks, and marketable common
stocks that the Adviser considers likely to yield relatively high income in
relation to cost. Equity securities acquired by conversion or exercise of a
warrant may be held by the Fund for a sufficient time to permit orderly
disposition or to establish a long-term holding period for tax purposes. If,
after purchase by the Fund, the rating of a portfolio security is lost or
reduced, the Fund would not be required to sell the security, but the Adviser
would consider such a change in deciding whether the Fund should retain the
security in its portfolio. See "Risks and Investment Considerations--Debt
Securities." Intermediate Bond Fund will not invest more than 20% of its assets
in debt securities rated below investment grade or, if unrated, determined by
the Adviser to be of comparable credit quality.
- -----------------------------
*A repurchase agreement is a sale of securities to a Fund in which the seller (a
bank or broker-dealer believed by the Adviser to be financially sound) agrees to
repurchase the securities at a higher price, which includes an amount
representing interest on the purchase price, within a specified time.
. GOVERNMENT MONEY MARKET FUND
GOVERNMENT MONEY MARKET FUND seeks maximum current income consistent with safety
of capital and maintenance of liquidity. The Fund invests in U.S. Government
Securities maturing in thirteen months or less from the date of purchase and
repurchase agreements for U.S. Government Securities.
U.S. Government Securities include:
(1) Securities issued by the U.S. Treasury;
(2) Securities issued or guaranteed as to principal and interest by agencies or
instrumentalities of the U.S. Government that are backed by the full faith and
credit guarantee of the U.S. Government;
(3) Securities issued or guaranteed as to principal and interest by agencies or
instrumentalities of the U.S. Government that are not backed by the full faith
and credit guarantee of the U.S. Government; and
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<PAGE>
(4) Repurchase agreements for securities listed in (1), (2), and (3) above,
regardless of the maturities of such underlying securities.
The Fund is a money market fund and follows procedures, described in the
Statement of Additional Information, designed to stabilize its net asset value
per share at $1.00. The Fund maintains a dollar-weighted average portfolio
maturity appropriate to its objective of maintaining a stable net asset value
per share and, in any case, not in excess of 90 days.
The U.S. Government Securities in which the Fund is permitted to invest include:
(i) bills, notes, bonds, and other debt securities, differing as to maturity and
rates of interest, that are issued by and are direct obligations of the U.S.
Treasury; and (ii) other securities that are issued or guaranteed as to
principal and interest by agencies or instrumentalities of the U.S. Government
and that include, but are not limited to, Federal Farm Credit Banks, Federal
Home Loan Banks, Government National Mortgage Association, Farmers Home
Administration, Federal Home Loan Mortgage Corporation and Federal National
Mortgage Association. The Fund also invests in repurchase agreements for U.S.
Government Securities. See "Risks and Investment Considerations."
RISKS AND INVESTMENT CONSIDERATIONS
RISKS
All investments, including those in mutual funds, have risks. No investment is
suitable for all investors. The risks inherent in each Fund depend primarily
upon the types of securities in the Fund's portfolio, as well as on market
conditions. There can be no guarantee that a Fund will achieve its objective.
MONETTA FUND, MID-CAP FUND AND LARGE-CAP FUND are designed for long-term
investors who can accept the fluctuations in portfolio value and other risks
associated with seeking capital growth through investment in common stocks.
BALANCED FUND is appropriate for long-term investors who can accept asset value
fluctuations from interest rate changes and credit risks associated with fixed
income investments, and other risks associated with investments in common
stocks.
INTERMEDIATE BOND FUND is appropriate for investors who seek high income with
less net asset value fluctuation from interest rate changes than that of a
longer-term fund but more net asset value fluctuation than with a shorter-term
fund, and who can accept the credit and others risks associated with securities
that are high and upper-medium quality. A longer-term bond fund will usually
provide a higher yield than an intermediate term fund like Intermediate Bond
Fund; conversely, an intermediate term fund usually has less net asset value
fluctuation, although there can be no guarantee that this will be the case.
GOVERNMENT MONEY MARKET FUND is designed for investors who seek income with
minimum risk (including the risk of principal loss) other than the risk of
changes in yield caused by fluctuation in prevailing levels of interest rates.
Because Government Money Market Fund's investment policy permits it to invest in
U. S. Government Securities that are not backed by the full faith and credit of
the U. S. Government, investment in that Fund may involve risks that are
different in some respects from an investment in a fund that invests only in
securities that are backed by the full faith and credit of the U. S. Government.
Such risks may include a greater risk of loss of principal and interest on the
securities in the Fund's portfolio that are supported only by the issuing or
guaranteeing U. S. Government agency or instrumentality since the Fund must look
principally or solely to that entity for ultimate repayment. There can be no
guarantee that Government Money Market Fund will be able at all times to
maintain its net asset value per share at $1.00.
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<PAGE>
INVESTMENT CONSIDERATIONS
Equity Securities. Common stocks represent an equity interest in a corporation.
Although common stocks have a history of long-term growth in value, their prices
tend to fluctuate in the short term. The securities of smaller companies, as a
class, have had periods of favorable results and other periods of less favorable
results compared to the securities of larger companies as a class. Stocks of
small to mid-size companies tend to be more volatile and less liquid than stocks
of large companies. Smaller companies, as compared to larger companies, may have
a shorter history of operations, may not have as great an ability to raise
additional capital, may have a less diversified product line making them
susceptible to market pressure, and may have a smaller public market for their
shares.
Debt Securities. Bonds and other debt instruments are methods for an issuer to
borrow money from investors. Debt securities have varying levels of sensitivity
to interest rate changes and varying degrees of quality. A decline in prevailing
levels of interest rates generally increases the value of debt securities, while
an increase in rates usually reduces the value of those securities. As a result,
interest rate fluctuations will affect a Fund's net asset value, but not the
income received by a Fund from its portfolio securities. (Because yields on debt
securities available for purchase by a Fund vary over time, no specific yield on
shares of a Fund can be assured.) In addition, if the bonds in a Fund's
portfolio contain call, prepayment or redemption provisions, during a period of
declining interest rates, these securities are likely to be redeemed, and the
Fund will probably be unable to replace them with securities having a comparable
yield. There can be no assurance that payments of interest and principal on
portfolio securities will be made when due.
"Investment grade" debt securities are those rated within the four highest
ratings categories of Moody's or S&P or, if unrated, determined by the Adviser
to be of comparable quality. Bonds rated Baa or BBB have speculative
characteristics and changes in economic conditions or other circumstances are
more likely to lead to a weakened capacity of their issuers to make principal
and interest payments than is the case with higher grade bonds. Lower-rated debt
securities (commonly called "junk bonds") on balance, are considered
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal according to the terms of the obligation and therefore carry
greater investment risk, including the possibility of issuer default and
bankruptcy; they are likely to be less marketable and more adversely affected by
economic downturns than higher-quality debt securities. Convertible debt
securities are frequently unrated or, if rated, are below investment grade. For
more information, see discussion of debt securities in the Fund's Statement of
Additional Information.
Short-term Investment. The Funds (other than Government Money Market Fund) may
make short-term investments without limitation in periods when the Adviser
determines that a temporary defensive position is warranted. Such investments
may be in U. S. Government Securities of the type in which Government Money
Market Fund may invest; certificates of deposit, bankers' acceptances and other
obligations of domestic banks having total assets of at least $500 million and
which are regulated by the U. S. Government, its agencies or instrumentalities;
commercial paper rated in the highest category by a recognized rating agency;
and demand notes comparable in quality, in the Adviser's judgment, to commercial
paper rated in the highest category.
Loans of Portfolio Securities. Subject to certain restrictions, Balanced Fund
and Intermediate Bond Fund may lend their portfolio securities to broker-dealers
and banks. Any such loan must be continuously secured by collateral in cash or
cash equivalents maintained on a current basis in an amount at least equal to
the market value of the securities loaned by the Fund. The Fund would continue
to receive the equivalent of the interest or dividends paid by the issuer on the
securities loaned, and would also receive an additional return that may be in
the form of a fixed fee or a percentage of the collateral. The Fund would have
the right to call the loan and obtain the securities loaned at any time on
notice of not more than five business days. In the event of bankruptcy or other
page 12
<PAGE>
default of the borrower, the Fund could experience both delays in liquidating
the loan collateral or recovering the loaned securities and losses including (a)
possible decline in the value of the collateral or in the value of the
securities loaned during the period while the Fund seeks to enforce its rights
thereto; (b) possible subnormal levels of income and lack of access to income
during this period; and (c) expenses of enforcing its rights.
When-Issued and Delayed-Delivery Securities. Balanced Fund, Intermediate Bond
Fund and Government Money Market Fund may invest in securities purchased on a
when-issued or delayed-delivery basis. Although the payment and interest terms
of these securities are established at the time the purchaser enters into the
commitment, the securities may be delivered and paid for a month or more after
the date of purchase, when their value may have changed. A Fund makes such
commitments only with the intention of actually acquiring the securities, but
may sell the securities before settlement date if the Adviser deems it advisable
for investment reasons. Government Money Market Fund may purchase securities on
a standby commitment basis, which is a delayed-delivery agreement in which the
Fund binds itself to accept delivery of a security at the option of the other
party to the agreement. When a Fund commits to purchase securities on a when-
issued or delayed-delivery basis, the Fund segregates assets to secure its
ability to perform and to avoid the creation of leverage.
Repurchase Agreements. Balanced Fund, Intermediate Bond Fund and Government
Money Market Fund may enter into repurchase agreements. In the event of a
bankruptcy or other default of a seller of a repurchase agreement, a Fund could
experience both delays in liquidating the underlying securities and losses,
including: (a) possible decline in the value of the collateral during the period
while the Fund seeks to enforce its rights thereto; (b) possible subnormal
levels of income and lack of access to income during this period; and (c)
expenses of enforcing its rights.
Options and Futures. Consistent with their objectives, Balanced Fund and
Intermediate Bond Fund may each purchase and write both call options and put
options on securities and on indexes, and enter into interest rate and index
futures contracts and options on such futures contracts (such put and call
options, futures contracts, and options on futures contracts are referred to as
"derivative products") in order to provide additional revenue, or to hedge
against changes in security prices or interest rates. The Fund may write a call
or put option only if the option is covered. The Fund will limit its use of
futures contracts and options on futures contacts to hedging transactions to the
extent required to do so by regulatory agencies. There are several risks
associated with the use of derivative products. As the writer of a covered call
option, the Fund foregoes, during the option's life, the opportunity to profit
from increases in market value of the security covering the call option. Because
of low margin deposits required, the use of futures contracts involves a high
degree of leverage, and may result in losses in excess of the amount of the
margin deposit. Since there can be no assurance that a liquid market will exist
when the Fund seeks to close out a derivative product position, these risks may
become magnified. Because of these and other risks, successful use of derivative
products depends on the Adviser's ability to predict correctly changes in the
level and the direction of stock prices, interest rates, and other market
factors, but even a well-conceived transaction may be unsuccessful because of an
imperfect correlation between the securities and derivative product markets.
When either Balanced Fund or Intermediate Bond Fund enter into a futures
contract, it segregates assets to secure its ability to perform and to avoid the
creation of leverage. For additional information, please refer to the Fund's
Statement of Additional Information.
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<PAGE>
Portfolio Turnover. Monetta Fund engages in an above-average number of portfolio
transactions. Its annual portfolio turnover rate is likely to exceed 100%, and
in some years may exceed 200% (excluding Treasury Bills and other short-term
money market instruments which mature in less than one year). Mid-Cap Fund,
Large-Cap Fund and Balanced Fund may also engage in an above-average number of
portfolio transactions and have an annual portfolio turnover rate exceeding
100%, although that rate is not expected to exceed 200% annually under normal
market conditions. A high portfolio turnover rate increases aggregate brokerage
commission expenses and taxes which must be borne directly by a Fund and
ultimately by its shareholders. These portfolio turnover rates and the resulting
commission expenses and taxes are higher on a relative basis than those of
mutual funds which may not trade as frequently, including those with a policy of
capital appreciation. Substantial trading involves substantial risk and may be
speculative. Investors should not consider purchase of a Fund's shares as a
complete investment program.
INVESTMENT RESTRICTIONS
The Funds' investment restrictions, noted below, and investment objectives
cannot be changed without shareholder approval. All investment restrictions for
each Fund are described in the Funds' Statement of Additional Information.
. MONETTA FUND
In pursuing its investment objective, Monetta Fund will not:
(1) Invest more than 5% of its assets in the securities of any one issuer
(except obligations issued or guaranteed by the United States Government, its
agencies or instrumentalities);
(2) Buy more than 10% of any class of securities of any one issuer; or
(3) Borrow money in excess of 5% of the value of its total assets, or pledge,
mortgage, or hypothecate its assets taken at market value, to an extent greater
than 10% of the Fund's total assets taken at cost (and no borrowing may be
undertaken except from banks as a temporary measure for extraordinary or
emergency purposes).
. MID-CAP FUND
. LARGE-CAP FUND
. BALANCED FUND
. INTERMEDIATE BOND FUND
. GOVERNMENT MONEY MARKET FUND
In pursuing its investment objective, each Fund will not:
(1) Invest more than 5% of its total assets (valued at the time of investment)
in the securities of any one issuer, except U. S. Government Securities and
repurchase agreements (this restriction applies to only 75% of the total assets
of all Funds except Government Money Market Fund);
(2) Acquire more than 10%, taken at the time of a particular purchase, of the
outstanding voting securities of any issuer; or
(3) Borrow money, except as a temporary measure for extraordinary or emergency
purposes, and then the aggregate borrowings at any one time may not exceed 10%
of its assets (at market value). A Fund will not purchase additional securities
when its borrowings exceed 5% of total assets.
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<PAGE>
INVESTMENT RETURN
The Total Return from an investment in a Fund is the percentage change in value
during a period of an investment in Fund shares, including the value of shares
acquired through reinvestment of all dividends and capital gains distributions.
"Average Annual Total Return" for a given period may be computed by finding the
average annual compounded rate that would equate a hypothetical initial $1,000
investment to the value of that investment that could be redeemed at the end of
the period, assuming reinvestment of all dividends and distributions.
Balanced Fund and Intermediate Bond Fund may quote their yield, calculated by
dividing net investment income per share (a hypothetical figure as defined in
the SEC rules) during a 30-day period by the net asset value per share on the
last day of the period. The yield formula provides for semi-annual compounding,
which assumes that net investment income is earned and reinvested at a constant
rate and annualized at the end of a six-month period.
Because Government Money Market Fund strives to maintain a $1.00 per share
value, its return is usually quoted either as a current seven-day yield,
calculated by adding the dividends on a Fund share for the previous seven days
and restating that yield as an annual rate, or as an effective yield, calculated
by adjusting the current yield to assume daily compounding. To obtain current
yield information, call 1-800-MONETTA (1-800-666-3882) or write to the address
shown on the back cover. Government Money Market Fund may also quote its Total
Return or Average Annual Total Return.
In advertising and sales literature, a Fund's performance may be compared to
market indexes and to the performance of other mutual funds. A Fund may also
publicize its comparative performance as computed in rankings or ratings
determined by independent services or publications including Lipper Analytical
Services, Inc., Morningstar, Inc. and others.
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<PAGE>
The following table illustrates Total Return as of December 31, 1995 of an
initial investment in each Fund made the first business day of the period
indicated, and Average Annualized Return as of December 31, 1995 for each of
Monetta Fund, Mid-Cap Fund and Intermediate Bond Fund for the same periods.
Average Annualized Return is not shown for Large-Cap Fund or Balanced Fund
because those Funds have been in operation less than one year. The figures
assume reinvestment of all income dividends and capital gain distributions in
additional shares of the Fund. The table does not take into account any federal,
state or local income taxes payable.
Returns for Periods Ended December 31, 1995
-------------------------------------------
<TABLE>
<CAPTION>
Average Annualized
Total Return Return
------------ ------
Life of Fund 5 Years 1 Year Life of Fund 5 Years 1 Year
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MONETTA FUND 211.2% 98.4% 28.0% 12.5% 14.7% 28.0%
S&P 500** 159.7 86.5 37.5 14.0 16.6 37.5
Nasdaq Composite** 186.0 185.3 39.9 11.0 23.0 39.9
- -----------------------------------------------------------------------------------------------------------------
MID-CAP FUND 72.3 n/a 24.5 21.2 n/a 24.5%
S&P 400** 44.1 31.0 13.8 31.0
S&P 500** 38.9 37.5 15.4 37.5
- -----------------------------------------------------------------------------------------------------------------
LARGE-CAP FUND 5.7 n/a n/a n/a n/a n/a
S&P 500** 10.5
- -----------------------------------------------------------------------------------------------------------------
BALANCED FUND 6.2 n/a n/a n/a n/a n/a
S&P 500** 10.5
Lehman Govt/Corp Intermediate Bond Index** 18.8
Lehman Govt/Corp Bond Index** 7.3
- -----------------------------------------------------------------------------------------------------------------
INTERMEDIATE BOND FUND 22.9 n/a 14.8 7.6 n/a 14.8
Lehman Gov/Corp Intermediate Bond Index** 18.8 15.3 6.3 15.3
</TABLE>
*Life of Fund is from the following dates: Monetta Fund, 5/6/86; Mid-Cap Fund
and Intermediate Bond Fund, 3/1/93; and Large-Cap Fund and Balanced Fund,
9/1/95.
** Comparative information is shown for the following indexes: Standard & Poor's
500 Stock Index ("S&P 500"), Standard & Poor's Stock Price Index ("S&P 400"),
and the Nasdaq Composite Index ("Nasdaq"), each of which is a group of unmanaged
common stock widely regarded as representative of their respective stock market
activities; the Lehman Government/Corporate Bond Index which is composed of
Treasury Bond and Agency Bond indices consisting of treasury securities with
maturities of one to three years and treasury issues with 20 years or more to
maturity and the Corporate Bond Index consisting of corporate debt; and the
Lehman Government/Corporate Intermediate Bond Index, which is composed of
approximately 5,000 publicly-issued corporate and U.S. debt securities rated Baa
or better with a maturity of 1 to 10 years, the specific segment of the bond
market in which Intermediate Bond Fund invests. Source: Lipper Analytical
Services, Inc.
The figures in each of the above tables are not necessarily indicative of future
results. The performance of a Fund is a result of conditions in the securities
markets, portfolio management and operating expenses. Although information such
as that shown above is useful in reviewing a Fund's performance and in providing
some basis for comparison with other investment alternatives, it should not be
used for comparison with other investments using different reinvestment
assumptions or time periods.
More information about a Fund's performance is included in its 1995 annual
report to shareholders, a copy of which may be obtained upon request at no
charge.
PAGE 16
<PAGE>
HOW TO PURCHASE SHARES
You may purchase shares of any of the Funds by check, by wire (into an existing
account only) or by exchange from your account with another Fund. Your initial
investment in the Monetta Funds must be at least $1,000, which may be allocated
among the Funds so long as at least $250 is invested in each Fund in which you
choose to invest. The minimum initial investment for UGMA accounts, Automatic
Investment Plan accounts and individual retirement accounts is $250. Additional
investments in ANY Fund must be at least $50. Each Fund has a minimum account
balance of $250. MONETTA FUND SHAREHOLDERS AS OF AUGUST 31, 1995, HOWEVER, WILL
BE ALLOWED TO MAINTAIN A MINIMUM ACCOUNT BALANCE OF $100 IN THAT FUND. If you
are purchasing shares to be held by a tax-sheltered retirement plan sponsored by
the Adviser, you must use special application forms which you can obtain by
calling the Funds at 1-800-MONETTA. (See "Shareholder Services-Tax-Sheltered
Retirement Plans.") Your purchase order must be received by the Funds' Transfer
Agent before the close of regular session trading on the New York Stock Exchange
(ordinarily 3:00 p. m., Central time) to receive the net asset value calculated
on that day. See "Purchase Price of Shares" below. PURCHASES BY AN INDIVIDUAL
SHAREHOLDER CANNOT BE MADE BY TELEPHONING OR FAXING AN APPLICATION TO THE FUNDS
OR THE TRANSFER AGENT.
PURCHASE BY CHECK
To purchase shares of a Fund by check, complete and sign the Share Purchase
Application included in this Prospectus and return it, with a check or other
negotiable bank draft made payable to MONETTA FUNDS, to: MONETTA, C/O FIRSTAR
TRUST COMPANY, P. O. BOX 701, MILWAUKEE, WISCONSIN 53201-0701. IF YOU INTEND TO
USE AN OVERNIGHT DELIVERY SERVICE, THE APPLICATION AND CHECK SHOULD BE SENT TO:
FIRSTAR TRUST COMPANY, MUTUAL FUND DIVISION, 615 EAST MICHIGAN STREET, 3RD
FLOOR, MILWAUKEE, WISCONSIN 53202-5207. If a phone number is requested, use:
1-414-765-4124. Applications will not be accepted unless accompanied by payment.
Additional purchases (minimum $50 for any Fund) may be made at any time by
mailing a check payable to MONETTA FUNDS, to the address above, together with
the detachable form from a prior account statement or a letter indicating the
account number to which the subsequent purchase is to be credited and the
name(s) of the registered owner(s).
Purchases must be made in U. S. dollars and checks must be drawn on U. S. banks.
No cash or third party checks will be accepted. If your order to purchase shares
is canceled because your check does not clear, you will be responsible for a
$20.00 return item fee and any resulting loss incurred by the Fund.
PURCHASES BY WIRE
Shares may also be purchased by wire transfer of funds INTO AN EXISTING ACCOUNT
ONLY. Before wiring funds call Firstar Trust Company at 1-800-241-9772 to ensure
prompt and accurate handling of your account. Then, instruct your bank to wire
the purchase amount to: Firstar Bank-Milwaukee N. A., 777 East Wisconsin
Avenue, Milwaukee, Wisconsin 53202, ABA number 0750-00022, credit Firstar Trust
Company, account number 112-952-137, further credit Monetta Funds, (shareholder
name and account number). Your bank may charge you a fee for sending the wire.
The Funds will not be responsible for the consequences of any delays, including
delays in the banking or Federal Reserve wire systems.
PURCHASES BY EXCHANGE
You may purchase shares by exchange of shares from another existing Fund account
either by phone (if you have not declined the Telephone Exchange Privilege on
the account form which the exchange is being made) or by mail. Restrictions
apply; please review the information under "How to Redeem Shares--By Exchange."
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<PAGE>
PURCHASES THROUGH DEALERS
You may also purchase (and redeem) shares through investment dealers, banks or
other institutions. The Funds may enter into an arrangement with such an
institution allowing the institution to process purchase orders or redemption
requests for its customers with the Funds on an expedited basis, including
requesting share purchases and redemptions by telephone. Although these
arrangements might permit you to effect a purchase or redemption of Fund shares
through the institution more quickly than would otherwise be possible, the
institution may impose charges for its services. Such fees may constitute a
substantial portion of a smaller account and may not be in your best interest.
You should check with the investment dealer, bank or other institution through
which you purchased Fund shares to determine if that institution offers
telephone redemptions. You may purchase or redeem shares directly from the Funds
without any charges other than those described in this Prospectus. If you
purchase shares through an investment dealer, the dealer will be responsible for
promptly forwarding your order to the Fund's transfer agent. Some institutions
which maintain moninee accounts with the Funds for their clients who are Fund
shareholders charge an annual fee of up to .35% of the average net assets held
in those accounts for accounting, servicing and distribution services they
provide with respect to the underlying Fund shares. Such fees are paid by the
Adviser.
PURCHASE PRICE OF SHARES
The price paid for shares is the net asset value per share of a Fund next
determined after receipt by Firstar Trust Company (the "Transfer Agent") of your
purchase order in proper form. (See "Determination of Net Asset Value.") Money
sent to purchase additional shares for existing accounts must be accompanied by
the shareholder's account number. Money sent to open a new account must be
preceded or accompanied by a completed application form.
CONDITIONS OF PURCHASE
All of your income dividends and capital gain distributions will be reinvested
in additional shares of the Fund paying the dividend or distribution unless you
elect to have distributions paid to you in cash. (See "Dividends, Distributions
and Taxes.") The Funds reserve the right to reinvest the proceeds and future
distributions in additional Fund shares at the current net asset values if
checks mailed to you for distributions are returned as undeliverable or are not
presented for payment within six months.
A purchase order for Fund shares is not binding until accepted and entered on
the books of that Fund. Once your purchase order has been accepted, you may not
cancel or revoke it; however, you may redeem the shares. The Funds reserve the
right not to accept any purchase order that it determines not to be in the best
interest of the Fund or of a Fund's shareholders. Election of the Telephone
Exchange Privilege authorizes the Funds and the Transfer Agent to tape-record
instructions to purchase. Reasonable procedures are used to confirm that
instructions received by telephone are genuine, such as requesting personal
identification information that appears on your application and requiring
permission to record the conversation. You will bear the risk of loss due to
unauthorized or fraudulent instructions regarding your account, although the
Funds may have a risk of such loss if reasonable procedures were not used. The
Funds also reserve the right to waive or change the investment minimums for any
reason. Monetta Fund and the Trust do not issue certificates for Fund shares
because of the availability of the telephone exchange privilege.
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HOW TO REDEEM SHARES
FOR CASH
To redeem all or part of the shares in your account without charge, send a
written redemption request "in good order" to the Transfer Agent, Firstar Trust
Company, P. O. Box 701, Attention: Monetta Funds, Milwaukee, Wisconsin 53201-
0701. If you intend to use an overnight delivery service, please send to:
Firstar Trust Company, Mutual Fund Division, 615 East Michigan Street, 3rd
Floor, Milwaukee, Wisconsin 53202-5207. A redemption request will be considered
to have been received in good order if the following conditions are satisfied:
(1) The request must be in writing, indicating the Fund, the number of shares
or dollar amount to be redeemed, and the shareholder's account number;
(2) The request must be signed by the shareholder(s) exactly as the shares are
registered;
(3) The signature(s) on the written redemption request must be guaranteed if
the shares to be redeemed have a value of $50,000 or more or the redemption
proceeds are to be sent to an address other than your address of record
(see "Signature Guarantee" below).
(4) Corporations and associations must submit with each request a form of
acceptable resolution; and
(5) Other supporting legal documents may be required from organizations,
executors, administrators, trustees, or others acting on accounts not
registered in their names.
SHARES MAY NOT BE REDEEMED BY FACSIMILE OR BY TELEPHONE (except for a telephone
exchange).
Signature Guarantee. The signature on your redemption request must be
guaranteed if the redemption proceeds are $50,000 or more, when the proceeds are
to be mailed to an address other than your address of record or if a change of
address request has been received by the Fund or transfer agent within the last
15 days. The guarantor must be a bank, member firm of a national securities
exchange, savings and loan association, credit union, or other entity authorized
by state law to guarantee signatures. A notary public may not guarantee
signatures. The signature guarantee must appear on the written redemption
request (the guarantor must use the phrase "signature guaranteed" and must
include the name of the guarantor bank or firm and an authorized
signature).
BY EXCHANGE
By writing (without charge) to, or by telephoning (for a fee) the Transfer
Agent, you may exchange all or any portion of your shares of any of the Monetta
Funds for shares of another Fund offered by Monetta for sale in your state. A
signed, properly completed Share Purchase Application must be on file. AN
EXCHANGE TRANSACTION IS A SALE AND PURCHASE OF SHARES FOR FEDERAL INCOME TAX
PURPOSES AND MAY RESULT IN CAPITAL GAIN OR LOSS. The registration of the account
to which you are making an exchange must be exactly the same as that of the Fund
account from which the exchange is made and the amount you exchange must meet
any applicable minimum investment of the Fund being purchased. Unless you have
elected to receive your dividends in cash, on an exchange of all shares, any
accrued unpaid dividends will be invested in the Fund to which you exchange on
the next
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<PAGE>
business day. An exchange may be made by following the redemption procedure
described above and indicating the Fund to be purchased, except that a signature
guarantee normally is not required.
To use the Telephone Exchange Privilege to exchange between your Monetta
accounts in the amount of $250 or more, call 1-800-241-9772 before 3:00 p. m.,
Central time. The Funds' Transfer Agent imposes a charge (currently $5.00) for
each Telephone Exchange. The general redemption policies apply to redemption of
shares of Telephone Exchange. (See "General Redemption Policies" below.) The
Funds reserve the right at any time without prior notice to suspend or terminate
the use of the Telephone Exchange Privilege by any person or class of persons,
or to terminate the Privilege in its entirety. Because such a step would be
taken only if their respective Boards believe it would be in the best interests
of the Funds, the Funds expect to provide shareholders with prior written notice
of any such action unless it appears that the resulting delay in the suspension,
limitation, modification, or termination of the Telephone Exchange Privilege
would adversely affect the Funds. If the Funds were to suspend, limit, modify,
or terminate the Telephone Exchange Privilege, a shareholder expecting to make a
Telephone Exchange might find that an exchange could not be processed or that
there might be a delay in the implementation of the exchange.
