As filed with the Securities and Exchange Commission on April 28, 1998
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. 19
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 21
----------------------------
MONETTA FUND, INC.
(Registrant)
1776-A South Naperville Road, Suite 100
Wheaton, Illinois 60187-8133
Telephone number: 630/462-9800
----------------------------
Robert S. Bacarella Arthur J. Simon
Monetta Fund, Inc. Sonnenschein Nath & Rosenthal
1776-A South Naperville Road, #100 8000 Sears Tower
Wheaton, Illinois 60187-8133 Chicago, Illinois 60606
(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 April 28, 1998
--- On ---------------- 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)
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, 1997 on March 26, 1998.
<PAGE>
MONETTA FUND, INC.
Cross-reference sheet pursuant to rule 495(a) of Regulation C
Item Location or caption*
-------- --------------------------------
Part A (Prospectus)
-------------------
1(a)-(b) Front Cover
2(a) Fund Expenses
(b)-(c) Summary
3(a) Financial Highlights
(b) Not Applicable
(c) Investment Return
4(a)(i) Other 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) How To Purchase Shares; How to Redeem Shares; Other Information
(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) Other Information
(b)-(d) Not Applicable
(e) Other Information
(f)-(g) Dividends, Distributions and Federal Taxes
(h) Not Applicable
7 How to Purchase Shares
(a) Management of the Funds
(b) How to Purchase Shares; Determination of Net Asset Value
(c)-(d) How to Purchase Shares; Shareholder Services
(e)-(f) Management of the Funds
8(a)-(d) How to Redeem Shares
9 Management of the Funds-Pending Government Proceeding
i
<PAGE>
Item Location or caption*
- - -------- --------------------------------
Part B (Statement of Additional Information)
--------------------------------------------
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)-(b) Directors/Trustees and Officers
(c) Not Applicable
15(a)-(c) Directors/Trustees and Officers
16(a) Investment Adviser; Directors/Trustees and Officers
(b) Investment Adviser
(c)-(e) Not Applicable
(f) Service and Distribution Plan
(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; More Information About Net
Assets Value
20 Tax Status
21(a) Distributor
(b) Not Applicable
(c) Distributor
22(a)-(b) Performance Information
23 Front Cover
ii
<PAGE>
Item Location or caption*
-------- ----------------------------
Part C (Other Information)
--------------------------
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
- - ----------------------------
* References are to captions within the part of the registration statement
to which the particular item relates except as otherwise indicated.
iii
<PAGE>
Monetta PROSPECTUS
NO SALES LOAD FUNDS April 28, 1998
NO REDEMPTION FEE
1776-A SOUTH NAPERVILLE ROAD, SUITE 100 WHEATON, IL 60187 1-800-MONETTA
www.monetta.com
* MONETTA FUND, INC.
* MONETTA SMALL-CAP EQUITY FUND
* 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.
The Monetta Small-Cap Equity Fund, Monetta Mid-Cap Equity Fund, Monetta Large-
Cap Equity Fund, Monetta Balanced Fund, Monetta Intermediate Bond Fund, and
Monetta Government Money Market Fund are series of Monetta Trust. Each Fund
is a "no-load" fund, and there are no sales or redemption charges. Each
series of the Trust has a 12b-1 plan.
Minimum Investment:
Initial Investment: $250
Subsequent Investments: No minimum
Automatic Investment Plan Subsequent Investment Minimum: $25
Plans Available:
Automatic Investment Plan
Individual Retirement Account
Education IRA
SIMPLE-IRA
Roth 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, or may be retrieved electronically for free from
http://www.sec.gov.
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 1>
SUMMARY
The Monetta Small-Cap Equity Fund, ("Small-Cap Fund"), 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 of the Funds is a "no-load" fund
and there are no sales or redemption charges. Each series of the Trust has a
12b-1 plan.
Investment Objectives
The MONETTA FUND, SMALL-CAP FUND, MID-CAP FUND, AND LARGE-CAP 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.
The MONETTA FUND generally invests in smaller and medium-sized companies
with market capitalizations ranging from $50 million to $1 billion. The
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.
The SMALL-CAP FUND typically invests in small-sized companies with market
capitalization less than $1 billion ("small-cap companies"). Under normal
market conditions, the Fund invests at least 65% of its total assets in common
stocks of small-cap companies.
The 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 65% of its total assets in common
stocks of mid-cap companies.
The LARGE-CAP FUND typically invests in large companies with market
capitalizations in excess of $5 billion ("large-cap companies"). Under normal
market conditions, the Fund invests at least 65% of its total assets in common
stocks of large-cap companies.
The 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 INTERMEDIATE BOND FUND seeks high current income, consistent with the
preservation of capital, by investing primarily in marketable debt securities.
The 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.
Investment Risks
All investments, including those in mutual funds, have risks. No investment is
suitable for all investors. The Monetta Fund, Small-Cap 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. The 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. The 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. The 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 the 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
<PAGE 2>
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
The Monetta Fund, Small-Cap Fund, Mid-Cap Fund, and Large-Cap Fund each pay
income dividends, if any, at least annually; the Balanced Fund pays income
dividends, if any, quarterly; and the 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 any of the Monetta Funds is $250. Additional
investments in ANY Fund can be made in any amount. No minimum amount is
required. Each Fund has a minimum account balance of $250.
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."
Advisor and Fees
Monetta Financial Services, Inc., (the "Advisor") is Investment Advisor to the
Funds. For a description of the Advisor and the advisory fees paid by the
Funds, see "Management of the Funds." The Small-Cap Fund, Mid-Cap Fund,
Large-Cap Fund, Balanced Fund, Intermediate Bond Fund, and Government Money
Market Fund have a Service and Distribution Plan adopted pursuant to rule 12b-1
under the Investment Company Act of 1940. See "Management of the Funds."
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 Small-Cap Mid-Cap Large-Cap Balanced Bond Money
Fund Fund Fund Fund Fund Fund Market Fund
<S> <C> <C> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load on Purchases NONE NONE NONE NONE NONE NONE NONE
Maximum Sales Load on Reinvested
Dividends NONE NONE NONE NONE NONE NONE NONE
Deferred Sales Load NONE NONE NONE NONE NONE NONE NONE
Redemption Fee (a) NONE NONE NONE NONE NONE NONE NONE
Telephone Exchange Fee $5.00 $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% 0.75% 0.75% 0.75% 0.40% 0.15%(d) 0.00%(d)
12b-1 Fees(c) NONE 0.25% 0.25% 0.25% 0.25% 0.25% 0.00%(d)
Other Expenses 0.48% 0.75% 0.26% 0.51% 0.37% 0.25% 0.39%(d)
Total Fund Operating Expenses 1.48% 1.75% 1.26% 1.51% 1.02% 0.65%(d) 0.39%(d)
</TABLE>
(a) If you request payment of redemption proceeds by wire, you must pay the
cost of the wire (currently $12.00).
(b) The Advisor pays all of the ordinary operating expenses of each Fund
except the fees and expenses of the Fund's transfer agent and custodian, the
non-interested board members, and the 12b-1 fees. 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) The 12b-1 fee is not based on historical data but is expected to equal the
maximum amount allowed under the plan. See "Service and Distribution Plan."
(d) In 1997, the Advisor voluntarily waived part or all of its management fees
for both the Intermediate Bond Fund and the Government Money Market Fund.
Additionally, the Advisor absorbed some of the other expenses for the
Government Money Market Fund. If the Advisor had not waived or absorbed these
fees and expenses, the "Total Fund Operating Expenses," which would have been
paid by the Intermediate Bond Fund in 1997, would have been 0.87% of Average
Net Assets (Management Fees would have been 0.35%). The "Total Fund Operating
Expenses," which would have been paid by the Government Money Market Fund,
would have been 0.76% of Average Net Assets in 1997 (Management Fees would have
been 0.25%, 12b-1 fees would have been 0.10%, and other expenses would have
been 0.41%). As of the date of the Prospectus, the waiver of management fees
for the Intermediate Bond Fund and the Government Money Market Fund continues
in effect, subject to review and possible termination by the Advisor at the
beginning of each quarter.
<PAGE 3>
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> <C>
Monetta Fund, Inc. $16 $48 $83 $182
Monetta Small Cap Equity Fund 18 57 N/A N/A
Monetta Mid-Cap Equity Fund 13 41 71 156
Monetta Large-Cap Equity Fund 16 49 85 185
Monetta Balanced Fund 11 33 58 128
Monetta Intermediate Bond Fund 7 21 37 83
Monetta Government Money Market Fund 4 13 22 51
</TABLE>
The purpose of this table is to assist the investor in understanding the
various costs and expenses that an investor might incur. 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 the Small-Cap Fund is new, the above amount is an estimate
and is projected only for the first three years of operations. See "Management
of the Funds."
<PAGE 4>
Financial Highlights
The following information for a share outstanding throughout each period
through 1997 has been audited by KPMG Peat Marwick LLP, independent auditors.
The audited financial statements for 1997 of the Monetta Fund are contained in
its 1997 annual report to Shareholders which may be obtained upon request at no
charge.
Monetta Fund
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value at
Beginning of Period $15.842 $15.591 $14.515 $15.539 $15.992 $15.731 $10.963 $10.441 $9.933 $9.649
_____________________________________________________________________________________________________________________
Net Investment Income
(Loss) (0.041) (0.079) 0.029 (0.026) (0.028) 0.006 0.081 0.103 0.219 0.106
Net Realized and Unrealized
Gain (Loss) on Investments 4.223 0.330 4.075 (0.938) 0.105 0.855 6.037 1.106 1.274 2.158
_____________________________________________________________________________________________________________________
Total from Investment
Operations 4.182 0.251 4.104 (0.964) 0.077 0.861 6.118 1.209 1.493 2.264
Less:
Distributions From Net
Investment Income 0 0 (0.028) 0 0 (0.006) (0.081) (0.103) (0.219) (0.106)
Distributions from Short
-Term Capital Gains, Net(a) (1.910) 0 (3.000) (0.060) (0.475) (0.594) (1.208) (0.584) (0.766) (1.874)
Distributions from Net
Realized Gains (0.840) 0 0 0 (0.055) 0 (0.061) 0 0 0
______________________________________________________________________________________________________________________
Total Distributions (2.750) 0 (3.028) (0.060) (0.530) (0.600) (1.350) (0.687) (0.985) (1.980)
______________________________________________________________________________________________________________________
Net Asset Value at
end of Period $17.274 $15.842 $15.591 $14.515 $15.539 $15.992 $15.731 $10.963 $10.441 $9.933
______________________________________________________________________________________________________________________
Total Return 26.18% 1.60% 28.02% (6.21)% 0.49% 5.49% 55.90% 11.37% 15.20% 23.07%
Ratio to Average Net Assets:
Expenses* 1.48% 1.38% 1.36% 1.35% 1.38% 1.45% 1.42% 1.50% 1.57%* 1.50%
Net Investment Income* (0.24%) (0.51)% 0.18% (0.15)% (0.19)% 0.16% 0.93% 1.09% 2.18%* 0.96%
Average Commission Paid
Per Equity Trade (b) $0.062 $0.063 - - - - - - - -
Portfolio Turnover 97.8% 204.8% 272.0% 191.3% 226.9% 126.6% 153.8% 206.5% 258.4% 170.4%
Net Assets ($ millions) $163.4 $211.5 $362.7 $364.9 $524.3 $408.0 $57.1 $6.1 $3.5 $2.6
_____________________________________________________________________________________________________________________
</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.
(a) Distributions of short-term capital gains are included as ordinary income
for tax purposes.
(b) Represents the average commissions per share paid on equity transactions
entered into during the period on which commissions were paid. This disclosure
is not applicable for periods prior to 1996.
The per share ratios are calculated using the weighted average number of shares
outstanding during the period except distributions which are based on shares
outstanding at record date.
<PAGE 5>
FINANCIAL HIGHLIGHTS
The following information for a share outstanding throughout each period
through 1997 has been audited by KPMG Peat Marwick LLP, independent auditors.
The audited financial statements for 1997 of the Small-Cap Fund, Mid-Cap Fund,
Large-Cap Fund, Balanced Fund, Intermediate Bond Fund, and Government Money
Market fund are contained in its 1997 annual report to Shareholders which may
be obtained upon request at no charge.
Monetta Trust
<TABLE>
<CAPTION>
Small-Cap Mid-Cap Large-Cap
Equity Equity Equity
Fund Fund Fund
____________________________________________________________________________________________________________________
2/1/97 3/1/93 9/1/95
Through Through Through
12/31/97 1997 1996 1995 1994 12/31/93 1997 1996 12/31/95
____________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset value at
Beginning of period $10.000 $14.814 $11.962 $12.199 $12.537 $10.000 $12.266 $10.571 $10.000
____________________________________________________________________________________________________________________
Net Investment Income(Loss) (0.148) (0.045) 0.044 0.059 0.071 0.006 (0.007) 0.023 0.005
Net Realized and Unrealized
Gain (Loss) on Investments 4.878 4.296 2.852 2.874 0.193 3.531 3.250 2.928 0.570
____________________________________________________________________________________________________________________
Total from Investment
Operations 4.730 4.251 2.896 2.933 0.264 3.537 3.243 2.951 0.575
Less:
Distributions from Net
Investment Income 0 0 (0.044) (0.050) (0.069) (0.006) 0 (0.023) (0.004)
Distributions from Short-
Term Capital Gains,Net(a) (0.830) (1.452) 0 (2.990) (0.533) (0.994) (1.113) (1.188) 0
Distributions from Net
Realized Gains 0 (2.638) 0 (0.130) 0 0 (1.037) (0.045) 0
_____________________________________________________________________________________________________________________
Total Distributions (.830) (4.090) (0.044) (3.170) (0.602) (1.000) (2.150) (1.256) (0.004)
_____________________________________________________________________________________________________________________
Net Asset Value at
end of period $13.900 $14.975 $14.814 $11.962 $12.199 $12.537 $13.359 $12.266 $10.571
_____________________________________________________________________________________________________________________
Total Return* 47.17% 29.14% 24.20% 24.54% 2.17% 35.40% 26.64% 28.20% 5.74%
Ratios to Average Net Assets:
Expenses-Net 1.75% 1.26% 1.23% 1.25% 1.30% 1.12% 1.51% 1.51% 0.69%
Net Investment Income (1.13)% (0.28)% 0.32% 0.44% 0.57% 0.07% (0.05)% 0.31% 0.05%
Average Commission Paid
per Equity Trade (b) $0.056 $0.068 $0.066 - - - $0.058 $0.051 -
Portfolio Turnover 138.8% 137.8% 93.3% 254.4% 210.0% 128.1% 123.2% 152.7% 38.2%
Net Assets ($ thousands) $2,518 $21,908 $17,338 $14,216 $11,736 $9,841 $4,265 $2,288 $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.
(a) Distributions of short-term capital gains are included as ordinary
income for tax purposes.
(b) Represents the average commissions paid on equity transactions during
the period where commissions were applicable. This disclosure is not
applicable for periods prior to 1996.
The per share ratios are calculated using the weighted average number of
shares outstanding during the period except distributions which are based on
shares outstanding at record date.
<PAGE 6>
Monetta Trust
<TABLE>
<CAPTION>
Intermediate
Balanced Bond
Fund Fund
------------------------- ----------------------------------------------
9/1/95 3/5/93
Through Through
1997 1996 12/31/95 1997 1996 1995 1994 12/31/93
__________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value at
Beginning of Period $12.643 $10.605 $10.000 $10.208 $10.244 $9.624 $10.345 $10.000
__________________________________________________________________________________________________________
Net Investment Income 0.264 0.132 .0009 0.599 0.612 0.655 0.589 0.357
Net Realized and Unrealized
Gain (Loss) on Investments 2.398 2.598 0.602 0.278 0.019 0.740 (0.690) 0.447
__________________________________________________________________________________________________________
Total from Investment
Operations 2.662 2.730 0.611 0.877 0.631 1.395 (0.101) 0.804
Less:
Distributions from Net
Investment Income (0.224) (0.132) (0.004) (0.592) (0.612) (0.655) (0.580) (0.357)
Distributions from Short-
Term Capital Gains,Net(a) (0.927) (0.560) (0.002) (0.047) (0.055) (0.120) (0.040) (.102)
Distributions from Net
Realized Gains (0.076) 0 0 (0.001) 0 0 0 0
__________________________________________________________________________________________________________
Total Distributions (1.227) (0.692) (0.006) (0.640) (0.667) (0.775) (0.620) (0.459)
__________________________________________________________________________________________________________
Net Asset Value at
end of period $14.078 $12.643 $10.605 $10.445 $10.208 $10.244 $9.624 $10.345
__________________________________________________________________________________________________________
Total Return* 21.21% 25.94% 6.16% 8.91% 6.46% 14.84% (1.04)% 8.17%
Ratios to Average Net Assets:
Expenses - Net 1.02% 1.40% 0.91% 0.65% 0.55% 0.27% 0.28% 0.28%
Expenses - Gross (b) N/A N/A N/A 0.87% 08.5% 0.75% 0.88% 0.75%
Net Investment Income 1.88% 1.54% 0.08% 5.82% 5.75% 5.94% 5.94% 4.13%
Net Investment Income-
Gross (b) N/A N/A N/A 5.60% 5.45% 5.46% 5.34% 3.66%
Average Commission Paid
Per Equity Trade (c) $0.060 $0.056 ---- N/A N/A N/A N/A N/A
Portfolio Turnover 115.9% 117.8% 54.8% 96.7% 28.9% 75.1% 94.5% 32.3%
Net Assets ($ thousands) $12,054 $2,336 $410 $3,933 $2,769 $3,589 $3,010 $2,959
__________________________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
Government
Money Market
Fund
3/1/93
Through
1997 1996 1995 1994 12/31/93
______________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Net Asset Value at
Beginning of Period $1.000 $1.000 $1.000 $1.000 $1.000
______________________________________________________________________________
Net Investment Income .050 0.049 0.059 0.040 0.023
Net Realized and Unrealized
Gain (Loss) on Investments 0 0 0 0 0
______________________________________________________________________________
Total from Investment Operations .050 0.049 0.059 0.040 0.023
Less:
Distributions from Net
Investment Income (.050) (0.049) (0.059) (0.040) (0.023)
Distributions from Short-Term
Capital Gains, Net (a) 0 0 0 0 0
Distributions from Net Realized
Gains 0 0 0 0 0
______________________________________________________________________________
Total Distributions (.050) (0.049) (0.059) (0.040) (0.023)
______________________________________________________________________________
Net Asset Value at end of period $1.000 $1.000 $1.000 $1.000 $1.000
______________________________________________________________________________
Total Return* 5.15% 5.06% 5.87% 4.04% 2.21%
Ratios to Average Net Assets:
Expenses - Net 0.39% 0.31% 0.07% 0.00% 0.03%
Expenses - Gross (b) 0.76% 0.67% 0.59% 0.66% 0.69%
Net Investment Income 5.02% 4.95% 5.69% 4.04% 2.32%
Net Investment Income-Gross(b) 4.65% 4.59% 5.17% 3.39% 1.66%
Average Commission Paid N/A N/A N/A N/A N/A
Per Equity Trade (c)
Portfolio Turnover N/A N/A N/A N/A N/A
Net Assets ($ thousands) $4,464 $6,232 $4,393 $3,315 $1,859
______________________________________________________________________________
</TABLE>
*Ratios and total return for the year of inception
are calculated from the date of inception to the
end of the period.
(a) Distributions of short-term capital gains are
included as ordinary income for tax purposes.
(b) Ratios of expenses and net income adjusted to
reflect investment advisory fees and charges of
the Trust's custodian and transfer agent assumed
by the investment advisor.
(c) Represents the average commissions paid on
equity transactions during the period where
commissions were applicable. This disclosure is
not applicable for periods prior to 1996.
<PAGE 7>
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, Small-Cap Fund, Mid-Cap Fund, and
Large-Cap Fund
The Monetta Fund, Small-Cap Fund, Mid-Cap Fund,
and Large-Cap 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.
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 Advisor'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 Advisor may invest up
to 20% of Monetta Fund's assets and 25% of the
assets of the Small-Cap Fund, Mid-Cap Fund, and
Large-Cap Fund's assets in securities not meeting
the above criteria but believed by the Advisor 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.
The Monetta Fund, Small-Cap 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 Advisor
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.
The 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
the 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 U. S.
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.
The Monetta Fund generally invests in smaller
companies with aggregate market capitalizations
ranging from $50 million to $1 billion. See "Risks
and Investment Considerations - Equity
Securities."
The SMALL-CAP FUND typically invests in smaller
companies with market capitalization of less than
$1 billion. See "Risks and Investment
Considerations - Equity Securities." Under normal
market conditions, the Fund invests at least 65%
of its total assets in common stocks of small-cap
companies.
The MID-CAP FUND typically invests in medium-sized
companies with market capitalizations of $1
billion to $5 billion. See "Risks and Investment
Considerations - Equity Securities." Under normal
market conditions, the Fund invests at least 65%
of its total assets in common stocks of mid-cap
companies.
The LARGE-CAP FUND typically invests in large
companies with market capitalizations in excess of
$5 billion. See "Risks and Investment
Considerations - Equity Securities." Under normal
market conditions, the Fund invests 65% of its
total assets in common stocks of large-cap
companies.
<PAGE 8>
* Balanced Fund
The 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 the Balanced Fund
combines the equity growth strategy used for the
Monetta Fund, Small-Cap Fund, Mid-Cap Fund, and
Large-Cap Fund and the income strategy employed by
the 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 Advisor's analysis of market,
financial, and economic conditions. Under normal
circumstances, the Fund invests 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 Advisor to be of
comparable credit quality. See "Risks and
Investment Considerations - Debt Securities."
* Intermediate Bond Fund
The 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, the 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 Advisor to be of credit quality
comparable to the commercial paper in which the
Fund may invest; or
(5) Bank obligations, including repurchase
agreements,* of banks having total assets in
excess of $500 million.
____________________________
Under normal market conditions, 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 Advisor 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
Advisor 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 Advisor 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.
*A repurchase agreement is a sale of securities to a
Fund in which the seller (a bank or broker-dealer
believed by the Advisor 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.
<PAGE 9>
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 Advisor 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 Advisor would consider such a
change in deciding whether the Fund should retain
the security in its portfolio. See "Risks and
Investment Considerations - Debt Securities." The
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
Advisor to be of comparable credit quality.
* Government Money Market Fund
The 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
(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."
<PAGE 10>
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
depends 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.
The MONETTA FUND, SMALL-CAP 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.
The 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.
The 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 the 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.
The 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
the 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 the
Government Money Market Fund will be able at all
times to maintain its net asset value per share at
$1.00.
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
Advisor 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.
<PAGE 11>
SHORT-TERM INVESTMENT. The Funds (other than the
Government Money Market Fund) may make short-term
investments without limitation in periods when the
Advisor determines that a temporary defensive
position is warranted. Such investments may be in
U. S. Government Securities of the type in which
the 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
Advisor's judgment, to commercial paper rated in
the highest category.
LOANS OF PORTFOLIO SECURITIES. Subject to certain
restrictions, the 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 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. The
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 Advisor
deems it advisable for investment reasons. The
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. The 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, the 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 contracts
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 Advisor's
ability to correctly predict 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 the
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.
<PAGE 12>
PORTFOLIO TURNOVER. The Monetta Fund and Small-
Cap Fund engage in an above-average number of
portfolio transactions. Their annual portfolio
turnover rates are 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).
The 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, the 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 U. S. 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).
* Small-Cap Fund
* 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 the 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.
Investment Return
"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.
The 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.
<PAGE 13>
Because the 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. The 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.
More information about a Fund's performance is
included in its 1997 annual report to
Shareholders, a copy of which may be obtained upon
request at no charge.
How to Purchase Shares
You may purchase shares of any of the Funds by
telephone (if you have the ACH plan), by check, by
wire (into an existing account only), or by
exchange from your account with another Monetta
Fund. Your initial investment in any of the
Monetta Funds must be at least $250. There is NO
minimum additional investment amount. Each Fund
has a minimum account balance of $250. If you are
purchasing shares to be held by a tax-sheltered
retirement plan sponsored by the Advisor, 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.
Additional shares may be purchased via the
Automatic Investment Plan. See "Shareholder
Services - Automatic Investment Plan." INITIAL
PURCHASES BY AN INDIVIDUAL SHAREHOLDER CANNOT BE
MADE BY TELEPHONING OR FAXING AN APPLICATION TO
THE FUNDS OR THE TRANSFER AGENT.
Purchase by Telephone
By using the Funds' telephone purchase option, you
may move money from your bank account to your Fund
account at your request. Only bank accounts held
at domestic financial institutions that are
Automated Clearing House (ACH) members may be used
for telephone transactions. The option will
become effective approximately 15 business days
after the application form is received.
Subsequent investments may be made by calling 1-
800-241-9772. To have your Fund shares purchased
at the offering price determined at the close of
regular trading on a given date, the transfer
agent must receive both your purchase order and
payment by Electronic Funds Transfer through the
ACH System before the close of regular trading on
such a date. Most transfers are completed within
one business day. You may not use telephone
purchase transactions for initial purchases of
Fund shares. If money is moved by ACH transfer,
you will not be charged by the Funds for these
services. The minimum amount that can be
transferred by telephone is $25. The Funds
reserve the right to modify or remove the ability
to purchase shares by telephone at any time.
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 by
check 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
return item fee and any resulting loss incurred by
the Fund.
<PAGE 14>
Purchase 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.
Purchase 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."
Purchase Through Intermediates
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. If you purchase shares
through an investment dealer, the dealer will be
responsible for promptly forwarding your order to
the Fund's transfer agent. 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. In
some cases, the Funds and the Advisor may enter
into arrangements with such intermediaries by
which a Fund may pay to such an intermediary up to
0.25% of the value of shares purchased through
that intermediary, to compensate the intermediary
for the services provided to those Fund
Shareholders and the intermediary's distribution-
related services. Any payments by a Fund would be
pursuant to its Service and Distribution Plan.
Any such payments by a Fund are borne by all Fund
Shareholders, not just those purchasing shares
through such intermediaries. See "Management of
the Funds - Service and Distribution Plan." The
Advisor may pay additional amounts to such
intermediaries from the Advisor's own resources.
Purchase Price of Shares
The price paid for shares is the net asset value
per share of a Fund next determined after receipt
of your purchase order in proper form by Firstar
Trust Company (the "Transfer Agent") or an
authorized sub-transfer agent. 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." Each Fund
reserves 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.
The purchase order is considered to have been
placed when it is received in proper form by the
Transfer Agent or by an authorized sub-transfer
agent. 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 and
redemption privileges.
<PAGE 15>
How to Redeem Shares
Redemption for Cash
IN WRITING. You may redeem all or part of the
shares in your account, without charge, by sending
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.
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 TELEPHONE. You may redeem shares having a
value up to $50,000 by calling Firstar at 1-800-
241-9772, if telephone redemption is available for
your account. For new accounts started after
February 2, 1997, telephone redemptions can be
authorized on the account application. Telephone
redemption is automatically available for accounts
which existed prior to February 2, 1997. To
terminate your option to redeem, please call 1-
800-MONETTA for the appropriate forms. Reasonable
procedures are used to confirm that instructions
received by telephone are genuine, such as
requesting personal identification information
that appears on the purchase application and
recording the conversation. The shareholder bears
the risk of any loss that might result from a
fraudulent instruction, although a Fund may bear
such risk if reasonable procedures were not used.
To reduce the risk of a fraudulent instruction,
proceeds of telephone redemptions may be sent only
to the shareholder's address of record or to a
bank or brokerage account designated by the
shareholder, in writing, on the purchase
application or in a letter with the signature(s)
guaranteed. The Funds reserve the right to record
all telephone redemption requests. See "General
Redemption Policies" below.
BY ACH TRANSFER. Redemption proceeds can be sent
to your bank account by ACH transfer. You can
elect this option by completing the appropriate
section of the purchase application. If money is
moved by ACH transfer, you will not be charged by
the Funds for these services. There is a $25
minimum per ACH transfer. Typically, funds are
credited to your bank account within three
business days.
<PAGE 16>
For Information on how to redeem shares through
intermediaries, see "How to Purchase Shares -
Purchases Through Intermediaries."
Redemption 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 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.
Redemption 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 the Government Money Market Fund
Shareholders. The Checkwriting Privilege is not
available for IRAs or other retirement accounts.
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.
<PAGE 17>
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 Advisor, 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 $12.00).
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 through
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.
During periods of volatile economic and market
conditions, you may have difficulty placing your
redemption or exchange by telephone, which might
delay implementation of the redemption or
exchange. Use of the Telephone Redemption or
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.
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.
Dividends, Distributions, and Federal Taxes
The Monetta Fund, Small-Cap Fund, Mid-Cap Fund,
and Large-Cap Fund declare and pay income
dividends, if any, at least annually. The
Balanced Fund pays income dividends, if any,
quarterly. The Intermediate Bond Fund declares
and pays income dividends monthly. Income
dividends of the 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
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.
<PAGE 18>
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.
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 Advisor 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 the Government Money Market Fund
The 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 of 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.
Certain Account Changes
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 $25 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 $25 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.
Payroll deduction is available for certain
qualifying employers; please call 1-800-MONETTA
for further information. 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 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 G 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 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.
<PAGE 19>
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 Advisor 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 Advisor 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.
EDUCATION IRA, providing tax-free earnings growth
and tax-free withdrawals for certain higher
education expenses (contributions not deductible).
ROTH IRA, providing tax-free earnings growth and
tax-free withdrawals with certain greater
flexibility than Traditional IRAs (contributions
not deductible).
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.
SAVINGS INCENTIVE MATCH PLANS (SIMPLE-IRAS)
permitting employers to provide retirement
benefits, including salary deferral, to their
employees using IRAs and minimizing administration
and reporting requirements.
Promotional Activities
From time to time, the advisor to each of the
Funds may undertake various promotional activities
with the view to increasing the assets or the
number of shareholder accounts of one or more of
the Funds. Those activities may include the
purchase by the Advisor on behalf of a new or
current shareholder of a Fund of additional shares
of such Fund, which purchases would be paid for by
the Advisor out of its own resources.
<PAGE 20>
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.
Investment Advisor
Each Fund's investments are managed by the
investment Advisor, MONETTA FINANCIAL SERVICES,
INC. (the "Advisor"). Subject to the overall
authority of the respective Boards, the Advisor
manages the business and investments of the Funds
under investment advisory agreements. The Advisor
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 and
transfer agent, fees, and expenses of the non-
interested board member and payments under a
Fund's Service and Distribution Plan. The Advisor
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
Advisor's address is 1776-A S. Naperville Road,
Suite 100, Wheaton, IL 60187.
The Advisor employs a team approach to the
management of the Fund. The management team is
comprised of the lead portfolio manager, other
Advisor portfolio managers, and research analysts.
Team members share responsibility for providing
ideas, information, knowledge, and expertise in
managing the Fund. Each team member has one or
more areas of expertise that is applied to the
management of the Fund. Daily decisions on
portfolio selection rest with the lead portfolio
manager who utilizes the input and advice of the
management team in making purchase and sale
determinations.
Mr. Robert S. Bacarella and Mr. Kevin D. Moore are
co-managers for all of the Monetta Family of Funds
with Mr. Bacarella as the lead manager for the
Monetta Fund and the Small-Cap Fund and Mr. Moore
as the lead manager for the Mid-Cap, Large-Cap,
Balanced, Intermediate Bond, and Government Money
Market Funds.
Mr. Bacarella has been Chairman and CEO of the
Advisor since October, 1996; Director since 1984;
and President of the Advisor from 1984 to 1996 and
April 1997 to present. He has served as the
portfolio manager of the Monetta Fund since it
began operations. Mr. Bacarella was Director -
Pension Fund Investments for Borg-Warner
Corporation until 1989.
Mr. Moore joined the Advisor as senior analyst in
October 1995. He has served as the co-manager of
the Large-Cap Fund and Balanced Fund since May
1996. Mr. Moore was a senior portfolio manager
and Vice President of First of America Investment
Corporation from 1992 to 1995. He was directly
responsible for managing over $450 million in
assets.
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, the fees and expenses of the non-interested
Directors and Trustees and payments under a Fund's
Service and Distribution Plan, the Advisor
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 the
Monetta Fund is 1% of average net assets; for each
of the Small-Cap Fund, Mid-Cap Fund, and Large-Cap
Fund is 0.75 of 1% of average net assets; for the
Balanced Fund is 0.40 of 1% of average net assets;
for the Intermediate Bond Fund is 0.35 of 1% of
average net assets; and for the Government Money
Market Fund is 0.25 of 1% of average net assets.
Monetta Fund, the Trust, and the Funds use
"Monetta" in their names by license from the
Advisor and would be required to stop using those
names if Monetta Financial Services, Inc., ceased
to be the Advisor. The Advisor has the right to
use the name for other enterprises, including
other investment companies.
The Advisor 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 Advisor 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 Investment Services, L.L.C., a registered
broker-dealer and an affiliate of the Advisor.
<PAGE 21>
At February 28, 1998, the Advisor owned 8.6% of
the outstanding shares of the Small-Cap Fund, 5.6%
of the outstanding shares of the Balanced Fund,
9.6% of the outstanding shares of the Government
Money Market Fund, 19.4% of the outstanding shares
of the Intermediate Bond Fund, 4.0% of the
outstanding shares of the Large-Cap Fund, and less
than 1% of the Monetta Fund and the Mid-Cap Fund.
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 Advisor's vote to approve or disapprove
any proposal requiring the approval of the
Shareholders of the Trust.
Pending Government Proceeding
On February 26, 1998, the Securities and Exchange
Commission issued an order instituting public
administrative cease-and-desist proceedings
entitled "In the Matter of Monetta Financial
Services, Inc., et al." (File No. 3-9546) against
Monetta Financial Services, Inc., Robert S.
Bacarella, Richard D. Russo, William M. Valiant,
and Paul W. Henry. The action alleges that the
defendants violated Section 17(a) of the
Securities Act of 1933, Section 10(b) of the
Securities Exchange Act of 1934 and Rule 10b-5
thereunder, and Section 206 of the Investment
Advisors Act of 1940, because they failed to
disclose that securities issued by third parties
in initial public offerings in 1993 were allocated
partly to Messrs. Russo, Valiant, and Henry, who
were either Trustees or Directors of publicly-
traded mutual funds advised by the Advisor, and
partly to the mutual fund and other clients of
Advisor, instead of solely to the mutual fund and
other clients of Advisor. The defendants do not
believe that these actions violated any of the
noted Sections or Rules, and are contesting the
action.
Distributor
Shares of each Fund are distributed by Funds
Distributor, Inc., 60 State Street, Boston,
Massachusetts 02109.