During periods of volatile economic and market conditions, you may have
difficulty placing your exchange by telephone which might delay implementation
of the exchange. Use of the Telephone Exchange Privilege authorizes the Funds
and the Transfer Agent to tape-record all instructions to redeem shares.
Reasonable procedures are used to confirm that instructions received by
telephone are genuine, such as requesting personal identification information
that appears on your application and requiring permission to record the
conversation. You will bear the risk of loss due to unauthorized or fraudulent
instructions regarding your account, although the Funds may have a risk of such
loss if reasonable procedures were not used.
BY CHECKWRITING - GOVERNMENT MONEY MARKET FUND ONLY
An investor in the Government Money Market Fund may request on the Share
Purchase Application that the Government Money Market Fund provide redemption
checks drawn on the Fund. Checks may be in amounts of $500 up to $50,000. The
shares redeemed by check will continue earning dividends until the check has
cleared. Checks will not be returned. If selected on the Application Form, a
book of 10 checks and 2 deposit forms will be sent to the shareholder.
Additional checks and deposit forms will be sent to the shareholder upon request
for a fee of $5.00 per book. This amount will be deducted from the shareholder's
account. In order to establish this checkwriting privilege after an account has
been opened, the shareholder must send a written request to the Government Money
Market Fund, P. O. Box 701, Attention: Monetta Funds, Milwaukee, Wisconsin
53201-0701. A fee of $20 will be charged for each stop payment request. If there
are insufficient shares in the shareholder's account to cover the amount of the
redemption by check, the check will be returned marked "insufficient funds," and
a fee of $20 will be charged to the shareholder's account. Because dividends on
the Fund accrue daily, checks may not be used to close an account, as a small
balance is likely to result. The Checkwriting Privilege is only available to
Government Money Market Fund shareholders. The Checkwriting Privilege is not
available for IRAs or other retirement accounts.
page 20
<PAGE>
REDEMPTION PRICE
The redemption price will be the net asset value (see "Determination of Net
Asset Value") per share of the Fund next determined after receipt by the
Transfer Agent of a redemption request in good order. This means that your
redemption request (including a telephone exchange request) must be received in
good order by the Transfer Agent before the close of regular session trading on
the New York Stock Exchange (ordinarily 3:00 p. m., Central time) to receive the
net asset value calculated that day. The principal value and return on your
investment will fluctuate and on redemption your shares may be worth more or
less than your original cost.
GENERAL REDEMPTION POLICIES
You may not cancel or revoke your redemption request once instructions have been
received and accepted. The Funds cannot accept a redemption request that
specifies a particular date or price for redemption or any special conditions.
Please telephone the Funds if you have any question about requirements for a
redemption before submitting your request. If you wish to redeem shares held by
one of the tax-sheltered retirement plans sponsored by the Adviser, special
procedures of those plans apply. (See "Tax-Sheltered Retirement Plans.") If you
request payment of redemption proceeds by wire, you must pay the cost of the
wire (currently $10.00).
YOUR REDEMPTION REQUEST MUST BE SENT TO THE TRANSFER AGENT AT ITS ADDRESS IN
MILWAUKEE SHOWN ON THE BACK COVER. IF A REDEMPTION REQUEST IS SENT DIRECTLY TO
THE FUNDS, IT WILL BE FORWARDED TO THE TRANSFER AGENT AND WILL RECEIVE THE
REDEMPTION PRICE NEXT CALCULATED AFTER RECEIPT BY THE TRANSFER AGENT. If you
redeem shares though an investment dealer, the dealer will be responsible for
promptly forwarding your request to the Fund's transfer agent. The Funds do not
consider the U. S. Postal Service or other independent delivery services to be
its agents. Deposit in the mail or with such services or receipt of redemption
requests at Firstar Trust Company's Post Office Box does not constitute receipt
by Firstar Trust Company or the Funds. CORRESPONDENCE BY OVERNIGHT COURIER
SHOULD BE SENT TO FIRSTAR TRUST COMPANY, 615 EAST MICHIGAN STREET, 3RD FLOOR,
MILWAUKEE, WISCONSIN 53202-5207. The Funds generally pay proceeds of a
redemption no later than seven days after proper instructions are received. If
you attempt to redeem shares within 15 days after they have been purchased by
check, a Fund may delay payment of the redemption proceeds to you until it can
verify that payment for the purchase of those shares has been (or will be)
collected.
Because of the relatively high cost of maintaining smaller accounts, the Funds
reserve the right to redeem shares in any account with a balance of less than
$250 in share value. Prior to any such redemption, a Fund will give the
shareholder thirty days' written notice during which time the shareholder may
increase his investment to avoid having his shares redeemed. The $250 minimum
balance will be waived if the account balance drops below the required minimum
due to market erosion. MONETTA FUND SHAREHOLDERS AS OF AUGUST 31, 1995 WILL BE
ALLOWED TO MAINTAIN A MINIMUM ACCOUNT BALANCE OF $100 IN THAT FUND.
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<PAGE>
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAXES
Monetta Fund, Mid-Cap Fund and Large-Cap Fund declare and pay income dividends,
if any, at least annually. Balanced Fund pays income dividends, if any,
quarterly. Intermediate Bond Fund declares and pays income dividends monthly.
Income dividends of Government Money Market Fund are declared daily and paid
monthly. Capital gains, if any, are distributed by each Fund at least annually.
Distributions of a Fund are automatically reinvested in additional shares of
that Fund unless you elect payment in cash. Cash dividends can be sent to you by
check or deposited directly into your bank account. Call the Transfer Agent at
1-800-241-9772 for more information and forms to sign up for direct deposit.
Each Fund is a separate entity for Federal income tax purposes. Each Fund
intends to continue to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code, and thus not be subject to Federal
income taxes on amounts it distributes to shareholders.
Each Fund will distribute all of its net income and gains to shareholders.
Dividends from investment income and net short-term capital gains are taxable as
ordinary income. Distributions of long-term capital gains are taxable as long-
term gains regardless of the length of time you have held your shares in a Fund.
Distributions will be taxable to you whether received in cash or reinvested in
shares of a Fund. You will be advised annually as to the source of your
distributions for tax purposes. If you are not subject to income taxation, you
will not be required to pay tax on amounts distributed to you. If you purchase
shares shortly before a record date for a distribution you will, in effect,
receive a return of a portion of your investment, but the distribution will be
taxable to you even if the net asset value of your shares is reduced below your
cost. However, for Federal income tax purposes your original cost would continue
as your tax basis.
If you fail to furnish your social security or other tax identification number
or to certify properly that it is correct, the Funds may be required to withhold
Federal income tax, currently at the rate of 31% ("backup withholding"), from
dividend, capital gain and redemption payments to you. Your dividend and capital
gain payments may also be subject to backup withholding if you fail to certify
properly that you are not subject to backup withholding due to the under-
reporting of certain income. These certifications are contained in the Share
Purchase Application, which you should complete and return when you make your
initial investment.
DETERMINATION OF NET ASSET VALUE
The purchase and redemption price of each Fund's shares is its net asset value
per share. The net asset value of a share of each Fund is determined as of the
close of trading on the New York Stock Exchange (currently 3:00 p. m., Central
time) by dividing the difference between the values of the Fund's assets and
liabilities by the number of shares outstanding. This is referred to as "net
asset value per share", which is determined as of the close of regular session
trading at the New York Stock Exchange on each day on which that exchange is
open for trading. A security listed or traded on a national securities exchange
or traded on the Nasdaq National Market is valued at its last quoted sales price
on the day the valuations are made. Listed securities and securities traded on
the over-the-counter market that do not trade on a particular day are valued at
the mean between the quoted bid and asked price.
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<PAGE>
VALUATION
Securities for which market quotations are readily available at the time of
valuation are valued on that basis. Each security traded on a national stock
exchange is valued at its last sale price on that exchange on the day of
valuation or, if there are no sales that day, at the mean of the latest bid and
asked quotations. Each over-the-counter security for which the last sale price
on the day of valuation is available from the Nasdaq National Market is valued
at that price. All other over-the-counter securities for which reliable
quotations are available are valued at the mean of the latest bid and asked
quotations. Long-term straight-debt securities for which market quotations are
not readily available are valued at a fair value based on valuations provided by
pricing services approved by the respective Boards, which may employ electronic
data processing techniques, including a matrix system, to determine valuations.
Short-term debt securities for which market quotations are not readily available
are valued by use of a matrix prepared by the Adviser based on quotations for
comparable securities. Other assets and securities held by a Fund for which
these valuation methods do not produce a fair value are valued by a method that
the Board believes will determine a fair value.
VALUATION OF GOVERNMENT MONEY MARKET FUND
Government Money Market Fund attempts to maintain its net asset value at $1.00
per share. Portfolio securities are valued based on their amortized cost, which
does not take into account unrealized gains or losses. Other assets and
securities of the Fund for which this valuation method does not produce a fair
value are valued at a fair value determined by the Board. The extent of any
deviation between the Fund's asset value based upon market quotations or
equivalents and $1.00 per share based on amortized cost will be examined by the
Board of Trustees. If such deviation were to exceed 1/2 of 1%, the Board would
consider what action, if any, should be taken, including selling portfolio
instruments, increasing, reducing or suspending distributions, or redeeming
shares in kind.
SHAREHOLDER SERVICES
REPORTING TO SHAREHOLDERS
You will receive a confirmation statement reflecting each of your purchases and
redemptions of shares of a Fund, as well as periodic statements detailing
distributions made by each Fund for which you are a shareholder. You may elect
to receive a combined statement for all Funds for which you are a shareholder.
In addition, you will receive semi-annual and annual reports showing the
portfolio holdings of each Fund and annual tax information.
Investors who wish to make a change in their address of record, a change in
investments made through an automatic investment plan or a change in the manner
in which dividends are received may do so by calling the transfer agent at
1-800-241-9772.
AUTOMATIC INVESTMENT PLAN
The Funds have an Automatic Investment Plan which permits an existing
shareholder to purchase additional shares of any Fund (minimum $50 per
transaction) at regular intervals. Under the Automatic Investment Plan, shares
are purchased by transferring funds from a shareholder's checking, bank money
market, NOW account, or savings account in an amount of $50 or more designated
by the shareholder. At your option, the account designated will be debited and
shares will be purchased on the date elected by the shareholder. There must be a
minimum of seven days between automatic purchases. If the date elected by the
shareholder is not a business day, funds will
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<PAGE>
be transferred the next business day thereafter. Only an account maintained at a
domestic financial institution which is an Automated Clearing House member may
be so designated. To establish an Automatic Investment Account, complete and
sign Section 7 of the Shareholder Purchase Application included in this
Prospectus and send it to the Transfer Agent. You may cancel this privilege or
change the amount of purchase at any time by calling 1-800-241-9772 or by
mailing written notification to: MONETTA, C/O FIRSTAR TRUST COMPANY, P.O. BOX
701, MILWAUKEE, WISCONSIN 53201-0701. The change will be effective five business
days following receipt of your notification by the Transfer Agent. A Fund may
modify or terminate this privilege at any time or charge a service fee, although
no such fee currently is contemplated. However, a $20.00 fee will be imposed by
Firstar Trust Company if sufficient funds are not available in the shareholder's
account at the time of the automatic transaction.
SYSTEMATIC EXCHANGE PLAN
The Funds offer a Systematic Exchange Plan whereby a shareholder may
automatically exchange shares (in increments of $250 or more) of one Monetta
Fund into another on any day, either monthly or quarterly, the shareholder
chooses. For additional information and a Systematic Exchange Plan form, please
call Firstar Trust Company at 1-800-241-9772. Before participating in the
Systematic Exchange Plan, an investor should consult a tax or other financial
adviser to determine the tax consequences of participation.
SYSTEMATIC WITHDRAWAL PLAN
The Funds offer a Systematic Withdrawal Plan for shareholders who own shares of
any Fund worth at least $10,000 at current net asset value. Under the Systematic
Withdrawal Plan, a fixed sum (minimum $500) will be distributed at regular
intervals (on any day, either monthly or quarterly). In electing to participate
in the Systematic Withdrawal Plan, investors should realize that within any
given period the appreciation of their investment in a particular Fund may not
be as great as the amount withdrawn. A shareholder may vary the amount or
frequency of withdrawal payments or temporarily discontinue them by notifying
Firstar Trust Company at 1-800-241-9772. The Systematic Withdrawal Plan does not
apply to shares of any Fund held in Individual Retirement Accounts or defined
contribution retirement plans. For additional information or to request an
application please call Firstar Trust Company at 1-800-241-9772.
TAX-SHELTERED RETIREMENT PLANS
The Adviser offers prototype tax-sheltered retirement plans for individuals,
businesses and nonprofit organizations. Please call 1-800-MONETTA for booklets
describing the following programs and the forms needed to establish them:
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS) for employed individuals and their non-
employed spouses.
MONEY PURCHASE PENSION AND PROFIT SHARING PLANS, including salary deferral
(401(K)) plans, for self-employed individuals, partnerships and corporations.
403(B) RETIREMENT PLANS for nonprofit organizations.
SIMPLIFIED EMPLOYEE PENSION PLANS permitting employers to provide retirement
benefits, including salary deferral, to their employees using IRAs and
minimizing administration and reporting requirements.
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MANAGEMENT OF THE FUNDS
The Board of Directors of Monetta Fund and the Board of Trustees of the Trust
have overall responsibility for the conduct of the affairs of their respective
Funds.
Each Fund's investments are managed by the investment adviser, MONETTA FINANCIAL
SERVICES, INC. (the "Adviser"). Subject to the overall authority of the
respective Boards, the Adviser manages the business and investments of the Funds
under investment advisory agreements. The Adviser also furnishes all office
space, equipment and personnel used by it in performing its duties and pays all
of each Fund's ordinary operating expenses except the fees of the custodian,
transfer agent and non-interested board members. The Adviser is controlled by
Robert S. Bacarella, the President and Founder of Monetta Fund and the Trust,
whose principal occupation has been in the field of money management since 1972.
The Adviser's address is 1776-A S. Naperville Road, Suite 207, Wheaton, IL
60187.
Mr. Bacarella is the portfolio manager of Monetta Fund and has served in that
capacity since it began operations. Mr. Bacarella has been President and
Director of the Adviser since 1984, and was Director - Pension Fund Investments,
for Borg-Warner Corporation until 1989.
John M. Alogna has been the portfolio manager of the Mid-Cap Fund, Large-Cap
Fund and Balanced Fund since each began operations, and portfolio manager of the
Intermediate Bond Fund and Government Money Market Fund since January 1994. Mr.
Alogna, who is a Trustee of the Trust, joined the Adviser as a portfolio manager
in January 1993. Mr. Alogna was a private investor immediately prior to joining
the Adviser and has been active in the field of professional investment
management since 1961. As the Senior Portfolio Manager of a large trust company
from 1974 to 1982, he was directly responsible for the management of over $2
billion in assets, including collective equity and special equity funds.
Additionally, he served as an investment counselor for a national advisory firm
managing personal as well as corporate investment portfolios.
In return for its services, and for the assumption of each Fund's ordinary
operating expenses except the fees and expenses of the custodian, transfer agent
and the non-interested directors and trustees, the Adviser receives a monthly
fee from each Fund based on that Fund's average net assets, computed and accrued
daily. The annualized rate of fee for each of Monetta Fund, Mid-Cap Fund and
Large-Cap Fund is 1% of average net assets; that of Balanced Fund is .65 of 1%
of average net assets; that of Intermediate Bond Fund is .60 of 1% of average
net assets; and that of Government Money Market Fund is .35 of 1% of average net
assets. The rate of fee paid by Monetta Fund, Mid-Cap Fund and Large-Cap Fund is
higher than the rate of fee paid by most mutual funds.
The advisory agreement also provides that the total annual expenses of each
Fund, exclusive of taxes, interest, extraordinary litigation expenses and
brokers' commissions and other charges relating to the purchase and sale of
securities but including fees paid to the Adviser, shall not exceed the limits,
if any, prescribed by any state in which shares of that Fund are qualified for
sale, and the Adviser has agreed to reimburse that Fund for any such expenses in
excess of such limits. The Adviser believes that currently the most restrictive
expense limitation of any state is (i) 2.5% of the first $30 million of average
net assets, (ii) 2% of the next $70 million and (iii) 1.5% thereafter.
Monetta Fund, the Trust and the Funds use "Monetta" in their names by license
from the Adviser and would be required to stop using those names if Monetta
Financial Services ceased to be the Adviser. The Adviser has the right to use
the name for other enterprises, including other investment companies.
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<PAGE>
The Adviser seeks the best combination of net price and execution in selecting
broker-dealers to execute portfolio transactions for the Funds. Subject to that
overriding consideration, and consistent with the Rules of Fair Practice of the
National Association of Securities Dealers, Inc., the Adviser may consider sales
of Fund shares, or recommendations that clients purchase Fund shares, as a
factor in the selection of broker-dealers to execute transactions for the Funds.
Brokerage transactions for the Funds may be executed through Monetta Brokerage,
Inc., a registered broker-dealer and an affiliate of the Adviser.
At March 31, 1996, the Adviser owned 47.1% of the outstanding shares of the
Balanced Fund, 19.5% of the outstanding shares of the Government Money Market
Fund, 18.8% of the outstanding shares of the Intermediate Bond Fund, 9.5% of the
outstanding shares of the Large-Cap Fund and less than 1% of the Mid-Cap Fund.
Ownership of a majority of the outstanding shares of the Government Money Market
Fund gives the Adviser control over the outcome of any matter requiring approval
of the shareholders of Government Money Market Fund, and ownership of a
significant percentage of the outstanding shares of the Trust reduces the number
of other shares that must be voted in accordance with the Adviser's vote to
approve or disapprove any proposal requiring the approval of the shareholders of
the Trust.
OTHER INFORMATION
All shareholder inquiries and instructions concerning Fund accounts should be
directed to: MONETTA, c/o Firstar Trust Company, P. O. Box 701, Milwaukee,
Wisconsin 53201-0701.
In approving the use of a single combined Prospectus, the Board of Directors of
Monetta Fund and the Board of Trustees of the Trust considered the possibility
that one Fund might be liable for misstatements in the Prospectus regarding
information concerning another Fund.
. MONETTA FUND
Monetta Fund is an open-end diversified management investment company
incorporated under the laws of the State of Maryland on October 16, 1985.
The Fund has one class of capital stock, $0.01 par value. Each full share is
entitled to one vote and to participate equally in dividends and distributions
declared by the Fund (fractional shares have the same rights, proportionally, as
full shares). Fund shares are fully paid and non-assessable when issued and have
no preemptive, conversion or exchange rights. The obligations and liabilities
associated with ownership or shares in the Fund are limited to the extent of a
shareholder's investment in the Fund.
Voting rights are non-cumulative, so that the holders of more than 50% of the
shares voting in any election can, if they choose to do so, elect all of the
directors of the Fund.
As a Maryland corporation registered under the Investment Company Act of 1940,
the Fund is not required to hold routine annual meetings of shareholders and
does not expect to do so. Maryland law permits shareholders to remove directors
and requires the Fund to assist in shareholder communication under certain
circumstances.
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<PAGE>
. THE TRUST
Mid-Cap Fund, Large-Cap Fund, Balanced Fund, Intermediate Bond Fund and
Government Money Market Fund are each a series of Monetta Trust, which was
organized as a Massachusetts business trust on October 20, 1992 and is an open-
end diversified management investment company.
Under the terms of the Trust's agreement and declaration of trust ("Declaration
of Trust"), the trustees may issue an unlimited number of shares of beneficial
interest without par value for each series of shares authorized by the trustees.
All shares issued are fully paid and non-assessable when issued and have no pre-
emptive, conversion or exchange rights.
Each Fund's shares are entitled to participate pro rata in any dividends and
other distributions declared by the Board of Trustees with respect to shares of
that Fund. All shares of a Fund have equal rights in the event of liquidation of
that Fund.
Under Massachusetts law, the shareholders of the Trust may, under certain
circumstances, be held personally liable for the Trust's obligations. However,
the Declaration of Trust disclaims liability of the shareholders, trustees, and
officers of the Trust for acts or obligations of any Fund, which are binding
only on the assets and property of that Fund. The Declaration of Trust requires
that notice of such disclaimer be given in each agreement, obligation, or
contract entered into or executed by the Trust or the Board of Trustees. The
Declaration of Trust provides for indemnification out of a Fund's assets of all
losses and expenses of any Fund shareholder held personally liable for the
Fund's obligations. Thus, the risk of a shareholder incurring financial loss on
account of shareholder liability is remote, since it is limited to circumstances
in which the disclaimer is inoperative and the Fund itself is unable to meet its
obligations. The risk of a particular Fund incurring financial loss on account
of an unsatisfied liability of another Fund of the Trust is also believed to be
remote, because it would be limited to claims to which the disclaimer did not
apply and to circumstances in which the other Fund was unable to meet its
obligations.
Each share has one vote and fractional shares have fractional votes. As a
business trust, the Trust is not required to hold annual shareholder meetings.
However, special meetings may be called for purposes such as electing or
removing trustees, changing fundamental policies or approving an investment
advisory agreement. On any matters submitted to a vote of shareholders, shares
are voted by individual series and not in the aggregate, except when voting in
the aggregate is required by the 1940 Act of other applicable law. Shares of a
Fund are not entitled to vote on any matter not affecting that Fund. All shares
of the Trust vote together in the election of trustees.
The trustees serve indefinite terms of unlimited duration. The trustees appoint
their own successors, provided that at least two-thirds of the trustees, after
any such appointment, have been elected by the shareholders. Shareholders may
remove a trustee, with or without cause, upon the declaration in writing or vote
of two-thirds of the outstanding shares of the Trust, respectively. A trustee
may be removed with or without cause upon the written declaration of a majority
of the trustees.
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<TABLE>
<CAPTION>
<S> <C>
TABLE OF CONTENTS
Summary 2
Fund Expenses 4
Financial Highlights 5
Investment Objectives and Policies 8
Risks and Investment Considerations 11
Investment Restrictions 14
Investment Return 15
How to Purchase Shares 17
How to Redeem Shares 19
Dividends, Distributions and
Federal Taxes 22
Determination of Net Asset Value 22
Shareholder Services 23
Tax-Sheltered Retirement Plans 24
Management of the Funds 25
Other Information 26
Application Centerfold
</TABLE>
SHAREHOLDERS NOTE:
SEND ALL SHARE PURCHASE APPLICATIONS, CHANGES OF ADDRESS, REQUESTS FOR ACCOUNT
INFORMATION AND REDEMPTION REQUESTS TO THE TRANSFER AGENT
Firstar Trust Company
P. O. Box 701
Milwaukee, WI 53201-0701
1-800-241-9772
Hearing Impaired Services
TDD 1-800-684-3416
INVESTMENT ADVISER:
Monetta Financial Services, Inc.
ADDRESS OF FUNDS AND ADVISER:
1776-A South Naperville Road
Suite 207
Wheaton, Illinois 60187-8133
AUDITORS:
KPMG Peat Marwick LLP
Chicago, Illinois 60601
LEGAL COUNSEL:
Bell, Boyd & Lloyd
Chicago, Illinois 60602
[LOGO OF MONETTA]
Monetta Fund, Inc.
Monetta Mid-Cap Equity Fund
Monetta Large-Cap Equity Fund
Monetta Balanced Fund
Monetta Intermediate Bond Fund
Monetta Government Money Market Fund
No-Load Mutual Funds
No Redemption Fees
No 12b-1 Charges
PROSPECTUS
APRIL 17, 1996
<PAGE>
SHARE PURCHASE APPLICATION
Mail Completed Application to: Overnight Express Mail to:
Monetta Monetta
Mutual Fund Services Mutual Fund Services, 3rd Floor
P.O. Box 701 615 East Michigan Street
Milwaukee, WI 53201-0701 Milwaukee, WI 53202
1-800-MONETTA
Use this form for individual, custodial, trust, profit sharing or pension plan
accounts. Do not use this form for Monetta Funds-sponsored IRA, Defined
Contribution (401(k) or 403(b)) plans which require forms available from Monetta
Funds. For information please call 1-800-666-3882.
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1. ACCOUNT REGISTRATION
[_] Individual
Name
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Social Security Number Citizen of [_] US [_] Other
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[_] Joint Owner*
Name
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Social Security Number Citizen of [_] US [_] Other
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[_] Gift to Minor
Custodian
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Minor Minor's Birthdate
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Minor's Social Security Number Citizen of [_] US [_] Other
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[_] Corporation, Partnership or Other Entity
Name of Entity
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Taxpayer Identification Number
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. A corporate resolution form or certificate is required for corporate
accounts.
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[_] Trust, Estate or Guardianship
Name
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Name of Fiduciary(s)
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Taxpayer Identification Number Date of Trust
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. Additional documentation and certification may be requested.
*Registration will be Joint Tenants with Rights of Survivorship (JTWROS) unless
otherwise specified
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2. MAILING ADDRESS [_] Send Duplicate Confirmations To:
- ----------------------------------- ------------------------------------
Street, Apt. Name
- ----------------------------------- ------------------------------------
City, State, Zip Code Street, Apt.
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Daytime Phone Number City, State, Zip Code
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3. INVESTMENT INSTRUCTION & DISTRIBUTION
The minimum initial investment is $1,000 for shares in any of the Monetta Funds
which may be allocated among the Funds so long as at least $250 is invested in
each Fund in which you choose to invest (For UGMA, AIP, or IRA the minimum
initial investment is $250). Subsequent investment to any Fund is $50 (also $50
for the Automatic Investment Plan).
DISTRIBUTION OPTIONS
Capital Gains and Dividends
Amount Reinvested Cash
[_] Monetta Fund $ [_] [_]
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[_] Monetta Mid-Cap Equity Fund $ [_] [_]
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[_] Monetta Large-Cap Equity Fund $ [_] [_]
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[_] Monetta Balanced Fund $ [_] [_]
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[_] Monetta Intermediate Bond Fund $ [_] [_]
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[_] Monetta Government Money Market Fund $ [_] [_]
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Total Investment $ (If no distribution option
========= is checked, dividends and
capital gains will be
reinvested.)
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4. CHECKWRITING (Monetta Government Money Market Fund Only. Not available for
IRA or other retirement accounts.)
[_] Check this box if you would like to establish check redemption privileges
for the Monetta Government Money Market Fund and have 10 checks and 2 deposits
forms printed. Each additional book of checks and deposit forms will be $5.00.
This amount will be deducted from your account. Check redemption privileges are
subject to the conditions on the reverse side.
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----------------------------------
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Account Number (For Bank Use Only)
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Name on Monetta Government Money Market Fund Account (must be the same as
Account Registration-please print)
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Authorized Signature(s) (For joint accounts, all owners must sign.)
For a corporate, trust, or other entity, or a joint account, how many
authorized signatures are required?
---------
<PAGE>
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5. BACKUP WITHHOLDING
[_] Check this box only if the IRS has notified you that you are subject to
backup withholding.
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6. Telephone Exchange Privilege
You automatically have the Telephone Exchange Privilege unless you check the box
below. Under this Privilege, the Funds and their transfer agent are authorized
to accept telephone instructions from any person to redeem shares from your
account and apply the proceeds to purchase shares for your account in another
Fund offered by Monetta, for sale in your state ("exchange"). The Exchange
Privilege may not be used to redeem shares purchased by check (except certified
and cashier checks) within the preceding 15 days. Telephone exchanges must be
for at least $250. Telephone exchanges may be made only to accounts with
identical registrations. You further agree that your election shall continue
until five business days after the Fund and its transfer agent receive written
notice of termination from you. The Privilege will be transferred automatically
to any new account you open within the Fund into which a telephone or written
exchange is made. See the statements below under "Signature."
[_] DECLINE TELEPHONE EXCHANGE. If you want to establish a Telephone
Exchange Privilege at a later date, you will be required to obtain a
signature guarantee.
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7. AUTOMATIC INVESTMENT PLAN (AIP) Your signed Application must be received at
least 15 business days prior to initial transaction.
An unsigned voided check from your checking account or a savings account
deposit slip is required with your application.
In many cases, the key to achieving long-term investment objectives is a
periodic and consistent investment program. The Funds' Automatic Investment Plan
will provide you with an easy and systematic approach to investing. Based on
your instructions, Firstar Trust Company, the transfer agent for Monetta Funds,
will automatically transfer money directly from your checking, bank money
market, NOW account or savings account named below on the day of each month or
funds will be transferred the next business day thereafter. If you have any
questions, call 1-800-MONETTA.