Distribution and Service Plan
Pursuant to a Service and Distribution Plan (the
"Plan") adopted by each series of the Trust
pursuant to Rule 12b-1 under the Investment
Company Act of 1940 as amended (the "Act"), each
series of the Trust may compensate service
organizations for their accounting, shareholder
services, and distribution services in amounts up
to 0.25 of 1% for the Small-Cap Fund, Mid-Cap
Fund, Large-Cap Fund, Balanced Fund, and
Intermediate Bond Fund and 0.10 of 1% for the
Government Money Market Fund per annum of the
values of accounts of Shareholders purchasing
through such organizations. In addition, each
Fund may pay for other services relating to
distribution of Fund shares, including the fees
and expenses of the distributor, the registration
fees payable to the states and other jurisdictions
in which Fund shares are offered for sale, and the
cost of printing prospectuses and shareholder
reports used for marketing purposes. The maximum
amounts payable by a Fund under the Plan, for
service fees and other distribution related
expenses, are 0.10 of 1% of the average net assets
of the Government Money Market Fund and 0.25 of 1%
of the average net assets of each of the Small-Cap
Fund, Mid-Cap Fund, Large-Cap Fund, Balanced Fund,
and Intermediate Bond Fund. Additional service
fees and additional amounts for other
distribution-related expenses may be paid by the
Advisor from its own resources.
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
The 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.
<PAGE 22>
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.
* The Trust
The Small-Cap Fund, 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 or 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.
<PAGE 23>
TABLE OF CONTENTS
Summary 2
Fund Expenses 3
Financial Highlights 5
Investment Objectives and Policies 8
Risks and Investment Considerations 11
Investment Restrictions 13
Investment Return 13
How to Purchase Shares 14
How to Redeem Shares 16
Dividends, Distributions, and Federal Taxes 18
Determination of Net Asset Value 19
Shareholder Services 19
Tax-Sheltered Retirement Plans 20
Management of the Funds 21
Other Information 22
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 ADVISOR:
Monetta Financial Services, Inc.
ADDRESS OF FUNDS AND ADVISOR:
1776-A South Naperville Road
Suite 100
Wheaton, Illinois 60187-8133
DISTRIBUTOR:
Funds Distributor, Inc.
Boston, Massachusetts 02109
AUDITORS:
KPMG Peat Marwick LLP
Chicago, Illinois 60601
LEGAL COUNSEL:
Sonnenschein, Nath & Rosenthal
Chicago, Illinois 60606
Monetta Fund, Inc.
Monetta Small-Cap Equity Fund
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
PROSPECTUS
April 28, 1998
<PAGE 24>
Share Purchase Application
MAIL COMPLETED APPLICATION TO:
Monetta Funds
c/o Firstar Trust Company
Mutual Fund Services
P.O. Box 701
Milwaukee, WI 53201-0701
OVERNIGHT EXPRESS MAIL TO:
Monetta Funds
c/o Firstar Trust Co.
615 East Michigan Street, 3rd Floor
Milwaukee, WI 53202
1-800-MONETTA
Make Checks Payble to: Monetta Funds
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.
A. Account Registration
[_]Individual [_]Joint Owner*
Name_______________________________ Birthdate________________
Social Security Number__________________Citizen of [_] US [_] Other
Joint Owner Name________________________Birthdate________________
Social Security Number__________________Citizen of [_] US [_] Other
* Registration will be Joint Tenants with Rights of Survivorship (JTWROS)
unless otherwise specified.
[_]Gift to Minor
Custodian_______________________________________________________________
Minor__________________________________________ Minor's Birthdate_________
Minor's Social Security Number__________________Citizen of [_] US [_] Other
[_]Corporation, Partnership , or Other Entity
Name of Legal Entity______________________________________________________
Taxpayer Identification Number______________________________________________
<>A corporation resolution form or certificate is required for
corporation accounts.
[_]Trust, Estate,or Guardianship
Name___________________________________________________________________
Name of Fiduciary(s)______________________________________________________
Taxpayer Identification Number________________________Date of Trust__________
<>Additional documentation and certification may be requested.
B. Mailing Address []Send Duplicate Confirmation To:
_____________________________________ ___________________________________
Street Address, Apt. # Name
_____________________________________ ___________________________________
City, State, Zip Code Street Address, Apt #
_____________________________________ ___________________________________
Daytime Phone Number City, State, Zip Code
- -----------------------------------------------------------------------------
C. Investment Choices
The minimum initial investment is $250 for shares in any of the
Monetta Funds. There is no minimum for subsequent investments; however, for
the Automatic Investment Plan the minimum is $25.
Distribution Options
Capital Gains and Distributions
Amount Reinvested Cash
[_]MONETTA FUND $ [_] [_]
[_]MONETTA SMALL-CAP EQUITY 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.)
D. Telephone Options
Your signed Application must be received at least 15 business days prior to
initial transaction.
An unsigned voided check (for checking accounts) or a savings
account deposit slip is required with your Application.
[_]Check if savings account
TELEPHONE REDEMPTION. The proceeds will be mailed to the address in
Section B. The telephone redemption privilege automatically
applies unless you check the box below.
[_]I DO NOT authorize telephone redemption
If you have not declined telephone redemption and you elect to have the
amount deposited (via wire payment) to your bank account, complete bank
account information below. A $12.00 fee will be charged to your account
for each wire transfer.
TELEPHONE EXCHANGE. Permits the exchange of shares between
identical registered accounts. The telephone exchange privilege
automatically applies unless you check the box below.
[_]I DO NOT authorize telephone exchange
[_]Telephone Redemption (ACH). The proceeds will be electronically sent to
your bank account. Complete bank account information below.
[_]Telephone Purchase (ACH). Permits the purchase of additional shares
using your bank account to clear the transaction. Minimum of $25.00.
Complete bank account information below.
Name(s) on Bank Account_____________________________________________________
Bank Name__________________________________Account Number____________________
Bank Address_________________________________________________________________
______________________________________________________________________________
E. Checkwriting
Monetta Government Money Market Fund Only. Not available for IRA or
other retirement accounts.
_____________________
Account Number|_____________________|
|_____________________|
(for Bank Use Only)
[_]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 deposit 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.
______________________________________________________________________________
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, other entity, or joint account, how many authorized
signatures are required?__________________
<PAGE>
______________________________________________________________________________
F. Backup Withholding
If the IRS has notified you that you are subject to backup
withholding, check this box. [_]
______________________________________________________________________________
G. 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.
[_]Check if savings account
Please start my AIP in the Monetta___________Fund as described in the
Prospectus beginning: Month ______________ Year ____________. I hereby
instruct Firstar Trust Company, transfer agent for
the Monetta Funds, to automatically transfer $_____________ (minimum
of $25.00) [_]Monthly [_]Quarterly directly from my
checking, NOW, or savings account named below on the ___________ day
of each month or quarter or the first business day thereafter into my
account. I understand that I will be assessed a $20.00 fee if the automatic
purchase cannot be made due to insufficient funds, stop payment, or for any
other reason. Automatic Investment Plan contributions to your IRA will
be reported as current year contributions.
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).
______________________________________________________________________________
H. Signature & Certification
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 A of the
application, by signing the application, I: (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 Redemption and Exchange Privilege(s) will
apply to my account unless I have specifically declined the privilege in
Part D of this application. I understand that by signing this
application, unless the Privilege(s) 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(s), 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 attributed 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 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 F of this application if the
IRS has notified you that you are subject to backup withholding.)
____________________________________ ______________________________________
Signature* Date Signature of Co-Owner, if any Date
* 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 below.
______________________________________________________________________________
Print name and title of officer signing for a corporation or other entity.
______________________________________________________________________________
I. Dealer Information
Please be sure to complete representative's first name and middle initial.
____________________________________ _________________________________________
Dealer Name Representative's Last Name First Name MI
DEALER HEAD OFFICE REPRESENTATIVE'S BRANCH OFFICE
____________________________________ _________________________________________
Address Address
____________________________________ _________________________________________
City, State Zip City, State, Zip
____________________________________ _________________________________________
Telephone Number Telephone Number
B.N. 0 ____ ____ ____ ____ _________________________________________
For Internal Use Only Rep's A.E. Number
______________________________________________________________________________
Condition 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 checkwriting 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.
STATEMENT OF ADDITIONAL INFORMATION
APRIL 28, 1998
MONETTA FUND, INC.
MONETTA TRUST
NO-LOAD FUNDS
MONETTA FUND, INC.
MONETTA SMALL-CAP EQUITY FUND
MONETTA MID-CAP EQUITY FUND
MONETTA LARGE-CAP EQUITY FUND
MONETTA BALANCED FUND
MONETTA INTERMEDIATE BOND FUND
MONETTA GOVERNMENT MONEY MARKET FUND
1776-A SOUTH NAPERVILLE ROAD, SUITE 100
WHEATON, IL 60187
1-800-MONETTA
(1-800-666-3882)
TABLE OF CONTENTS
Other Fund Information.............................................B-1
Investment Objectives and Policies ................................B-1
Risks and Investment Considerations ...............................B-5
Investment Restrictions ..........................................B-10
Performance Information ..........................................B-14
Investment Advisor ...............................................B-17
Service and Distribution Plan ....................................B-18
Directors/Trustees and Officers ..................................B-20
Purchasing and Redeeming Shares ..................................B-23
More Information About Net Asset Value ...........................B-24
Tax Status .......................................................B-25
Portfolio Transactions ...........................................B-26
Distributor ......................................................B-29
Custodian ........................................................B-30
Independent Auditors .............................................B-30
Appendix - Ratings ...............................................B-31
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 28, 1997, and any supplement thereto. The
Prospectus and additional copies of the annual and semi-annual reports may
be obtained without charge by writing or telephoning the Funds at the
address or telephone number shown above.
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. The
Monetta Small-Cap Equity Fund ("Small-Cap Fund"), 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"). The Monetta Fund and each of
the Trust series are collectively referred to as the "Funds."
The 1997 annual report of The Monetta Fund and the Trust, a copy of which
accompanies this Statement of Additional Information, contains 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.
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 the Small-Cap Fund, Mid-Cap
Fund, Large-Cap Fund, and Balanced Fund, the Advisor 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.
{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
. Monetta Fund, Small-Cap Fund, Mid-Cap Fund, and Large-Cap Fund
The Monetta Fund, Small-Cap 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 Advisor's emphasis is on common stocks with improving earnings
per share growth, a history of growth and sound management, and a strong
balance sheet. The Advisor may invest up to 20% of the Monetta Fund's
assets and 25% of the Small-Cap Fund, Mid-Cap Fund, and Large-Cap Fund's
assets in securities not meeting the above criteria but believed by the
Advisor 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.
The 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 longer-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").
The Monetta Fund generally invests in smaller companies with aggregate
market capitalizations ranging from $50 million to $1 billion.
The SMALL-CAP FUND typically invests in small-sized companies with market
capitalization of less than $1 billion ("small-cap companies"). Under
normal market conditions, the Fund invests at least 65% of its total assets
in common stocks of small-cap companies.
The 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 65% of its total assets
in common stocks of mid-cap companies.
The LARGE-CAP FUND typically invests in large companies with market
capitalizations in excess of $5 billion ("large-cap companies"). Under
normal market conditions, the Fund invests at least 65% of its total assets
in common stocks of large-cap companies.
. BALANCED FUND
The 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.
B-2
The investment approach for the Balanced Fund combines the equity growth
strategy used for the Monetta Fund, Small-Cap 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 Advisor's analysis of market,
financial, and economic conditions. Under normal circumstances, the Fund
invests 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 Advisor to be of
comparable credit quality.
. INTERMEDIATE BOND FUND
The INTERMEDIATE BOND FUND seeks high current income, consistent with the
preservation of capital, by investing primarily in marketable debt
securities.
Under normal market conditions, the Intermediate Bond Fund invests at least
65% of the 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 Advisor to
be of credit quality comparable to the commercial paper in which the
Fund may invest; or
5. Bank obligations, including repurchase agreements{2} of banks having
total assets in excess of $500 million.
. GOVERNMENT MONEY MARKET FUND
The 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:
B-3
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, 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.
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 Advisor 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
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
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. In pursuing its investment objective, each 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 a 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 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 a 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.
The value of convertible securities is influenced by both the yield of
nonconvertible 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
B-5
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 Advisor will consider
substantially the same criteria that would be considered in purchasing the
underlying stock. 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 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
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 Advisor's judgment, a material
event requiring a Shareholder's 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. The 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
Advisor deems it advisable for investment reasons. At the time a Fund
enters into a binding obligation to purchase securities on a when-issued or
delayed-delivery basis, assets 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
B-6
the period of the obligation. The use of this investment strategy 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 Advisor 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. The 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, assets
having a value at least equal to that 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.
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 affected when a Fund desires.
B-7
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.
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.
B-8
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 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
{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
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.
PORTFOLIO TURNOVER. The Monetta Fund and Small-Cap Fund engage in an above-
average number of portfolio transactions. Their annual portfolio turnover
rates are 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). The 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 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 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);
B-10
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;
9. The Fund will not purchase or retain the securities of any issuer if
the Officers and Directors of the Fund or its Investment Advisor 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), 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
B-11
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 a 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;
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;
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);{4} (for Government Money Market Fund) (a) purchasing U.S.
Government Securities or (b) entering into repurchase agreements;
{4} Although they have the power to do so, the Balanced Fund and Intermediate
Bond Fund do not intend to lend portfolio securities.
B-12
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 maybe 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; {5}
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;
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;
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;
[/R]
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, the Small-
Cap Fund, 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 Shareholders' 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 more than 5% of its total assets (valued at time of
investment) in securities of issuers with less than three years'
operation (including predecessors);
c. Acquire securities of other registered investment companies except
in compliance with the Investment Company Act of 1940 and applicable
state law;
{5} The Funds do not currently intend to invest in restricted securities.
B-13
d. 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.
PERFORMANCE INFORMATION
YIELD. The 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:
YIELD = 2(((a-b/cd) + 1){6} - 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).
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, 1997, was
5.25 %.
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
B-14
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.
For the seven days ended December 31, 1997, the Government Money Market
Fund's current seven-day yield was 5.05% and the effective yield was 5.18%.
TOTAL RETURN. From time to time, each Fund may give information about its
performance by quoting figures in advertisements and sales literature.
"Average Annual Total Return" is the average annual compounded rate of
change in value represented by the total return percentage for the period.
Average Annual Total 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
The following table shows each Fund's Average Annual Total Return for the
following periods: the year ended December 31, 1997; for Monetta Fund, the
five-year period ended December 31, 1997, and the ten-year period ended
December 31, 1997; and for all other Funds, the commencement of operations
through December 31, 1997.
<TABLE>
<CAPTION>
Commencement of
Year ended Five years ended Ten years ended operations through
DECEMBER 31, 1997 DECEMBER 31, 1997 DECEMBER 31, 1997 DECEMBER 31, 1997
<S> <C> <C> <C> <C>
Monetta Fund 26.2% 9.1% 14.9% N/A
Small-Cap Fund 47.2% N/A N/A 47.2%
Mid-Cap Fund 29.1% N/A N/A 23.4%
Large-Cap Fund 26.6% N/A N/A 26.0%
Balanced Fund 21.2% N/A N/A 23.0%
Intermediate
Bond Fund 8.91% N/A N/A 7.62%
Government Money
Market Fund 5.15% N/A N/A 4.64%
</TABLE>
B-15
The commencement of operations for each of the Funds is as follows: Monetta
Fund, May 6, 1986; Small-Cap Fund, February 1, 1997; Mid-Cap Fund,
March 1, 1993; Large-Cap Fund, September 1, 1995; Balanced Fund,
September 1, 1995; Intermediate Bond Fund, March 5, 1993; and Government
Money Market Fund March 1, 1993.
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:
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
B-16
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
Russell Indexes, 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 Treasury 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.
INVESTMENT ADVISOR
The investment Advisor for Monetta Fund and the Trust is Monetta
Financial Services, Inc. ("MFSI" or the "Advisor"). The Advisor
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 February 1, 1997, respectively. The
Advisor 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 Advisor, investment
agreement and Advisory fees under "Management of the Funds" in
the Prospectus, which is incorporated herein by reference. For
the years ended December 31, 1997, 1996, and 1995, the Monetta
Fund paid the following aggregate Advisory fees to the Advisor:
$1,664,886, $2,946,088, and $3,648,564, respectively. For the
years ended December 31, 1997, 1996, and 1995, the following
Funds paid aggregate Advisory fees to the Advisor: Mid-Cap Fund
- - $153,402, $162,014, and $134,677, respectively; Intermediate
Bond Fund - $11,485, $19,829, and $19,834, respectively; and
Government Money Market Fund - $13,868, $20,637, and $12,563,
respectively. For the years ended December 31, 1997, 1996, and
1995, the following Funds paid aggregate Advisory fees to the
Advisor: Large-Cap Fund $28,120, $14,030, and $2,844,
respectively; Balanced Fund - $33,561, $5,316, and $570,
respectively. For the year ended December 31, 1997, the Small-
Cap Fund paid aggregate Advisor fees to the Advisor in the
amount of $6,627.
B-17
Investment Advisory fees waived for the years ended December 31,
1997, 1996, and 1995, for the Intermediate Bond Fund were
$6,929, $9,915, and $17,132, respectively, on total fees of
$11,485, $19,829, and $19,834, respectively. Investment
Advisory fees waived for the years ended December 31, 1997,
1996, and 1995, for the Government Money Market Fund were
$13,868, $20,637, and $12,563, respectively, on total fees of
$13,868, $20,637, and $12,563, respectively. Custodian and
Transfer Agent charges of $6,008, $800, and $6,111,
respectively, for the years ended December 31, 1997, 1996, and
1995, for the Government Money Market Fund, were absorbed by the
Advisor.