Your Monetta account must be established with $250 minimum deposit before the
Plan goes into effect. Please start my AIP as described in the Prospectus
beginning: Month __________ Year ______. I hereby instruct Firstar Trust
Company, transfer agent for Monetta Funds, to automatically transfer $_________
(minimum $50) directly from my checking, Now or savings account named below on
the ______ day of each month or the first business day thereafter into my
_______________________ account. I understand that I will be assessed a $20 fee
if the automatic purchase cannot be made due to insufficient funds, stop
payment, or for any other reason.
Name(s) on Bank Account
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Bank Name Account Number
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Bank Address
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- ------------------------------------- ---------------------------------------
Signature of Bank Account Owner Signature of Joint Owner
. Termination must be in writing or by calling Firstar Trust Company. Allow 5
business days to become effective. Your participation in the Plan will
terminate automatically if you redeem all your Monetta Fund shares.
. IRA contributions apply as a current year purchase (purchases may not be used
for prior year contributions).
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8. SIGNATURE & CERTIFICATION Required by The Internal Revenue Service
I affirm that I have received a current prospectus of the Funds and agree to be
bound by its terms. I certify that I have full authority and legal capacity to
purchase shares of the Fund(s) and to establish and use any related Privileges,
and agree that such Privileges and their terms and conditions shall be governed
by Illinois law. If I have not provided a social security or other tax
identification number in Part 1 of the Application, by signing the Application,
1: (i) certify, under penalties of perjury, that I have not been issued a
number, but have applied (or soon will apply for one; and (ii) understand that
if I do not provide the Funds or their transfer agent with a certified number
within 60 days, they will be required to withhold 31% from all dividend, capital
gain, and redemption payments from my account(s) until I provide them with a
certified number.
I understand that the Telephone Exchange Privilege will apply to my account
unless I have specifically declined the privilege in Part 6, above. I understand
that by signing this application unless the Privilege is declined, I agree that
neither the Funds nor their transfer agent, their agents, officers, trustees or
employees will be liable for any loss, liability, cost or expense for acting
instructions given under the Privilege, placing the risk of any loss on me. See
"How to Redeem Shares--By Exchange" in the prospectus.
I agree that any of the Funds and their transfer agent may redeem shares
and retain the proceeds from any of my account(s) with any Fund(s) up to a total
of (a) any IRS penalties attributable to my failure to provide any of the Funds
or their transfer agent with correct and complete information requested by
either, and (b) any tax not withheld from distributions to me which should have
been withheld by them.
UNDER THE PENALTY OF PERJURY, I CERTIFY THAT (1) THE SOCIAL SECURITY NUMBER
OR TAXPAYER IDENTIFICATION NUMBER SHOWN ON THIS FORM IS MY CORRECT TAXPAYER
IDENTIFICATION NUMBER, AND (2) I AM NOT SUBJECT TO BACKUP WITHHOLDING EITHER
BECAUSE I HAVE NOT BEEN NOTIFIED BY THE INTERNAL REVENUE SERVICE (IRS) THAT I AM
SUBJECT TO BACKUP WITHHOLDING AS A RESULT OF A FAILURE TO REPORT ALL INTEREST OR
DIVIDENDS, OR THE IRS HAS NOTIFIED ME THAT I AM NO LONGER SUBJECT TO BACKUP
WITHHOLDING. The IRS does not require your consent to any provision of this
document other than the certification in this paragraph required to avoid backup
withholding. (Note: you must check the box in Part 5 of this Application if the
IRS has notified you that you are subject to backup withholding due to your
failure to report such income.)
- ------------ ----------------------------- ---------------------------------
Date Signature* Signature of Co-Owner, if any
*If shares are to be registered in the name of (1) two persons jointly, both
persons must sign, (2) a custodian for a minor, the custodian must sign, (3) a
trust, the trustee(s) must sign, or (4) a corporation or other entity, an
officer must sign and print name and title on space provided below.
- --------------------------------------------------------------------------------
Print name and title of officer signing for a corporation or other entity
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CONDITIONS OF REDEMPTION OPTION
Checks may not be for less than $500 or such other minimum amounts as may from
time to time be established by the Monetta Government Money Market Fund upon
prior written notice to its shareholders. Maximum amount for withdrawal is
$50,000. Shares purchased by check, (including certified or cashier's check)
will not be redeemed by check-writing or any other method of redemption until
the transfer agent is reasonably satisfied that the check has been collected,
which could take up to 7 days from the purchase date.
By signing this card, I appoint the Firstar Bank Milwaukee, NA my agent to
present checks drawn on this account to the transfer agent, Firstar Trust
Company, as requests to redeem shares and I authorize the Monetta Government
Money Market Fund and Firstar Trust Company to honor such requests and redeem
shares in an amount equal to the amount of the check. I agree to be subject to
the rules pertaining to the check redemption privileges as amended from time to
time. The Monetta Government Money Market Fund or Firstar Trust Company may
reserve the right to modify or terminate this account and authorization at any
time.
B.N. 0 ________ ________ ________ ________
Internal Use Only
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
APRIL 17, 1996
MONETTA FUND, INC.
MONETTA TRUST
NO-LOAD FUNDS
1776-A SOUTH NAPERVILLE ROAD, SUITE 207
WHEATON, IL 60187
1-800-MONETTA
(1-800-666-3882)
MONETTA FUND, INC.
MONETTA MID-CAP EQUITY FUND
MONETTA LARGE-CAP EQUITY FUND
MONETTA BALANCED FUND
MONETTA INTERMEDIATE BOND FUND
MONETTA GOVERNMENT MONEY MARKET FUND
TABLE OF CONTENTS
PAGE
----
Other Fund Information............................................ B-1
Investment Objectives and Policies................................ B-1
Risks and Investment Considerations............................... B-5
Investment Restrictions........................................... B-11
Performance Information........................................... B-16
Investment Adviser.............................................. B-20
Directors/Trustees and Officers................................... B-21
Purchasing and Redeeming Shares................................. B-25
More Information About Net Asset Value.......................... B-25
Tax Status...................................................... B-27
Portfolio Transactions.......................................... B-27
Custodian....................................................... B-29
Independent Auditors............................................ B-30
Appendix - Ratings................................................ B-30
<PAGE>
OTHER FUND INFORMATION
Monetta Fund, Inc. ("Monetta Fund") is an open-end diversified management
investment company organized under the laws of the State of Maryland. Monetta
Mid-Cap Equity Fund ("Mid-Cap Fund"), Monetta Large-Cap Equity Fund ("Large-Cap
Fund"), Monetta Balanced Fund ("Balanced Fund"), Monetta Intermediate Bond Fund
("Intermediate Bond Fund") and Monetta Government Money Market Fund ("Government
Money Market Fund") are series of Monetta Trust (the "Trust"), a Massachusetts
business trust (the "Trust"). Monetta Fund and each of the Trust series are
collectively referred to as the "Funds."
This Statement of Additional Information is not a prospectus, but provides
additional information that should be read in conjunction with the Funds'
prospectus dated April 17, 1996 and any supplement thereto. The 1994 annual
reports of Monetta Fund and the Trust, copies of which accompany this Statement
of Additional Information, contain financial statements, notes thereto, and the
report of independent auditors, all of which (but no other part of the annual
report) are incorporated herein by reference. The prospectus and additional
copies of the annual reports may be obtained without charge by writing or
telephoning the Funds at the address or telephone number shown on the previous
page.
INVESTMENT OBJECTIVES AND POLICIES
The following information supplements the discussion of the Funds'
investment objectives and policies in the prospectus. In pursuing its
objective, each Fund will invest as described below and in the prospectus. Each
Fund's investment objective is a fundamental policy, which may not be changed
without the approval of a "majority of the outstanding voting securities" of
that Fund./1/
The Funds' investment objectives differ principally in the types of
securities selected for investment and the relative importance each Fund places
on growth potential, current income and preservation of capital as
considerations in selecting investments.
In pursuing the investment objectives of each of Mid-Cap Fund, Large-Cap
Fund and Balanced Fund, the Adviser pursues an active and disciplined trading
strategy. Those selling disciplines result in a higher than average rate of
portfolio turnover, as discussed in the prospectus. In addition, it may be
necessary for a Fund to sell short against the box rather than sell outright a
security it wants to sell, to control the timing of the disposition of that
security for federal income tax purposes. In a short sale against the box, the
Fund sells short a security it owns and enters into an arrangement with the
broker/dealer through which the short sale is executed to receive income from
the proceeds of the short sale for as long as the short position remains open.
The Fund incurs transaction costs in connection with short sales that are likely
to
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/1/ A "majority of the outstanding voting securities" means the approval of the
lesser of (i) 67% of the Fund's shares present at a meeting if more than
50% of the shares outstanding are present or (ii) more than 50% of the
Fund's outstanding shares.
B-1
<PAGE>
exceed the transaction costs that would be incurred in an outright sale. See
"Risks and Investment Considerations." The Funds have no present intention to
sell short securities comprising 5% or more of its total assets.
. Monetta Fund, Mid-Cap Fund and Large-Cap Fund
Monetta Fund, Mid-Cap Fund and Large-Cap Fund each seek long-term capital
growth by investing in common stocks believed to have above average growth
potential. The Funds differ from each other with respect to the (i) market
capitalizations of the companies in which they invest and (ii) relative
importance placed on investing for current income.
Each Fund's investment approach emphasizes a competitive return in rising
markets and preservation of capital in declining markets in an attempt to
generate long-term capital growth over a complete business cycle (approximately
3 to 5 years) when compared to the broader stock market indices. The Adviser's
emphasis will be on common stocks with improving earnings per share growth, a
history of growth and sound management, and a strong balance sheet. The Adviser
may also invest up to 20% of Monetta Fund's assets and 25% of Mid-Cap Fund and
Large-Cap Fund's assets in securities not meeting the above criteria but
believed by the Adviser to be undervalued based on a company's current price-
earnings ratio relative to its estimated earnings growth rate.
The securities in which each Fund invests will be listed on a national
securities exchange or traded on an over-the-counter market.
MONETTA FUND'S primary investment objective is to provide its shareholders
with capital appreciation by investing at least 70% of the Fund's assets in
equity securities believed to have growth potential. A secondary objective of
Monetta Fund is to provide its shareholders with income, in part by investing
the balance of the Fund's assets in dividend paying equity securities or in
long-term (greater than one year) debt securities. The Fund's investments in
long-term debt securities will consist of United States Treasury Notes and
Treasury Bonds of various maturities and investment grade securities rated at
least A or better by either Moody's Investor Services, Inc. ("Moody's") or
Standard and Poor's Corporation ("S&P").
Monetta Fund generally invests in smaller and medium-sized companies with
aggregate market capitalizations ranging from $50 million to $1 billion.
MID-CAP FUND typically invests in medium-sized companies with market
capitalizations of $1 billion to $5 billion ("mid-cap companies"). Under normal
market conditions, the Fund invests at least 90% of its total assets in
equities, and 65% of its total assets in common stocks of mid-cap companies.
LARGE-CAP FUND typically invests in large companies with market
capitalizations in excess of $5 billion ("large-cap companies"). Under normal
market conditions, at least 90% of the Fund's total assets invested in equities,
and 65% of the Fund's total assets, will be invested in common stocks of large-
cap companies.
B-2
<PAGE>
. BALANCED FUND
BALANCED FUND seeks a favorable total rate of return through capital
appreciation and current income consistent with preservation of capital, derived
from investing in a portfolio of equity and fixed income securities.
The investment approach for Balanced Fund combines the equity growth
strategy used for Monetta Fund, Mid-Cap Fund and Large-Cap Fund and the income
strategy employed by Intermediate Bond Fund, as discussed below.
The Fund may emphasize fixed income securities or equity securities or hold
equal amounts of both, depending upon the Adviser's analysis of market,
financial and economic conditions. Under normal circumstances, the Fund will
invest at least 80% of its net assets in fixed income and equity securities. At
least 25% of the Fund's assets invested in fixed income securities will consist
of corporate bonds and debentures rated A or better and securities issued or
guaranteed as to principal and interest by the U.S. Government and its agencies
and instrumentalities. The Fund does not presently intend to invest more than
10% of its assets in securities rated below investment grade or, if unrated,
determined by the Adviser to be of comparable credit quality.
. INTERMEDIATE BOND FUND
INTERMEDIATE BOND FUND seeks high current income, consistent with the
preservation of capital, by investing primarily in marketable debt securities.
Under normal market conditions, Intermediate Bond Fund invests at least 65%
of the total value of its total assets in bonds and debentures and at least 70%
of the value of its total assets (taken at market value at the time of
investment) in the following:
1. Marketable straight-debt securities of domestic issuers, and of
foreign issuers payable in U.S. dollars, rated at time of purchase
within the three highest grades assigned by Moody's or S&P;
2. Securities issued or guaranteed by the U.S. Government or by its
agencies or instrumentalities;
3. Commercial paper rated Prime-1 by Moody's or A-1 by S&P at time of
purchase, or, if unrated, issued or guaranteed by a corporation with
any outstanding debt rated A or better by Moody's or S&P;
4. Variable rate demand notes, if unrated, determined by the Adviser to
be of credit quality comparable to the commercial paper in which the
Fund may invest; or
B-3
<PAGE>
5. Bank obligations, including repurchase agreements,/2/ of banks having
total assets in excess of $500 million.
. GOVERNMENT MONEY MARKET FUND
GOVERNMENT MONEY MARKET FUND seeks maximum current income consistent with
safety of capital and maintenance of liquidity. The Fund invests in U.S.
Government Securities maturing in 13 months or less from the date of purchase.
U.S. Government Securities include:
1. Securities issued by the U.S. Treasury;
2. Securities issued or guaranteed as to principal and interest by
agencies or instrumentalities of the U.S. Government that are backed
by the full faith and credit guarantee of the U.S. Government;
3. Securities issued or guaranteed as to principal and interest by
agencies or instrumentalities of the U.S. Government that are not
backed by the full faith and credit guarantee of the U.S. Government;
and
4. Repurchase agreements for securities listed in (1), (2), and (3)
above, regardless of the maturities of such underlying securities.
U.S. Government Securities include: (i) bills, note, bonds and other debt
securities, differing as to maturity and rates of interest, that are issued by
and are direct obligations of the U.S. Treasury; and (ii) other securities that
are issued or guaranteed as to principal and interest by agencies or
instrumentalities of the U.S. Government and that include, but are not limited
to, Federal Farm Credit Banks, Federal Home Loan Banks, Government National
Mortgage Association, Farmers Home Administration, Federal Home Loan Mortgage
Corporation and Federal National Mortgage Association.
Because the Fund's investment policy permits it to invest in U.S.
Government Securities that are not backed by the full faith and credit of the
U.S. Treasury, investment in the Fund may involve risks that are different in
some respects from an investment in a fund that invests only in securities that
are backed by the full faith and credit of the U.S. Treasury. Such risks may
include a greater risk of loss of principal and interest in the securities in
the Fund's portfolio that are supported only by the issuing or guaranteeing
agency or instrumentality and, accordingly, the Fund must look principally or
solely to that entity for ultimate repayment.
- --------------------
/2/ A repurchase agreement is a sale of securities to a Fund in which the
seller (a bank or broker-dealer believed by the Adviser to be financially
sound) agrees to repurchase the securities at a higher price, which
includes an amount representing interest on the purchase price, within a
specified time.
B-4
<PAGE>
The Fund will not enter into a repurchase agreement maturing in more than
seven days if as a result thereof more than 10% of its net assets (taken at
market value at the time of investment) would be invested in illiquid
securities, including repurchase agreements maturing in more than seven days:
however, there is otherwise no limitation on the percentage of the Fund's assets
that may be invested in repurchase agreements. The Fund will enter into
repurchase agreements only where (i) the underlying securities are U.S.
Government Securities and (ii) the seller agrees that the value of the
underlying U.S. Government Securities, including accrued interest (if
purchased), will at all times be equal to or exceed the value of the repurchase
agreement.
The Fund maintains a dollar-weighted average portfolio maturity appropriate
to its objective of maintaining a stable net asset value per share, and, in any
case, not in excess of 90 days.
It is the Fund's intention, in general, to hold securities to maturity.
However, the Fund may attempt, from time to time, to increase its yield by
trading to take advantage of variations in the markets for U.S. Government
Securities. In addition, redemptions of the Fund's shares could necessitate the
sale of portfolio securities, and such sales may occur at times when sales
would not otherwise be desirable. An increase in prevailing interest rates will
generally reduce the value of the Fund's portfolio investments, and a decline in
prevailing interest rates will generally increase the market value of the Fund's
portfolio investments.
RISKS AND INVESTMENT CONSIDERATIONS
Debt Securities. In pursuing its investment objective, the Fund may invest
in debt securities of corporate and governmental issuers. The risks inherent in
debt securities depend primarily on the term and quality of the obligations in
the Fund's portfolio as well as on market conditions. A decline in the
prevailing levels of interest rates generally increases the value of debt
securities, while an increase in rates usually reduces the value of those
securities. As a result, interest rate fluctuations will affect a Fund's net
asset value, but not the income received by the Fund from its portfolio
securities. (Because yields on debt securities available for purchase by the
Fund vary over time, no specific yield on shares of the Fund can be assured.)
In addition, if the bonds in a Fund's portfolio contain call, prepayment or
redemption provisions, during a period of declining interest rates, these
securities are likely to be redeemed, and the Fund will probably be unable to
replace them with securities having a comparable yield. There can be no
assurance that payments of interest and principal on portfolio securities will
be made when due.
Convertible Securities. Convertible securities include any corporate debt
security or preferred stock that may be converted into underlying shares of
common stock. The common stock underlying convertible securities may be issued
by a different entity than the issuer of the convertible securities.
Convertible securities entitle the holder to receive interest payments paid on
corporate debt securities or the dividend preference on a preferred stock until
such time as the convertible security matures or is redeemed or until the holder
elects to exercise the conversion privilege.
B-5
<PAGE>
The value of convertible securities is influenced by both the yield of non-
convertible securities of comparable issuers and by the value of a convertible
security viewed without regard to its conversion feature (i.e., strictly on the
basis of its yield) is sometimes referred to as its investment value. The
investment value of the convertible security will typically fluctuate inversely
with changes in prevailing interest rates. However, at the same time, the
convertible security will be influenced by its `conversion value,' which is the
market value of the underlying common stock that would be obtained if the
convertible security were converted. Conversion value fluctuates directly with
the price of the underlying common stock.
By investing in convertible securities, a Fund obtains the right to benefit
from the capital appreciation potential in the underlying stock upon exercise of
the conversion right, while earning higher current income than would be
available if the stock were purchased directly. In determining whether to
purchase a convertible security, the Adviser will consider substantially the
same criteria that would be considered in purchasing the underlying stock.
Although convertible securities purchased by a Fund are frequently rated
investment grade. Convertible securities rated below investment grade (a) tend
to be more sensitive to interest rate and economic changes, (b) may be
obligations of issuers who are less creditworthy than issuers of higher quality
convertible securities, and (c) may be more thinly traded due to such securities
being less well known to investors than either common stock or conventional debt
securities.
Lending of Portfolio Securities. Subject to certain restrictions under
"Investment Restrictions" in this statement of additional information, Balanced
Fund and Intermediate Bond Fund may lend its portfolio securities to broker-
dealers and banks. Any such loan must be continuously secured by collateral in
cash or cash equivalents maintained on a current basis in an amount at least
equal to the market value of the securities loaned by the Fund. The Fund would
continue to receive the equivalent of the interest or dividends paid by the
issuer on the securities loaned, and also would receive an additional return
that may be in the form of a fixed fee or a percentage of the collateral. The
Fund would have the right to call the loan and obtain the securities loaned at
any time on notice of not more than five business days. The Fund would not have
the right to vote the securities during the existence of the loan but would call
the loan to permit voting of the securities if, in the Adviser's judgment, a
material event requiring a shareholder vote would otherwise occur before the
loan was repaid. In the event of bankruptcy or other default of the borrower,
the Fund could experience both delays in liquidating the loan collateral or
recovering the loaned securities and losses, including (a) possible decline in
the value of the collateral or in the value of the securities loaned during the
period while the Fund seeks to enforce its rights thereto, (b) possible
subnormal levels of income and lack of access to income during this period, and
(c) expenses of enforcing its rights.
When-Issued and Delayed Delivery Securities. Balanced Fund, Intermediate
Bond Fund and Government Money Market Fund may purchase securities on a when-
issued or delayed-delivery basis. Although the payment and interest terms of
these securities are established at the time a Fund enters into the commitment,
the securities may be delivered and paid for a month or more after the date of
purchase, when their value may have changed. A Fund makes such commitments only
with the intention of actually acquiring the securities, but may sell the
securities before settlement date if the Adviser deems it advisable for
investment reasons. At the
B-6
<PAGE>
time a Fund enters into a binding obligation to purchase securities on a when-
issued or delayed-delivery basis, liquid assets (cash, U.S. Government
securities or other "high-grade" debt obligations) of the Fund having a value at
least as great as the purchase price of the securities to be purchased will be
segregated on the books of the Fund and held by the custodian throughout the
period of the obligation. The use of this investment strategies may increase net
asset value fluctuation.
Repurchase Agreements. A repurchase agreement is a sale of securities to a
Fund in which the seller (a bank or broker-dealer believed by the Adviser to be
financially sound) agrees to repurchase the securities at a higher price, which
includes an amount representing interest on the purchase price, within a
specified time. In the event of a bankruptcy or other default of a seller of a
repurchase agreement, a Fund could experience both delays in liquidating the
underlying securities and losses, including: (a) possible decline in the value
of the collateral during the period while the Fund seeks to enforce its rights
thereto; (b) possible below normal levels of income and lack of access to income
during this period; and (c) expenses of enforcing its rights.
Options on Securities and Indexes. Balanced Fund and Intermediate Bond
Fund may purchase and sell put options and call options on securities and on
indexes and enter into interest rate and index futures contracts and options on
futures contracts.
An option on a security (or index) is a contract that gives the purchaser
(holder) of the option, in return for a premium, the right to buy from (call) or
sell to (put) the seller (writer) of the option the security underlying the
option (or the cash value of the index) at a specified exercise price at any
time during the term of the option (normally not exceeding nine months). The
writer of an option on an individual security has the obligation upon exercise
of the option to deliver the underlying security upon payment of the exercise
price or to pay the exercise price upon delivery of the underlying security or
foreign currency. Upon exercise, the writer of an option on an index is
obligated to pay the difference between the cash value of the index and the
exercise price multiplied by the specified multiplier for the index option. (An
index is designed to reflect specified facets of a particular financial or
securities market, a specific group of financial instruments or securities, or
certain economic indicators.)
A Fund will write call options and put options only if they are "covered."
For example, in the case of a call option on a security, the option is "covered"
if a Fund owns the security underlying the call or has an absolute and immediate
right to acquire that security without additional cash consideration (or, if
additional cash consideration is required, cash or cash equivalents in such
amount are held in a segregated account by its custodian) upon conversion or
exchange of other securities held in its portfolio.
If an option written by a Fund expires, the Fund realizes a capital gain
equal to the premium received at the time the option was written. If an option
purchased by the Fund expires, the Fund realizes a capital loss equal to the
premium paid.
B-7
<PAGE>
Prior to the earlier of exercise or expiration, an option may be closed out
by an offsetting purchase or sale of an option of the same series (type,
exchange, underlying security or index, exercise price, and expiration). There
can be no assurance, however, that a closing purchase or sale transaction can be
effected when a Fund desires.
A Fund will realize a capital gain from a closing purchase transaction if
the cost of the closing option is less than the premium received from writing
the option, or, if it is more, the Fund will realize a capital loss. If the
premium received from a closing sale transaction is more than the premium paid
to purchase the option, the Fund will realize a capital gain or, if it is less,
the Fund will realize a capital loss. The principal factors affecting the
market value of a put or a call option include supply and demand, interest
rates, the current market price of the underlying security or index in relation
to the exercise price of the option, the volatility of the underlying security
or index, and the time remaining until the expiration date.
A put or call option purchased by a Fund is an asset of the Fund, valued
initially at the premium paid for the option. The premium received for an option
written by a Fund is recorded as a deferred credit. The value of an option
purchased or written is marked-to-market daily and is valued at the closing
price on the exchange on which it is traded or, if not traded on an exchange or
no closing price is available, at the mean between the last bid and asked
prices.
There are several risks associated with transactions in options. For
example, there are significant differences between the securities markets, the
currency markets, and the options markets that could result in an imperfect
correlation between these markets, causing a given transaction not to achieve
its objectives. A decision as to whether, when and how to use options involves
the exercise of skill and judgment, and even a well-conceived transaction may be
unsuccessful to some degree because of market behavior or expected events.
There can be no assurance that a liquid market will exist when a Fund seeks
to close out an option position. If a Fund were unable to close out an option
that it had purchased on a security, it would have to exercise the option in
order to realize any profit or the option would expire and become worthless. If
a Fund were unable to close out a covered call option that it had written on a
security, it would not be able to sell the underlying security until the option
expired. As the writer of a covered call option on a security, a Fund foregoes,
during the option's life, the opportunity to profit from increases in the market
value of the security covering the call option above the sum of the premium and
the exercise price of the call.
If trading were suspended in an option purchased or written by the Fund,
the Fund would not be able to close out the option. If restrictions on exercise
were imposed, the Fund might be unable to exercise an option it has purchased.
B-8
<PAGE>
Futures Contracts and Options on Futures Contracts. A Fund may use
interest rate futures contracts, index futures contracts, and options on such
futures contracts. An interest rate, index or option on a futures contract
provides for the future sale by one party and purchase by another party of a
specified quantity of a financial instrument or the cash value of an index/3/ at
a specified price and time. A public market exists in futures contracts
covering a number of indexes (including, but not limited to: the S&P 500 Index,
the Value Line Composite Index, and the New York Stock Exchange Composite Index)
as well as financial instruments (including, but not limited to: U.S. Treasury
bonds, U.S. Treasury notes, Eurodollar certificates of deposit, and foreign
currencies). Other index and financial instrument futures contracts are
available and it is expected that additional futures contracts will be developed
and traded.
A Fund may purchase and write call and put futures options. Futures
options possess many of the same characteristics as options on securities and
indexes (discussed above). A futures option gives the holder the right, in
return for the premium paid, to assume a long position (call) or short position
(put) in a futures contract at a specified exercise price at any time during the
period of the option. Upon exercise of a call option, the holder acquires a
long position in the futures contract and the writer is assigned the opposite
short position. In the case of a put option, the opposite is true. A Fund
might, for example, use futures contracts to hedge against or gain exposure to
fluctuations in the general level of stock prices, anticipated changes in
interest rates or currency fluctuations that might adversely affect either the
value of the Fund's securities or the price of the securities that the Fund
intends to purchase. Although other techniques could be used to reduce or
increase a Fund's exposure to stock price, interest rate and currency
fluctuations, a Fund may be able to achieve its exposure more effectively and
perhaps at a lower cost by using futures contracts and futures options.
A Fund will only enter into futures contracts and futures options that are
standardized and traded on an exchange, board of trade, or similar entity, or
quoted on an automated quotation system.
There are several risks associated with the use of futures contracts and
futures options. A purchase or sale of a futures contract may result in losses
in excess of the amount invested in the futures contract. In trying to increase
or reduce market exposure, there can be no guarantee that there will be a
correlation between price movements in the futures contract and in the portfolio
exposure sought. In addition, there are significant differences between the
securities and futures markets that could result in an imperfect correlation
between the markets, causing a given
- --------------------
/3/ A futures contract on an index is an agreement pursuant to which two
parties agree to take or make delivery of an amount of cash equal to the
difference between the value of the index at the close of the last trading
day of the contract and the price at which the index contract was
originally written. Although the value of a securities index is a function
of the value of certain specified securities, no physical delivery of those
securities is made.
B-9
<PAGE>
transaction not to achieve its objectives. The degree of imperfection of
correlation depends on circumstances such as: variations in speculative market
demand for futures, futures options and the related securities, including
technical influences in futures and futures options trading and differences
between the securities market and the securities underlying the standard
contracts available for trading. For example, in the case of index futures
contracts, the composition of the index, including the issuers and the weighting
of each issue, may differ from the composition of a Fund's portfolio, and, in
the case of interest rate futures contracts, the interest rate levels,
maturities, and creditworthiness of the issues underlying the futures contract
may differ from the financial instruments held in a Fund's portfolio. A decision
as to whether, when and how to use futures contracts involves the exercise of
skill and judgment, and even a well-conceived transaction may be unsuccessful to
some degree because of market behavior or unexpected stock price or interest
rate trends.
Futures exchanges may limit the amount of fluctuation permitted in certain
futures contract prices during a single trading day. The daily limit
establishes the maximum amount that the price of a futures contract may vary
either up or down from the previous day's settlement price at the end of the
current trading session. Once the daily limit has been reached in a futures
contract subject to the limit, no more trades may be made on that day at a price
beyond that limit. The daily limit governs only price movements during a
particular trading day and therefore does not limit potential losses because the
limit may work to prevent the liquidation of unfavorable positions. For
example, futures prices have occasionally moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some holders of futures contracts to
substantial losses. Stock index futures contracts are not normally subject to
such daily price change limitations.
There can be no assurance that a liquid market will exist at a time when
the Fund seeks to close out a futures or futures option position. A Fund would
be exposed to possible loss on the position during the interval of inability to
close, and would continue to be required to meet margin requirements until the
position is closed. In addition, many of the contracts discussed above are
relatively new instruments without a significant trading history. As a result,
there can be no assurance that an active secondary market will develop or
continue to exist.
Short Sales. The Fund may make short sales "against the box." In a short
sale, the Fund sells a borrowed security and is required to return the identical
security to the lender. A short sale "against the box" involves the sale of a
security with respect to which the Fund already owns an equivalent security in
kind and amount. A short sale "against the box" enables the Fund to obtain the
current market price of a security which it desires to sell but is unavailable
for settlement.
Portfolio Turnover. Monetta Fund engages in an above-average number of
portfolio transactions. Its annual portfolio turnover rate is likely to exceed
100%, and in some years may exceed 200% (excluding Treasury Bills and other
short-term money market instruments which mature in less than one year). Mid-
Cap Fund, Large-Cap Fund and Balanced Fund may also engage in an above-average
number of portfolio transactions and an annual portfolio turnover rate exceeding
100%, although that rate is not expected to exceed 200% annually under normal
B-10
<PAGE>
market conditions. A high portfolio turnover rate increases aggregate brokerage
commission expenses and taxes which must be borne directly by a Fund and
ultimately by its shareholders. These portfolio turnover rates and the
resulting commission expenses and taxes are higher on a relative basis than
those of mutual funds which may not trade as frequently, including those with a
policy of capital appreciation. Substantial trading involves substantial risk
and may be speculative. Investors should not consider purchase of a Fund's
shares as a complete investment program.
INVESTMENT RESTRICTIONS
MONETTA FUND operates under the following investment restrictions:
1. The Fund will not issue any senior securities;
2. The Fund will not (i) sell securities short (unless the Fund owns an
equal amount of such securities or owns securities that are
convertible or exchangeable, without payment of further consideration,
into an equal amount of such securities), (ii) purchase securities on
margin, or (iii) write put and call options;
3. The Fund will not borrow money in excess of 5% of the value of its
total assets, or pledge, mortgage or hypothecate its assets taken at
market value to an extent greater than 10% of the Fund's total assets
taken at cost (and no borrowing may be undertaken except from banks as
a temporary measure for extraordinary or emergency purposes);
4. The Fund will not invest more than 5% of its total assets in the
securities of any one issuer (except that this limitation shall not
apply to obligations issued or guaranteed by the United States
Government, its agencies or instrumentalities);
5. The Fund will not purchase the securities of companies in a particular
industry if thereafter more than 25% of the Fund's total assets would
consist of securities issued by companies in that industry (except
that this limitation shall not apply to obligations issued or
guaranteed by the United States Government, its agencies or
instrumentalities);
6. The Fund will not acquire more than 10% of the outstanding voting
securities, or 10% of all of the securities, of any one issuer;
7. The Fund will not purchase the securities of any other investment
company;
8. The Fund will not purchase securities of any company with a record of
less than 3 years continuous operation (including that of predecessor
companies) if such purchase would cause the Fund's investments in all
such companies taken at cost to exceed 5% of the value of the Fund's
total assets;
B-11
<PAGE>
9. The Fund will not purchase or retain the securities of any issuer if
the officers and directors of the Fund or its Investment Adviser own
individually more than 1/2 of 1% of the securities of such issuer or
together own more than 5% of the securities of such issuer;
10. The Fund will not act as securities underwriter, except to the extent
necessary in connection with the disposition of Fund shares, or invest
in real estate (although it may purchase shares of a real estate
investment trust),/4/ or invest in commodities, commodities contracts
or financial futures contracts;
11. The Fund will not invest in companies for the purpose of exercising
control or management of such company.
12. The Fund will not invest in securities commonly called "restricted
securities", or repurchase agreements which mature in more than seven
days, which it would be required to register under the Securities Act
of 1933 before the securities could be resold to the public;
13. The Fund will not purchase shares which are not readily marketable;
and
14. The Fund will not make loans other than in accordance with the Fund's
investment objectives, including for the purchase of a portion of an
issue of publicly distributed bonds, debentures, or other securities
whether or not the purchase was made upon the original issuance of the
securities.
Each of the restrictions noted above is "fundamental" which means that it.
cannot be changed without the approval of a majority of the Fund's outstanding
voting securities.
THE TRUST AND EACH OF ITS FUNDS operate under the following investment
restrictions. A Fund may not:
1. [for all Funds except Government Money Market Fund] With respect to
75% of the value of the Fund's total assets, invest more than 5% of
its total assets (valued at the time of investment) in securities of a
single issuer, except that this restriction does not apply to U.S.
Government Securities;
[for Government Money Market Fund] Invest more than 5% of its total
assets (valued at the time of investment) in securities of a single
issuer, except that this restriction does not apply to (i) U.S.
Government Securities or (ii) repurchase agreements;
- --------------------
/4/ Monetta Fund has not invested in real estate investment trusts and does
not currently intend to do so.
B-12
<PAGE>
2. Acquire securities of any one issuer that at the time of investment
represent more than 10% of the outstanding voting securities of the
issuer;
B-13
<PAGE>
3. Invest more than 25% of its total assets (valued at the time of
investment) in securities of companies in any one industry, except
that this restriction does not apply to U.S. Government Securities or
[for Government Money Market Fund only] to repurchase agreements;
4. Make loans, but this restriction shall not prevent the Fund from:
[for all Funds except Government Money Market Fund] (a) buying bonds,
debentures, or other debt obligations that are publicly distributed or
a type privately placed with financial institutions, (b) investing in
repurchase agreements, or (c) lending portfolio securities, provided
that it may not lend securities if, as a result, the aggregate value
of all securities loaned would exceed 33% of its total assets (taken
at market value at the time of such loan);/5/ for Government Money
Market Fund] (a) purchasing U.S. Government Securities or (b) entering
into repurchase agreements;
5. Borrow money except (a) from banks for temporary or emergency purposes
in amounts not exceeding 10% of the value of the Fund's total assets
at the time of borrowing, provided that the Fund will not purchase
additional securities when its borrowings exceed 5% of total assets
and (b) [for Balanced Fund and Intermediate Bond Fund only] in
connection with transactions in options, futures and options on
futures;
6. Underwrite the distribution of securities of other issuers except
insofar as it may be deemed to be an "underwriter" for purposes of the
Securities Act of 1933 on disposition of securities subject to legal
or contractual restrictions on resale;/6/
7. Purchase and sell real estate or interests in real estate, although it
may invest in marketable securities of enterprises that invest in real
estate or interests in real estate;/7/
8. Purchase and sell commodities or commodity contracts, except [for
Balanced Fund and Intermediate Bond Fund only] that it may enter into
futures and options on futures;
- --------------------
/5/ Although they have the power to do so, the Balanced Fund and Intermediate
Bond Fund do not intend to lend portfolio securities.
/6/ The Funds do not currently intend to invest in restricted securities. In
addition, as long as shares of a Fund are offered for sale in Arkansas,
that Fund will not invest more than 10% of its total assets in restricted
securities.
/7/ As long as shares of a Fund are offered for sale in Texas, that Fund will
not purchase interests in real estate limited partnerships.
B-14
<PAGE>
9. Make margin purchases of securities, except for use of such short-term
credits as are needed for clearance of transactions and [for Balanced
Fund and Intermediate Bond Fund only] except in connection with
transactions in options, futures and options on futures;
10. Sell securities short or maintain a short position, except securities
that the Fund owns or has the right to acquire without payment of
additional consideration; and
11. Issue any senior security except to the extent permitted under the
Investment Company Act of 1940.
Restrictions 1 through 11 above are "fundamental." In addition, Mid-Cap
Fund, Large-Cap Fund, Balanced Fund, Intermediate Bond Fund and Government Money
Market Fund are subject to a number of restrictions that may be changed by the
Board of Trustees of the Trust without shareholder approval. Under those non-
fundamental restrictions, a Fund will not:
a. Invest in companies for the purpose of management or the exercise of
control;
b. Invest in oil, gas or other mineral leases or exploration or
development programs, although it may invest in marketable securities
of enterprises engaged in oil, gas or mineral exploration;
c. Invest more than 5% of its net assets (valued at time of investment)
in warrants, nor more than 2% of its net assets in warrants that are
not listed on the New York or American stock exchanges, valued at the
lower of cost or market; provided that warrants acquired in units or
attached to securities shall be deemed to be without value for
purposes of this restriction;
d. Invest more than 5% of its total assets (valued at time of investment)
in securities of issuers with less than three years' operation
(including predecessors);
e. Acquire securities of other registered investment companies except in
compliance with the Investment Company Act of 1940 and applicable
state law;
f. Purchase or retain securities of a company if all of the Trustees,
Directors and Officers of the Trust and of its investment adviser who
individually own beneficially more than 1/2% of the securities of the
company collectively own beneficially more than 5% of such securities;
g. Pledge, mortgage or hypothecate its assets, except as may be necessary
in connection with permitted borrowing, short sales, options, futures
and options on futures;
h. Invest more than 10% of its net assets (valued at the time of each
investment) in illiquid securities, including repurchase agreements
maturing in more than seven days;
B-15
<PAGE>
i. Write, purchase or sell puts, calls, straddles or spreads, except [for
Intermediate Bond Fund only] for permitted transactions in options,
futures and options on futures; and
j. [for Balanced Fund and Intermediate Bond Fund only]:
(i) Write an option on a security unless the option is issued by
the Options Clearing Corporation, an exchange, or similar
entity;
(ii) Buy or sell an option on a security, a futures contract, or an
option on a futures contract unless the option, the futures
contract, or the option on the futures contract is offered
through the facilities of a recognized securities association
or listed on a recognized exchange or similar entity; and
(iii) Purchase a put or call option if the aggregate premiums paid
for all put and call options exceed 20% of its net assets (less
the amount by which any such positions are in-the-money),
excluding put and call options purchased as closing
transactions./8/
PERFORMANCE INFORMATION
Yield. Balanced Fund and Intermediate Bond Fund may quote yield figures
from time to time. "Yield" is computed by dividing the net investment income
per share earned during a 30-day period (using the average number of shares
entitled to receive dividends) by the net asset value per share on the last day
of the period. The Yield formula provides for semiannual compounding which
assumes that net investment income is earned and reinvested at a constant rate
and annualized at the end of a six-month period.
The Yield formula is as follows:
6
YIELD = 2[((a-b/cd) + 1) - 1]
Where: a = dividends and interest earned during the period. (For
this purpose, the Fund will recalculate the yield to
maturity based on market value of each portfolio
security on each business day on which net asset value
is calculated.)
b = expenses accrued for the period (net of
reimbursements).
- --------------------
/8/ As long as shares of Balanced Fund and Intermediate Bond Fund are offered
for sale in Arkansas, neither Fund will not purchase puts, calls,
straddles, spreads or any combination thereof if as a result the value of
its aggregate investment in such classes of securities would exceed 5% of
its total assets.
B-16
<PAGE>
c = the average daily number of shares outstanding during
the period that were entitled to receive dividends.
d = the net asset value of the Fund.
Intermediate Bond Fund's yield for the 30 days ended December 31, 1995
was 5.95%.
Current or Effective Yield. Government Money Market Fund may quote a
"Current Yield" or "Effective Yield" or both from time to time. The Current
Yield is an annualized yield based on the actual total return for a seven-day
period. The Effective Yield is an annualized yield based on a daily compounding
of the Current Yield. These yields are each computed by first determining the
"Net Change in Account Value" for a hypothetical account having a share balance
of one share at the beginning of a seven-day period ("Beginning Account Value"),
excluding capital changes. The Net Change in Account Value will always equal
the total dividends declared with respect to the account, assuming a constant
net asset value of $1.00.
The Yields are then computed as follows:
Current Yield = Net Change in Account Value x 365
--------------------------- ---
Beginning Account Value 7
365/7
Effective Yield = [1 + Net Change in Account Value] - 1
---------------------------------
Beginning Account Value
In addition to fluctuations reflecting changes in net income of the Fund
resulting from changes in income earned on its portfolio securities and in its
expenses, the Fund's yield also would be affected if the Fund were to restrict
or supplement its dividends in order to maintain its net asset value at $1.00.
(See "Net Asset Value" in the Prospectus and "Additional Information on the
Determination of Net Asset Value" herein.) Portfolio changes resulting from net
purchases or net redemptions of Fund shares may affect yield. Accordingly, the
Fund's yield may vary from day to day and the yield stated for a particular past
period is not a representation as to its future yield. The Fund's yield is not
assured, and its principal is not insured; however, the Fund will attempt to
maintain its net asset value per share at $1.00.
Government Money Market Fund's current yield and effective yield for the
seven days ended December 31, 1995 were 5.38% and 5.53%, respectively.
Total Return. From time to time, each Fund may give information about its
performance by quoting figures in advertisements and sales literature. "Total
Return" for a period is the percentage change in value of an investment in a
Fund's shares, including the value of shares acquired through reinvestment of
all dividends and capital gains distributions. "Average Annual Total Return" is
the average annual compounded rate of change in value represented by the total
return percentage for the period.
B-17
<PAGE>
Average annual return is computed as follows:
n
ERV = P(1+T)
Where: P = the amount of an assumed initial investment in Fund
shares
T = average annual total return
n = number of years from initial investment to the end of
the period
ERV = ending redeemable value of shares held at the end of the
period
Each Fund's total return (other than Large-Cap Fund and Balanced Fund) for
the year ended December 31, 1995 was: Monetta Fund, 28.0% Mid-Cap Fund,
24.5%; Large-Cap Fund, 5.7% since inception (September 1, 1995); Balanced Fund,
6.2% since inception (September 1, 1995); Intermediate Bond Fund, 14.8%; and
Government Money Market Fund, 5.9%. Average annual total return for the
twelve months ended December 31, 1995, for the five-year period ended December
31, 1995 and from the commencement of operations through December 31, 1995
for Monetta Fund were 28.0%, 14.7% and 12.5%. Average annual total return
for the twelve months ended December 31, 1995 and from the commencement of
operation through December 31, 1995 for the other Funds were: Mid-Cap Fund,
24.5% and 21.2%, respectively; Intermediate Bond Fund, 14.8% and 7.6%,
respectively; and Government Money Market Fund, 5.9% and 4.2%,
respectively.
General. Investment performance figures assume reinvestment of all
dividends and distributions, and do not take into account any Federal, state or
local income taxes which shareholders must pay on a current basis. They are not
necessarily indicative of future results.
In advertising and sales literature, a Fund may compare its yield and
performance with that of other mutual funds, indexes or averages of other mutual
funds, indexes of related financial assets or data and other competing
investment and deposit products available from or through other financial
institutions. The composition of these indexes or averages differs from that of
the Funds. Comparison of a Fund to an alternative investment should be made
with consideration of differences in features and expected performance.
All of the indexes and averages used will be obtained from the indicated
sources or reporting services, which the Funds believe to be generally accurate.
A Fund may also note its mention in newspapers, magazines or other media from
time to time. However, the Funds assume no responsibility for the accuracy of
such data. Newspapers and magazines which might mention a Fund include, but are
not limited to, the following:
B-18
<PAGE>
Business Week Los Angeles Times
Changing Times Money
Chicago Tribune Mutual Fund Letter
Chicago Sun-Times Morningstar
Crain's Chicago Business Newsweek
Consumer Reports The New York Times
Consumer Digest Pensions and Investment
Financial World Personal Investor
Forbes Stanger Reports
Fortune Time
Investor's Daily USA Today
Kiplinger's U.S. News and World Report
L/G No-Load Fund Analyst The Wall Street Journal
When a newspaper, magazine or other publication mentions the Fund, such
mention may include: (i) listings of some or all of the Fund's holdings, (ii)
descriptions of characteristics of some or all of the securities held by the
Fund, including price-earnings ratios, earnings, growth rates and other
statistical information, and comparisons of that information to similar
statistics for the securities comprising any of the indexes or averages listed
above; and (iii) descriptions of the Fund's or a portfolio manager's economic
and market outlook.
A Fund's performance is a result of conditions in the securities markets,
portfolio management, and operating expenses. Although information such as that
described above may be useful in reviewing a Fund's performance and in providing
some basis for comparison with other investment alternatives, it is not
necessarily indicative of future performance and should not be used for
comparison with other investments using different reinvestment assumptions or
time periods.
The Funds may also compare their performances to various stock indices
(groups of unmanaged common stocks), including Standard & Poor's 500 Stock
Index, the Value Line Composite Average, the Nasdaq Composite Index and the Dow
Jones Industrial Average, or to the Consumer Price Index or groups of comparable
mutual funds, including rankings determined by Lipper Analytical Services, Inc.,
an independent service that monitors the performance of over 1,000 mutual funds,
Morningstar, Inc., or that of another service.
The Funds may also cite its ranking, recognition, or other mention by
Morningstar. Morningstar's ranking system is based on risk-adjusted total
return performance and is expressed in a star-rated format. The risk-adjusted
number is computed by subtracting a fund's risk score (which is a function of
the fund's monthly return less the 3-month T-bill return) from the fund's load-
adjusted total return score. This numerical score is then translated into
ranking categories, with the top 10% labeled five star, the next 22.5% labeled
four star, the next 35% labeled three star, and next 22.5% labeled two star, and
the bottom 10% one star. A high ranking reflects either above-average
performance or below average risk or both.
B-19
<PAGE>
INVESTMENT ADVISER
The investment adviser for Monetta Fund and the Trust is Monetta Financial
Services, Inc. ("MFSI" or the "Adviser"). The Adviser furnishes continuing
investment supervision to the Funds and is responsible for overall management of
the Trust's business affairs pursuant to investment advisory agreements dated
November 10, 1988 and January 19, 1993, respectively. The Adviser furnishes
office space, equipment and personnel to the Funds and assumes all of the Funds'
ordinary operating expenses except the charges of the custodian, transfer agent
and fees paid to non-interested trustees.
Please refer to the description of the Adviser, investment agreement and
advisory fees under "Management of the Funds" in the Prospectus, which is
incorporated herein by reference. For the year ended December 31, 1995, the
Funds paid aggregate advisory fees to the Adviser of: Monetta Fund - $3,648,564;
Mid-Cap Fund - $134,677; Large-Cap Fund - $2,844; Balanced Fund - $570;
Intermediate Bond Fund - $19,834; and Government Money Market Fund - $12,563.
Investment advisory fees waived though December 31, 1995, for the Intermediate
Bond Fund were $17,132 of total fees of $19,834. Investment advisory fees waived
through December 31, 1995 for the Government Money Market Fund were $12,563.
Custodian and Transfer Agent charges of $6,111 for the period ending December
31, 1995 for the Government Money Market Fund were absorbed by the Adviser. The
investment advisory agreements each provide that the Adviser will reimburse each
Fund to the extent that a Fund's total annual operating expenses exceed the most
restrictive limits prescribed by any state in which Fund shares are being
offered for sale. The Adviser believes that the most restrictive limit to which
the Funds are subject is 2 1/2% of the first $30 million of the average net
asset value, 2% of the next $70 million, and 1 1/2% of the average net asset
value in excess of $100 million, exclusive of (i) taxes, (ii) interest charges,
(iii) litigation and other extraordinary expenses, and (iv) brokers' commissions
and other charges relating to the purchase and sale of a Fund's portfolio
securities.
Robert S. Bacarella, president and a director of the Monetta Fund and
president and a trustee of the Trust, owns 71% of the outstanding voting
securities of the Adviser. Paul W. Henry and John W. Bakos, directors of
Monetta Fund, each own 2% of the outstanding voting securities of the Adviser.
The Adviser's address is 1776-A South Naperville Road, Wheaton, Illinois 60187.
Messrs. Bacarella, Henry and Bakos and John P. Rozinsky, a director and
officer of the Fund and trustee and officer of the Trust, are also shareholders
of Monetta Brokerage, Inc. ("MBI"), a registered broker-dealer. Their
percentage ownership interests in MBI are: Mr. Bacarella - 44%; and Mr.
Rozinsky - 3%; Mr. Henry - 3%; and Mr. Bakos - 2%. The investment advisory
agreements each authorize MBI to act as broker for a Fund in connection with the
purchase or sale of securities by or to the Fund in conformity with SEC rules.
See "Portfolio Transactions."
B-20
<PAGE>
DIRECTORS/TRUSTEES AND OFFICERS
The ages at March 31, 1996 and principal business activities during the
past five years of the directors/ trustees and officers of Monetta Fund and the
Trust are:
<TABLE>
<CAPTION>
POSITIONS POSITIONS
HELD HELD PRINCIPAL OCCUPATIONS
NAME AGE WITH FUND WITH TRUST AND OTHER AFFILIATIONS
- ---- ---- ------------ ----------- ----------------------
<S> <C> <C> <C> <C>
Robert S. Bacarella+* 46 Director and Trustee President and Director, MFSI
President and since 1984; Secretary,
President Treasurer and Director, Monetta
Brokerage, Inc., since 1987;
President and Director, Monetta
Trust (registered investment
company), since 1993; President
and Director, Monetta Fund,
Inc., since 1985; Director, Pension
Investment Dept., Borg-Warner
Corporation (manufacturer of
automobile parts and accessories),
1972-1989.
John M. Alogna* 59 n/a Trustee Portfolio manager, MFSI, since January
and Vice 1993; private investor, 1986-1992;
President Portfolio Manager, M.H. Investment
Council, 1982-1986; Senior Portfolio
Manager, Harris Trust & Savings
Bank, 1974-1982.
John W. Bakos+ 49 Director n/a Inventory Planner, Sears, Roebuck & Co.,
since 1969; Director, MFSI, since 1984 and
vice president, 1984-1991.
John L. Guy Jr. 42 n/a Trustee President, Heller First Capital Corporation,
since May 1995; Senior Vice President and
Treasurer, Heller Financial Inc.,
(August 1992-May 1995); Senior Vice President,
Director Internal Audit (November 1989-
August 1992) and Vice President Financial
Planning and Analysis (December 1987-November
1989) prior thereto.
</TABLE>
B-21
<PAGE>
<TABLE>
<CAPTION>
POSITIONS POSITIONS
HELD HELD PRINCIPAL OCCUPATIONS
NAME AGE WITH FUND WITH TRUST AND OTHER AFFILIATIONS
- ---- ---- ------------ ----------- ----------------------
<S> <C> <C> <C> <C>
Paul W. Henry+ 53 Director n/a Manager, Financial Systems, Signature Group
(Telemarketing) since August 1994; Manager,
Computer Systems, Bann International,
(Computer Software) December 1993 to
June 1994; Manager, Special Projects, Waste
Management, Inc. (waste collection of hazardous
and chemical waste materials), since 1987 to
December 1993; Director, MFSI, since 1984,
and vice president, 1984-1991.
Mark F. Ogan 53 Director Trustee President and Secretary, Salida Corp. (formerly
Pollenex Corp.) February 1993 to Present; Vice
President, Sunbeam-Oster Corp. May 1992 to
December 1992; President, Sunbeam-Oster
Household Products Group, May 1991 to May 1992;
Vice President, Business Development and
Corporate Strategy, Sunbeam-Oster Co., October
1990 - May 1991; Management consultant
(self-employed), February 1989 - September 1990;
President, Borg-Warner Equities Corporation,
1986-1989.
John P. Rozinsky+* 57 Director Trustee Vice President MFSI, since May 1991; Director,
and Vice and Vice MFSI, May 1991 to February 1994; Vice President,
President President treasurer and trustee, Monetta Trust, since
1993; Vice President and Director, MBI, since
January 1990; Vice President and Director Monetta
Fund, Inc., since 1985.
Richard D. Russo 43 n/a Trustee Attorney at law-Richard Russo & Associates,
Associated Legal Services Chartered, 1985
to Present.
</TABLE>
B-22
<PAGE>
<TABLE>
<CAPTION>
POSITIONS POSITIONS
HELD HELD PRINCIPAL OCCUPATIONS
NAME AGE WITH FUND WITH TRUST AND OTHER AFFILIATIONS
- ---- ---- ------------ ----------- ----------------------
<S> <C> <C> <C> <C>
William M. Valiant* 70 n/a Trustee Retired; Vice President and Treasurer,
Borg-Warner Corporation, until July 1990
and consultant to Borg-Warner
corporation, July - December 1990.
Albert A. Pisterzi 55 Vice Vice Vice President, MFSI since January 1995;
President President prior thereto, Director of Marketing, Harris
Associates, L.P. since September 1988.
Maria Cesario DeNicolo 47 Treasurer Secretary Treasurer MFSI, since February 1994;
Controller, MFSI, since June 1992; Secretary,
Monetta Trust, since 1993; Sole proprietor,
Cesario DeNicolo C.P.A. and Associates, since
May 1990 to June 1993; Partner, Menconi & Cesario
P.C., C.P.A., September 1989 to April 1990.
Valerie A. LeFevre 61 Secretary n/a Employee, MFSI since January 1986.
</TABLE>
+ Messrs. Bacarella, Bakos, Henry and Rozinsky are "interested persons" of
Monetta Fund, as defined in the Investment Company Act of 1940 (the "1940 Act"),
for the following reasons: Mr. Bacarella - as an officer of Monetta Fund and as
a shareholder, officer and director of MFSI; Mr. Rozinsky - as an officer of
Monetta Fund and as an officer and director of MFSI; and Messrs. Bakos and Henry
- - as shareholders of MFSI.
* Messrs. Bacarella, Alogna, Rozinsky and Valiant are "interested persons"
of the Trust, as defined in the 1940 Act, as officers of the Trust and as
officers and directors (and, in Mr. Bacarella's case, as a shareholder) of MFSI.
The address of Messrs. Alogna, Bacarella, Pisterzi, Rozinsky and Valiant
and of Ms. DeNicolo and Ms. LeFevre is 1776-A South Naperville Road, Suite 207,
Wheaton, Illinois 60187. The addresses of the other directors and trustees are:
Mr. Bakos - 1261 Spring Valley Drive, Carol Stream, Illinois 60018; Mr. Guy -
500 West Monroe Street, Chicago, Illinois 60661; Mr. Henry - 1384 Hunter Circle,
Naperville, Illinois 60540; Mr. Ogan - One Oakbrook Terrace, Suite 802, Oak
Brook Terrace, Illinois 60181, and Mr. Russo - 1155 South Naperville Road,
Wheaton, Illinois 60187.
B-23
<PAGE>
At March 31, 1996, the directors and officers of Monetta Fund as a group
owned beneficially less than 1% of the issued and outstanding shares of common
stock of Monetta Fund. No person was known by Monetta Fund to own beneficially
5% or more of the outstanding shares of the Fund at that date.
Shares owned by the Adviser, trustees and officers at March 31, 1996
were as follows:
<TABLE>
<CAPTION>
Adviser Trustees & Officers
---------------- -------------------
% of % of
Shares Fund Shares Fund
--------- ----- -------- -----
<S> <C> <C> <C> <C>
Mid-Cap Fund 7,347 0.6% 72,256 6.0%
Large-Cap Fund 10,004 8.8% 3,594 3.2%
Balanced Fund 19,945 46.1% 7,537 17.4%
Intermediate Bond Fund 70,278 18.9% 3,382 0.9%
Government Money Market Fund 1,075,302 21.1% 234,375 4.6%
</TABLE>
Ownership of a significant percentage of the outstanding shares of the
Balanced Fund, the Intermediate Bond Fund and of the Money Market Fund reduces
the number of other shares that must be voted in accordance with the Adviser's
vote to approve or disapprove any proposal requiring the approval of the
shareholders of the Trust or of the Funds.
Robert S. Bacarella and John M. Alogna serve as members of the Executive
Committee of the board of each of Monetta Fund and the Trust. The Executive
Committees, which meet between regular meetings of the respective boards, are
authorized to exercise all of the powers of the boards. Each Executive
Committee held four meetings during 1995.
The following table sets forth compensation paid by Monetta Fund and the
Trust to their respective directors and trustees during 1995.
<TABLE>
<CAPTION>
COMPENSATION COMPENSATION COMPENSATION
RECEIVED FROM RECEIVED FROM RECEIVED FROM
NAME OF PERSON THE FUND THE TRUST FUND COMPLEX
- -------------- ------------- ------------- -------------
<S> <C> <C> <C>
Robert S. Bacarella(1) 0 $ 0 $ 0
John M. Alogna(1) 0 0 0
John W. Bakos(1) 0 0 0
John L. Guy, Jr. 0 100 100
Paul W. Henry(1) 0 0 0
Mark F. Ogan 2,000 400 2,400
John P. Rozinsky(1) 0 0 0
Richard Russo 0 300 300
William Valiant 0 200 200
</TABLE>
B-24
<PAGE>
(1) Directors and/or trustees who are interested persons, including all
employees of MFSI receive no compensation from Monetta Fund or the Trust.