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 Advisor. Paul W. Henry and
John W. Bakos, Directors of Monetta Fund, each own 2% of the
outstanding voting securities of the Advisor. The Advisor's
address is 1776-A South Naperville Road, Wheaton, Illinois
60187.
The Advisor owns a 99% interest in Monetta Investment Services,
L.L.C., ("MIS") a registered broker-dealer. Mr. Bacarella, due
to his ownership interest in the Advisor, has a beneficial
ownership interest in MIS of 71%. The Investment Advisory
Agreements authorize MIS 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.")
SERVICE AND DISTRIBUTION PLAN
Pursuant to a Service and Distribution Plan (the "Plan") adopted
pursuant to Rule 12b-1 under the 1940 Act effective February 1,
1997, each series of the Trust may compensate service
organizations for their accounting, Shareholder Services, and
distribution services in amounts up to 0.10 of 1% for Government
Money Market Fund and 0.25 of 1% for each other series of the
Trust, per annum of the values of accounts of Shareholders
purchasing through such organizations.
Servicing activities provided by service organizations to their
customers investing in the Funds may include, among other
things, one or more of the following: establishing and
maintaining Shareholder's accounts and records; processing
purchase and redemption transactions; answering customer
inquiries regarding the Fund; assisting customers in changing
dividend options; account designations and addresses; performing
sub-accounting; investing customer cash account balances
automatically in Fund shares; providing periodic statements
showing a customer's account balance and integrating such
statements with those of other transactions and balances in the
customer's other accounts serviced by the service agent;
arranging for bank wires; and distribution and such other
services as the Fund may request to the extent the service agent
is permitted by applicable statute, rule, or regulation.
In addition, each Fund pays other costs and expenses in
connection with advertising and marketing shares of that Fund,
including but not limited to: advertising, direct mail, and
promotional expenses; compensation to a distributor and its
employees; fulfillment expenses, including the costs of printing
B-18
and distributing Prospectuses, Statements of Additional
Information, and reports for other than existing Shareholders;
the costs of preparing, printing, and distributing sales
literature and advertising materials; and the costs of
registration or notification under state securities laws.
The maximum aggregate amount a Fund may pay for service fees and
other distribution related expenses is .10 of 1% of the average
net assets of Government Money Market Fund and .25 of 1% of the
average net assets of each other Fund of the Trust. Additional
service fees and additional amounts for other distribution-
related expenses may be paid by the Advisor from its own
resources.
The Plan will continue in effect only so long as it is approved
at least annually, and any material amendment or agreement
related thereto is approved, by the Trust's Board of Trustees,
including those Trustees who are not "interested persons" of the
Trust and who have no direct or indirect financial interest in
the operation of the Plan or any agreement related to the Plan
("Qualified Trustees") acting in person at a meeting called for
that purpose, unless terminated by vote of a majority of the
Qualified Trustees, or by vote of a majority of the outstanding
voting securities of a Fund.
It is the opinion of the Board of Trustees that the Plan is
necessary to maintain a flow of subscriptions to offset
redemptions and to encourage sales of shares to permit the Funds
to reach an economically viable size. Redemptions of mutual
fund shares are inevitable. If redemptions are not offset by
subscriptions, a fund shrinks in size and its ability to
maintain quality Shareholder services declines. Eventually,
redemptions could cause a fund to become uneconomic.
Furthermore, an extended period of significant net redemptions
may be detrimental to orderly management of the portfolio. The
offsetting of redemptions through sales efforts benefits
Shareholders by maintaining the viability of a fund. Additional
benefits may accrue from net sales of shares relative to
portfolio management and increased Shareholder servicing
capability. Increased assets enable a fund to further diversify
its portfolio, which spreads and reduces investment risk while
increasing opportunity. In addition, increased assets enable
the establishment and maintenance of a better Shareholder
servicing staff which can respond more effectively and promptly
to Shareholder's inquiries and needs.
As provided for by the Service and Distribution Plan, the
following aggregate amounts, which represent .25% of the
respective Fund's average net assets, were accrued for the
period February 1, 1997 through December 31, 1997: Small-Cap
Fund $2,209; Mid-Cap Fund $46,303; Large-Cap Fund $8,698;
Balanced Fund $20,060 and Intermediate Bond Fund $7,215.
Commission amounts paid to financial intermediaries for sales of
shares for each Fund were Small-Cap Fund $1,230; Mid-Cap Fund
$5,016; Large-Cap Fund $1,262; Balanced Fund $7,320 and
Intermediate Bond Fund $2,894. Amounts paid to financial
intermediaries for distribution costs were Small-Cap Fund $737;
Mid-Cap Fund $3,621; Large-Cap $3,621; Balanced Fund $3,621 and
Intermediate Bond Fund $3,621. Distribution expenses incurred
in 1997 that will be paid in 1998 were Small-Cap Fund $819; Mid-
Cap Fund $38,840; Large-Cap Fund $4,703; Balanced Fund $10,973
and Intermediate Bond Fund $1,889.
B-19
DIRECTORS/TRUSTEES AND OFFICERS
The ages at December 31, 1997, and principal business activities
during the past five years of the Directors/Trustees and
Officers of Monetta Fund and the Trust are:
<TABLE>
<CAPTION>
POSITION(S) POSITION(S)
HELD HELD PRINCIPAL OCCUPATIONS
NAME AGE WITH FUND WITH TRUST AND OTHER AFFILIATIONS
<S> <C> <C> <C> <C>
Robert S. Bacarella+* 48 Director and Trustee and Chairman, Chief Executive
President President Officer, and President of MFSI
since April 1997; Chairman and
Chief Executive Officer of
MFSI, October 1, 1996, to April
1997; President, MFSI, 1984 to
September 1996; Director, MFSI,
since 1984; Secretary,
Treasurer, and Director, Monetta
Investment Services, L.L.C.,
(formerly Monetta Brokerage,
Inc.) since 1987; President and
Director, Monetta Fund, Inc.,
(registered investment company)
since 1985; President and
Director, Monetta Trust
(registered investment company)
since 1993.
John W. Bakos+* 50 Director Trustee Division Placement Manager,
Sears, Roebuck & Co., since
1969; Director and Vice
President, MFSI, 1984 to 1991.
John L. Guy Jr. 45 Director(a) Trustee President, Heller Small
Business Lending Corporation
(formerly Heller First Capital
Corp.), since May 1995; Senior
Vice President and Treasurer,
Heller Financial Inc., (August
1992 to May 1995); Senior Vice
President, Director Internal
Audit (November 1989 to August
1992).
Mark F. Ogan 55 Director Trustee President, DuPage Capital
Management, Ltd., since April
1995; President and
Secretary, Salida Corp.
(formerly Pollenex Corp.),
February 1993 to April 1995.
B-20
</TABLE>
<TABLE>
<CAPTION>
Position(s) Position(s)
Held Held Principal Occupations
Name Age with Fund with Trust and Other Affiliations
<S> <C> <C> <C> <C>
Paul W. Henry+ 55 Director N/A SPR, Inc., Project Manager,
Computer Systems, since June
1997; Manager, Financial
Systems, Signature Group
(Telemarketing) 1994 to 1997;
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), 1987
to December 1993; Director,
MFSI. 1984 to 1996, and Vice
President, 1984 to 1991.
Richard D. Russo 45 Director Trustee Attorney at law, Richard
(until 1/21/98) (until 1/21/98) Russo & Associates, President of
Associated Legal Services
Chartered, a Professional
Corporation, since 1985.
William M. Valiant 72 N/A Trustee Retired; Director, MFSI,
February 1991 to 1997; Director,
MIS, s1988 to 1997; Vice
President and Treasurer, Borg-
Warner Corporation, until July
1990.
William R. Bacarella 46 Vice Vice Vice President, Monetta Fund
President President and Monetta Trust, since May 1997;
President, Monetta Investment
Services, L.L.C., (formerly
Monetta Brokerage, Inc., since
June 1995.
Maria Cesario DeNicolo 48 Treasurer and Secretary and Chief Financial Officer,
Assistant Treasurer MFSI, since May 1997; Secretary, MFSI,
Secretary since October 1996; Treasurer,
MFSI, since February 1994;
Controller, MFSI, since June
1992; Secretary, Monetta Trust,
since 1993; Treasurer, Monetta
Trust, since 1994; Treasurer,
Monetta Fund, Since 1993; Chief
Financial Officer, Monetta
Investment Services, L.L.C.,
(formerly Monetta Brokerage,
Inc., since 1995; Sole
proprietor, Cesario DeNicolo CPA
and Associates, May 1990 to June
1993.
</TABLE>
<TABLE>
B-21
Held Held Principal Occupations
Name Age with Fund with Trust and Other Affiliations
<S> <C> <C> <C> <C>
Valerie A. LeFevre 62 Secretary Assistant Secretary, Monetta Fund,
Treasurer since January 1986; Secretary and
Treasurer; MFSI, 1987 to 1992;
Assistant Treasurer, Monetta
Trust, since May 1997
</TABLE>
[/R]
(a) Effective February 12, 1998, replaced Mr. Richard Russo as Director.
+ Messrs. Bacarella, Bakos, and Henry 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; and Messrs.
Bakos and Henry - as Shareholders of MFSI.
* Messrs. Bacarella and Bakos are "interested
persons" of the Trust, as defined in the 1940 Act, as
Officers of the Trust and Shareholders of MFSI; and, in
Mr. Bacarella's case, also as Officer and Director of
MFSI
The address of Messrs. Bacarella, Bakos, Guy, Henry, Ogan,
and Valiant and of Ms. DeNicolo and Ms. LeFevre is 1776-A
South Naperville Road, Suite 100, Wheaton, Illinois 60187.
At February 28, 1998, the Advisor owned beneficially less
than 1% and 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 of the Trust owned by the Advisor, Trustees, and
Officers at February 28, 1998, were as follows:
ADVISOR TRUSTEES & OFFICERS (1)
<TABLE>
<CAPTION>
SHARES % OF FUNDS SHARES % OF FUND
<S> <C> <C> <C> <C>
Small-Cap Fund 17,946 8.6% 24,928 11.9%
Mid-Cap Fund 9,407 0.7% 51,001 3.6%
Large-Cap Fund 12,849 4.0% 17,871 5.6%
Balanced Fund 59,914 5.6% 69,348 6.5%
Intermediate Bond Fund 79,431 19.4% 80,664 19.7%
Government Money Market Fund 512,031 9.6% 723,439 13.6%
</TABLE>
Note 1 The share ownership for the Trustees and Officers as a group
includes the following shares owned by the Advisor over which
Mr. Bacarella exercises voting control: 17,946 shares of the
Small-Cap Fund; 9,407 shares of Mid-Cap Fund, 12,849 shares of
the Large-Cap Fund; 59,914 shares of the Balanced Fund; 79,431
shares of the Intermediate Bond Fund; and 512,031 shares of the
Government Money Market Fund. The share ownership for the
Trustees and Officers as a group does includes the following
shares held in a 401(k) Plan for the employees of MFSI for which
Mr. Bacarella is the Trustee of the plan and has voting control:
214 shares of the Small-Cap Fund; 18,157 shares of the Mid-Cap
Fund; 2,693 shares of the Large-Cap Fund; 5,405 shares of the
Balanced Fund; 928 shares of the Intermediate Bond Fund; and
6,275 shares of the Government Money Market Fund.
B-22
Ownership of a significant percentage of the outstanding
shares of the Intermediate Bond Fund reduces the number of
other shares that must be voted in accordance with the
Advisor's vote to approve or disapprove any proposal
requiring the approval of the Shareholders of the Trust or
of the Funds.
Mr. Bacarella and Mr. Bakos serve as members of the
Executive Committee of Monetta Fund and Monetta Trust. The
Executive Committees, which meet between regular meetings
of the respective Boards, are authorized to exercise all
of the powers of the Boards.
The following table sets forth compensation paid by
Monetta Fund and the Trust to their respective Directors
and Trustees during 1997:
<TABLE>
<CAPTION>
Compensation Compensation Compensation
Received Received Received
NAME OF PERSON From from from
the Fund the Trust Fund Complex
<S> <C> <C> <C>
Robert S. Bacarella(1) $ 0 $ 0 $ 0
John W. Bakos(1) 0 0 0
John L. Guy, Jr. 0 2,625 1,350
Paul W. Henry(1) 0 0 0
Mark F. Ogan 2,625 2,625 5,250
Richard Russo 2,625 2,625 5,250
William Valiant 0 1,500 0
</TABLE>
(1) Directors and/or Trustees who are interested
persons, including all employees of MFSI,
receive no compensation from Monetta Fund or the
Trust. Mr. Valiant was an interested Trustee
through July 1997. Compensation reflected above
is for the period of August through December
1997.
(2) The Monetta Fund Complex consists of Monetta
Fund and the series of the Trust. 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 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
B-23
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 January, 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 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 Advisor 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)
B-24
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 Advisor'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 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.
B-25
PORTFOLIO TRANSACTIONS
The Advisor has discretion to select brokers and dealers
to execute portfolio transactions initiated by the Advisor
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 Advisor 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 Advisor 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 Advisor. The
Advisor 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 Advisor 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
Advisor exercises investment discretion. It is possible
that certain of the services received by the Advisor
attributable to a particular transaction will benefit one
or more other accounts for which investment discretion is
exercised by the Advisor.
In valuing research services, the Advisor makes a
judgement of the usefulness of research and other
information provided by a broker to the Advisor 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 Advisor in advising the Funds.
The Advisor 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 Advisor, 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
finished 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 Advisor in
providing management services to the Funds is not
determinable. In addition, it is understood by the
respective Board that other clients of the Advisor might
also benefit from the information obtained for the Funds,
B-26
in the same manner that the Funds might also benefit from
the information obtained by the Advisor in performing
services for others.
Although investment decisions for the Funds are made
independently from those for other investment Advisory
clients of the Advisor, 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.
MFSI and its affiliates, Officers, Directors, and
employees may, from time to time, have long or short
positions in, and buy or sell, the securities or
derivatives of companies held, purchased, or sold by
individual Clients or the Monetta Family of Mutual Funds.
MFSI has adopted guidelines to avoid any conflict of
interest between the interests of Monetta Trust, Monetta
Fund, individually managed accounts and affiliates,
Officers, Directors, and employees. In any situation
where the potential for conflict exists, transactions for
the Funds and individual clients take precedence over any
Advisor or affiliate transactions. Guidelines include a
restriction on trading in any security which the Advisor
knows, or has reason to believe, is being purchased or
sold or considered for purchase or sale by a mutual fund
or individual Client until these transactions have been
completed or considered abandoned. Initial public
offerings are allocated only to the Advisor's mutual fund
clients.
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 Investment Services, L.L.C.,
("MIS") if, in the judgment of the Advisor, the use of MIS
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, MIS charges
the Fund commission rates consistent with those charged by
MIS 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 MIS are consistent
with the foregoing standard. The Funds will not affect
principal transactions with MIS.
Brokerage commissions incurred by the Monetta Fund for the
years ended December 31, 1997, 1996, and 1995, aggregated
$418,742, $839,203, and $1,449,063, respectively, not
including the gross underwriting spread on securities
purchased in underwritten public offerings. Of these
amounts, the Fund paid brokerage commissions aggregating
$308,389, $641,348, and $1,034,235, respectively, in
connection with portfolio transactions involving purchases
and sales aggregating $110,939,216, $246,355,924, and
$366,529,232, respectively, to brokers who furnished
investment research services to the Fund.
Brokerage commissions incurred by the Mid-Cap Fund for the
years ended December 31, 1997, 1996, and 1995, aggregated
$78,449, $41,223, and $85,201, respectively, not including
the gross underwriting spread on securities purchased in
underwritten public offerings. Of this amount, the
B-27
Mid-Cap Fund paid brokerage commissions of $72,730,
$35,370, and $78,743, respectively, in connection with
portfolio transactions involving purchases and sales
aggregating $37,120,103, $14,991,561, and $33,625,853,
respectively, to brokers who furnished research services
to the Fund.
Brokerage commissions incurred by the Large-Cap Fund for
the year ended December 31, 1997 and 1996, and the period
September 1, 1995, through December 31, 1995, aggregated
$10,537, $3,499, and $1,507, respectively, not including
the gross underwriting spread on securities purchased in
underwritten public offerings. Of this amount, the Large-
Cap Fund paid brokerage commissions of $7,554, $1,467, and
$1,316, respectively, in connection with portfolio
transactions involving purchases and sales aggregating
$4,305,468, $935,048, and $1,082,682, respectively, to
brokers who furnished research services to the Fund.
Brokerage commissions incurred by the Balanced Fund for
the year ended December 31, 1997 and 1996, and the period
September 1, 1995, through December 31, 1995, aggregated
$24,205, $2,540, and $350, respectively, not including
the gross underwriting spread on securities purchased in
underwritten public offerings. Of this amount, the
Balanced Fund paid brokerage commissions of $17,830,
$1,537, and $301, respectively, in connection with
portfolio transactions involving purchases and sales
aggregating $12,333,990, $696,211, and $182,600,
respectively, to brokers who furnished research services
to the Fund.
The aggregate brokerage commissions paid by the Small-Cap
Fund for the period February 1, 1997, through December
31, 1997, aggregated $8,172, not including the gross
underwriting spread on securities purchased in
underwritten public offerings. Of this amount, the
Small-Cap Fund paid brokerage commissions of $3,611 in
connection with portfolio transactions involving
purchases and sales aggregating $925,013 to brokers who
furnished research services to the Fund.
Of the aggregate brokerage commissions paid by the Monetta
Fund for the years ended December 31, 1997, 1996, and
1995, an aggregate amount of $7,750, $32,700, and
$70,235, respectively, was paid to MIS. This aggregate
amount represented 1.9%, 3.9%, and 4.8%, respectively, of
all commissions paid by the Monetta Fund on transactions
aggregating 1.5%, 4.6%, and 6.4%, respectively, of the
aggregate dollar amount of transactions involving the
payment of commissions.
Of the aggregate brokerage commissions paid by the Mid-Cap
Fund for the years ended December 31, 1997, 1996, and
1995, an aggregate amount of $750, $0, and $0,
respectively, was paid to MIS. This aggregate amount
represented 1.0%, 0.0%, and 0.0%, respectively, of all
commissions paid by the Mid-Cap Fund on transactions
aggregating 0.8%, 0.0%, and 0.0%, respectively, of the
aggregate dollar amount of transactions involving the
payment of commissions.
Of the aggregate brokerage commissions paid by the Large-
Cap Fund for the year-ended December 31, 1997, 1996, and
1995, an aggregate amount of $50, $0, and $0,
respectively, was paid to MIS. This aggregate amount
represented 0.5%, 0.0%, and 0.0%, respectively, of all
B-28
commissions paid by the Large-Cap Fund on transactions
aggregating 0.5%, 0.0%, and 0.0%, respectively, of the
aggregate dollar amount of commissions.
Of the aggregate brokerage commissions paid by the
Balanced Fund for the year-ended December 31, 1997, 1996,
and 1995, an aggregate amount of $100, $0, and $0,
respectively, was paid to MIS. This aggregate amount
represented 0.4%, 0.0%, and 0.0%, respectively, of all
commissions paid by the Balanced Fund on transactions
aggregating 0.3%, 0.0%, and 0.0%, respectively, of the
aggregate dollar amount of transactions involving the
payment of commissions.
All securities transactions of the Intermediate Bond Fund
and the Government Money Market Fund in 1997, 1996, and
1995 were executed on a principal basis.
The portfolio turnover rates of the Monetta Fund for 1997,
1996, and 1995, were 97.8%, 204.8%, and 272.0%,
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 rates of the Intermediate Bond Fund
for 1997, 1996, and 1995, were 96.7%, 28.9%, and 75.1%,
respectively, and is expected to be less than 100%
annually. The portfolio turnover rate of the Small-Cap
Fund for the period February 1, 1997, through December 31,
1997, was 138.8%. The portfolio turnover rates of the
Mid-Cap Fund were 137.8%, 93.3%, and 254.4% for 1997,
1996, and 1995, and may continue to be greater than 100%.
The portfolio turnover rates for the Large-Cap Fund for
1997, 1996, and 1995 were 123.2%, 152.7%, and 38.2%; and
the portfolio turnover rates for the Balanced Fund for
1997, 1996, and 1995 were 115.9%, 117.8%, and 54.8%.
Greater portfolio activity increases a Fund's transaction
costs, including brokerage commissions.
DISTRIBUTOR
The shares of each Fund are offered for sale on a
continuous basis through Funds Distributor, Inc.,
("Distributor") pursuant to written Distribution
Agreements with Monetta Fund and the Trust. Those
agreements continue from year to year, provided such
continuance is approved annually (i) by a majority of the
Board members or by a majority of the outstanding voting
securities of the affected Funds and (ii) by a majority of
the Board members who are not parties to the Agreements or
interested persons of any such party. There are no sales
commissions or charges directly to Shareholders of the
Funds. The fees and expenses of the Distributor are paid
(i) by each Fund of Monetta Trust to the extent it is able
to do so within the limits of its Distribution and Service
Plan and (ii) to the extent Fund assets are not available
under the Plan, by the Advisor. The Advisor pays all the
fees and expenses of the Distributor for Monetta Fund.
As agent, the Distributor offers shares of each Fund to
investors at net asset value, without sales commissions or
other sales load. The Distributor offers the Funds' shares
only on a best-efforts basis.
B-29
The Distributor or another broker affiliated with the
Distributor may receive brokerage commissions on purchases
and sales of portfolio securities by a Fund. Those
amounts, if any, are described under "Portfolio
Transactions."
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 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 East 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.
B-30
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 Advisor
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
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.
B-31
Ba. Bonds rated 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.
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.
B-32
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-33
MONETTA FAMILY OF FUNDS
Dear Fellow Shareholders January 19, 1998
With this report, I am pleased to present the Monetta Family of Funds Annual
Report.
1997, by almost any measure, was a terrific year for the equity markets. The
investment climate was ideal as corporate earnings growth remained robust,
inflation reached a 23-year low, and the Federal Reserve maintained a stable
interest rate environment.
Small-cap stocks ended another year with great absolute returns (20%+) but well
behind the returns of the mid-cap and large-cap sectors which increased 30%+.
The best performing industry sectors last year were financial services,
consumer staples, utilities, and auto/transportation. In general, both
technology and healthcare sectors suffered in 1997, primarily due to lower
earnings expectations.
Overall, we were very pleased with our Funds' performance last year. The
bottom-up stock selection process, coupled with the team investment approach,
was the cornerstone of our strong performance record from last year. I am very
proud of our experienced, knowledgeable, and dedicated portfolio management
team that desires nothing but the best returns for our shareholders.
The major fund highlights from last year include:
The Monetta Small-Cap Equity Fund posted a superior 47.2% investment
return since inception
(February 1, 1997).
The Monetta Fund's 26.2% return was an impressive return, well ahead of
its benchmark indices, the Russell 2000 and the NASDAQ Composite, which
had returns of 22.4% and 21.6%, respectively.
The Monetta Mid-Cap Equity Fund appreciated 29.1%, a competitive return
versus its benchmark index, the S&P 400, which had a return of 32.3%.
The Monetta Large-Cap Equity Fund also posted a very solid return of
26.6%, exceeding the average growth fund return of 25.3%, as tracked by
Lipper Analytical Services.
The conservatively-managed Monetta Balanced Fund appreciated 21.2%
versus the average return of 19.0% for the Balanced Funds category, as
reported by Lipper Analytical Services.
The Monetta Intermediate Bond Fund's return of 8.9% exceeded its
benchmark index, the Lehman Govt./Corp. Intermediate Bond Index, which
returned 7.9%, seeking shorter duration, less volatility, and higher
income yield than its peers.
The risk-averse Monetta Government Money Market Fund's return of 5.15%
continues to make it a strong performing fund in the U.S. Government
Money Market Fund category, as reported by Lipper Analytical Services.
We also launched Monetta's internet site under http://www.monetta.com. The
site provides basic information about the firm with quarterly updates. In the
near future, we will be adding a daily NAV update section and interactive
programs to help shareholders with asset diversification decisions.
We thank you for the trust you have placed in us, and we look forward to
working even harder to continue to deliver results that you, as shareholders,
deserve and expect.
Best personal regards,
Robert S. Bacarella
President and Founder
<TABLE>
<CAPTION>
Table of Contents
Performance Highlights
<S> <C>
Monetta Fund 3
Monetta Small-Cap Equity Fund 4
Monetta Mid-Cap Equity Fund 5
Monetta Large-Cap Equity Fund 6
Monetta Balance Fund 7
Monetta Intermediate Bond Fund 8
Monetta Government Money Market Fund 9
Independent Auditors Report 10
Schedule of Investments
Monetta Fund 11
Monetta Small-Cap Equity Fund 14
Monetta Mid-Cap Equity Fund 16
Monetta Large-Cap Equity Fund 18
Monetta Balance Fund 20
Monetta Intermediate Bond Fund 22
Monetta Government Money Market Fund 23
Financial Statements
Statements of Assets & Liabilities 24
Statement of Operations 26
Statement of Changes in Net Assets 28
Notes to Financial Statements 30
</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. Historically, small company stocks have been
more volatile than large company stocks, U.S. Government Bonds, and Treasury
Bills. An investment in the Government Money Market Fund is neither insured nor
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.
References to individual securities are the views of the Advisor at the date of
this report and may change. References are not a recommendation to buy or sell
any security. Fund holdings are subject to change.
Since indices are unmanaged, it is not possible to invest in them.
Sources for performance data include Lipper Analytical Services, Inc., and
Frank Russell Company.
Page 2
MONETTA FUND PERIOD ENDED 12/31/97
Monetta Fund:
Investment Objective: Market Capitalization Range: Total Net Assets:
Capital Appreciation/Income $50 million - $1 billion $163 million
<TABLE>
<CAPTION>
Performance:
1 Year 5 Years 10 Years
<S> <C> <C> <C>
Monetta Fund 26.2% 9.1% 14.9%
Russell 2000* 22.4% 16.4% 15.8%
NASDAQ Composite* 21.6% 18.3% 16.9%
</TABLE>
*Source Lipper Analytical Services, Inc.
[Performance Graph Appears Here]
<TABLE>
<CAPTION>
Measurement Period Monetta Russell Nasdq
(Fiscal Period Covered) Equity Fund 2000
<S> <C> <C> <C>
3/88 10,620 11,907 11,603
6/88 11,963 12,692 12,390
9/88 12,242 12,573 11,732
12/88 12,305 12,489 11,541
3/89 12,689 13,452 12,308
6/89 13,702 14,308 13,173
9/89 14,352 15,274 14,311
12/89 14,178 14,518 13,763
3/90 14,938 14,197 13,179
6/90 16,705 14,745 13,988
9/90 13,483 11,127 10,424
12/90 15,790 11,686 11,311
3/91 18,714 15,161 14,592
6/91 19,275 14,926 14,400
9/91 21,883 16,143 15,942
12/91 24,614 17,068 17,742
3/92 24,772 18,348 18,269
6/92 23,192 17,096 17,054
9/92 23,880 17,586 17,649
12/92 25,965 20,210 20,484
3/93 24,244 21,074 20,883
6/93 24,423 21,534 21,301
9/93 26,323 23,417 23,081
12/93 26,094 24,031 23,506
3/94 25,405 23,393 22,498
6/94 24,028 22,482 21,363
9/94 25,720 24,043 23,127
12/94 24,472 23,594 22,755
3/95 26,832 24,681 24,730
6/95 28,686 26,995 28,246
9/95 32,260 29,661 31,577
12/95 31,331 30,304 31,837
3/96 31,813 31,850 33,327
6/96 32,799 33,443 35,857
9/96 32,740 33,556 37,126
12/96 31,837 35,302 39,068
3/97 29,525 33,476 36,970
6/97 35,596 38,903 46,639
9/97 42,711 44,693 51,010
12/97 40,174 43,195 47,521
</TABLE>
The graph above to the right compares the change in value of a $10,000
investment in the Monetta Fund, the Russell 2000 Stock Index, and the NASDAQ
Composite Index with dividend and capital gains reinvested. The Russell 2000
Stock Index is a broad measure representative of the general market, while the
NASDAQ measures performance of stocks in the over-the-counter market. Since
the S & P 500 and the Russell 2500 are not appropriate indices, they are no
longer reflected on the above graph. Had they been reflected, the value of a
$10,000 investment at the end of 10 years per the S & P 500 and the Russell
2500 indices would be $51,223 and $47,805, respectively. Please refer to
footnote at bottom of Page 2.
<TABLE>
<CAPTION>
% of Net Assets
<S> <C>
Jones Medical Industries, Inc. 1.6%
Transcrypt Int'l, Inc. 1.5%
Newpark Resources, Inc. 1.5%
AFC Cable Systems, Inc. 1.4%
ScanSource, Inc. 1.4%
Total Top 5 Holding 7.4%
</TABLE>
Commentary:
The Monetta Fund posted an impressive return of 26.2% for the year ended
December 31, 1997. This compares favorably with the 22.4% return of the
Russell 2000 index during this time period.
Throughout 1997, we have communicated to you in our quarterly reports that we
have focused on early- stage growth companies that offer the best opportunity
for price appreciation, without the requisite risk often associated with late-
stage growth companies. We felt strongly that by avoiding companies that are
nearing the apex of their growth, which are often over-owned institutionally,
we could demonstrate strong performance with reduced volatility. It is with
great pleasure that we report that the implementation of this strategy was
successful in 1997. While the major indices reported strong gains in 1997, it
was a very volatile market which we used to our advantage by dollar-averaging
into our better securities.
The Fund posted very strong returns in historically volatile groups such as
technology and healthcare through a disciplined investment approach. We had a
number of holdings, such as Medquist, Inc., Transcrypt Int'l, Inc., and
Smallworldwide PLC, that posted returns of over 75%. While we let our strong
performers appreciate as company fundamentals improved, we were quick to sell
stocks which reported deteriorating fundamentals or reached our predetermined
price targets.
Entering 1998, we plan to continue to focus on adding value to the investment
process through intensive due diligence on prospective investments and careful
monitoring of existing stocks. Our greatest strength is being able to identify
the best and brightest companies early in their growth phase, and we will
continue to exploit this strength going forward.
Page 3
MONETTA SMALL-CAP EQUITY FUND PERIOD ENDED 12/31/97
Monetta Small-Cap Equity Fund
Investment Objective: Market Capitalization Range: Total Net Assets:
Capital Appreciation under $1 billion $2.5 million
<TABLE>
<CAPTION>
Performance: Fourth Since Inception
Quarter 2/1/97
<S> <C> <C>
Monetta Small-Cap Equity Fund (2.5)% 47.2%
Russell 2000* (3.4)% 20.0%
</TABLE>
*Source Lipper Analytical Services, Inc.
[Performane Graph Appears Here]
<TABLE>
<CAPTION>
Small-Cap Russell
Month Fund 2000
<S> <C> <C>
1/31/97 10,000 10,000
2/28/97 10,150 9,758
3/31/97 9,490 9,297
4/30/97 9,260 9,323
5/31/97 10,840 10,360
6/30/97 11,820 10,804
7/31/97 12,900 11,307
8/31/97 13,710 11,566
9/30/97 15,090 12,412
10/31/97 14,950 11,867
11/30/97 14,791 11,790
12/31/97 14,717 11,996
</TABLE>
The graph above to the right compares the change in value of a $10,000
investment in the Monetta Small-Cap Equity Fund and the Russell 2000 Stock
Index with dividend and capital gains reinvested.The Russell 2000 index is a
broad measure representative of the general market. Please refer to footnote at
bottom of Page 2.
PORTFOLIO COMPOSITION
<TABLE>
<CAPTION>
Top 5 Equity Holdings % of Net Assets
<S> <C>
CHS Electronics, Inc. 3.4%
QuadraMed Corp. 3.3%
Jones Medical Industries, Inc. 3.0%
ANADIGICS, Inc. 3.0%
JPM Co. 3.0%
Total Top 5 Holdings 15.7%
</TABLE>
Commentary:
The Monetta Small-Cap Fund continues to perform exceptionally well, posting a
return of 47.2% from inception on February 1, 1997, through December 31, 1997.
This compares exceptionally well versus the Russell 2000 index, which returned
20.0% during the same period.
In 1997, the Fund recorded strong gains across all industry sectors. We
experienced an extraordinary breadth of strong individual stock performance
which drove the superior returns we enjoyed in 1997. The top performing
securities were: QuadraMed Corp., which provides decision-support software for
healthcare providers; Medquist, Inc., a provider of medical transcription
services; Transcrypt Int'l., Inc., provides information security products to
the cellular market; and Remec, Inc., a manufacturer of telecommunications
equipment. Generally, the Fund was fully invested throughout the year, ending
the year with approximately 97% invested in common stocks.
As small-cap stocks badly lagged the major market indices in 1997, we are
especially pleased to report a 47.2% return for the Fund. While small-cap
stocks recovered in mid-1997, they again lagged the major market indices in the
fourth quarter of 1997. Industry experts are currently stating that the
substantially higher earnings growth rates associated with small-cap stocks,
coupled with much lower relative valuations versus large-cap stocks, portends
well for small-cap funds as we enter 1998. The Monetta Small-Cap Fund continues
to be well positioned to benefit from a narrowing of this valuation discrepancy
in 1998.
Page 4
MONETTA MID-CAP EQUITY FUND PERIOD ENDED 12/31/97
Monetta Mid-Cap Equity Fund:
Investment Objective: Market Capitalization Range: Total Net Assets:
Capital Appreciation $1 billion - $5 billion $21.9 million
<TABLE>
<CAPTION>
Performance:
AVERAGE ANNUAL TOTAL RETURN
Since Inception
1 Year 3 Years 3/1/93
<S> <C> <C> <C>
Monetta Mid-Cap Equity Fund 29.1% 26.8% 23.4%
S & P 400* 32.3% 27.3% 18.5%
</TABLE>
*Source Lipper Analytical Services, Inc.
[Performance Graph Appears Here]
<TABLE>
<CAPTION>
Mearsurement Period Mid-Cap S & P 400
(Fiscal Year Covered)
<S> <C> <C>
3/1/93 10,000 10,000
3/93 11,670 10,220
6/93 11,880 10,455
9/93 13,120 10,978
12/93 13,540 11,274
3/94 13,475 10,793
6/94 13,109 10,399
9/94 13,887 11,103
12/94 13,835 10,817
3/95 14,835 11,692
6/95 16,536 12,723
9/95 17,603 13,965
12/95 17,233 14,165
3/96 18,717 15,037
6/96 19,106 15,470
9/96 19,855 15,920
12/96 21,402 16,885
3/97 21,314 16,634
6/97 24,277 19,085
9/97 27,761 22,145
12/97 27,639 22,329
</TABLE>
The graph above to the right compares the change in value of a $10,000
investment in the Monetta Mid-Cap Equity Fund to the S & P 400. The S & P 400
index is a broad measure representative of the general market. Since the S & P
500 is not an appropriate index, it is no longer reflected on the above graph.