(2) The Monetta Fund Complex consists of Monetta Fund, the Trust and the
five Trust portfolios. Neither Monetta Fund nor the Trust offers any retirement
or deferred compensation plan to Board Members.
PURCHASING AND REDEEMING SHARES
Purchases and redemptions are discussed in the Funds' Prospectus under the
headings "How to Purchase Shares," "How to Redeem Shares" and "Determination of
Net Asset Value." All of that information is incorporated herein by reference.
The Prospectus discloses that you may purchase (or redeem) shares through
investment dealers, banks or other institutions. The State of Texas has asked
that the Funds disclose in the Statement of Additional Information, as a
reminder to any such institution, that it must be registered as a dealer in
Texas.
The Funds reserves the right to suspend or postpone redemptions of shares
of any Fund during any period when: (a) trading on the New York Stock Exchange
("NYSE") is restricted, as determined by the Securities and Exchange Commission,
or the NYSE is closed for other than customary weekend and holiday closings; (b)
the Securities and Exchange Commission has by order permitted such suspension;
or (c) an emergency, as determined by the Securities and Exchange Commission,
exists, making disposal of portfolio securities or valuation of net assets of
such Fund not reasonably practicable.
Monetta Fund and the Trust have each elected to be governed by Rule 18f-1
under the 1940 Act, pursuant to which it is obligated to redeem shares of each
Fund solely in cash up to the lesser of $250,000 or 1% of the net asset value of
that Fund during any 90-day period for any one shareholder. Redemptions in
excess of the above amounts will normally be paid in cash, but may be paid
wholly or partly by a distribution of securities in kind.
MORE INFORMATION ABOUT NET ASSET VALUE
Each Fund's net asset value is determined on days on which the New York
Stock Exchange ("NYSE") is open for trading. The NYSE is regularly closed on
Saturdays and Sundays and on New Year's Day, the third Monday in February, Good
Friday, the last Monday in May, Independence Day, Labor Day, Thanksgiving and
Christmas. If one of these holidays falls on a Saturday or Sunday, the Exchange
will be closed on the preceding Friday or the following Monday, respectively.
For purposes of calculating the net asset value per share, the assets of
the Fund are valued as follows:
Valuation. Securities for which market quotations are readily available at
the time of valuation are valued on that basis. Each security traded on a
national stock exchange or on the Nasdaq National Market is valued at its last
sale price on that day or, if there are no sales that day, at the mean of the
latest bid and asked quotations. All other over-the-counter securities for
B-25
<PAGE>
which reliable quotations are available are valued at the mean of the latest bid
and asked quotations. Long-term straight-debt securities for which market
quotations are not readily available are valued at a fair value based on
valuations provided by pricing services approved by the Board, which may employ
electronic data processing techniques, including a matrix system, to determine
valuations. Short-term debt securities for which market quotations are not
readily available are valued by use of a matrix prepared by the Adviser based on
quotations for comparable securities. Other assets and securities held by a
Fund for which these valuation methods do not produce a fair value are valued by
a method that the Board believes will determine a fair value.
Valuation of Government Money Market Fund. Government Money Market Fund
values its portfolio by the "amortized cost method" by which it attempts to
maintain its net asset value at $1.00 per share. This involves valuing an
instrument at its cost and thereafter assuming a constant amortization to
maturity of any discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the instrument. Although this method
provides certainty in valuation, it may result in periods during which value as
determined by amortized cost is higher or lower than the price the Fund would
receive if it sold the instrument. Other assets are valued at a fair value
determined in good faith by the board of trustees.
In connection with the Government Money Market Fund's use of amortized cost
and the maintenance of the Fund's per share net asset value of $1.00, the Trust
has agreed (i) to seek to maintain a dollar-weighted average portfolio maturity
appropriate to the Fund's objective of maintaining relative stability of
principal and not in excess of 90 days; (ii) not to purchase a portfolio
instrument with a remaining maturity of greater than thirteen months; and (iii)
to limit its purchase of portfolio instruments to those instruments that are
denominated in U.S. dollars which the Board of Trustees determines present
minimal credit risks and that are of eligible quality as determined by any major
rating service as defined under SEC Rule 2a-7 or, in the case of any instrument
that is not rated, of comparable quality as determined by the Board.
The Trust has established procedures reasonably designed to stabilize the
Fund's price per share as computed for the purpose of sales and redemptions at
$1.00. Those procedures include review of the Fund's portfolio holdings by the
Board of Trustees, at such intervals as it deems appropriate to determine
whether the Fund's net asset values calculated by using available market
quotations or market equivalents deviate from $1.00 per share based on amortized
cost. Calculations are made to compare the value of its investments valued at
amortized cost with market value. Market values are obtained by using actual
quotations provided by market makers, estimates of market value, values from
yield data obtained from the Adviser's matrix, or values obtained from an
independent pricing service. Any such service might value the Fund's investments
based on methods which include consideration of: yields or prices of securities
of comparable quality, coupon, maturity and type; indications as to values from
dealers; and general market conditions. The service may also employ electronic
data processing techniques, a matrix system or both to determine valuations.
In connection with the Fund's use of the amortized cost method of portfolio
valuation to maintain its net asset value at $1.00 per share, the Fund might
incur or anticipate an unusual
B-26
<PAGE>
expense, loss, depreciation, gain or appreciation that would affect its net
asset value per share or income for a particular period. The extent of any
deviation between the Fund's net asset value based upon available market
quotations or market equivalents and $1.00 per share based on amortized cost
will be examined by the Board of Trustees as it deems appropriate. If such
deviation exceeds 1/2 of 1%, the Board of Trustees will promptly consider what
action, if any, should be initiated. In the event the Board of Trustees
determines that a deviation exists that may result in material dilution or other
unfair results to investors or existing shareholders, it will take such action
as it considers appropriate to eliminate or reduce to the extent reasonably
practicable such dilution or unfair results. Actions which the Board might take
include: selling portfolio instruments prior to maturity to realize capital
gains or losses or to shorten average portfolio maturity; increasing, reducing
or suspending dividends or distributions from capital or capital gains; or
redeeming shares in kind. The board might also establish a net asset value per
share by using market values, as a result of which the net asset value might
deviate from $1.00 per share.
TAX STATUS
Each Fund intends to continue to qualify to be taxed as a regulated
investment company under the Internal Revenue Code of 1986, as amended, so as to
be relieved of federal income tax on its capital gains and net investment income
currently distributed to shareholders.
PORTFOLIO TRANSACTIONS
The Adviser has discretion to select brokers and dealers to execute
portfolio transactions initiated by the Adviser and to select the markets in
which such transactions are to be executed. The primary responsibility
regarding portfolio transactions is to seek the best combination of net price
and execution for the Funds. When executing transactions for the Funds, the
Adviser will consider all factors it deems relevant, including the breadth of
the market in the security, the price of the security, the financial condition
and execution capability of the broker or dealer and the reasonableness of the
commission.
Transactions of the Funds in the over-the-counter market are executed with
primary market makers acting as principal except where it is believed that
better prices and execution may be obtained otherwise.
In selecting brokers or dealers to execute particular transactions and in
evaluating the best net price and execution available, the adviser is authorized
to consider "brokerage and research services" (as those terms are defined in
Section 28 (e) of the Securities Exchange Act of 1934), statistical quotations,
specifically the quotations necessary to determine the Funds' asset values, and
other information provided to the Funds or the Adviser. The Adviser is also
authorized to cause the Funds to pay a broker or dealer who provides such
brokerage and research services a commission for executing a portfolio
transaction which is in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction. The Adviser must
determine in good faith, however, that such commission was reasonable in
relation to the value of the brokerage and research services provided, viewed in
terms of that particular transaction or in terms of all the accounts over which
the Adviser exercises investment discretion. It is possible
B-27
<PAGE>
that certain of the services received by the Adviser attributable to a
particular transaction will benefit one or more other accounts for which
investment discretion is exercised by the Adviser.
In valuing research services, the Adviser makes a judgment of the
usefulness of research and other information provided by a broker to the Adviser
in managing the Funds' investment portfolios. In some cases, the information,
e.g., data or recommendations concerning particular securities, relates to the
specific transaction placed with the broker, but for the greater part, the
research consists of a wide variety of information concerning companies,
industries, investment strategy and economic, financial and political conditions
and prospects, useful to the Adviser in advising the Funds.
The Adviser is the principal source of information and advice to the Funds
and is responsible for making and initiating the execution of investment
decisions by the Funds. However, the respective boards recognize that it is
important for the Adviser, in performing its responsibilities to the Funds, to
continue to receive and evaluate the broad spectrum of economic and financial
information that many securities brokers have customarily furnished in
connection with brokerage transactions, and that in compensating brokers for
their services, it is in the interest of the Funds to take into account the
value of the information received for use in advising the Funds. The extent, if
any, to which the obtaining of such information may reduce the expenses of the
Adviser in providing management services to the Funds is not determinable. In
addition, it is understood by the respective board that other clients of the
Adviser might also benefit from the information obtained for the Funds, in the
same manner that the Funds might also benefit from the information obtained by
the Adviser in performing services for others.
Although investment decisions for the Funds are made independently from
those for other investment advisory clients of the Adviser, it may develop that
the same investment decision is made for a Fund and one or more other advisory
clients. If a Fund and other clients purchase or sell the same class of
securities on the same day, the transactions will be allocated as to amount and
price in a manner considered equitable to each.
The board of directors of Monetta Fund and the board of trustees of the
Trust have each determined that portfolio brokerage transactions for their
respective Funds may be executed through Monetta Brokerage, Inc. ("MBI") if, in
the judgment of the Adviser, the use of MBI is likely to result in prices and
execution at least as favorable to the Fund as those available from other
qualified brokers and, if, in such transaction, MBI charges the Fund commission
rates consistent with those charged by MBI to comparable unaffiliated customers
in similar transactions. The board of directors of Monetta Fund, including a
majority of the directors who are not "interested" directors, and the board of
trustees of the Trust, including a majority of the trustees who are not
"interested" trustees, have each adopted procedures which are reasonably
designed to provide that any commissions, fees or other remuneration paid to MBI
are consistent with the foregoing standard. The Funds will not effect principal
transactions with MBI.
Brokerage commissions incurred by Monetta Fund for 1995, 1994 and 1993
aggregated $1,449,063, $1,974,854 and $2,080,880, respectively, not including
the gross underwriting spread on securities purchased in underwritten public
offerings. Of this amount,
B-28
<PAGE>
the Fund paid brokerage commissions aggregating $1,034,235, $1,290,759 and
$1,394,802 in 1995, 1994 and 1993, respectively, in connection with portfolio
transactions involving purchases and sales aggregating $366,529,232,
$512,538,346, and $556,301,080, respectively, to brokers who furnished
investment research services to the Fund.
Brokerage commissions incurred by Mid-Cap Fund for the years ended
December 31, 1995 and 1994 aggregated $85,201 and $69,865, respectively, not
including the gross underwriting spread on securities purchased in underwritten
public offerings. Of this amount, Mid-Cap Fund paid brokerage commissions of
$78,743 and $50,407, for 1995 and 1994, respectively, in connection with
portfolio transactions involving purchases and sales aggregating $33,625,853 and
$20,848,618, for 1995 and 1994, respectively, to brokers who furnished
research services to the Fund.
Brokerage commissions incurred by Large-Cap Fund and Balanced Fund for the
period September 1, 1995 through December 31, 1995 aggregated $1,507 and $350,
respectively, not including the gross underwriting spread on securities
purchased in underwritten public offerings.
The brokerage commissions set forth above include brokerage commissions
paid to MBI. Of the aggregate brokerage commissions paid by Monetta Fund in
1995, 1994 and 1993, 4.8%, 8.7% and 15.7%, respectively, was paid to MBI
for transactions aggregating 6.4%, 10.3% and 23.4%, respectively, of the
aggregate dollar amount of transactions involving the payment of commissions.
Aggregate brokerage commissions paid to MBI by Mid-Cap Fund during 1995 and
1994, were -0- and 5.9%, respectively, aggregating -0- and 10.6% respectively
of the aggregate dollar amount of transactions involving the payment of
commissions.
All securities transactions of Large-Cap Fund and Balanced Fund in 1995
were executed on a principal basis. All securities transactions of Intermediate
Bond Fund and Government Money Market Fund in 1995 and 1994 were executed on a
principal basis.
The portfolio turnover rates of Monetta Fund for 1995 and 1994 were
272.0% and 191.27%, respectively. The Fund's portfolio turnover rate may vary
greatly from year to year, and is likely to be greater than 100% and in some
years may exceed 200%. Greater portfolio activity increases the Fund's
transaction costs, including brokerage commissions.
The portfolio turnover rate of the Intermediate Bond Fund for 1995 was
75.1%, and is expected to be less than 100% annually. The portfolio turnover
rate of Mid-Cap Fund was 254.4% for 1995, and may continue to be greater than
100%. There was no significant variation in either Fund's respective 1995 and
1994 portfolio turnover rates. The portfolio turnover rate for Large-Cap Fund
for 1995 was 38.2% and 54.8% for Balanced Fund. Greater portfolio activity
a Fund's transaction costs, including brokerage commissions.
CUSTODIAN
Firstar Trust Company, 615 East Michigan Street, 3rd Floor, Milwaukee,
Wisconsin 53202 is the custodian for the Funds. It is responsible for holding
all securities and cash of the
B-29
<PAGE>
Funds, receiving and paying for securities purchased, delivering against payment
securities sold, receiving and collecting income from investments, making all
payments covering expenses of the Funds, and performing other administrative
duties, all as directed by authorized persons of the Funds. The custodian does
not exercise any supervisory function in such matters as purchase and sale of
portfolio securities, payment of dividends, or payment of expenses of the Funds.
The Funds have authorized the custodian to deposit certain portfolio securities
in central depository systems as permitted under federal law. The Funds may
invest in obligations of the custodian and may purchase or sell securities from
or to the custodian.
INDEPENDENT AUDITORS
The independent auditors for the Funds are KPMG Peat Marwick LLP, 303
Wacker Drive, Chicago, Illinois 60601. The independent auditors audit and
report on the Funds' annual financial statements, review certain regulatory
reports and the Fund's income tax returns, and perform other professional
accounting, auditing, tax and advisory services when engaged to do so by the
Funds.
APPENDIX - RATINGS
- ------------------
RATINGS IN GENERAL
- ------------------
A rating by a rating service represents the service's opinion as to the
credit quality of the security being rated. However, the ratings are general
and are not absolute standards of quality or guarantees as to the credit-
worthiness of an issuer. Consequently, the Adviser believes that the quality of
debt securities in which the Fund invests should be continuously reviewed and
that individual analysts give different weightings to the various factors
involved in credit analysis. A rating is not a recommendation to purchase,
sell, or hold a security, because it does not take into account market value or
suitability for a particular investor. When a security has received a rating
from more than one service, each rating should be evaluated independently.
Ratings are based on current information furnished by the issuer or obtained by
the rating services from other sources which they consider reliable. Ratings
may be changed, suspended, or withdrawn as a result of changes in or
unavailability of such information, or for other reasons.
The following is a description of the characteristics of ratings used by
Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's Corporation
("S&P").
BOND RATINGS
RATINGS BY MOODY'S:
Aaa. Bonds rated Aaa are judged to be the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt edge."
Interest payments are protected by a large or an exceptionally stable margin and
principal is secure. Although the various protective
B-30
<PAGE>
elements are likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such bonds.
Aa. Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high-grade
bonds. They are rated lower than the best bonds because margins of protections
may not be as large as in the Aaa Bonds, fluctuation of protective elements may
be of greater amplitude, or there may be other elements present which make the
long-term risks appear somewhat larger than in Aaa bonds.
A. Bonds rated A possess many favorable investment attributes and are to
be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa. Bonds rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba. Bonds rate Ba are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
other good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
B. Bonds rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa. Bonds rated Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest. NOTE: Moody's applies numerical modifiers 1, 2, and 3 in each of
these generic rating classifications in its corporate bond rating systems. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category.
Ratings by Standard and Poor's:
AAA. Debt rated AAA has the highest rating. Capacity to pay interest and
repay principal is extremely strong.
AA. Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in a small degree.
A. Debt rated A has a very strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
B-31
<PAGE>
BBB. Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions, or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than for debt in higher rated categories.
BB-B-CC. Bonds rated BB, B and CC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligations. While such
bonds will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse conditions.
NOTE: These ratings may be modified by the addition of a plus(+) or
minus(-) sign to show relative standing within the major rating categories.
COMMERCIAL PAPER RATINGS
Ratings by Moody's:
The rating Prime-1 (P-1) is the highest commercial paper rating assigned by
Moody's. Among the factors considered by Moody's in assigning ratings are the
following: (1) evaluation of the management of the issuer; (2) economic
evaluation of the issuer's industry or industries and an appraisal of
speculative type risks which may be inherent in certain areas; (3) evaluation of
the issuer's products in relation to competition and customer acceptance; (4)
liquidity; (5) amount and quality of long-term debt; (6) trend of earnings over
a period of ten years; (7) financial strength of a parent company and the
relationships which exist with the issuer; and (8) recognition by the management
of obligations which may be present or may arise as a result of public interest
questions and preparations to meet such obligations. These factors are all
considered in determining whether the commercial paper is rated P-2 or P-3.
RATINGS BY STANDARD & POOR'S:
The rating A-1+ is the highest, and A-1 the second highest, commercial
paper rating assigned by S&P. Paper rated A-1+ must have either the direct
credit support of an issuer or guarantor that possesses excellent long-term
operating and financial strengths combined with strong liquidity characteristics
(typically, such issuers or guarantors would display credit quality
characteristics which would warrant a senior bond rating of AA or higher), or
the direct credit support of an issuer or guarantor that possesses above average
long-term fundamental operating and financing capabilities combined with ongoing
excellent liquidity characteristics. Paper rated A-1 must have the following
characteristics: liquidity ratios are adequate to meet cash requirements, long-
term senior debt is rated A or better, the issuer has access to at least two
additional channels of borrowing, and basic earnings and cash flow have an
upward trend with allowance made for unusual circumstances. Typically, the
issuer's industry is well established and the issuer has a strong position
within the industry and the reliability and quality of management are
unquestioned. Relative strength or weakness of the above factors determines
whether the issuer's commercial paper is rated A-2 or A-3.
B-32
<PAGE>
- -------------------------------------------------------------------------------
FAMILY OF FUNDS
- -------------------------------------------------------------------------------
Dear Fellow Shareholders: January 16, 1996
1995 was a banner year for the financial markets. Both the Dow Jones Industrial
Average and the S & P 500 Index recorded their best annual gains since 1958. The
NASDAQ Composite turned in its second-best performance in its twenty-four year
existence.
The market gains can be attributed to the Federal Reserve Board orchestrating a
rare "soft landing" that led to modest economic growth, declining interest
rates, and low inflation. This environment propelled corporate profitability to
record levels as companies benefited from improved operating rates, stable
pricing and stronger balance sheets.
In terms of sector performance last year, the best performing groups were
financial, technology and healthcare. The under-performing groups were basic
industry, retail, energy and transportation. In the last few months of the year,
the larger capitalization stocks significantly out performed the smaller
companies as investors shifted out of the hot technology and financial sectors
to the energy-related and drug groups to take advantage of rising oil prices and
a promising pipeline of new drugs.
MARKET OUTLOOK/INVESTMENT STRATEGY
We remain bullish on stocks, although they are unlikely to surpass the
spectacular returns of 1995. In our view, the economy is poised for modest
growth, low inflation and stable interest rates. The Federal Reserve policy is
expected to ease in 1996, with the bulk of the move to occur in the first part
of the year. This type of economic environment should be positive for the
financial markets. Two limiting factors for the stock market are a slowdown in
corporate earnings growth and/or consumer spending levels, which affects about
two-thirds of economic activity. A sharp drop in spending could kick off a
recession, but based on current economic conditions, this appears unlikely in
1996.
As for 1996 being a Presidential election year, history suggests a "no fear"
attitude. Not since 1960 has the stock market been down in an election year.
Most gains have been in the 10-15% range.
The technology sector has been undergoing a significant reappraisal over the
last few weeks. We believe this to be a normal market pullback after this
sector's huge advance. We do not expect the correction to be long lasting and
believe it to be a buying opportunity.
We favor sectors with above average revenue growth potential trading at below
average price-earnings multiples relative to their two year growth rates.
Favored groups would include financials, computer service companies,
telecommunications, food and healthcare. We also look for the small cap issues
to gain the momentum this sector lost in the fourth quarter.
We appreciate your support of the Monetta Family of Funds and look forward to a
profitable 1996.
Sincerely,
ROBERT S. BACARELLA
President and Founder
Page 1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PERFORMANCE HIGHLIGHTS
<S> <C>
Monetta Fund.......................... 3
Monetta Mid-Cap Equity Fund........... 4
Monetta Large-Cap Equity Fund......... 5
Monetta Balanced Fund................. 6
Monetta Intermediate Bond Fund........ 7
Monetta Government Money Market Fund.. 8
INDEPENDENT AUDITORS REPORT 10
SCHEDULE OF INVESTMENTS
Monetta Fund.......................... 11
Monetta Mid-Cap Equity Fund........... 14
Monetta Large-Cap Equity Fund......... 16
Monetta Balanced Fund................. 18
Monetta Intermediate Bond Fund........ 20
Monetta Government Money Market Fund.. 21
FINANCIAL STATEMENTS
Statements of Assets and Liabilities.. 22
Statements of Operations.............. 24
Statements of Changes in Net Assets... 26
Notes to Financial Statements......... 29
</TABLE>
FOOTNOTE:
Past performance is no guarantee of future results. The principal value and
return on your investment will fluctuate and on redemption may be worth more or
less than your original cost.
References to individual securities are the views of the Adviser at the date of
this report and may change. References are not a recommendation to buy or sell
any security.
Page 2
<PAGE>
MONETTA FUND PERIOD ENDED 12/31/95
Investment Objective: Market
Capitalization Range: Total Net Assets:
Capital Appreciation/Income $50 million - $1 billion $363 million
- -------------------------------------------------------------------------------
PERFORMANCE:
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
Since Incep.
------------
1 Year 5 Years (5/6/86)
------ ------- ------------
<S> <C> <C> <C>
MONETTA FUND 28.0% 14.7% 12.5%
RUSSELL 2500 31.7 21.0 11.9
NASDAQ COMPOSITE* 39.9 23.0 11.0
S &P 500* 37.5 16.6 14.0
</TABLE>
*Source Lipper Analytical Services, Inc.
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) MONETTA FUND RUSSELL 2500 S & P NASDAQ
- -------------------- ------------ ------------ ------- -------
<S> <C> <C> <C> <C>
6/86 $10,100 $10,533 $10,590 $10,130
9/86 9,474 9,505 9,849 8,783
12/86 9,815 9,631 10,400 8,765
3/87 11,297 11,753 12,615 10,834
6/87 11,376 11,823 13,246 10,736
9/87 11,012 12,402 14,121 11,262
12/87 9,966 9,180 10,943 8,402
3/88 10,584 10,651 11,567 9,544
6/88 11,928 11,374 12,331 10,079
9/88 12,202 11,281 12,368 9,928
12/88 12,263 11,266 12,751 9,789
3/89 12,643 12,137 13,656 10,464
6/89 13,655 13,058 14,858 11,228
9/89 14,297 14,012 16,448 12,227
12/89 14,125 14,568 16,793 11,787
3/90 14,888 14,163 16,289 11,316
6/90 16,634 14,721 17,299 12,040
9/90 13,425 11,485 14,929 8,994
12/90 15,735 12,401 16,258 9,785
3/91 18,645 15,559 18,632 12,672
6/91 19,205 15,529 18,576 12,558
9/91 21,797 16,864 19,560 13,964
12/91 24,522 18,192 21,204 15,598
3/92 24,679 18,971 20,673 16,144
6/92 23,100 18,109 21,066 15,127
9/92 23,786 18,604 21,719 15,717
12/92 25,862 21,137 22,827 18,294
3/93 24,147 22,138 23,010 18,642
6/93 24,326 22,602 23,102 19,071
9/93 26,219 24,200 23,702 20,673
12/93 25,991 24,632 24,247 20,962
3/94 25,305 24,086 23,324 20,062
6/94 23,933 23,221 23,415 19,050
9/94 25,618 24,886 23,560 20,624
12/94 24,375 24,360 24,555 20,292
3/95 26,725 26,160 26,945 22,053
6/95 28,572 28,623 29,512 25,189
9/95 32,129 31,374 31,870 28,160
12/95 31,204 32,231 33,764 28,392
</TABLE>
The graph above to the right compares the changes in value of a $10,000
investment in the Monetta Fund, the S & P 500 Composite Index, and the NASDAQ
Composite Index and the Russell 2500 Stock Index. The S & P 500 and the Russell
2500 indices are a broad measure representative of the general market, while the
NASDAQ measures performance of stocks in the over-the-counter market. Please
refer to footnote on the botton of page 2.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION:
<TABLE>
<CAPTION>
<S> <C>
TOP 5 HOLDINGS** % OF NET ASSETS
Genzyme Corp. 3.2%
Glenayre Technologies Inc. 2.6
Clear Channel Communications 2.4
American Oncology Resources 2.3
Reynolds & Reynolds 2.1
----
TOTAL TOP 5 HOLDINGS 12.6%
====
</TABLE>
**excluding short-term investments
- --------------------------------------------------------------------------------
COMMENTARY:
Over the past year the performance of Monetta Fund surged with the overall stock
market advance. The Fund posted a 28% return, its second best annual return
since inception.
Through most of the year, the Fund benefited from its investments in Technology
and Healthcare sectors. The Fund's best performing technology holdings were
Ascend Communications, U.S. Robotics, Altera Corporation and Teradyne Inc. The
healthcare component of the Fund was dominated with those companies that would
benefit from a capitated medical environment. The best performing Fund
securities in this sector were Oxford Health Plans, Physician Sales & Services,
HBO & Co. and Phycor, Inc.
During the year the Fund was very active as securities were sold in accordance
with our sell discipline. Net realized gains totaled approximately $62 million,
which resulted in a three dollar short-term capital gain dividend paid in the
fourth quarter.
As we enter 1996 the economy continues to advance at a moderate pace, however we
are detecting some concerns over consumer spending power. This suggests a more
cautious approach to investing, emphasizing those sectors/companies that will
generate solid earning momentum and accelerating revenue growth. As such, the
Fund is positioned to concentrate on those companies generating strong earning
results such as: Glenayre Technologies, Inc., which manufactures
telecommunication equipment; American Oncology Resources, a leading physician
practice management company focused on oncology; and General Nutrition Company,
which operates a chain of health products stores.
The Fund's above average cash position provides a cushion in the event of a
short-term market sell-off and an opportunity to purchase superior growth
companies at a discount to their growth rates.
Page 3
<PAGE>
<TABLE>
<CAPTION>
MONETTA MID-CAP EQUITY FUND PERIOD ENDED 12/31/95
<S> <C> <C>
Investment Objective: Market
Capitalization Range: Total Net Assets:
Capital Appreciation $1 billion - $5 billion $14.2 million
- -----------------------------------------------------------------------------------------------------------------------------------
PERFORMANCE: AVERAGE ANNUAL TOTAL RETURN
Since Incep.
---------------
1 Year 2 Years (3/1/93)
------ ------- ---------------
MONETTA MID-CAP
EQUITY FUND 24.5% 12.8% 21.2%
S & P 400* 31.0 12.4 13.8
S & P 500* 37.5 18.0 15.4
</TABLE>
*Source Lipper Analytical Services, Inc.
[Performance Graph Appears Here]
<TABLE>
<CAPTION>
Measurement Period MIDCAP S & P
(Fiscal Year Covered) EQUITY FUND 400 INDEX S & P 500 LEHMAN
- ------------------- ----------- --------- --------- ------
<S> <C> <C> <C> <C>
3/1/93 10,000 10,000 10,000 10,007
3/93 11,670 10,220 10,080 10,018
6/93 11,880 10,455 10,120 10,255
9/93 13,120 10,978 10,383 10,486
12/93 13,540 11,274 10,622 10,504
3/94 13,475 10,793 10,218 10,291
6/94 13,109 10,399 10,258 10,229
9/94 13,887 11,103 10,759 10,313
12/94 13,835 10,817 10,757 10,302
3/95 14,835 11,692 11,804 10,754
6/95 16,536 12,723 12,929 11,292
9/95 17,603 13,965 13,955 11,479
12/95 17,233 14,165 14,785 11,883
</TABLE>
The graph above to the right compares the change in value of a $10,000
investment in the Monetta Trust Mid-Cap Equity Fund to the S & P 500 and 400.
The S & P 500 and 400 indices are a broad measure representative of the general
market. Please refer to footnote on the bottom of page 2.
- -------------------------------------------------------------------------------
PORTFOLIO COMPOSITION:
<TABLE>
<CAPTION>
[Pie Chart Appears Here]
TOP 5 HOLDINGS** % OF NET ASSETS
<S> <C>
Paychex 2.8%
American Oncology Resources 2.7
Analog Devices 2.5
Coleman Inc. 2.5
Kohl's Corp. 2.4
------
TOTAL TOP 5 HOLDINGS 12.9%
======
</TABLE>
**excluding short-term investments
- -------------------------------------------------------------------------------
COMMENTARY:
For the one-year period ended December 31, 1995, the Monetta Mid-Cap Equity Fund
posted a 24.5% return. And while past performance is no guarantee of future
results, the Fund continues to do well on a long-term basis, generating an
annualized return, since inception (March 1993) of 21.2%, significantly
outperforming the major stock market indices.
Through much of the year, the Fund was underweighted in the top performing
Technology sector. However, the Fund's weightings in the Industrial and
Financial sectors produced competitive investment returns last year.
The Fund's top performing securities last year were Discreet Logic, Inc.,
Cascade Communication, 3Com Corporation and Analog Devices.
The Fund's financial investments benefited from the declining interest rate
environment as gains were realized on the following issues Money Store,
Beneficial Corporation, and Mercury Finance Corporation.
In addition, the Fund benefited from its investments in a diverse group of
industries. Some of the better performers were Harman International,
Kennametal, Inc. and Value Jet Airlines, Inc.
Looking ahead, the manager believes the Fund's current emphasis in Industrial,
Financial, and Consumer Related sectors should remain intact. Any significant
weakness in the Technology or Healthcare areas would be considered buying
opportunities as the long-term attractiveness of these industries is appealing.
<PAGE>
MONETTA LARGE-CAP EQUITY FUND PERIOD ENDED 12/31/95
Investment Objective: Market
Capitalization Range: Total Net Assets:
Capital Appreciation $5 billion + $1.1 million
- ------------------------------------------------------------------------------
PERFORMANCE:
TOTAL RETURN QUARTER ENDING
Since Incep. (9/1/95) 12/31/95
--------------------- --------------
MONETTA LARGE-CAP EQUITY FUND 5.7% 5.8%
S & P 500* 10.5 6.0
*Source Lipper Analytical Services, Inc.
The S & P 500 is a broad measure representative of the general market. Please
refer to footnote on the bottom of page 2.
- ------------------------------------------------------------------------------
PORTFOLIO COMPOSITION:
[Pie chart appears here showing % of holdings.]
TOP 5 HOLDINGS** % OF NET ASSETS
Amgen, Inc. 4.4%
United Technologies 4.4
General Motors Corp. - Class E 4.4
Norwest Corp. 4.3
Worldcom Inc. 3.9
-----
TOTAL TOP 5 HOLDINGS 21.4%
=====
**excluding short-term investments
- ------------------------------------------------------------------------------
COMMENTARY:
Monetta Large-Cap Equity Fund was launched on September 1, 1995. From its
inception through December 31, 1995, the Fund posted a 5.7% return.
The Fund has benefited from its holdings in the Technology and Basic Industry
sectors. The Fund's best performing issues were Computer Associates, Amgen Inc.,
First Interstate Bank and Pfizer, Inc.
At year-end approximately 90% of the Fund was invested in established growth
companies. Technology continues to be the dominate theme for the Fund,
especially the semiconductor and telecommunication sectors.
At this point, it appears the economy is poised for modest growth. With
inflationary risk receding, the previous degree of restrictive Federal Reserve
monetary policy is no longer needed. This suggests a stable interest rate
environment which should continue to benefit the Financial and Industrial
sectors of the market.
Page 5
<PAGE>
MONETTA BALANCED FUND PERIOD ENDED 12/31/95
Investment Objective: Market Average
Capitalization Range: Maturity: Total Net Assets:
Capital Appreciation/Income $50 million + 4.9 years $410 thousand
- --------------------------------------------------------------------------------
PERFORMANCE:
TOTAL RETURN QUARTER ENDING
Since Incep. (9/1/95) 12/31/95
--------------------- --------
MONETTA BALANCED FUND 6.2% 7.2%
S & P 500* 10.5 6.0
LEHMAN GOVT/CORP BOND INDEX* 7.3 4.7
*Source Lipper Analytical Services, Inc.
The S & P 500 is broad measure representative of the general market, while the
Lehman Government/Corporate Bond Index measures that specific segment of the
bond market. Please refer to footnote on the bottom of page 2.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION:
[Pie chart appears here showing % of holdings.]
TOP 5 HOLDINGS % OF NET ASSETS
U.S. Treasury Bill
Due 1/25/96 24.3%
U.S. Treasury Notes
Due 10/31/00 9.9
First Tennessee Nat'l 3.0
Intel Corp. 2.8
Greenpoint Financial Corp. 2.6
-----
TOTAL TOP 5 HOLDINGS 42.6%
=====
- --------------------------------------------------------------------------------
COMMENTARY:
Monetta Balanced Fund was launched on September 1, 1995. Since inception through
year-end the Fund appreciated 6.2%.
At year-end approximately 64% of the Fund was invested in common stocks and 36%
in the fixed income markets.
This is a conservatively managed fund as the fixed income sector are invested
primarily in short-term Treasury Bills. The common stock portion of the Fund is
invested in solid growth stocks representing all market capitalization ranges.
Approximately half of the stock portfolio is invested in the larger
capitalization growth companies with the balance split between mid-cap
and small-cap issues.
The Fund will continue to maintain an asset composition in line with its primary
investment objective of capital appreciation and income.
During 1996, the Fund will continue to seek growth companies with the potential
of generating upside earning surprises. The average maturity of the fixed income
portfolio is not expected to change materially, as long as interest rates remain
in a narrow yield range.
Page 6
<PAGE>
- ------------------------------
MONETTA INTERMEDIATE BOND FUND PERIOD ENDED 12/31/95
- ------------------------------
Investment Objective: 30-Day SEC Average
Yield: Maturity: Total Net Assets:
Income 5.95% 5.5 Years $3.6 million
- -------------------------------------------------------------------------------
PERFORMANCE: AVERAGE ANNUAL TOTAL RETURN
Since Incep.
------------
1 Year 2 Years (3/5/93)
------ ------- --------
MONETTA INTERMEDIATE
BOND FUND 14.8% 6.6% 7.6%
LEHMAN GOV/CORP
INTERMEDIATE
BOND INDEX* 15.3 6.4 6.3
*Source Lipper Analytical Services, Inc.
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
INTERMEDIATE
BOND S & P
DATE FUND S & P 400 500 LEHMAN
- ---- ------------ --------- ----- ------
<S> <C> <C> <C> <C>
X
3/1/93 10,000 10,000 10,000 10,007
3/93 10,000 10,220 10,080 10,028
6/93 10,399 10,455 10,120 10,255
9/93 10,732 10,978 10,383 10,486
12/93 10,817 11,274 10,622 10,504
3/94 10,585 10,793 10,218 10,291
6/94 10,494 10,399 10,258 10,229
9/94 10,613 11,103 10,759 10,313
12/94 10,705 10,817 10,757 10,302
3/95 11,270 11,692 11,804 10,754
6/95 11,866 12,723 12,929 11,292
9/95 12,046 13,965 13,955 11,479
12/95 12,282 14,165 14,785 11,883
</TABLE>
The graph above to the right compares the change in value of a $10,000
investment in the Monetta Trust Intermediate Bond Fund to the Lehman
Government/Corporate Intermediate Bond Index. The Lehman Government/Corporate
Intermediate Bond Index measures that specific segment of the bond market.
Please refer to footnote on the bottom of page 2.
- -------------------------------------------------------------------------------
PORTFOLIO COMPOSITION:
MATURITY PROFILE
1 Year or Less 15.7%
1-3 Years 5.9
[Pie Chart appears here 4-6 Years 31.8
showing % of holdings.] 7-10 Years 45.9
Over 10 Years 0.6
-----
100.0%
=====
- -------------------------------------------------------------------------------
COMMENTARY:
For the one-year period ended December 31, 1995 the Monetta Intermediate Bond
Fund was up 14.8%, slightly below the 15.3% return of the Lehman
Government/Corporate Intermediate Bond Index.
The Fund was managed conservatively during the year as maturities were shortened
during market rallies and assets were reinvested in the U.S. Treasury market.
The average maturity of the Fund during the year was approximately four years.
At year-end over half of the Fund was invested in Treasury Notes and Government
Agency issues with a weighted maturity of 7.1 years. Corporate Bonds,
representing 31% of the Fund, generally outperformed the Treasury securities
with similar maturities as investors worries over a possible recession
diminished.
In the coming months, we do not anticipate any major changes in the Fund's asset
mix or average duration. Based on the assumption of moderate economic growth, we
anticipate a relatively stable interest rate environment during 1996.
Page 7
<PAGE>
MONETTA GOVERNMENT MONEY MARKET FUND PERIOD ENDED 12/31/95
Investment Objective: 7-Day Yield: Average Days Total Net
to Maturity: Assets:
Income and Capital Preservation 5.38% 78 Days $4.4 million
- -------------------------------------------------------------------------------
PERFORMANCE:
AVERAGE ANNUAL TOTAL RETURN
1 Year 2 Years Since Incep. (3/1/93)
------ ------- ---------------------
MONETTA GOVERNMENT MONEY MARKET FUND 5.9%** 5.0%** 4.2%**
LIPPER U.S. GOV'T MONEY MARKET
FUNDS AVG.* 5.3 4.4 3.9
*Source Lipper Analytical Services, Inc.
**Total returns are net of advisory fees waived and voluntary absorption of the
Funds' operating expenses by the Advisor. Please refer to footnote on the
bottom of page 34.
An investment in the Monetta Government Money Market Fund is neither insured or
guaranteed by the U.S. Government. There can be no assurance that the Fund will
be able to maintain a stable $1.00 per share net asset value. Please refer to
footnote on the bottom of page 2.
- -------------------------------------------------------------------------------
PORTFOLIO COMPOSITION:
[Pie chart appears here showing % of holdings.]
ALLOCATION % OF NET ASSETS
U.S. Treasuries 53.4%
Government Agencies 46.3
Total Investments 99.9
Other Assets & Liabilities 0.1
------
TOTAL 100.0%
======
- -------------------------------------------------------------------------------
COMMENTARY:
According to Lipper Analytical Services, Inc., Monetta Government Money Market
Fund ranked second for 1995 in its category of 105 Government Money Market Funds
with a one year return of 5.9%.
Throughout most of the year we maintained a bullish outlook. This was due to
economic growth, low inflation and declining interest rates. As a result, the
Fund average maturity during the year was in excess of 70 days, capitalizing
on declining interest rates.
As of December 31, 1995, the Fund's 7-day yield was 5.38% down from the third
quarter yield of 5.75%. Approximately 53% of the Fund's assets are invested
in U.S. Treasury securities, with the balance in government agencies.
We believe the Federal Reserve Board will be accommodative in 1996 and therefore
we expect a relatively stable interest rate environment next year.
Page 8
<PAGE>
This page intentionally left blank
Page 9
<PAGE>
Independent Auditors' Report
The Board of Directors and Trustees and the Shareholders of
Monetta Fund, Inc. and Monetta Trust:
We have audited the accompanying statements of assets and liabilities of Monetta
Fund, Inc. and Monetta Trust (comprising, respectively, the Mid-Cap Equity Fund,
Large-Cap Equity Fund, Balanced Fund, Intermediate Bond Fund and Government
Money Market Fund), collectively referred to as the "Funds", including the
schedules of investments, as of December 31, 1995, and the related statements of
operations for the period then ended, the statements of changes in net assets
for each of the periods presented in the two-year period then ended, and the
financial highlights for each of the periods presented in the ten-year period
then ended. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned, as of
December 31, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Monetta Fund, Inc. and each of the respective funds constituting the Monetta
Trust as of December 31, 1995, the results of their operations for the period
then ended, the changes in their net assets for each of the periods presented in
the two-year period then ended, and the financial highlights for each of the
periods presented in the ten-year period then ended, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
January 16, 1996
Page 10
<PAGE>
Schedule of Investments
December 31, 1995
================================================================================
------------------------
MONETTA FUND
------------------------
<TABLE>
<CAPTION>
Quoted
Shares or Market
Principal Value
Amount (In Thousands)
- --------- --------------
<S> <C>
COMMON STOCKS -76.4%
- ------------------------------------------------------------------
CONSUMER RELATED - 19.5% $70,634
- ------------------------------------------------------------------
BROADCASTING/CABLE TV - 4.2%
*200,000 Clear Channel
Communications $ 8,825
*220,000 Lin Television Corp 6,545
-------
15,370
-------
MISCELLANEOUS SERVICES - 2.8%
*235,000 ATC Environmental 2,762
*1,250,000 Aura Systems Inc. 7,031
-------
9,793
-------
RESTAURANTS & LODGING - 2.5%
*225,000 DAKA International, Inc. 6,187
*116,000 IHOP Corp. 3,016
-------
9,203
-------
RETAIL TRADES - 10.0%
*100,000 CDW Computer Centers 4,050
*300,000 General Nutrition Cos., Inc. 6,900
*100,000 Nautica 4,375
*200,000 Officemax, Inc. 4,475
*150,000 Proffitt's, Inc. 3,938
120,000 St. John's Knits Inc. 6,375
*180,000 Starbucks Corp. 3,780
*100,000 Sunglass Hut International 2,375
-------
36,268
-------
</TABLE>
<TABLE>
<CAPTION>
Quoted
Shares or Market
Principal Value
Amount (In Thousands)
- --------- --------------
<S> <C>
- ------------------------------------------------------------------
FINANCIAL RELATED - 13.3% $48,268
- ------------------------------------------------------------------
FINANCIAL SERVICES - 13.3%
*100,000 American Travelers Corp. 2,812
175,000 First Security Corp. 6,738
150,000 Firstar Corp. 5,944
*200,000 Glendale Federal Bank 3,500
375,000 Money Store 5,859
*210,000 PC Quote Inc. 3,334
*100,000 PMT Services, Inc. 3,025
100,000 Paychex Inc. 4,987
200,000 Reynolds & Reynolds 7,775
*150,000 Verifone Inc. 4,294
-------
48,268
-------
- ------------------------------------------------------------------
MEDICAL RELATED - 20.9% $75,825
- ------------------------------------------------------------------
PHARMACEUTICALS - 5.5%
*185,000 Genzyme Corp. $11,539
*400,003 ICN Pharmaceuticals, Inc. 7,700
*100,000 Quidel Corp. 713
-------
19,952
-------
PHYSICIAN SERVICES - 9.3%
*150,000 American Medical
Response 4,875
*175,000 American Oncology
Resources 8,509
*80,000 Compdent Corp. 3,320
*71,700 IDX Systems Corp. 2,492
*225,000 Occusystems, Inc. 4,500
*150,000 Phamis, Inc. 4,462
</TABLE>
Page 11
<PAGE>
Schedule of Investments
December 31, 1995
================================================================================
------------------------
MONETTA FUND (CONTINUED)
------------------------
<TABLE>
<CAPTION>
Quoted
Shares or Market
Principal Value
Amount (In Thousands)
- --------- --------------
<S> <C>
*290,000 Sheriden Healthcare 3,516
*50,000 United Dental Care Inc. 2,063
-------
33,737
-------
MEDICAL SUPPLY - 6.1%
*77,000 ICU Medical Inc. 1,309
*225,000 Inamed Corp. 1,997
*185,000 Laser Vision Centers Inc. 2,683
120,000 Mentor Corp. 2,760
*150,000 Patterson Dental Co. 4,050
150,000 Physician Sales & Services 4,275
*150,000 Summit Technology Inc. 5,062
-------
22,136
-------
- ------------------------------------------------------------------
TECHNOLOGY RELATED - 22.7% $82,345
- ------------------------------------------------------------------
SEMICONDUCTORS - 6.3%
*120,000 Altera Corporation $ 5,970
*150,000 Cypress Semiconductor
Corp. 1,912
*160,000 Integrated Circuit Systems 1,980
*155,000 Kulicke & Soffa Industries 3,604
*300,000 S3, Inc. 5,288
*100,000 Sierra Semiconductor Corp. 1,387
*100,000 Ultra Tech. Stepper 2,575
-------
22,716
-------
COMPUTER SOFTWARE - 3.2%
*100,000 Davidson & Associates 2,200
*166,500 Maxis Inc. 6,327
*96,700 Meta Group 2,961
-------
11,488
-------
</TABLE>
<TABLE>
<CAPTION>
Quoted
Shares or Market
Principal Value
Amount (In Thousands)
- --------- --------------
<S> <C>
COMPUTERS & OFFICE EQUIPMENT - 4.4%
*100,000 FTP Software 2,900
*105,000 Hutchinson Tech 4,436
*150,000 Informix Corp. 4,500
*18,800 Natural Microsystems Corp. 573
*150,000 Read-Rite Corp. 3,488
-------
15,897
-------
TELECOMMUNICATIONS SERVICES & EQUIP. - 8.9%
*100,000 Anicom Inc. 1,063
*70,000 Ascend
Communications, Inc. 5,679
*150,000 Glenayre Technologies, Inc. 9,337
*100,000 Madge Networks 4,475
*70,500 Shiva Corp. 5,129
*145,000 Sync Research 6,561
-------
32,244
-------
TOTAL COMMON STOCKS
(COST $267,667)(a) 277,072
VARIABLE DEMAND NOTES - 0.5%
89,800 American Family - 5.49% 90
1,100,000 Eli Lily - 5.32% 1,100
17,700 General Mills - 5.53% 18
370,200 Sara Lee - 5.47% 370
170,500 Southwestern Bell - 5.72% 170
-------
TOTAL DEMAND NOTES 1,748
-------
</TABLE>
Page 12
<PAGE>
Schedule of Investments
December 31, 1995
================================================================================
------------------------
MONETTA FUND (CONTINUED)
------------------------
<TABLE>
<CAPTION>
Quoted
Shares or Market
Principal Value
Amount (In Thousands)
- --------- --------------
<S> <C>
COMMERCIAL PAPER - 21.9%
7,700,000 AT & T Corp. - 5.68%
Due 01/02/96 7,699
10,500,000 Philip Morris - 5.60%
Due 01/03/96 10,497
3,000,000 Philip Morris - 5.60%
Due 01/04/96 2,999
12,000,000 GE Capital - 5.72%
Due 01/05/96 11,992
11,000,000 GE Capital - 5.72%
Due 01/08/96 10,988
10,000,000 Cargil - 5.72%
Due 01/09/96 9,987
5,000,000 AT & T Corp. - 5.72%
Due 01/10/96 4,993
5,000,000 Cargil Inc. - 5.75%
Due 01/11/96 4,992
5,000,000 Duke Power - 5.78%
Due 01/12/96 4,991
10,500,000 Merrill Lynch - 5.70%
Due 01/16/96 10,475
--------
TOTAL COMMERCIAL PAPER 79,613
--------
</TABLE>
<TABLE>
<CAPTION>
Quoted
Market
Value
(In Thousands)
--------------
<S> <C>
TOTAL SHORT-TERM INVESTMENTS 81,361
--------
TOTAL INVESTMENTS - 98.8%
(COST $349,028)(a) 358,433
--------
OTHER ASSETS LESS LIABILITIES - 1.2% 4,287
--------
NET ASSETS - 100% $362,720
========
</TABLE>
(a) Cost is identical for book and tax purposes; the aggregate gross unrealized
appreciation is $27,729 and aggregate gross unrealized depreciation is $18,324,
resulting in net unrealized appreciation of $9,405 (in thousands).
* Non-income producing security.
Page 13
<PAGE>
Schedule of Investments
December 31, 1995
================================================================================
-------------------------------
MONETTA MID-CAP EQUITY FUND
-------------------------------
<TABLE>
<CAPTION>
Quoted
Shares or Market
Principal Value
Amount (In Thousands)
- --------- --------------
<S> <C>
COMMON STOCKS - 91.2%
- ------------------------------------------------------------------
CONSUMER RELATED - 14.7% $2,090
- ------------------------------------------------------------------
RECREATION & ENTERTAINMENT - 3.3%
*10,000 Coleman, Inc. $ 351
4,000 Hasbro Inc. 124
-------
475
-------
FOOD PROCESSING - 5.5%
15,000 Flowers Industries, Inc. 182
*10,000 Smithfield Foods 317
12,000 Whitman Co. 279
-------
778
-------
RETAIL TRADES - 5.9%
*14,000 General Nutrition 322
*6,600 Kohl's Corp. 347
*8,000 Starbucks Corp. 168
-------
837
-------
- ------------------------------------------------------------------
FINANCIAL RELATED - 24.0% $3,411
- ------------------------------------------------------------------
FINANCIAL SERVICES - 24.0%
4,300 AON Corp. $ 214
*15,100 Boston Fed Bancorp Inc. 177
3,500 Comerica, Inc. 140
5,000 Compass Bancorp 165
3,500 Crestar Financial Corp. 207
*15,000 Dime Bancorp Inc. 174
2,700 Fifth Third Bancorp 198
5,000 First Tennessee National 303
</TABLE>
<TABLE>
<CAPTION>
Quoted
Shares or Market
Principal Value
Amount (In Thousands)
- --------- --------------
<S> <C>
12,000 Green Tree Financial Corp. 317
10,000 Greenpoint Financial Corp. 267
12,000 Mercury Finance Co. 159
5,000 PHH Corp. 234
8,000 Paychex Inc. 399
10,000 Roosevelt Financial Group 194
10,000 Southern National Corp. 263
-------
3,411
-------
- ------------------------------------------------------------------
INDUSTRIAL RELATED - 37.8% $5,374
- ------------------------------------------------------------------
INDUSTRIAL/ELECTRONICS PRODUCTS - 21.7%
18,000 Ametek, Inc. 338
14,000 Albany International Corp. -
Class A 254
10,000 Applied Power Inc.
Class A 300
3,000 Consolidated Papers Inc. 168
10,000 Danaher Corp. 318
*10,000 Lydall, Inc. 228
8,000 Millipore Corp. 329
2,625 Molex, Inc. 83
6,000 Sigma Aldrich Corp. 297
14,400 Tri Mas Corp. 272
3,000 Williamette Inds. 169
7,000 York International Corp. 329
-------
3,085
-------
RETAIL MANUFACTURERS/DISTRIBUTION - 8.2%
6,000 Alco Standard Corp. 274
6,000 Avery Dennison Corp 301
8,000 Black & Decker Corp 282
12,000 Newell Co. 310
-------
1,167
-------
</TABLE>
Page 14
<PAGE>
Schedule of Investments
December 31, 1995
================================================================================
-------------------------------
MONETTA MID-CAP EQUITY FUND
(CONTINUED)
-------------------------------
<TABLE>
<CAPTION>
Quoted
Shares or Market
Principal Value
Amount (In Thousands)
- --------- --------------
<S> <C>
TRANSPORTATION - 1.8%
*18,000 Knight Transportation 252
-------
ENERGY RESOURCES & SERVICES - 1.8%
4,000 Kerr McGee Corp. 254
-------
HOUSING - 2.1%
8,000 Oakwood Homes 307
-------
MINING & MINERAL RELATED - 2.2%
5,000 Vigoro Corp. 309
-------
- ------------------------------------------------------------------
MEDICAL RELATED - 5.1% $728
- ------------------------------------------------------------------
PHARMACEUTICALS - 2.4%
*7,500 Forest Laboratories $ 339
-------
PHYSICIAN SERVICES - 2.7%
*8,000 American Oncology
Resources 389
-------
- ------------------------------------------------------------------
TECHNOLOGY RELATED - 9.6% $1,365
- ------------------------------------------------------------------
SEMICONDUCTORS - 4.3%
*10,000 Analog Devices 354
6,000 Watkins-Johnson Co. 262
-------
616
-------
</TABLE>
<TABLE>
<CAPTION>
Quoted
Shares or Market
Principal Value
Amount (In Thousands)
- --------- --------------
<S> <C>
COMPUTERS & OFFICE EQUIPMENT - 0.7%
*4,000 Read-Rite Corp. 92
-------
TELECOMMUNICATIONS SERVICES & EQUIP. - 4.6%
*4,500 Bay Networks Inc. $185
*5,000 DSC Communications Corp. 185
*3,000 Tellabs, Inc. 111
*5,000 Worldcom, Inc. 176
-------
657
-------
TOTAL COMMON STOCKS
(COST $12,675)(a) 12,968
-------
VARIABLE DEMAND NOTES - 17.2%
521,800 Eli Lilly - 5.32% 522
468,800 General Mills - 5.58% 469
373,400 Sara Lee - 5.47% 373
585,300 Southwestern Bell - 5.72% 585
502,600 Warner Lambert - 5.46% 503
-------
TOTAL DEMAND NOTES 2,452
-------
TOTAL INVESTMENTS - 108.4%
(COST $15,127)(a) 15,420
-------
OTHER ASSETS LESS LIABILITIES - (8.4%) (1,204)
-------
NET ASSETS - 100% $14,216
=======
</TABLE>
(a) Cost is identical for book and tax purposes; the aggregate gross unrealized
appreciation is $615 and aggregate gross unrealized depreciation is $322,
resulting in net unrealized appreciation of $293 (in thousands).
*Non-income producing security
Page 15
<PAGE>
Schedule of Investments
December 31, 1995
================================================================================
-------------------------------
MONETTA LARGE-CAP EQUITY
FUND
-------------------------------
<TABLE>
<CAPTION>
Quoted
Shares or Market
Principal Value
Amount (In Thousands)
- --------- --------------
<S> <C>
COMMON STOCKS - 89.8%
- ------------------------------------------------------------------
CONSUMER RELATED - 7.7% $83
- ------------------------------------------------------------------
FOOD PROCESSING - 4.3%
400 Philip Morris $36
300 Seagram Co., Ltd. 10
-------
46
-------
RETAIL MANUFACTURERS/DISTRIBUTORS - 3.4%
800 Alco Standard Corp. 37
-------
- ------------------------------------------------------------------
FINANCIAL RELATED - 12.5% $134
- ------------------------------------------------------------------
FINANCIAL SERVICES - 12.5%
400 American Int'l Group 37
300 Federal Nat'l Mortgage 37
100 First Interstate Bank 14
1,400 Norwest Corp. 46
-------
134
-------
- ------------------------------------------------------------------
INDUSTRIAL RELATED - 19.3% $207
- ------------------------------------------------------------------
INDUSTRIAL/ELECTRONICS PRODUCTS - 19.3%
800 Allied Signal, Inc. 38
500 Boeing Co. 39
600 Eastman Kodak 40
800 Rockwell Int'l. 42
500 United Technologies 48
-------
207
-------
</TABLE>
<TABLE>
<CAPTION>
Quoted
Shares or Market
Principal Value
Amount (In Thousands)
- --------- --------------
<S> <C>
- ------------------------------------------------------------------
MEDICAL RELATED - 18.6% $199
- ------------------------------------------------------------------
PHARMACEUTICALS - 14.7%
200 American Home Products $ 19
*800 Amgen, Inc. 48
200 Bristol-Myers Squibb Co. 17
200 Eli Lilly & Co. 11
200 Johnson & Johnson Co. 17
200 Pfizer, Inc. 13
600 Schering Plough 33
-------
158
-------
PHYSICIAN SERVICES - 3.8%
800 Columbia Healthcare 41
-------
- ------------------------------------------------------------------
TECHNOLOGY RELATED - 31.7% $340
- ------------------------------------------------------------------
SEMICONDUCTORS - 4.3%
500 Intel Corp. 28
*700 Teradyne, Inc. 18
-------
46
-------
COMPUTERS & OFFICE EQUIPMENT - 3.3%
200 Hewlett Packard 17
200 Int'l Business Machines 18
-------
35
-------
COMPUTER SOFTWARE - 17.7%
*100 Arbor Software Corp. $ 4
*400 Cisco Systems, Inc. 30
400 Computer Associates 23
900 General Motors Corp. -
Class E 47
</TABLE>
Page 16
<PAGE>
Schedule of Investments
December 31, 1995
================================================================================
------------------------
MONETTA LARGE-CAP EQUITY
FUND (CONTINUED)
------------------------
<TABLE>
<CAPTION>
<S> <C>
Quoted
Shares or Market
Principal Value
Amount (In Thousands)
- --------- --------------
*400 Microsoft 35
*100 Network Appliance Inc. 4
*700 Oracle Systems 30
*400 People Soft 17
------
190
------
Telecommunications Services & Equip. - 6.4%
*600 DSC Communications Corp. 22
*100 Sync Research 5
*1,200 Worldcom Inc. 42
------
69
------
Total Common Stocks
(Cost $900)(a) 963
------
Variable Demand Notes - 20.6%
50,400 American Family - 5.49% 50
49,000 Eli Lilly - 5.32% 49
4,500 General Mills - 5.58% 5
25,000 Pitney Bowes - 5.49% 25
45,200 Sara Lee - 5.47% 45
30,900 Southwestern Bell - 5.72% 31
15,400 Warner Lambert - 5.46% 15
------
Total Demand Notes 220
------
Total Investments - 110.4%
(Cost $1,120)(a) 1,183
------
Other Assets Less Liabilities - (10.4)% (111)
------
Net Assets - 100% $1,072
======
</TABLE>
(a) Cost is identical for book and tax purposes; the aggregate gross unrealized
appreciation is $72 and aggregate gross unrealized depreciation is $9, resulting
in net unrealized appreciation of $63 (in thousands).