Had it been reflected, the value of a $10,000 investment since inception per
the S & P 500 index would be $24,240. Please refer to footnote at bottom of
Page 2.
PORTFOLIO COMPOSITION TOP 5 EQUITY HOLDINGS:
<TABLE>
<CAPTION>
% of Net Assets
<S> <C>
Allied Waste Industries, Inc. 3.2%
USA Waste Services, Inc. 3.0%
Sante Fe Int'l Corp. 2.8%
Newpark Resources, Inc. 2.4%
Watson Pharmaceuticlas 2.4%
Total Top 5 Holdings 13.8%
</TABLE>
Commentary:
The 29.1% 1997 return of the Monetta Mid-Cap Fund represented another very
strong performance year. The Fund ranked in the top 17th percentile of all mid-
cap funds tracked by Lipper Analytical Services, while moderately lagging the
return of the S&P 400 index, which rose 32.3%. Since inception (March 1, 1993),
the Fund has generated an average annual investment return of 23.4%.
The average one-year return for the Mid-Cap Funds category, as reported by
Lipper Analytical Services, was 19.6%. This wide divergence between the typical
mid-cap fund and the S&P 400 index is largely explained by sector weightings.
Financial stocks comprise a significant portion of the index, and returns for
this sector soared in 1997 due to declining interest rates and takeover
activity. At the same time, technology and other traditional growth sectors
struggled. Many mid-cap funds were underweighted in interest-sensitive issues
and overweighted in growth issues.
The Monetta Mid-Cap Fund benefited from the shift in investor sentiment away
from the large-cap issues to the mid-cap sector. The Fund's performance was
enhanced by its sector weightings in the consumer, industrial, and financial
areas. Also, by steering clear of over-owned, fully-valued technology stocks
(especially early in the year), the Fund gained substantial ground on the
market indices and is now positioned to selectively add to this depressed
sector.
We find no shortage of attractive mid-cap ideas that fit our criteria of strong
and improving earnings growth at price levels that leave room for ample
appreciation. We continue to manage risk via careful analysis and stock
selection, and seek to produce favorable returns while holding volatility below
that of the market.
Page 5
Monetta Large-Cap Equity Fund:
Investment Objective: Market Capitalization Range: Total Net Assets:
Capital Appreciation $5 billion + $4.3 million
<TABLE>
<CAPTION>
Performance: Since Inception
1 Year 2 Year 9/1/95
<S> <C> <C> <C>
Monetta Large-Cap Equity Fund 26.6% 27.4% 26.0%
S & P 500* 33.4% 28.0% 29.0%
</TABLE>
*Source Lipper Analytical Services, Inc.
[Performance Graph Appears Here]
<TABLE>
<CAPTION>
Mearsurement Perod Large-Cap S & P 500
(Fiscal Year End)
<S> <C> <C>
9/95 10,000 10,482
12/95 10,574 11,105
3/96 11,344 11,701
6/96 11,923 12,225
9/96 12,864 12,603
12/96 13,555 13,653
3/97 13,842 14,020
6/97 15,621 16,465
9/97 17,333 17,699
12/97 17,167 18,207
</TABLE>
The graph above to the right compares the change in value of a $10,000
investment in the Monetta Large-Cap Equity Fund to the S & P 500. The S & P 500
Composite index is a broad measure representative of the general market. Please
refer to footnote at bottom of Page 2.
<TABLE>
<CAPTION>
% of Net Assets
<S> <C>
Eaton Corp. 3.1%
Aluminum Company of America 3.0%
AMF Bowling, Inc. 2.9%
Sante Fe Int'l Corp. 2.9%
Hertz Corp. 2.8%
Total Top 5 Holdings 14.7%
</TABLE>
Commentary:
The Monetta Large-Cap Fund produced another strong total return of 26.6% in
1997. The performance of the Fund exceeded the 25.3% return of the average
growth fund tracked by Lipper Analytical Services, but trailed the 33.4% return
of its primary benchmark, the S&P 500 index.
The S&P 500 produced stellar returns during 1997 as large capitalization stocks
once again outperformed small. However, even among large stocks, the gains were
not evenly spread. A handful of big stocks continued to produce the bulk of the
gains as investors sought the "safety" of consistent, predictable earnings
growth. This trend was further augmented by money flowing into the U.S. from
troubled Southeast Asia and looking for "name brands" and a liquid haven.
Our strategy does not involve blindly holding these "nifty fifty" market
leaders. We think many of these "safe" stocks are highly susceptible to any
market or company-specific hiccup due to severe overvaluation and potential
slowing of earnings growth rates.
We continue to manage risk by utilizing research-intensive, bottom-up stock
picking to identify rapidly-growing companies while also insisting upon
attractive valuations. Our knowledge of what a company is worth enables strong
returns to be produced while avoiding the volatility associated with trend
chasing. Our strong absolute returns and better-than-average performance in the
growth fund category validate this strategy. Financial services, consumer
cyclicals, and oil service were particularly strong industry groups for us in
1997. Top performing stocks included Halliburton, Equitable Cos., Household
Int'l., EMC Corp., Home Depot, CVS Corp., and Schlumberger.
Page 6
MONETTA BALANCED FUND PERIOD ENDED 12/31/97
Monetta Balance Fund:
Investment Objective: Market Capitalization Range:
Capital Appreciation/Income $50 million +
Average Maturity: Total Net Assets:
6.8 Years $12.1 million
<TABLE>
<CAPTION>
Performance:
AVERAGE ANNUAL TOTAL RETURN
Since Inception
1 Year 2 Year 9/1/95
<S> <C> <C> <C>
Monetta Balanced Fund 21.2% 23.5% 23.0%
Benchmark* 25.1% 20.4% 21.6%
</TABLE>
*Source Lipper Analytical Services, Inc
[Performane Graph Appears Here]
<TABLE>
<CAPTION>
Monetta
Measurement Period Balance
(Fiscal Year End) Fund Benchmark
<S> <C> <C>
9/95 10,000 10,313
12/95 10,616 10,919
3/96 11,131 11,220
6/96 11,913 11,577
9/96 12,547 11,887
12/96 13,369 12,682
3/97 13,358 12,888
6/97 14,642 14,615
9/97 16,431 15,554
12/97 16,205 16,014
</TABLE>
The graph above to the right compares the change in value of a $10,000
investment in the Monetta Balanced Fund to the Benchmark with dividends and
capital gains reinvested.
*The Benchmark is a composite blend of two indices, 65% S & P 500 (stock
index), and 35% Lehman Govt/Corp Bond (bond index). It is a hypothetical
benchmark.
Please refer to footnote at bottom of Page 2.
PORTFOLIO COMPOSITION TOP 5 EQUITY HOLDINGS:
<TABLE>
<CAPTION>
% of Net Assets
<S> <C>
Imperial Credit Com. Mrtg. Invt. 1.2%
USAWaste Serv. Inc. 1.2%
Eaton Corp. 1.2%
Aluminum Company of America 1.2%
Allied Waste Industries Inc. 1.2%
Total Top 5 Holdings 6.0%
</TABLE>
Commentary:
The Monetta Balanced Fund added to its stellar past record with a 21.2% return
in 1997. This placed it in the top 27th percentile of all balanced funds for
the year, as rated by Lipper Analytical Services. For the two years ending
December 31, 1997, the Fund's annual return of 23.5% ranked it in the top 2% of
all balanced funds tracked by Lipper Analytical Services.
Stocks comprised 62% of the Fund's assets at year-end. The stock portion is
diversified by sector and size with 40% in small-cap issues, 30% in mid-cap
issues, and 30% in large-cap issues. Each stock is owned in one of our other
equity mutual funds and, therefore, is consistent with our analytical criteria
of rapid earnings growth, substantial appreciation potential, and limited risk.
Based on the capitalization weightings, we currently find the most compelling
investments in the small-cap arena.
At year-end, high-grade corporate and U.S. treasury securities comprised 34% of
assets, and cash was 4% of assets. The fixed income segment benefited from a
late-year rally in bonds which provided capital gains to augment the
approximately 6% yield of the fixed income portfolio. The average maturity was
6.8 years, fairly consistent throughout the year.
In summary, stock selection added significant value to the portfolio, with our
average stock up 31% for the year. The fixed income portion produced modest
capital gains to augment the income produced. The stock portion of the Balanced
Fund continues to provide for participation in rising equity markets while its
fixed income components cushion against inevitable market volatility, making
the Balanced Fund an ideal choice for the conservative investor.
Page 7
MONETTA INTERMEDIATE BOND FUND PERIOD ENDED 12/31/97
Monetta Intermediate Bond Fund:
Investment Objective: 30-Day SEC Yield: Average Maturity:
Capital Appreciation/Income 5.25% 4.5 Years
Total Net Assets:
$3.9 million
<TABLE>
<CAPTION>
Fund/Benchmark
AVERAGE ANNUAL TOTAL RETURN
Since Inception
1 Year 3 Years (3/1/93)
<S> <C> <C> <C>
Monetta Intermediate Bond Fund 8.91% 10.00% 7.62%
Lehman Govt/Corp 7.87% 8.98% 6.14%
Intermediate Bond Index*
</TABLE>
*Source Lipper Analytical Services, Inc.
[Performane Graph Appears Here]
<TABLE>
<CAPTION>
Measurement Period Monetta Intermediate
(Fiscal Year Covered) Bond Fund Lehman
<S> <C> <C>
3/1/93 10,000 10,007
3/93 10,000 10,028
6/93 10,399 10,255
9/93 10,732 10,486
12/93 10,817 10,504
3/94 10,585 10,291
6/94 10,494 10,229
9/94 10,613 10,313
12/94 10,705 10,302
3/95 11,270 10,754
6/95 11,866 11,292
9/95 12,046 11,479
12/95 12,282 11,883
3/96 12,245 11,784
6/96 12,428 11,859
9/96 12,702 12,068
12/96 13,074 12,364
3/97 13,041 12,350
6/97 13,485 12,715
9/97 13,908 13,058
12/97 14,238 13,338
</TABLE>
The graph above to the right compares the change in value of a $10,000
investment in the Monetta 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 at bottom of Page 2.
PORTFOLIO COMPOSITION MATURITY PROFILE:
<TABLE>
<CAPTION>
Maturity Profile:
<S> <C>
1 Year or Less 12.7%
1 - 3 Years 9.2%
4 - 6 Years 55.3%
7 - 10 Years 22.4%
Over 10 Years .4%
</TABLE>
Commentary:
The 1997 return scorecard for the Monetta Intermediate Bond Fund was an
impressive one despite a roller coaster fixed income environment. The Fund's
return of 8.9% ranked it in the top 36th percentile among the Intermediate
Investment Grade Debt category, as measured by Lipper Analytical Services. The
Fund outperformed its primary benchmark, the Lehman Government Corporate
Intermediate Bond Index, by 104 basis points for the year.
The Fund's 30-day SEC yield at 12/31/97 was 5.25%. During the year, the Fund
paid out an annualized income return of 6.22%.
The global bond markets began 1997 with a sentiment that would have made
Charles Dickens proud - great expectations - but ended with perhaps the
greatest divergence of market opinion in this decade. The Federal Reserve
caused some mild angst during the first three quarters of the year, highlighted
by the March discount rate hike; but spread volatility was the lowest in three
decades in the higher-quality sectors. The fourth quarter took away Fed
uncertainty but left us with more negative surprises from Asia, a few European
short-term rate hikes, a flattening U.S. Treasury curve, and sloppy sector swap
spreads. The U.S. bond market responded positively to this sentiment change;
and, suddenly, the road to total return Oz became a lot more enjoyable as the
Fund ended 1997 on a positive note.
There is no doubt that 1998 will debut with many questions and few answers,
although there seems to be one given - global economic growth will suffer in
1998 as the Asian drama continues to play itself out. There is no miracle cure
for this dilemma. Global economic policy-making and capital markets will
continue to converge as they have done throughout the 1990s.
There are several factors that we will be monitoring closely during 1998 -
European Monetary Union, financial industry consolidation, asset
securitization, and declines in global government issuances, just to name a
few. We believe that the economy is arguably in the best shape since the 1960s
and expect both investment grade and high-yield valuations to improve modestly
during 1998 - at least in the first half - as rates continue to trend lower.
The Fund is currently maintaining a core strategy of overweighting higher
yielding sectors of the corporate market but will not hesitate to adjust
maturity and sector characteristics closer to the primary benchmark as the
anticipated improvement in rates continues.
Page 8
MONETTA GOVERNMENT MONEY MARKET FUND PERIOD ENDED 12/31/97
Monetta Government Money Market:
Investment Objective: 7-Day Yield: Average Days to Maturity:
Income and Capital Preservation 5.05% 41 Days
Total Net Assets:
$4.5 million
<TABLE>
<CAPTION>
Fund/Benchmark Since Inception
1 Year 3 Years (3/1/93)
<S> <C> <C> <C>
Monetta Government Money
Market Fund 5.15%** 5.36%** 4.64%**
Lipper US Gov't Money
Market Funds Avg.* 4.90% 4.98% 4.28%
</TABLE>
*Source Lipper Analytical Services, Inc.
[Performance Graph Appears Here]
<TABLE>
<CAPTION>
Measurement Period Money Market Lipper
(Fiscal Year Covered) Average
<S> <C> <C>
3/1/93 10,000 10,000
3/93 10,013 10,023
6/93 10,072 10,088
9/93 10,147 10,154
12/93 10,224 10,222
3/94 10,301 10,290
6/94 10,396 10,374
9/94 10,507 10,475
12/94 10,637 10,597
3/95 10,788 10,738
6/95 10,950 10,885
9/95 11,110 11,030
12/95 11,262 11,174
3/96 11,401 11,309
6/96 11,539 11,440
9/96 11,683 11,579
12/96 11,832 11,711
3/97 11,977 11,846
6/97 12,126 11,988
9/97 12,281 12,135
12/97 12,441 12,284
</TABLE>
**Total returns are net of advisory fees waived and voluntary absorption of all
or part of the Fund's operating expenses by the Advisor. Had the advisory fee
not been waived, the 7-day SEC yield would have been 4.67%, versus 5.05%. 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 at bottom of Page 2.
<TABLE>
<CAPTION>
<S> <C>
Government Agencies 99.6%
Short-Term Investments, Net .4%
Total 100.0%
</TABLE>
Commentary:
For the twelve months ending December 31, 1997, the Monetta Government Money
Market Fund posted an impressive return of 5.15%. The Fund was ranked 14th of
118 funds in the U.S. Government money market funds category, as measured by
Lipper Analytical Services. The average return of the Lipper U.S. Government
Fund category was 4.90%. As of December 31, 1997, the Fund's seven-day yield
was 5.05%, with an average maturity of 41 days.
Money market yields were reasonably constant over the past six months but
slightly higher for the year as evidenced by the 60-89 day Federal Farm Credit
yield curve, which increased from 5.32% early in the year to 5.52% on December
31, 1997.
For the year, the Fund maintained an average maturity of 62 days. The
flattening of the yield curve did not warrant a longer maturity risk given the
anticipated return. In 1998, it appears that the Federal Reserve will provide
additional liquidity and ease of monetary policy in response to slower economic
growth and moderate inflation expectation. Two major factors for this belief
are a soft landing scenario for the Asian crisis and good news on the budget
deficit which could reduce short-end government financing needs. Going forward,
we do not anticipate any major change in the Fund's characteristics until
current events begin to acknowledge Federal Reserve easing.