* Non-income producing security.
Page 17
<PAGE>
Schedule of Investments
December 31, 1995
================================================================================
-----------------------------
MONETTA BALANCED FUND
-----------------------------
<TABLE>
<CAPTION>
Quoted
Shares or Market
Principal Value
Amount (In Thousands)
- --------- --------------
<S> <C>
COMMON STOCKS - 64.4%
- ---------------------------------------------------------
Consumer Related - 3.9% $16
- ---------------------------------------------------------
Food Processing - 0.7%
*100 Boston Beer Co. - Class A $ 3
---
Retail Trades - 3.2%
*400 General Nutrition Co. 9
*200 Starbucks Corp. 4
---
13
---
- ---------------------------------------------------------
Financial - 18.5% $76
- ---------------------------------------------------------
Financial Services - 18.5%
100 American Int'l Group $ 9
*400 Bostonfed Bancorp Inc. 5
*600 Dime Bancorp Inc. 7
200 First Tennessee Nat'l 12
300 Green Tree Financial Corp. 8
400 Greenpoint Financial Corp. 11
500 Mercury Finance Co. 6
200 Paychex Inc. 10
400 Roosevelt Fin'l Group Inc. 8
---
76
---
</TABLE>
<TABLE>
<CAPTION>
Quoted
Shares or Market
Principal Value
Amount (In Thousands)
- --------- --------------
<S> <C>
- ---------------------------------------------------------
Industrial - 12.4% $51
- ---------------------------------------------------------
Energy Resources & Services - 1.5%
100 Kerr McGee Corp. 6
---
Housing - 1.0%
100 Oakwood Homes 4
---
Industrial/Electronics Products - 3.6%
100 Allied Signal, Inc. 5
100 United Technologies 10
---
15
---
Retail Manufacturers/Distribution - 6.3%
200 Alco Standard Corp. 9
200 Avery Dennison Corp. 10
200 Black & Decker Corp. 7
---
26
---
- ---------------------------------------------------------
Medical - 10.1% $41
- ---------------------------------------------------------
Pharmaceuticals - 4.9%
*100 Amgen, Inc. 6
100 Johnson & Johnson Co. 9
100 Schering Plough 5
---
20
---
Physician Services - 5.2%
*200 American Oncology
Resources 10
100 Columbia Healthcare 5
*100 Henry Schein Inc. 3
*100 IDX Systems Corp. 3
---
21
---
</TABLE>
Page 18
<PAGE>
Schedule of Investments
December 31, 1995
================================================================================
-----------------------------
MONETTA BALANCED FUND
(CONTINUED)
-----------------------------
<TABLE>
<CAPTION>
Quoted
Shares or Market
Principal Value
Amount (In Thousands)
- --------- --------------
<S> <C>
- -----------------------------------------------------------
Technology - 19.5% $80
- -----------------------------------------------------------
Semiconductors - 2.7%
200 Intel Corp. 11
---
Computers & Office Equipment - 4.4%
100 Hewlett Packard $ 9
100 Int'l Business Machines 9
---
18
---
Computer Software - 7.8%
*100 Arbor Software Corp. 5
*100 Corestaff Inc. 4
100 General Motors Corp. -
Class E 5
*100 Meta Group 3
*100 Metatools Inc. 2
*100 Microsoft 9
*100 Network Appliance Inc. 4
---
32
---
Telecommunication Services & Equip. - 4.6%
*100 Bay Networks Inc. 4
*100 Sync Research 4
300 Worldcom Inc. 11
---
19
---
</TABLE>
<TABLE>
<CAPTION>
Shares or Quoted
Principal Market
Amount Value
(In Thousands) (In Thousands)
- -------------- --------------
<S> <C>
Total Common Stocks
(Cost $243)(a) 264
----
U.S. Treasury Bills - 24.4%
100,000 Due 01/25/96 100
----
U.S. Treasury Notes - 9.8%
40,000 5.75% Due 10/31/00 40
----
Variable Demand Notes - 9.0%
9,900 Eli Lilly - 5.32% 10
5,900 General Mills - 5.58% 6
8,400 Sara Lee - 5.47% 8
12,600 Southwestern Bell - 5.72% 13
----
Total Demand Notes 37
----
Total Investments - 107.6%
(Cost $420)(a) 441
----
Other Assets Less
Liabilities - (7.6%) (31)
----
Net Assets - 100% $410
====
</TABLE>
(a) Cost is identical for book and tax purposes; the aggregate gross unrealized
appreciation is $26 and aggregate gross unrealized depreciation is $5, resulting
in net unrealized appreciation of $21 (in thousands).
*Non-income producing security.
Page 19
<PAGE>
SCHEDULE OF INVESTMENTS
December 31, 1995
================================================================================
--------------------------
MONETTA INTERMEDIATE
BOND FUND
--------------------------
<TABLE>
<CAPTION>
Quoted
Shares or Market
Principal Value
Amount (In Thousands)
- --------- --------------
<S> <C>
TREASURY NOTES - 46.5%
100,000 7.00% Due 04/15/99 105
100,000 6.87% Due 07/31/99 105
100,000 7.12% Due 09/30/99 106
200,000 5.50% Due 04/15/00 202
100,000 7.50% Due 11/15/01 110
200,000 6.37% Due 08/15/02 210
200,000 5.75% Due 08/15/03 203
200,000 5.87% Due 02/15/04 204
200,000 6.50% Due 05/15/05 213
200,000 6.50% Due 08/15/05 213
-------
1,671
-------
GOVERNMENT AGENCY - 1.2%
40,000 Sheboygan, WI TIF#6
8.25% Due 03/15/03 43
-------
CORPORATE BONDS - 30.9%
100,000 Delta Airlines, 7.73%
Due 05/14/97 102
50,000 American Airlines, 8.70%
Due 01/15/98 53
50,000 Salomon, Inc., 9.37%
Due 04/15/98 53
100,000 Kroger Co., 9.00%
Due 08/15/99 102
100,000 Chase Manhattan Corp. 8.80%
Due 02/01/00 103
50,000 ADT Operations, 8.25%
Due 08/01/00 53
50,000 American Standard, 9.87%
Due 06/01/01 54
100,000 Harrah's Jazz, 14.25%
Due 11/15/01(b) 29
100,000 Albany Int'l, Corp., 5.25%
Due 03/15/02 90
50,000 Dayton-Hudson, 9.75%
Due 07/01/02 59
100,000 IBM Corp., 7.25%,
Due 11/01/02 107
100,000 RJR Nabisco, Inc., 8.62%,
Due 12/01/02 104
100,000 Webb, Del E., 9.75%,
Due 03/01/03 103
100,000 Salomon, Inc., 6.75%,
Due 01/15/06 98
-------
1,110
-------
FEDERAL HOME BANK LOAN - 2.8%
100,000 6.44% Due 11/28/05 100
-------
MORTGAGE OBLIGATIONS - 0.6%
21,177 GNMA, 8.50%, Due 07/15/21 22
-------
CLOSED-END BOND FUND - 1.0%
4,500 Putnam Master Income Trust 36
-------
DEMAND NOTES - 15.4%
84,700 Eli Lilly - 5.32% 85
132,300 General Mills - 5.58% 132
83,300 Pitney Bowes - 5.49% 83
125,000 Sara Lee - 5.47% 125
125,900 Southwest Bell - 5.72% 126
-----
551
-----
TOTAL INVESTMENTS - 98.4%
(COST: $3,542)(a)
3,533
-------
OTHER ASSETS LESS LIABILITIES - 1.6% 56
--------
NET ASSETS - 100% $3,589
========
</TABLE>
(a) Cost is identical for book and tax purposes, the aggregate gross unrealized
appreciation is $80 and aggregate gross unrealized depreciation is $89,
resulting in net unrealized depreciation of $9 (in thousands).
(b) Harrah's Jazz filed a voluntary bankruptcy petition under Chapter 11 on
November 22. Therefore the Fund ceased accruing interest on that date.
Harrah's Jazz is required to submit a petition for reorganization by March 21,
1996.
Page 20
<PAGE>
SCHEDULE OF INVESTMENTS
December 31, 1995
================================================================================
------------------------
MONETTA GOVERNMENT
MONEY MARKET FUND
------------------------
<TABLE>
<CAPTION>
Shares or Value
Principal (In Thousands)
Amount ------------
- ------------
<S> <C>
GOVERNMENT OBLIGATIONS - 53.4%
U.S. TREASURY BILLS - 53.4%
760,000 Due 01/11/96 $ 759
130,000 Due 03/21/96 129
1,260,000 Due 04/04/96 1,243
225,000 Due 11/14/96 215
-----
2,346
-----
GOVERNMENT AGENCIES - 46.6%
FEDERAL FARM CREDIT DISCOUNT NOTE - 0.9%
40,000 5.55% Due 03/26/96 39
-----
FEDERAL AGRICULTURE MORTGAGE CORP
DISCOUNT NOTE - 3.1%
135,000 5.55% Due 01/03/96 135
-----
FEDERAL HOME LOAN BANK
DISCOUNT NOTES - 17.4%
160,000 5.54% Due 01/24/96 159
240,000 5.50% Due 03/01/96 238
135,000 5.39% Due 05/01/96 133
240,000 5.46% Due 07/26/96 232
----
762
----
FEDERAL NATIONAL MORTGAGE ASSOCIATION
DISCOUNT NOTES - 13.9%
495,000 5.67% Due 01/12/96 494
70,000 5.44% Due 02/20/96 69
50,000 5.52% Due 07/15/96 49
----
612
----
FEDERAL HOME LOAN MORTGAGE
CORP DISCOUNT NOTE - 11.2%
500,000 5.47% Due 03/07/96 495
----
TOTAL INVESTMENTS - 99.9% (a) 4,389
-----
OTHER ASSETS LESS LIABILITIES - 0.1% 4
-----
NET ASSETS - 100% $4,393
======
</TABLE>
(a) Cost is identical for book and tax purposes.
Page 21
<PAGE>
Statements of Assets and Liabilities
December 31, 1995
(In Thousands)
<TABLE>
<CAPTION>
=========================================================================================
Monetta Mid-Cap
Fund Equity Fund
----------------------
<S> <C> <C>
Assets
Investments in common stocks at market value (cost:
$349,028; $15,127; $1,120; $420; $3,542; $4,389)(Note 1) $358,433 $15,420
Cash 0 10
Interest and dividends receivable 27 18
Receivable for securities sold 13,841 247
- -----------------------------------------------------------------------------------------
Total assets 372,301 15,695
- -----------------------------------------------------------------------------------------
Liabilities
Payables:
Custodial bank 165 0
Investment advisory fees (Note 2) 307 12
Investments purchased 9,019 1,464
Accrued expenses 90 3
- -----------------------------------------------------------------------------------------
Total liabilities 9,581 1,479
- -----------------------------------------------------------------------------------------
Net assets $362,720 $14,216
- -----------------------------------------------------------------------------------------
Analysis of net assets
Paid in capital (b) 354,376 14,177
Accumulated undistributed net realized gain (loss) (1,061) (254)
Net unrealized appreciation (depreciation) on investments 9,405 293
- -----------------------------------------------------------------------------------------
Net assets $362,720 $14,216
- -----------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per
share (23,265 shares of capital stock and 1,188; 101.416;
38.66; 350.356; 4,393 shares of beneficial interest
outstanding respectively) $ 15.59 $ 11.96
=========================================================================================
</TABLE>
See accompanying notes to financial statements
(a) Rounds to less than $1,000
(b) Amount for Monetta Fund represents $233 of $0.01 par value and $354,143 of
additional paid in capital, 100 million shares are authorized. Each fund of
Monetta Trust has an unlimited number of no par value shares of beneficial
interest authorized.
Page 22
<PAGE>
<TABLE>
<CAPTION>
=================================================================================================================================
Large-Cap Balanced Intermediate Government Money
Fund Fund Bond Fund Market Fund
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
Investments in common stocks at market value (cost:
$349,028; $15,127; $1,120; $420; $3,542; $4,389)(Note 1) $1,183 $ 441 $3,533 $4,389
Cash (a) 1 0 6
Interest and dividends receivable 2 (a) 61 (a)
Receivable for securities sold 0 0 0 0
- ---------------------------------------------------------------------------------------------------------------------------------
Total assets 1,185 442 3,594 4,395
- ---------------------------------------------------------------------------------------------------------------------------------
Liabilities
Payables:
Custodial bank 0 0 3 0
Investment advisory fees (Note 2) 1 (a) 1 0
Investments purchased 111 31 0 0
Accrued expenses 1 1 1 2
- ---------------------------------------------------------------------------------------------------------------------------------
Total liabilities 113 32 5 2
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets $1,072 $ 410 $3,589 $4,393
- ---------------------------------------------------------------------------------------------------------------------------------
Analysis of net assets
Paid in capital (b) 1,017 393 3,580 4,393
Accumulated undistributed net realized gain (loss) (8) (4) 18 0
Net unrealized appreciation (depreciation) on investments 63 21 (9) 0
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets $1,072 $ 410 $3,589 $4,393
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, offering price, and redemption price per
share (23,265 shares of capital stock and 1,188; 101.416;
38.66; 350.356; 4,393 shares of beneficial interest
outstanding respectively) $10.57 $10.61 $10.24 $ 1.00
=================================================================================================================================
</TABLE>
Page 23
<PAGE>
Statements of Operations
December 31, 1995
(In Thousands)
================================================================================
<TABLE>
<CAPTION>
Mid-Cap
Monetta Equity
Fund Fund
------------------------------
<S> <C> <C>
Investment income and expenses:
Investment income:
Interest $ 4,041 $ 114
Dividends 1,100 112
Miscellaneous income 476 0
- ------------------------------------------------------------------------------------------
Total investment income 5,617 226
- ------------------------------------------------------------------------------------------
Expenses:
Investment advisory fee (Note 2) 3,648 134
Custodial fees and bank cash management fee 105 12
Transfer and shareholder servicing agent fee 1,217 21
Other 0 (a)
- ------------------------------------------------------------------------------------------
Total expenses 4,970 167
Expenses waived and reimbursed 0 0
- ------------------------------------------------------------------------------------------
Expenses net of waived and reimbursed expenses 4,970 167
- ------------------------------------------------------------------------------------------
Net investment income 647 59
- ------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investments:
Realized gains (loss) on investments:
Proceeds from sales 903,424 29,873
Cost of securities sold 841,762 27,389
- ------------------------------------------------------------------------------------------
Net realized gain (loss) on investments 61,662 2,484
- ------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) on investments:
Beginning of period (17,513) (23)
End of period 9,405 293
- ------------------------------------------------------------------------------------------
Net change in net unrealized appreciation/depreciation
on investments during the period 26,918 316
- ------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 88,580 2,800
- ------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations $ 89,227 $2,859
==========================================================================================
</TABLE>
See accompanying notes to financial statements
(a) Rounds to less than $1,000
Page 24
<PAGE>
================================================================================
<TABLE>
<CAPTION>
Intermediate Government
Large-Cap Balanced Bond Money Market
Fund Fund Fund Fund
------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment income and expenses:
Investment income:
Interest $ 3 $ 2 $ 220 $ 207
Dividends 3 1 3 0
Miscellaneous income 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------
Total investment income 6 3 223 207
- ------------------------------------------------------------------------------------------------------------------------
Expenses:
Investment advisory fee (Note 2) 3 1 20 13
Custodial fees and bank cash management fee 2 1 3 4
Transfer and shareholder servicing agent fee 1 1 4 4
Other (a) 0 0 0
- ------------------------------------------------------------------------------------------------------------------------
Total expenses 6 3 27 21
Expenses waived and reimbursed 0 0 17 19
- ------------------------------------------------------------------------------------------------------------------------
Expenses net of waived and reimbursed expenses 6 3 10 2
- ------------------------------------------------------------------------------------------------------------------------
Net investment income (a) (a) 213 205
- ------------------------------------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investments:
Realized gains (loss) on investments:
Proceeds from sales 332 121 2,160 16,792
Cost of securities sold 340 125 2,077 16,792
- ------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments (8) (4) 83 0
- ------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) on investments:
Beginning of period 0 0 (165) 0
End of period 63 21 (9) 0
- ------------------------------------------------------------------------------------------------------------------------
Net change in net unrealized appreciation/depreciation
on investments during the period 63 21 156 0
- ------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 55 17 239 0
- ------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations $ 55 $17 $452 $205
========================================================================================================================
</TABLE>
Page 25
<PAGE>
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
December 31, 1995
(In Thousands)
=======================================================================================================================
Monetta Mid-Cap Equity
Fund Fund
--------------------- ---------------------
Year Year Year Year
Ended Ended Ended Ended
12/31/95 12/31/94 12/31/95 12/31/94
=======================================================================================================================
<S> <C> <C> <C> <C>
From investment activities:
Operations:
Net investment income $ 647 $ (648) $ 59 $ 64
Net realized gain (loss) on investments 61,662 (3,144) 2,484 488
Net change in net unrealized appreciation
(depreciation) on investments during the period 26,918 (22,651) 316 (298)
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations 89,227 (26,443) 2,859 254
Distribution from net investment income (647) 0 (59) (64)
Distribution in excess of net investment income (59,578) (1,654) (2,897) (498)
Distribution from net realized gains on securities 0 0 (19) 0
- -----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from
investment activities 29,002 (28,097) (116) (308)
=======================================================================================================================
From capital transactions (Note 3):
Proceeds from shares sold 22,913 44,169 2,203 3,474
Net asset value of shares issued through
dividend reinvestment 59,595 1,632 2,930 554
Cost of shares repurchased (113,702) (177,077) (2,538) (1,824)
- -----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from
capital transactions (31,194) (131,276) 2,595 2,204
=======================================================================================================================
Total increase (decrease) in net assets (2,192) (159,373) 2,479 1,896
- -----------------------------------------------------------------------------------------------------------------------
Net assets at beginning of period 364,912 524,285 11,737 9,841
- -----------------------------------------------------------------------------------------------------------------------
Net assets at end of period $ 362,720 $ 364,912 $14,216 $11,737
=======================================================================================================================
</TABLE>
See accompanying notes to financial statements
(a) Rounds to less than $1,000
Page 26
<PAGE>
<TABLE>
<CAPTION>
=======================================================================================================================
Large-Cap Equity Balanced
Fund Fund
--------------------- ---------------------
Period Period
Ended Ended
12/31/95 12/31/95
=======================================================================================================================
<S> <C> <C> <C> <C>
From investment activities:
Operations:
Net investment income $ (a) $ (a)
Net realized gain (loss) on investments (8) (4)
Net change in net unrealized appreciation
(depreciation) on investments during the period 63 21
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations 55 17
Distribution from net investment income (a) (a)
Distribution in excess of net investment income 0 (a)
Distribution from net realized gains on securities 0 0
- -----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from
investment activities 55 17
=======================================================================================================================
From capital transactions (Note 3):
Proceeds from shares sold 1,019 445
Net asset value of shares issued through
dividend reinvestment (a) (a)
Cost of shares repurchased (2) (52)
- -----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from
capital transactions 1,017 393
=======================================================================================================================
Total increase (decrease) in net assets 1,072 410
- -----------------------------------------------------------------------------------------------------------------------
Net assets at beginning of period 0 0
- -----------------------------------------------------------------------------------------------------------------------
Net assets at end of period $1,072 $410
=======================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
=======================================================================================================================
Intermediate Bond Government Money
Fund Market Fund
--------------------- ---------------------
Year Year Year Year
Ended Ended Ended Ended
12/31/95 12/31/94 12/31/95 12/31/94
=======================================================================================================================
<S> <C> <C> <C> <C>
From investment activities:
Operations:
Net investment income $ 213 $ 173 $ 205 $ 92
Net realized gain (loss) on investments 83 (28) 0 0
Net change in net unrealized appreciation
(depreciation) on investments during the period 156 (173) 0 0
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations 452 (28) 205 92
Distribution from net investment income (215) (171) (205) (92)
Distribution in excess of net investment income (38) (11) 0 0
Distribution from net realized gains on securities 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from
investment activities 199 (210) 0 0
=======================================================================================================================
From capital transactions (Note 3):
Proceeds from shares sold 701 697 4,068 2,559
Net asset value of shares issued through
dividend reinvestment 229 167 196 89
Cost of shares repurchased (550) (603) (3,186) (1,192)
- -----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from
capital transactions 380 261 1,078 1,456
=======================================================================================================================
Total increase (decrease) in net assets 579 51 1,078 1,456
- -----------------------------------------------------------------------------------------------------------------------
Net assets at beginning of period 3,010 2,959 3,315 1,859
- -----------------------------------------------------------------------------------------------------------------------
Net assets at end of period $3,589 $3,010 $ 4,393 $ 3,315
=======================================================================================================================
</TABLE>
Page 27
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
Page 28
<PAGE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
1. SIGNIFICANT ACCOUNTING POLICIES:
Monetta Fund, Inc. ("Monetta Fund") is an open-end diversified management
investment company registered under the Investment Company Act of 1940, as
amended. The primary objective of Monetta Fund is capital appreciation by
investing primarily in equity securities believed to have growth potential. The
Fund generally invests in companies with a market capitalization range of $50
million to $1 billion.
Monetta Trust ("the Trust") is an open-end diversified management investment
company registered under the Investment Company Act of 1940, as amended. The
following funds are series of the Trust:
Mid-Cap Equity Fund. The primary objective of this fund is long-term capital
growth by investing in common stocks believed to have above average growth
potential. The Fund typically invests in companies within a market
capitalization range of $1 billion to $5 billion.
Large-Cap Equity Fund. The primary objective of this fund is to seek long-term
capital growth by investing in common stocks believed to have above average
growth potential. The Fund typically invests in companies with market
capitalization of greater than $5 billion.
Balanced Fund. The objective of this fund is to seek a favorable total rate of
return through capital appreciation and current income consistent with
preservation of capital, derived from investing in a portfolio of equity and
fixed income securities.
Intermediate Bond Fund. The objective of this fund is to seek high current
income consistent with the preservation of capital by investing primarily in
marketable debt securities.
Government Money Market Fund. The primary objective of this fund is to seek
maximum current income consistent with safety of capital and maintenance of
liquidity. The Fund invests in U. S. Government securities maturing in thirteen
months or less from the date of purchase and repurchase agreements for U. S.
Government securities. U. S. Government securities include securities issued or
guaranteed by the U.S. Government or by its agencies or instrumentalities.
Monetta Family of Funds is comprised of Monetta Fund, Inc. and each of the
Trust Series and are collectively referred to as the "Funds". The following is a
summary of significant accounting policies followed by the Funds in the
preparation of their financial statements in accordance with generally accepted
accounting principles:
(a) Securities Valuation
Investments are stated at market value based on the last reported sale price on
national securities exchanges, or the NASDAQ Market, on the last business day of
the period. Listed securities and securities traded on the over-the-counter
markets that did not trade on the last business day are valued at the mean
between the quoted bid and asked prices. Short-term securities, including all
securities held by the Government Money Market Fund, are stated at amortized
cost, which is substantially equivalent to market value.
Page 29
<PAGE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
(b) Federal Income Taxes
It is each Fund's policy to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute
substantially all of its taxable income to its shareholders. Accordingly, no
provision for federal income taxes is required.
The Funds intend to utilize provisions of the federal income tax laws which
allow them to carry a realized capital loss forward for eight years following
the year of the loss and offset such losses against any future realized capital
gains. At December 31, 1995, the Large-Cap Fund had an accumulated capital loss
carry forward for tax purposes of $1,591 which will expire on December 31, 2003.
Net realized losses of the funds may differ for financial statements and tax
purposes because of the deferral of post October 31 losses for tax purposes.
(c) General
Security transactions are accounted for on a trade date basis. Daily realized
gains and losses from security transactions are reported on the first-in, first-
out cost basis. Interest income is recorded daily on the accrual basis and
dividend income on the ex-dividend date.
(d) Distributions of incomes and gains
Distributions to shareholders are recorded by the Funds (except for the
Government Money Market Fund) on the ex-dividend date. The Government Money
Market Fund declares dividends daily and automatically reinvests such dividends
daily. Due to inherent differences in the characterization of short-term capital
gains under generally accepted accounting principles and for federal income tax
purposes, the amount of distributable net investment income for book and federal
income tax purposes may differ. These differences are permanent in nature, and
may result in distributions in excess of book basis net investment income for
certain periods.
2. RELATED PARTIES:
Robert S. Bacarella is an officer and director of the Funds and also an
officer, director and majority shareholder of the investment adviser, Monetta
Financial Services, Inc. "Adviser". For twelve months ended December 31, 1995,
remuneration required to be paid to any director or trustee has been absorbed by
the Adviser.
Each Fund pays an investment advisory fee to the Adviser, based on that
Fund's individual net assets, payable monthly at the annual rate of 1% for
Monetta Fund, Mid-Cap and Large-Cap Equity Funds; 0.65% for Balanced Fund; 0.60%
for Intermediate Bond Fund and 0.35% for the Government Money Market Fund. From
these fees the Adviser pays all the Fund's ordinary operating expenses other
than the advisory fee and charges of the Fund's custodian and transfer agent.
Investment advisory fees waived through December 31, 1995, for the Intermediate
Bond Fund were $17,132 of total fees of $19,834. Investment advisory fees waived
through December 31, 1995 for the Government Money Market Fund were $12,563.
Custodian and transfer agent charges of $6,111 for the period ending December
31, 1995 for the Government Money Market Fund were absorbed by the Adviser.
Additionally, brokerage commissions of $70,235 were paid by the Monetta Fund to
Monetta Brokerage, Inc. during 1995.
Page 30
<PAGE>
Notes to Financial Statements
December 31, 1995
Shares Owned
by the Advisor
==================================
Shares % of Fund
------ ---------
Mid-Cap Fund 7,347 0.6%
Large-Cap Fund 10,004 9.9%
Balanced Fund 19,883 51.3%
Intermediate Bond Fund 69,318 19.8%
Government Money Market Fund 1,062,110 24.2%
3. CAPITAL STOCK AND SHARE UNITS:
There are 100,000,000 shares of $0.01 par value capital stock authorized for
Monetta Fund. There is an unlimited number of no par value shares of beneficial
interest authorized for each series of the Trust.
<TABLE>
<CAPTION>
==========================================================================================================
Monetta Mid-Cap Large-Cap Balanced Intermediate Government
(In Thousands) Fund Equity Fund Equity Fund Fund Bond Fund Money Market
==========================================================================================================
<S> <C> <C> <C> <C> <C> <C>
1994 Beginning shares 33,741 785 - - 286 1,859
- ----------------------------------------------------------------------------------------------------------
Shares sold 2,898 276 - - 70 2,560
Shares issued upon
dividend reinvestment 104 46 - - 17 89
Shares redeemed (11,603) (145) - - (60) (1,193)
==========================================================================================================
Net increase (decrease) in
shares outstanding (8,601) 177 - - 27 1,456
==========================================================================================================
1995 Beginning shares 25,140 962 - - 313 3,315
- ----------------------------------------------------------------------------------------------------------
Shares sold 1,400 161 101 44 69 4,068
Shares issued upon
dividend reinvestment 3,779 249 (a) (a) 22 196
Shares redeemed (7,054) (184) (a) (5) (54) (3,186)
==========================================================================================================
Net increase (decrease) in
shares outstanding (1,875) 226 101 39 37 1,078
==========================================================================================================
Ending Shares 23,265 1,188 101 39 350 4,393
==========================================================================================================
</TABLE>
(a) Rounds to less than $1,000
4. PURCHASES AND SALES OF INVESTMENT SECURITIES:
The cost of purchases and proceeds from sales of securities for the period
ending December 31, 1995, excluding short-term securities were: Monetta Fund
$797,769,176 and $903,424,497; Mid-Cap Fund $29,441,667 and $29,873,302;
Large-Cap Fund $1,239,640 and $331,924; Balanced Fund $408,253 and $121,069;
and Intermediate Bond Fund $2,190,691 and $2,160,247.