Page 9
Independent Auditors' Report
The Boards 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 Small-Cap
Equity Fund, 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, 1997, 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, 1997, 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, 1997; 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 19, 1998
Page 10
SCHEDULE OF INVESTMENTS DECEMBER 31, 1997
MONETTA FUND
Quoted
Shares or Market
Principal Value
Amount (In Thousands)
<TABLE>
<CAPTION>
COMMON STOCKS - 95.7%
<S> <C>
CONSUMER RELATED - 35.4% $57,844
Broadcasting/Cable TV - 3.0%
*27,273 Chancellor Media Corp - CL A $ 2,035
*40,000 Metro Networks, Inc. 1,310
*153,500 VDI Media 1,478
4,823
Food Processing - 0.9%
*50,700 WSMP, Inc. 1,470
Recreation/Entertainment - 2.7%
*47,800 AMF Bowling, Inc. 1,195
*27,000 Avis Rent A Car, Inc 862
*40,000 Budget Group, Inc. - CL A 1,383
*50,000 Dollar Thrifty 1,025
4,465
Restaurants/Lodging - 6.0%
*95,300 Ark Restaurants Corp. 1,120
*85,000 BridgeStreet Accommodations 863
*100,000 Hospitality Worldwide Services 1,313
70,000 Innkeepers USA Trust 1,085
*51,500 Landry's Seafood Restaurants,Inc. 1,236
*71,000 Logan's Roadhouse Inc. 1,101
*40,000 Outback Steakhouse, Inc. 1,150
30,000 Patriot American Hospitality,Inc. 864
*43,000 Schlotzsky's, Inc. 629
*50,000 Shells Seafood Restaurants, Inc. 487
9,848
Retail Manufactures & Distribution - 9.7%
*100,000 CHS Electronics, Inc. 1,712
*44,000 Central Garden & Pet Co. 1,155
*50,000 Galey & Lord, Inc. 894
*40,000 Hirsch Int'l Corp. - CL A 880
*110,000 Home Products Int'l, Inc. 1,293
*50,000 Industrial Distribution Group,Inc. 785
*52,500 Mohawk Industries, Inc. 1,152
*28,500 Performance Food Group Co. 677
*70,000 Quaker Fabric Corp. 1,373
*108,000 Styling Technology Corp. 1,755
*25,500 Suiza Foods Corp. 1,519
*50,500 Tefron Ltd. 1,161
*23,000 Triangle Pacific Corp. 779
30,000 Wolverine World Wide, Inc. 679
15,814
Retail Trades - 3.9%
*35,000 Dominick's Supermarkets, Inc. 1,278
*75,000 Furniture Brands Int'l, Inc. 1,538
*40,000 Guitar Center, Inc. 920
*25,000 Stage Stores, Inc. 934
*48,300 The Buckle, Inc. 1,654
6,324
Miscellaneous - 9.2%
*45,000 American Business Info.,Inc.-CL A 461
*35,000 American Business Info.,Inc.-CL B 359
*100,000 American Eco Corp. 1,081
*50,000 CKS Group, Inc. 706
*25,000 Consolidated Graphics, Inc. 1,166
*101,000 FirstService Corp. 758
*53,000 Forensic Technologies Int'l Corp. 662
*80,000 MAXIMUS, Inc. 1,935
*125,000 May & Speh, Inc. 1,687
40,000 Norrell Corp. 795
*20,000 QuickResponse Services, Inc. 740
*50,000 SOS Staffing Services, Inc. 944
*35,000 Superior Services, Inc. 1,011
*65,500 Vestcom Int'l, Inc. 1,465
*60,000 Warrantech Corp. 585
*40,000 Waste Industries, Inc. 745
15,100
FINANCIAL RELATED -7.3% $12,016
Financial Services - 7.3%
*40,000 Affiliated Managers Group, Inc. $ 1,160
*60,000 Annaly Mortgage Management, Inc. 660
*60,000 BA Merchant Services, Inc. 1,065
30,000 Excel Realty Trust, Inc. 945
55,000 Fidelity National Fin'l, Inc. 1,712
*47,300 First Int'l Bancorp, Inc. 573
*40,000 Golf Trust of America, Inc. 1,160
*100,000 Imperial Credit Commercial
Mortgage Investment Corp. 1,462
*65,000 LINC Capital, Inc. 1,276
60,000 Ocwen Asset Investment Corp. 1,230
*30,000 Trammell Crow Co. 773
12,016
Page 11
SCHEDULE OF INVESTMENTS DECEMBER 31, 197
Schedule of Investments December 31, 1997
MONETTA FUND (CONTINUED)
QUOTED
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT (IN THOUSANDS)
INDUSTRIAL RELATED - 22.9% $37,358
ENERGY RESOURCES & SERVICES - 3.8%
*60,000 HANOVER COMPRESSOR CO. $ 1,226
*60,000 ITEQ, INC. 690
*140,000 NEWPARK RESOURCES, INC. 2,450
*50,000 THE HOUSTON EXPLORATION CO. 919
*100,000 TITAN EXPLORATION, INC. 950
6,235
HOUSING - 0.7%
*65,625 AMERICAN HOMESTAR CORP. 1,083
INDUSTRIAL & ELECTRONICS PRODUCTS - 14.3%
*75,350 AFC CABLE SYSTEMS, INC. 2,242
*79,000 ADVANCED LIGHTING TECH., INC. 1,501
30,000 APPLIED POWER, INC. 2,070
*50,000 BALLANTYNE OF OMAHA, INC. 900
*50,000 BERG ELECTRONICS CORP. 1,137
63,000 CHART INDUSTRIES, INC. 1,437
*60,000 FIBERMARK, INC. 1,290
*30,000 GENRAD, INC. 906
*100,000 JPM CO. 2,125
*50,000 KELLSTROM INDUSTRIES, INC. 1,237
70,000 MASCOTECH, INC. 1,286
*39,000 METTLER-TOLEDO INT'L, INC. 673
20,000 PRECISION CASTPARTS CORP. 1,206
*24,600 SPS TECHNOLOGIES, INC. 1,073
70,000 SPARTECH CORP. 1,059
*66,000 TOTAL CONTROL PRODUCTS, INC. 809
*60,000 TRIDENT INT'L, INC. 780
*40,000 U.S. FILTER CORP. 1,198
*60,000 WPI GROUP, INC. 442
23,371
TRANSPORTATION - 3.5%
27,000 EXPEDITORS INT'L OF
WASHINGTON, INC. 1,040
*100,000 MILLER INDUSTRIES, INC. 1,075
*85,000 RAILAMERICA, INC. 547
*51,000 SIMON TRANSPORTATION
SERVICES, INC. 1,224
*30,000 SWIFT TRANSPORTATION CO., INC. 971
25,000 USFREIGHTWAYS CORP. 812
5,669
MISCELLANEOUS - 0.6%
*40,000 NICHOLS RESEARCH CORP. 1,000
MEDICAL RELATED - 13.4% $21,900
MEDICAL SUPPLIES - 2.1%
50,000 BALLARD MEDICAL PRODUCTS $ 1,212
*110,000 GRAHAM-FIELD HEALTH
PRODUCTS, INC. 1,836
*30,000 MERIDIAN DIAGNOSTICS, INC. 304
3,352
MEDICAL TECHNOLOGY - 2.3%
55,000 ADAC LABORATORIES 1,086
*30,000 COHR, INC. 382
*40,000 OEC MEDICAL SYSTEMS, INC. 798
*80,000 STERIGENICS INT'L, INC. 1,520
3,786
PHARMACEUTICALS - 5.7%
*113,000 CHIREX, INC. 1,992
70,000 JONES MEDICAL IND., INC. 2,677
*30,000 MEDICIS PHARMACEUTICAL
CORP. - CL A 1,534
*156,366 PHARMERICA, INC. 1,622
*23,100 PRIORITY HEALTHCARE CORP. 349
*110,000 VIVUS, INC. 1,169
9,343
PHYSICIAN SERVICES - 3.3%
*71,000 CASTLE DENTAL CENTERS, INC. 550
*27,500 HEALTHWORLD CORP. 332
91,300 HOOPER HOLMES, INC. 1,330
*61,000 MEDQUIST, INC. 2,120
*72,500 SHERIDAN HEALTHCARE, INC. 1,087
5,419
TECHNOLOGY RELATED -16.7% $27,336
COMPUTER SOFTWARE & SYSTEMS - 2.1%
*30,000 PLATINUM TECHNOLOGY, INC. $ 848
*30,000 PROGRAMMER'S PARADISE, INC. 281
*35,000 QUADRAMED CORP. 963
*40,900 SMALLWORLDWIDE PLC 894
*119,000 STORAGE DIMENSIONS, INC. 446
3,432
PAGE 12
SCHEDULE OF INVESTMENTS DECEMBER 31, 1997
MONETTA FUND (CONTINUED)
QUOTED
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT (IN THOUSANDS)
COMPUTER & OFFICE EQUIPMENT - 2.2%
*37,500 ASIA ELECTRONICS HOLDING CO.,INC. 233
*50,500 NORSTAN, INC. 1,200
*112,000 SCANSOURCE, INC. 2,240
3,673
SEMICONDUCTORS - 4.0%
*55,100 ATMI, INC. 1,336
*83,400 AAVID THERMAL
TECHNOLOGIES, INC. 2,002
*150,000 AEROFLEX, INC. 1,312
*45,000 AMERICAN TECHNICAL
CERAMICS CORP. 681
*40,000 ANADIGICS, INC. 1,205
6,536
TELECOMMUNICATIONS & EQUIPMENT - 8.4%
*55,200 AMERILINK CORP. 1,421
*63,000 AXSYS TECHNOLOGIES, INC. 1,162
*102,000 CMC INDUSTRIES, INC. 599
*125,400 COMDIAL CORP. 1,160
*85,000 DYCOM INDUSTRIES, INC. 1,833
*24,000 ELECTROMAGNETIC SCIENCES, INC. 486
*60,000 MASTEC, INC. 1,373
*74,000 P-COM, INC. 1,277
*56,000 REMEC, INC. 1,260
*100,000 RMH TELESERVICES, INC. 637
*100,000 TRANSCRYPT INT'L, INC. 2,487
13,695
TOTAL COMMON STOCKS
(COST $133,229) (A) 156,454
VARIABLE DEMAND NOTES - 2.6%
3,779,700 AMERICAN FAMILY - 5.64% 3,780
489,800 WARNER LAMBERT - 5.64% 490
TOTAL VARIABLE DEMAND NOTES 4,270
COMMERCIAL PAPER - 3.1%
3,000,000 MERRILL LYNCH
5.820% DUE 01/14/98 2,993
2,000,000 MERRILL LYNCH
5.800% DUE 01/23/98 1,993
TOTAL COMMERCIAL PAPER 4,986
TOTAL SHORT-TERM INVESTMENTS 9,256
TOTAL INVESTMENTS - 101.4%
(COST $142,485) (A) 165,710
OTHER ASSETS LESS LIABILITIES - (1.4)% 2,295
NET ASSETS - 100.0% $163,415
</TABLE>
(A) FOR TAX PURPOSES, COST IS $142,557; THE AGGREGATE GROSS UNREALIZED
APPRECIATION IS $30,713; AND AGGREGATE GROSS UNREALIZED DEPRECIATION IS
$7,560, RESULTING IN NET UNREALIZED APPRECIATION OF $23,153
(IN THOUSANDS).
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
* NON-INCOME PRODUCING SECURITY.
PAGE 13
SCHEDULE OF INVESTMENTS DECEMBER 31, 1997
MONETTA SMALL-CAP EQUITY FUND
QUOTED
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT (IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCKS - 96.8%
<S> <C>
CONSUMER RELATED - 31.3% $790
BROADCASTING/CABLE TV - 2.3%
*6,000 VDI MEDIA $58
RECREATION/ENTERTAINMENT - 2.2%
*2,200 AMF BOWLING, INC. 55
RESTAURANTS/LODGING - 4.4%
*4,000 ARK RESTAURANTS CORP. 47
*5,000 HOSPITALITY WORLDWIDE SERVICES 66
113
RETAIL MANUFACTURES & DISTRIBUTION - 8.1%
*5,000 CHS ELECTRONICS, INC. 86
*4,500 HOME PRODUCTS INT'L, INC. 53
*4,000 STYLING TECHNOLOGY CORP. 65
204
MISCELLANEOUS - 14.3%
*4,000 FORENSIC TECH INT'L CORP. 50
*3,000 MAXIMUS, INC. 73
*5,000 MAY & SPEH, INC. 67
*3,000 SOS STAFFING SERVICE, INC. 57
*3,000 VESTCOM INT'L, INC. 67
*2,500 WASTE INDUSTRIES, INC. 46
360
FINANCIAL RELATED - 10.2% $256
FINANCIAL SERVICES - 10.2%
*1,500 AFFILIATED MGRS GROUP, INC. $ 43
*2,000 ANNALY MORTGAGE MANAGEMENT,INC. 22
*1,800 FIRST INT'L BANCORP, INC. 22
*4,000 IMPERIAL CREDIT COMMERCIAL
MORTGAGE INVESTMENT CORP. 58
*3,000 LINC CAPITAL, INC. 59
*2,000 TRAMMELL CROW CO. 52
256
INDUSTRIAL RELATED - 11.2% $281
ENERGY RESOURCES & SERVICES - 2.8%
*4,000 NEWPARK RESOURCES, INC. $ 70
INDUSTRIAL & ELECTRONICS PRODUCTS - 7.1%
*3,500 JPM CO. 74
*1,000 SPS TECHNOLOGIES, INC. 44
*5,000 TOTAL CONTROL PRODUCTS, INC. 61
179
TRANSPORTATION - 1.3%
*5,000 RAILAMERICA, INC. 32
MEDICAL RELATED - 12.7% $321
MEDICAL SUPPLIES - 2.5%
*3,800 GRAHAM-FIELD HEALTH PROD,INC. 63
MEDICAL TECHNOLOGY - 2.6%
*3,500 STERIGENICS INT'L, INC. 67
PHARMACEUTICALS - 5.5%
*1,500 CHIREX, INC. 26
*2,000 JONES MEDICAL IND., INC. 77
*700 MEDICIS PHARMACEUTICAL
CORP. CL A 36
139
PHYSICIAN SERVICES - 2.1%
*1,500 MEDQUIST, INC. 52
TECHNOLOGY RELATED - 31.4% $790
COMPUTER SOFTWARE & SYSTEMS - 3.3%
*3,000 QUADRAMED CORP. $82
COMPUTER & OFFICE EQUIPMENT - 2.4%
*3,000 SCANSOURCE, INC. 60
SEMICONDUCTORS - 8.3%
*3,000 AAVID THERMAL TECHNOLOGIES,INC. 72
*7,000 AEROFLEX, INC. 61
*2,500 ANADIGICS, INC. 76
209
PAGE 14
SCHEDULE OF INVESTMENTS DECEMBER 31, 1997
MONETTA SMALL-CAP EQUITY FUND (CONTINUED)
QUOTED
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT (IN THOUSANDS)
TELECOMMUNICATIONS & EQUIPMENT - 17.4%
*2,000 AMERILINK CORP. 52
*3,000 AXSYS TECHNOLOGIES, INC. 55
*3,000 BRIGHTPOINT, INC. 42
*5,000 CMC INDUSTRIES, INC. 29
*6,000 COMDIAL CORP. 56
*2,000 DYCOM INDUSTRIES, INC. 43
*3,300 REMEC, INC. 74
*8,000 RMH TELESERVICES, INC. 51
*1,500 TRANSCRYPT INT'L, INC. 37
439
TOTAL COMMON STOCKS
(COST $2,321) (A) 2,438
VARIABLE DEMAND NOTES - 4.9%
71,600 JOHNSON CONTROLS - 5.57% 72
51,400 WARNER LAMBERT - 5.64% 51
TOTAL VARIABLE DEMAND NOTES 123
TOTAL INVESTMENTS - 101.7%
(COST $2,444) (A) 2,561
OTHER ASSETS LESS LIABILITIES - (1.7)% (43)
NET ASSETS - 100.0% $2,518
</TABLE>
(A) COST IS IDENTICAL FOR BOOK AND TAX PURPOSES; THE AGGREGATE GROSS
UNREALIZED APPRECIATION IS $252, AND AGGREGATE GROSS UNREALIZED DEPRECIATION
IS $135, RESULTING IN NET UNREALIZED APPRECIATION OF $117 (IN THOUSANDS).
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
* NON-INCOMING PRODUCING SECURITY.
PAGE 15
SCHEDULE OF INVESTMENTS DECEMBER 31, 1997
MONETTA MID-CAP EQUITY FUND
QUOTED
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT (IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCKS - 93.4%
<S> <C>
CONSUMER RELATED - 27.7% $6,062
FOOD PROCESSING - 1.6%
6,000 DEAN FOODS CO. $357
RECREATION/ENTERTAINMENT - 7.3%
*20,000 AMF BOWLING, INC. 500
*12,000 BUDGET GROUP, INC. 415
*10,000 GALILEO INT'L, INC. 276
10,000 HERTZ CORP. - CL A 402
1,593
RESTAURANTS/LODGING - 1.2%
6,000 CKE RESTAURANTS, INC. 253
RETAIL MANUFACTURES & DISTRIBUTION - 3.1%
*25,000 CHS ELECTRONICS, INC. 428
8,000 HASBRO, INC. 252
680
RETAIL TRADES - 8.3%
20,000 AMERICAN STORES CO. 411
*14,000 AUTOZONE, INC. 406
6,000 DILLARD'S INC. 211
4,500 NORDSTROM, INC. 272
*18,000 PROFFITT'S, INC. 512
1,812
MISCELLANEOUS - 6.2%
*30,000 ALLIED WASTE INDUSTRIES, INC. 700
*17,000 USA WASTE SERVICES, INC. 667
1,367
FINANCIAL RELATED - 12.4% $2,726
FINANCIAL SERVICES - 12.4%
*10,000 AFFILIATED MANAGERS GROUP,INC. $290
10,000 BANK UNITED CORP. - CL A 489
*7,000 DIME BANCORP, INC. 212
*10,000 HARTFORD LIFE, INC. 453
*20,000 IMPERIAL CREDIT COMMERCIAL
MORTGAGE INVESTMENT CORP. 293
*7,700 NATIONWIDE FINANCIAL
SERVICES, INC. CL A 278
*10,000 SECURITY CAPITAL GROUP,INC.-CL B 325
*15,000 TRAMMELL CROW CO. 386
2,726
INDUSTRIAL RELATED - 31.4% $6,867
ENERGY RESOURCES & SERVICES - 9.5%
*10,000 HANOVER COMPRESSOR CO. $ 204
*10,000 INPUT/OUTPUT, INC. 297
*30,000 NEWPARK RESOURCES, INC. 525
*15,000 SANTE FE INT'L CORP. 611
8,000 TIDEWATER, INC. 441
2,078
HOUSING - 0.9%
6,000 OAKWOOD HOMES CORP. 199
INDUSTRIAL & ELECTRONICS PRODUCTS - 14.9%
7,000 APPLIED POWER, INC. - CL A 483
19,000 COOPER TIRE AND RUBBER CO. 463
*13,000 GULFSTREAM AEROSPACE CORP. 380
10,000 HARNISCHFEGER INDUSTRIES, INC. 353
25,000 MASCOTECH, INC. 460
*15,000 METTLER-TOLEDO INT'L, INC. 259
7,000 PRECISION CASTPARTS CORP. 422
*15,000 US FILTER CORP. 449
3,269
MINING/MINERAL RESOURCES - 3.3%
*7,000 ALUMAX, INC. 238
8,000 REYNOLDS METALS CO. 480
718
TRANSPORTATION - 1.7%
4,500 CNF TRANSPORTATION, INC. 173
6,000 SWIFT TRANSPORTATION CO., INC. 194
367
MISCELLANEOUS - 1.1%
4,000 CUMMINS ENGINE 236
PAGE 16
SCHEDULE OF INVESTMENTS DECEMBER 31, 1997
MONETTA MID-CAP EQUITY FUND (CONTINUED)
QUOTED
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT (IN THOUSANDS)
MEDICAL RELATED -10.0% $2,193
PHARMACEUTICALS - 7.8%
*6,500 ELAN CORP. PLC - ADR $ 333
10,000 JONES MEDICAL INDUSTRIES, INC. 382
*20,000 PHARMERICA, INC. 207
*25,000 VIVUS, INC. 266
*16,000 WATSON PHARMACEUTICALS, INC. 519
1,707
PHYSICIAN SERVICES - 2.2%
*18,000 PHYCOR, INC. 486
TECHNOLOGY RELATED - 11.9% $2,621
COMPUTER SOFTWARE & SYSTEMS - 2.4%
*15,000 PLATINUM TECHNOLOGY, INC. $ 424
*5,000 SYMANTEC CORP. 109
533
COMPUTER & OFFICE EQUIPMENT - 1.8%
*10,000 JABIL CIRCUIT, INC. 398
SEMICONDUCTORS - 0.5%
*6,000 LSI LOGIC CORP. 119
TELECOMMUNICATIONS & EQUIPMENT - 7.2%
11,000 CORNING, INC. 408
8,000 HARRIS CORP. 367
*15,000 MASTEC, INC. 343
*10,000 NEWBRIDGE NETWORKS CORP. 349
*6,000 P-COM, INC. 104
1,571
TOTAL COMMON STOCKS
(COST $18,428) (A) 20,469
VARIABLE DEMAND NOTES - 3.1%
362,000 AMERICAN FAMILY - 5.64% 362
320,100 PITNEY BOWES - 5.57% 320
TOTAL VARIABLE DEMAND NOTES 682
COMMERCIAL PAPER - 4.6%
1,000,000 MERRILL LYNCH & CO.