Page 31
<PAGE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
================================================================================
5. FINANCIAL HIGHLIGHTS:
MONETTA FUND
Financial highlights for Monetta Fund for a share of capital stock outstanding
throughout the period is presented below:
<TABLE>
<CAPTION>
1995 1994 1993 1992
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value at beginning of period $14.515 $15.539 $15.992 $15.731
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) .029 (.026) (.028) .006
Net realized and unrealized gain (loss) on investments 4.075 (.938) .105 .855
- ---------------------------------------------------------------------------------------------------------------------------
Total from investment operations: 18.619 (.964) .077 .861
Less:
Distributions from net investment income (.028) 0 0 (.006)
Distributions in excess of net investment income (3.000) (.060) (.475) (.594)
Distributions from net realized gains on securities 0 0 (.055) 0
- ---------------------------------------------------------------------------------------------------------------------------
Total distributions (3.028) (.060) (.530) (.600)
===========================================================================================================================
Net asset value at end of period $15.591 $14.515 $15.539 $15.992
===========================================================================================================================
Total return 28.0% (6.21)% 0.49% 5.49%
Ratio to average net assets
Expenses* 1.36% 1.35% 1.38% 1.45%
Net investment income* 0.18% (0.15)% (0.19)% .16%
Portfolio turnover 272.0% 191.27% 226.85% 126.60%
Net assets (in millions) $ 362.7 $ 364.9 $ 524.3 $ 408.0
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
*If certain expenses had not been assumed by the investment advisor in 1989,
the ratios of expenses and net investment income to average net assets would
have been 1.83% and 1.92%, respectively.
The per share ratios are calculated using the weighted average number of shares
outstanding during the period.
Page 32
<PAGE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
================================================================================
<TABLE>
<CAPTION>
5/6/86
Through
1991 1990 1989 1988 1987 12/31/86
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period $10.963 $10.441 $ 9.933 $ 9.649 $ 9.670 $10.000
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) .081 .103 .219 .106 .113 .115
Net realized and unrealized gain (loss) on investments 6.037 1.106 1.274 2.158 .016 (.335)
- ---------------------------------------------------------------------------------------------------------------------------
Total from investment operations: 6.118 1.209 1.493 2.264 .129 (.220)
Less:
Distributions from net investment income (.081) (.103) (.219) (.106) (.150) (.110)
Distributions in excess of net investment income (1.208) (.584) (.766) (1.874) 0 0
Distributions from net realized gains on securities (.061) 0 0 0 0 0
- ---------------------------------------------------------------------------------------------------------------------------
Total distributions (1.350) (.687) (.985) (1.980) (.150) (.110)
===========================================================================================================================
Net asset value at end of period $15.731 $10.963 $10.441 $ 9.933 $ 9.649 $ 9.670
===========================================================================================================================
Total return 55.90% 11.37% 15.20% 23.07% 1.54% (2.20)%
Ratio to average net assets
Expenses* 1.42% 1.50% 1.57% 1.50% 2.31% 1.27%
Net investment income* .93% 1.09% 2.18% .96% 1.33% 2.45%
Portfolio turnover 153.80% 206.51% 258.42% 170.43% 333.47% 80.02%
Net assets (in millions) $ 57.1 $ 6.1 $ 3.5 $ 2.6 $ 2.1 $ 1.9
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 33
<PAGE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
- --------------------------------------------------------------------------------
Financial highlights for each Fund of the Trust for a share outstanding
throughout the period is presented below:
<TABLE>
<CAPTION>
Mid-Cap Large-Cap
Equity Equity
Fund Fund
---------------------------- ---------
3/1/93 9/1/95
Through Through
12/31/95 12/31/94 12/31/93 12/31/95
----------------------------------------
<S> <C> <C> <C> <C>
Net asset value at
beginning of period* $12.199 $12.537 $10.000 $10.000
- --------------------------------------------------------------------------------
Net investment income 0.059 0.071 0.006 0.005
Net realized and unrealized
gain (loss) on investments 2.874 0.193 3.531 0.570
- -------------------------------------------------------------------------------
Total from investment operations 2.933 0.264 3.537 0.575
Less:
Distributions from net investment
income (0.050) (0.069) (0.006) (0.004)
Distributions in excess of net
investment income (2.990) (0.533) (0.994) 0
Distributions from net realized
gains on securities (0.130) 0 0 0
- --------------------------------------------------------------------------------
Total distributions (3.170) (0.602) (1.000) (0.004)
================================================================================
Net asset value at end of period $11.962 $12.199 $12.537 10.571
================================================================================
Total return* 24.54% 2.17% 35.40% 5.74%
Ratios to average net assets:
Expenses** 1.25% 1.30% 1.12% 0.69%
Net investment income** 0.44% 0.57% 0.07% 0.05%
Portfolio turnover 254.35% 209.97% 128.12% 38.20%
Net assets (in thousands) $14,216 $11,736 $ 9,841 $ 1,072
================================================================================
</TABLE>
*Ratios and total return for the year of inception are calculated from the date
of inception to the end of the period.
**If certain investment advisory fees and charges of the Trust's custodian and
transfer agent had not been assumed by the investment advisor, the ratios of
expenses and net income to average net assets would be as follows: for the
Intermediate Bond Fund, expenses would have been 0.75%, 0.88% and 0.75% for
1995, 1994 and 1993 respectively. For the Government Money Market Fund,
expenses would have been 0.59%, 0.66% and 0.69%, for 1995, 1994 and 1993
respectively. For the Intermediate Bond Fund, net investment income would have
been 5.46%, 5.34% and 3.66% for 1994 and 1993 respectively. For the Government
Money Market Fund, the investment income would have been 5.17%, 3.39% and 1.66%
for 1995, 1994 and 1993 respectively.
The per share ratios are calculated using the weighted average number of shares
outstanding during the period.
Page 34
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Intermediate Government
Balanced Bond Money Market
Fund Fund Fund
-------- ----------------------------- -----------------------------
9/1/95 3/5/93 3/1/93
Through Through Through
12/31/95 12/31/95 12/31/94 12/31/93 12/31/95 12/31/94 12/31/93
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of period* $10.000 $9.624 $10.345 $10.000 $1.000 $1.000 $1.000
- ----------------------------------------------------------------------------------------------------------------
Net investment income 0.009 0.655 0.589 0.357 0.059 0.040 0.023
Net realized and unrealized
gain (loss) on investments 0.602 0.740 (0.690) 0.447 0 0 0
- ----------------------------------------------------------------------------------------------------------------
Total from investment operations 0.611 1.395 (0.101) 0.804 0.059 0.040 0.023
Less:
Distributions from net investment
income (0.004) (0.655) (0.580) (0.357) (0.059) (0.040) (0.023)
Distributions in excess of net
investment income (0.002) (0.120) (0.040) (0.102) 0 0 0
Distributions from net realized
gains on securities 0 0 0 0 0 0 0
- ----------------------------------------------------------------------------------------------------------------
Total distributions (0.006) (0.775) (0.620) (0.459) (0.059) (0.040) (0.023)
================================================================================================================
Net asset value at end of period 10.605 10.244 $9.624 $10.345 $1.000 $1.000 $1.000
================================================================================================================
Total return* 6.16% 14.84% (1.04)% 8.17% 5.87% 4.04% 2.21%
Ratios to average net assets:
Expenses** 0.91% 0.27% 0.28% 0.28% 0.07% 0.0% 0.03%
Net investment income** 0.08% 5.94% 5.94% 4.13% 5.69% 4.04% 2.32%
Portfolio turnover 54.78% 75.07% 94.48% 32.26% N/A N/A N/A
Net assets (in thousands) $410 $3,589 $3,010 $2,959 $4,393 $3,315 $1,859
================================================================================================================
</TABLE>
Page 35
<PAGE>
================================================================================
Annual Report
December 31, 1995
MONETTA FAMILY OF FUNDS
Monetta Fund, Inc.
Monetta Mid-Cap Equity Fund
Monetta Large-Cap Equity Fund
Monetta Balanced Fund
Monetta Intermediate Bond Fund
Monetta Government Money
Market Fund
Monetta Funds
1776-A South Naperville Road
Suite 207
Wheaton, Illinois 60187
1-800-MONETTA
================================================================================
<PAGE>
PART C -- OTHER INFORMATION
---------------------------
Item 24. Financial Statement and Exhibits
- ------- --------------------------------
(a) Financial statements:
(1) Financial statements included in Part A of this registration
statement:
None
(2) Financial statements included in Part B of this amendment:
The following financial statements, but no other part of the
report, are incorporated by reference to the following
portions of Monetta Fund's annual report to shareholders for
the fiscal year ended December 31, 1995:
Schedule of Investments at December 31, 1995
Statement of Assets and Liabilities at December 31, 1995
Statement of Operations for the Year Ended December 31, 1995
Statement of Changes in Net Assets for the Years Ended
December 31, 1995 and 1994
Notes to financial statements
Independent Auditors' Report
Note: The following schedules have been omitted for the following reasons:
Schedule I - The required information is presented
in the schedule of investments at December 31, 1995.
Schedules II, III, IV, V, VI and VII - the required
information is not present.
(b) Exhibits:
NOTE: As used herein the term "Registration Statement" refers to the
registration statement of registrant on form N-1A, no. 33-1398.
1 Amended and restated charter of registrant (2)
1.1 Articles supplementary dated February 4, 1992 (3)
1.2 Articles of amendment dated February 14, 1992 (3)
2 Bylaws of registrant (amended and restated 11/10/88) (2)
3 None
<PAGE>
4 Form of stock certificate (1)
5 Investment advisory agreement with Monetta Financial Services, Inc.
dated November 10, 1988 (2)
6 None
7 None
8 Custody agreement with Firstar Trust Company (formerly First
Wisconsin Trust Company) (1)
9 None
10 Opinion of counsel (1)
11 Consent of independent auditors
12 None
13 Subscription agreement (1)
14 Monetta Funds Individual retirement account prototype plan,
disclosure statement and application (4)
15 None
16 Schedule for computation of performance quotations (2)
17 Financial Data Schedule
18 Form of application
- ------------------------
(1) Incorporated by reference to the exhibit of the same number to the
Registration Statement.
(2) Incorporated by reference to the exhibit of the same number filed with
post-effective amendment no. 4 to the Registration Statement.
(3) Incorporated by reference to the exhibit of the same number filed with
post-effective amendment no. 9 to the Registration Statement.
(4) Incorporated by reference to the exhibit of the same number filed with
post-effective amendment no. 13 to the Registration Statement.
C-2
<PAGE>
Item 25. Persons Controlled By or Under Common Control with Registrant
- ------- -------------------------------------------------------------
The registrant does not consider that there are any persons directly
or indirectly controlling, controlled by, or under common control with, the
registrant within the meaning of this item. The information in the prospectus
under the caption "Management of the Fund" and in the Statement of Additional
Information under the captions "Investment Adviser" and "Directors/Trustees and
Officers" is incorporated by reference.
Item 26. Number of Holders of Securities
- ------- -------------------------------
As of March 31, 1996 there were 65,507 record holders of capital
stock of the registrant. The registrant has no other class of securities
outstanding.
Item 27. Indemnification
- ------- ---------------
Section 2-418 of the General Corporation Law of Maryland authorizes
the registrant to indemnify its directors and officers under specified
circumstances. Section 9.01 of Article IX of the bylaws of the registrant
(exhibit 2 to this amendment, which is incorporated herein by reference)
provides in effect that the registrant shall provide certain indemnification of
its directors and officers. In accordance with section 17(h) of the Investment
Company Act, this provision of the bylaws shall not protect any person against
any liability to the registrant or its shareholders to which he would otherwise
be subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
- ------- ----------------------------------------------------
Monetta Financial Services, Inc. ("MFSI"), registrant's investment
adviser, also acts as investment adviser to Monetta Trust and to individual and
institutional clients. The directors and officers of MFSI are: Robert S.
Bacarella, President and Director; Paul W. Henry, Director; William M. Valiant,
Director; Albert A. Pisterzi, Vice President; John P. Rozinsky, Vice President
and Secretary; and Maria C. DeNicolo, Controller and Treasurer. The information
in the Statement of Additional Information under the heading "Directors/Trustees
and Officers" describing the principal occupations and other affiliations of Mr.
Bacarella, Mr. Henry, Mr. Pisterzi, Mr. Rozinsky and Ms. DeNicolo is
incorporated herein by reference. Mr. Valiant, who is now retired, was Vice
President and Treasurer, Borg-Warner Corporation, until July 1990.
Item 29. Principal Underwriters
- ------- ----------------------
None
C-3
<PAGE>
Item 30. Location of Accounts and Records
- ------- --------------------------------
Robert S. Bacarella
Monetta Fund, Inc.
1776-A South Naperville Road, Suite 207
Wheaton, Illinois 60187-8133
Item 31. Management Services
- ------- -------------------
None
Item 32. Undertakings
- ------- ------------
(a) Not applicable.
(b) Not applicable
(c) Registrant undertakes to furnish each person to
whom a prospectus is delivered with a copy of
Registrant's latest annual report to shareholders,
upon request and without charge.
C-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it meets all of the requirements for effectiveness of this
amendment to the registration statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this amendment to the registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Wheaton, Illinois on April 15, 1996.
MONETTA FUND, INC.
/s/ Robert S. Bacarella
By___________________________
Robert S. Bacarella, President
Pursuant to the requirements of the Securities Act of 1933, this amendment to
the registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<S> <C> <C>
/s/ Robert S. Bacarella
___________________________ Director and President )
Robert S. Bacarella (principal executive
officer) )
)
)
/s/ John W. Bakos )
___________________________ Director )
John W. Bakos )
)
)
/s/ Paul W. Henry )
___________________________ Director )
Paul W. Henry )
)
) April 15, 1996
/s/ Mark F. Ogan )
___________________________ Director )
Mark F. Ogan )
)
)
/s/ John P. Rozinsky )
___________________________ Director and )
Vice President )
John P. Rozinsky )
)
)
/s/ Maria Cesario DeNicolo )
___________________________ Treasurer )
Maria Cesario DeNicolo (principal financial
officer) )
</TABLE>
<PAGE>
Index of Exhibits Filed with this Amendment
-------------------------------------------
Exhibit
Number Exhibit Page
- ------- ---------------- ----
11 Consent of independent auditors
17 Financial Data Schedule
18 Form of Application
99 Opinion of counsel required by Section F(3) of
the General Instructions to Form N-1A
<PAGE>
EXHIBIT 11
[LOGO OF KPMG PEAT MARWICK LLP]
CONSENT OF INDEPENDENT AUDITORS
To the Boards of Directors and Trustees and the Shareholders
of Monetta Fund, Inc. and Monetta Trust:
We consent to the use of our report which is incorporated by reference into the
Statement of Additional Information and to the reference to our Firm under the
headings "Financial Highlights" in the Prospectus and "Independent Auditors" in
the Statement of Additional Information.
/s/ KPMG Peat Marwick LLP
Chicago, Illinois
April 9, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 349,028
<INVESTMENTS-AT-VALUE> 358,433
<RECEIVABLES> 13,868
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 372,301
<PAYABLE-FOR-SECURITIES> 9,019
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 562
<TOTAL-LIABILITIES> 9,581
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 354,376
<SHARES-COMMON-STOCK> 23,265
<SHARES-COMMON-PRIOR> 25,140
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,061)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9,405
<NET-ASSETS> 362,720
<DIVIDEND-INCOME> 1,100
<INTEREST-INCOME> 4,041
<OTHER-INCOME> 476
<EXPENSES-NET> 4,970
<NET-INVESTMENT-INCOME> 647
<REALIZED-GAINS-CURRENT> 61,662
<APPREC-INCREASE-CURRENT> 26,918
<NET-CHANGE-FROM-OPS> 89,227
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 647
<DISTRIBUTIONS-OF-GAINS> 59,578
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,400
<NUMBER-OF-SHARES-REDEEMED> 7,054
<SHARES-REINVESTED> 3,779
<NET-CHANGE-IN-ASSETS> (2,192)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,648
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,970
<AVERAGE-NET-ASSETS> 364,850
<PER-SHARE-NAV-BEGIN> 14.52
<PER-SHARE-NII> .03
<PER-SHARE-GAIN-APPREC> 4.07
<PER-SHARE-DIVIDEND> .03
<PER-SHARE-DISTRIBUTIONS> 3.00
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.59
<EXPENSE-RATIO> 1.36
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
SHARE PURCHASE APPLICATION
Mail Completed Application to: Overnight Express Mail to:
Monetta Monetta
Mutual Fund Services Mutual Fund Services, 3rd Floor
P.O. Box 701 615 East Michigan Street
Milwaukee, WI 53201-0701 Milwaukee, WI 53202
1-800-MONETTA
Use this form for individual, custodial, trust, profit sharing or pension plan
accounts. Do not use this form for Monetta Funds-sponsored IRA, Defined
Contribution (401(k) or 403(b)) plans which require forms available from Monetta
Funds. For information please call 1-800-666-3882.
================================================================================
1. ACCOUNT REGISTRATION
[_] Individual
Name
----------------------------------------------------------------------------
Social Security Number Citizen of [_] US [_] Other
============================================================================
[_] Joint Owner*
Name
----------------------------------------------------------------------------
Social Security Number Citizen of [_] US [_] Other
============================================================================
[_] Gift to Minor
Custodian
----------------------------------------------------------------------------
Minor Minor's Birthdate
----------------------------------------------------------------------------
Minor's Social Security Number Citizen of [_] US [_] Other
============================================================================
[_] Corporation, Partnership or Other Entity
Name of Entity
----------------------------------------------------------------------------
Taxpayer Identification Number
----------------------------------------------------------------------------
. A corporate resolution form or certificate is required for corporate
accounts.
============================================================================
[_] Trust, Estate or Guardianship
Name
----------------------------------------------------------------------------
Name of Fiduciary(s)
----------------------------------------------------------------------------
Taxpayer Identification Number Date of Trust
============================================================================
. Additional documentation and certification may be requested.
*Registration will be Joint Tenants with Rights of Survivorship (JTWROS) unless
otherwise specified
================================================================================
2. MAILING ADDRESS [_] Send Duplicate Confirmations To:
- ----------------------------------- ------------------------------------
Street, Apt. Name
- ----------------------------------- ------------------------------------
City, State, Zip Code Street, Apt.
- ----------------------------------- ------------------------------------
Daytime Phone Number City, State, Zip Code
================================================================================
3. INVESTMENT INSTRUCTION & DISTRIBUTION
The minimum initial investment is $1,000 for shares in any of the Monetta Funds
which may be allocated among the Funds so long as at least $250 is invested in
each Fund in which you choose to invest (For UGMA, AIP, or IRA the minimum
initial investment is $250). Subsequent investment to any Fund is $50 (also $50
for the Automatic Investment Plan).
DISTRIBUTION OPTIONS
Capital Gains and Dividends
Amount Reinvested Cash
[_] Monetta Fund $ [_] [_]
- -------------------------------------------------------------------------------
[_] Monetta Mid-Cap Equity Fund $ [_] [_]
- -------------------------------------------------------------------------------
[_] Monetta Large-Cap Equity Fund $ [_] [_]
- -------------------------------------------------------------------------------
[_] Monetta Balanced Fund $ [_] [_]
- -------------------------------------------------------------------------------
[_] Monetta Intermediate Bond Fund $ [_] [_]
- -------------------------------------------------------------------------------
[_] Monetta Government Money Market Fund $ [_] [_]
- -------------------------------------------------------------------------------
Total Investment $ (If no distribution option
========= is checked, dividends and
capital gains will be
reinvested.)
================================================================================
4. CHECKWRITING (Monetta Government Money Market Fund Only. Not available for
IRA or other retirement accounts.)
[_] Check this box if you would like to establish check redemption privileges
for the Monetta Government Money Market Fund and have 10 checks and 2 deposits
forms printed. Each additional book of checks and deposit forms will be $5.00.
This amount will be deducted from your account. Check redemption privileges are
subject to the conditions on the reverse side.
----------------------------------
----------------------------------
----------------------------------
Account Number (For Bank Use Only)
----------------------------------------------------------------------------
Name on Monetta Government Money Market Fund Account (must be the same as
Account Registration-please print)
----------------------------------------------------------------------------
Authorized Signature(s) (For joint accounts, all owners must sign.)
For a corporate, trust, or other entity, or a joint account, how many
authorized signatures are required?
---------
<PAGE>
================================================================================
5. BACKUP WITHHOLDING
[_] Check this box only if the IRS has notified you that you are subject to
backup withholding.
================================================================================
6. Telephone Exchange Privilege
You automatically have the Telephone Exchange Privilege unless you check the box
below. Under this Privilege, the Funds and their transfer agent are authorized
to accept telephone instructions from any person to redeem shares from your
account and apply the proceeds to purchase shares for your account in another
Fund offered by Monetta, for sale in your state ("exchange"). The Exchange
Privilege may not be used to redeem shares purchased by check (except certified
and cashier checks) within the preceding 15 days. Telephone exchanges must be
for at least $250. Telephone exchanges may be made only to accounts with
identical registrations. You further agree that your election shall continue
until five business days after the Fund and its transfer agent receive written
notice of termination from you. The Privilege will be transferred automatically
to any new account you open within the Fund into which a telephone or written
exchange is made. See the statements below under "Signature."
[_] DECLINE TELEPHONE EXCHANGE. If you want to establish a Telephone
Exchange Privilege at a later date, you will be required to obtain a
signature guarantee.
================================================================================
7. AUTOMATIC INVESTMENT PLAN (AIP) Your signed Application must be received at
least 15 business days prior to initial transaction.
An unsigned voided check from your checking account or a savings account
deposit slip is required with your application.
In many cases, the key to achieving long-term investment objectives is a
periodic and consistent investment program. The Funds' Automatic Investment Plan
will provide you with an easy and systematic approach to investing. Based on
your instructions, Firstar Trust Company, the transfer agent for Monetta Funds,
will automatically transfer money directly from your checking, bank money
market, NOW account or savings account named below on the day of each month or
funds will be transferred the next business day thereafter. If you have any
questions, call 1-800-MONETTA.
Your Monetta account must be established with $250 minimum deposit before the
Plan goes into effect. Please start my AIP as described in the Prospectus
beginning: Month __________ Year ______. I hereby instruct Firstar Trust
Company, transfer agent for Monetta Funds, to automatically transfer $_________
(minimum $50) directly from my checking, Now or savings account named below on
the ______ day of each month or the first business day thereafter into my
_______________________ account. I understand that I will be assessed a $20 fee
if the automatic purchase cannot be made due to insufficient funds, stop
payment, or for any other reason.
Name(s) on Bank Account
---------------------------------------------------------
Bank Name Account Number
------------------------------------ --------------------
Bank Address
--------------------------------------------------------------------
- ------------------------------------- ---------------------------------------
Signature of Bank Account Owner Signature of Joint Owner
. Termination must be in writing or by calling Firstar Trust Company. Allow 5
business days to become effective. Your participation in the Plan will
terminate automatically if you redeem all your Monetta Fund shares.
. IRA contributions apply as a current year purchase (purchases may not be used
for prior year contributions).
================================================================================
8. SIGNATURE & CERTIFICATION Required by The Internal Revenue Service
I affirm that I have received a current prospectus of the Funds and agree to be
bound by its terms. I certify that I have full authority and legal capacity to
purchase shares of the Fund(s) and to establish and use any related Privileges,
and agree that such Privileges and their terms and conditions shall be governed
by Illinois law. If I have not provided a social security or other tax
identification number in Part 1 of the Application, by signing the Application,
1: (i) certify, under penalties of perjury, that I have not been issued a
number, but have applied (or soon will apply for one; and (ii) understand that
if I do not provide the Funds or their transfer agent with a certified number
within 60 days, they will be required to withhold 31% from all dividend, capital
gain, and redemption payments from my account(s) until I provide them with a
certified number.
I understand that the Telephone Exchange Privilege will apply to my account
unless I have specifically declined the privilege in Part 6, above. I understand
that by signing this application unless the Privilege is declined, I agree that
neither the Funds nor their transfer agent, their agents, officers, trustees or
employees will be liable for any loss, liability, cost or expense for acting
instructions given under the Privilege, placing the risk of any loss on me. See
"How to Redeem Shares--By Exchange" in the prospectus.
I agree that any of the Funds and their transfer agent may redeem shares
and retain the proceeds from any of my account(s) with any Fund(s) up to a total
of (a) any IRS penalties attributable to my failure to provide any of the Funds
or their transfer agent with correct and complete information requested by
either, and (b) any tax not withheld from distributions to me which should have
been withheld by them.
UNDER THE PENALTY OF PERJURY, I CERTIFY THAT (1) THE SOCIAL SECURITY NUMBER
OR TAXPAYER IDENTIFICATION NUMBER SHOWN ON THIS FORM IS MY CORRECT TAXPAYER
IDENTIFICATION NUMBER, AND (2) I AM NOT SUBJECT TO BACKUP WITHHOLDING EITHER
BECAUSE I HAVE NOT BEEN NOTIFIED BY THE INTERNAL REVENUE SERVICE (IRS) THAT I AM
SUBJECT TO BACKUP WITHHOLDING AS A RESULT OF A FAILURE TO REPORT ALL INTEREST OR
DIVIDENDS, OR THE IRS HAS NOTIFIED ME THAT I AM NO LONGER SUBJECT TO BACKUP
WITHHOLDING. The IRS does not require your consent to any provision of this
document other than the certification in this paragraph required to avoid backup
withholding. (Note: you must check the box in Part 5 of this Application if the
IRS has notified you that you are subject to backup withholding due to your
failure to report such income.)
- ------------ ----------------------------- ---------------------------------
Date Signature* Signature of Co-Owner, if any
*If shares are to be registered in the name of (1) two persons jointly, both
persons must sign, (2) a custodian for a minor, the custodian must sign, (3) a
trust, the trustee(s) must sign, or (4) a corporation or other entity, an
officer must sign and print name and title on space provided below.
- --------------------------------------------------------------------------------
Print name and title of officer signing for a corporation or other entity
================================================================================
CONDITIONS OF REDEMPTION OPTION
Checks may not be for less than $500 or such other minimum amounts as may from
time to time be established by the Monetta Government Money Market Fund upon
prior written notice to its shareholders. Maximum amount for withdrawal is
$50,000. Shares purchased by check, (including certified or cashier's check)
will not be redeemed by check-writing or any other method of redemption until
the transfer agent is reasonably satisfied that the check has been collected,
which could take up to 7 days from the purchase date.
By signing this card, I appoint the Firstar Bank Milwaukee, NA my agent to
present checks drawn on this account to the transfer agent, Firstar Trust
Company, as requests to redeem shares and I authorize the Monetta Government
Money Market Fund and Firstar Trust Company to honor such requests and redeem
shares in an amount equal to the amount of the check. I agree to be subject to
the rules pertaining to the check redemption privileges as amended from time to
time. The Monetta Government Money Market Fund or Firstar Trust Company may
reserve the right to modify or terminate this account and authorization at any
time.
B.N. 0 ________ ________ ________ ________
Internal Use Only
<PAGE>
[Bell, Boyd & Lloyd Letterhead]
April 17, 1996
Monetta Fund, Inc.
1776-A South Naperville Road
Suite 207
Wheaton, Illinois 60187
MONETTA FUND, INC.
SECURITIES ACT REGISTRATION NO. 33-1398
Ladies and Gentlemen:
We have represented Monetta Fund, Inc., a Maryland corporation (the
"Fund"), in connection with the filing with the Securities and Exchange
Commission of Post-Effective Amendment No. 15 to the Fund's registration
statement under the Securities Act of 1933. In this connection, we have
examined originals, or copies certified or otherwise identified to our
satisfaction, of such documents or other records, certifications and other
papers as we deem it necessary to examine for the purpose of this opinion,
including the charter and bylaws of the Fund and resolutions of the board of
directors authorizing the issuance of shares.
Based on the foregoing examination, we are of the opinion that the
2,028,606 shares of common stock being registered by the Fund (the "Shares")
when issued and sold and paid for in accordance with the then applicable
prospectus included as part of the registration statement as then in effect, the
Shares will be duly authorized, validly issued, fully paid and nonassessable by
the Fund.
We consent to the filing of this opinion with the Fund's post-effective
amendment to its registration statement. In giving this consent, we do not
admit that we are in the category of persons whose consent is required under
Section 7 of the Securities Act of 1933.
Very truly yours,
Bell, Boyd & Lloyd