5.810% DUE 01/21/98 997
TOTAL SHORT-TERM INVESTMENTS 1,679
TOTAL INVESTMENTS - 101.1%
(COST $20,107) (A) 22,148
OTHER ASSETS LESS LIABILITIES (1.1)% (240)
NET ASSETS - 100.0% $21,908
</TABLE>
(A) COST IS IDENTICAL FOR BOOK AND TAX PURPOSES; THE AGGREGATE GROSS
UNREALIZED APPRECIATION IS $3,174, AND AGGREGATE GROSS UNREALIZED
DEPRECIATION IS $1,133, RESULTING IN NET UNREALIZED APPRECIATION OF $2,041
(IN THOUSANDS).
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
* NON-INCOME PRODUCING SECURITY.
PAGE 17
SCHEDULE OF INVESTMENTS DECEMBER 31, 1997
MONETTA LARGE-CAP EQUITY FUND
QUOTED
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT (IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCKS - 92.2%
<S> <C>
CONSUMER RELATED - 27.5% $1,173
RECREATION/ENTERTAINMENT - 7.7%
*5,000 AMF BOWLING, INC. $ 125
*3,000 GALILEO INT'L, INC. 83
3,000 HERTZ CORP. 121
329
RETAIL MANUFACTURES & DISTRIBUTION - 3.8%
2,000 ESTEE LAUDER CO. 103
1,200 KIMBERLY-CLARK CORP. 59
162
RETAIL TRADES - 6.3%
4,400 AMERICAN STORES CO. 90
*2,500 AUTOZONE, INC. 73
*9,000 KMART CORP. 104
267
MISCELLANEOUS - 9.7%
*4,000 ALLIED WASTE INDUSTRIES, INC. 93
2,000 BROWNING-FERRIS INDUSTRIES, INC. 74
1,000 COASTAL CORP. 62
1,100 TIME WARNER, INC. 68
*3,000 USA WASTE SERVICES, INC. 118
415
FINANCIAL RELATED - 15.1% $644
FINANCIAL SERVICES - 15.1%
1,800 EQUITABLE COMPANIES, INC. $ 89
1,100 FLEET FINANCIAL GROUP, INC. 82
*2,000 HARTFORD LIFE, INC. 91
*600 HOUSEHOLD INT'L, INC. 76
*2,600 NATIONWIDE FINANCIAL SVCS.,INC. 94
CL A
500 SLM HOLDING CORP. 70
*2,000 SECURITY CAPITAL GROUP B 65
1,200 WASHINGTON MUTUAL, INC. 77
644
INDUSTRIAL RELATED - 29.6% $1,266
ENERGY RESOURCES & SERVICES - 7.4%
1,000 DIAMOND OFFSHORE DRILLING, INC. $ 48
*3,000 SANTE FE INT'L CORP. 122
2,000 TRANSOCEAN OFFSHORE, INC. 96
2,100 UNION PACIFIC RESOURCES GROUP,INC. 51
317
INDUSTRIAL & ELECTRONICS PRODUCTS - 10.7%
2,500 COOPER TIRE AND RUBBER CO. 61
1,500 EATON CORP. 134
1,600 HARNISCHFEGER INDUSTRIES, INC. 56
1,000 PRECISION CASTPARTS CORP. 60
*3,000 US FILTER CORP. 90
1,000 WHIRLPOOL CORP. 55
456
MINING/MINERAL RESOURCES - 6.6%
1,800 ALUMINUM COMPANY OF AMERICA 127
1,000 NUCOR CORP. 48
1,800 REYNOLDS METALS CO. 108
283
MISCELLANEOUS - 4.9%
1,000 CUMMINS ENGINE 59
1,200 INTERNATIONAL PAPER CO. 52
2,500 TENNECO, INC. 99
210
MEDICAL RELATED - 5.2% $221
PHARMACEUTICALS - 1.8%
*1,500 ELAN CORP. PLC - ADR $77
PHYSICIAN SERVICES - 3.4%
*4,000 MEDPARTNERS, INC. 90
*2,000 PHYCOR, INC. 54
144
TECHNOLOGY RELATED - 14.8% $629
COMPUTER & OFFICE EQUIPMENT - 1.5%
900 XEROX CORP. $ 66
SEMICONDUCTORS - 2.0%
*1,800 ALTERA CORP. 59
*1,200 LSI LOGIC CORP. 24
83
PAGE 18
SCHEDULE OF INVESTMENTS DECEMBER 31, 1997
MONETTA LARGE-CAP EQUITY FUND (CONTINUED)
QUOTED
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT (IN THOUSANDS)
TELECOMMUNICATIONS & EQUIPMENT - 11.3%
*2,200 AIRTOUCH COMMUNICATIONS, INC. 91
1,800 CINCINNATI BELL, INC. 56
2,800 CORNING INC. 104
2,200 HARRIS CORP. 101
900 MOTOROLA, INC. 51
*2,200 NEWBRIDGE NETWORKS CORP. 77
480
TOTAL COMMON STOCKS
(COST $3,734) (A) 3,933
VARIABLE DEMAND NOTES - 3.1%
133,000 JOHNSON CONTROLS - 5.57% 133
COMMERCIAL PAPER - 4.7%
200,000 MERRILL LYNCH
5.840% DUE 01/16/98 200
TOTAL SHORT-TERM INVESTMENTS 333
TOTAL INVESTMENTS - 100.0%
(COST $4,067) (A) 4,266
OTHER ASSETS LESS LIABILITIES (1)
NET ASSETS - 100.0% $4,265
</TABLE>
(A) COST IS IDENTICAL FOR BOOK AND TAX PURPOSES; THE AGGREGATE GROSS
UNREALIZED APPRECIATION IS $391, AND AGGREGATE GROSS UNREALIZED
DEPRECIATION IS $192, RESULTING IN NET UNREALIZED APPRECIATION
OF $199 (IN THOUSANDS).
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
* NON-INCOME PRODUCING SECURITY.
PAGE 19
SCHEDULE OF INVESTMENTS DECEMBER 31, 1997
MONETTA BALANCED FUND
QUOTED
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT (IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCKS - 61.5%
<S> <C>
CONSUMER RELATED - 20.4% $2,464
BROADCASTING/CABLE TV - 0.8%
*10,000 VDI MEDIA $96
FOOD PROCESSING - 0.7%
1,500 DEAN FOODS CO. 89
RECREATION/ENTERTAINMENT - 3.9%
5,000 AMF BOWLING, INC. 125
4,000 BUDGET GROUP, INC. - CL A 138
3,000 GALILEO INT'L, INC. 83
3,000 HERTZ CORP. 121
467
RESTAURANTS/LODGING - 1.7%
*6,000 ARK RESTAURANTS CORP. 70
*6,000 BRIDGESTREET ACCOMMODATIONS 61
*6,000 HOSPITALITY WORLDWIDE SERVICES 79
210
RETAIL MANUFACTURES & DISTRIBUTION - 6.1%
*7,000 CHS ELECTRONICS, INC 120
1,500 ESTEE LAUDER CO. 77
*4,000 HIRSCH INT'L CORP. - CL A 88
*5,000 INDUSTRIAL DISTRIBUTION GROUP,INC. 78
1,800 KIMBERLY-CLARK CORP. 89
*3,000 QUAKER FABRIC CORP. 59
*7,000 STYLING TECHNOLOGY CORP. 114
*5,000 TEFRON LTD. 115
740
RETAIL TRADES - 2.4%
4,000 AMERICAN STORES CO. 82
*3,000 AUTOZONE, INC. 87
*10,000 KMART CORP. 116
285
MISCELLANEOUS - 4.8%
*6,000 ALLIED WASTE INDUSTRIES, INC. 140
*2,500 AMERICAN BUSINESS INFO., INC. 26
CL A
*2,500 AMERICAN BUSINESS INFO., INC. 25
CL B
*10,000 FIRSTSERVICE CORP 75
*3,500 MAXIMUS, INC. 85
*6,000 MAY & SPEH, INC. 81
*3,700 USA WASTE SERVICES, INC. 145
577
FINANCIAL RELATED - 8.7% $1,046
FINANCIAL SERVICES - 8.7%
*3,500 AFFILIATED MANAGERS GROUP, INC. $101
*6,000 ANNALY MORTGAGE MANAGEMENT, INC. 66
*2,000 EQUITABLE COMPANIES, INC. 100
*900 FIRST INT'L BANCORP, INC. 11
*3,000 GOLF TRUST OF AMERICA, INC. 87
*10,000 IMPERIAL CREDIT COMMERCIAL
MORTGAGE INVESTMENT CORP. 146
*7,000 LINC CAPITAL, INC. 137
*1,900 NATIONWIDE FINANCIAL SVCS., INC. 69
CL A
5,000 OCWEN ASSET INVESTMENT CORP. 103
*3,000 SECURITY CAPITAL GROUP B 97
*5,000 TRAMMELL CROW CO. 129
1,046
INDUSTRIAL RELATED - 15.8% $1,900
ENERGY RESOURCES & SERVICES - 4.1%
*7,000 NEWPARK RESOURCES, INC. $ 123
*3,400 SANTE FE INT'L CORP. 138
2,000 TIDEWATER, INC. 110
2,500 TRANSOCEAN OFFSHORE, INC. 121
492
INDUSTRIAL & ELECTRONICS PRODUCTS - 8.3%
*4,000 ADVANCED LIGHTING TECH., INC. 76
4,000 COOPER TIRE AND RUBBER CO. 98
1,600 EATON CORP. 143
*3,000 GULFSTREAM AEROSPACE CORP. 88
1,200 HARNISCHFEGER INDUSTRIES, INC. 42
*4,000 JPM CO. 85
6,000 MASCOTECH, INC. 110
*6,000 METTLER-TOLEDO INT'L INC. 104
1,400 PRECISION CASTPARTS CORP. 84
*8,500 TOTAL CONTROL PRODUCTS, INC. 104
*2,000 U.S. FILTER CORP. 60
994
MINING/MINERAL RESOURCES - 1.9%
2,000 ALUMINUM COMPANY OF AMERICA 141
1,500 REYNOLDS METALS CO. 90
231
TRANSPORTATION - 0.5%
*10,000 RAILAMERICA, INC. 64
MISCELLANEOUS - 1.0%
3,000 TENNECO, INC. 119
PAGE 20
SCHEDULE OF INVESTMENTS DECEMBER 31, 1997
MONETTA BALANCED FUND (CONTINUED)
QUOTED
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT (IN THOUSANDS)
MEDICAL RELATED - 6.2% $744
MEDICAL TECHNOLOGY - 1.5%
*7,000 COHR, INC. $ 89
*5,000 STERIGENICS INT'L INC. 95
184
PHARMACEUTICALS - 3.1%
*7,200 CHIREX INC. 127
*7,000 PHARMERICA, INC. 73
*7,000 VIVUS, INC. 74
*3,000 WATSON PHARMACEUTICALS, INC. 97
371
PHYSICIAN SERVICES - 1.6%
*10,000 CASTLE DENTAL CENTERS, INC. 77
*5,000 MEDPARTNERS, INC. 112
189
TECHNOLOGY RELATED - 10.4% $1,263
COMPUTER SOFTWARE & SYSTEMS - 0.3%
*10,000 STORAGE DIMENSIONS, INC. $ 38
COMPUTER & OFFICE EQUIPMENT - 1.0%
*6,000 SCANSOURCE, INC. 120
SEMICONDUCTORS - 2.9%
*5,000 AAVID THERMAL TECHNOLOGIES, INC. 120
*13,000 AEROFLEX, INC. 114
*4,000 ANADIGICS, INC. 120
354
TELECOMMUNICATIONS & EQUIPMENT - 6.2%
*6,000 AXSYS TECHNOLOGIES, INC. 111
*7,000 CMC INDUSTRIES, INC. 41
*6,000 COMDIAL CORP. 56
3,000 CORNING, INC. 111
*3,000 DYCOM INDUSTRIES, INC. 65
2,000 HARRIS CORP. 92
*2,300 NEWBRIDGE NETWORKS CORP. 80
*12,000 RMH TELESERVICES, INC. 76
*4,800 TRANSCRYPT INT'L, INC. 119
751
TOTAL COMMON STOCKS
(COST $7,130) (A) 7,417
VARIABLE DEMAND NOTES - 4.8%
449,200 JOHNSON CONTROLS - 5.57% 449
122,000 PITNEY BOWES - 5.57% 122
TOTAL VARIABLE DEMAND NOTES 571
U.S. TREASURY NOTES - 13.9%
100,000 6.000% DUE 10/15/99 101
900,000 5.750% DUE 11/15/00 902
220,000 6.250% DUE 02/15/03 225
300,000 5.750% DUE 08/15/03 300
150,000 5.875% DUE 02/15/04 151
TOTAL U.S. TREASURY NOTES 1,679
CORPORATE BONDS - 9.5%
450,000 CHASE MANHATTAN
9.750% DUE 11/01/01 504
300,000 ONT GLOBAL BOND
7.375% DUE 01/27/03 315
300,000 BANK UNITED CORP.
8.875% DUE 05/01/07 328
TOTAL CORPORATE BONDS 1,147
GOVERNMENT OBLIGATIONS - 6.6%
775,000 HUD HOUSING URBAN DEVELOPMENT
6.410% DUE 08/01/05 792
MORTGAGE OBLIGATIONS - 3.4%
400,000 GREEN TREE HOME IMPV. MORTG.
6.780% DUE 06/15/28 409
TOTAL INVESTMENTS - 99.7%
(COST $11,664) (A) 12,015
OTHER ASSETS LESS LIABILITIES - 0.3% 39
NET ASSETS - 100.0% $12,054
</TABLE>
(A) FOR TAX PURPOSES, COST IS $11,664; THE AGGREGATE GROSS UNREALIZED
APPRECIATION IS $870; AND AGGREGATE GROSS UNREALIZED
DEPRECIATION IS $519; RESULTING IN NET UNREALIZED APPRECIATION OF $351
IN THOUSANDS).
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
* NON-INCOME PRODUCING SECURITY.
PAGE 21
SCHEDULE OF INVESTMENTS DECEMBER 31, 1997
MONETTA INTERMEDIATE BOND FUND
QUOTED
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT (IN THOUSANDS)
<TABLE>
<CAPTION>
TREASURY NOTES - 23.6%
<S> <C>
200,000 5.500% DUE 04/15/00 $ 199
210,000 6.625% DUE 04/30/02 217
100,000 6.000% DUE 07/31/02 101
200,000 5.750% DUE 08/15/03 200
200,000 6.500% DUE 05/15/05 209
926
MUNICIPAL TAXABLE BOND - 1.1%
40,000 SHEBOYGAN, WI TIF #6
8.250% DUE 03/15/03 43
CORPORATE BONDS - 63.3%
50,000 AMERICAN AIRLINES, 8.700%
DUE 01/15/98 50
50,000 SALOMON INC., 9.375%
DUE 04/15/98 51
200,000 AHMANSON, 6.530%
DUE 06/01/98 201
150,000 INT'L LEASE FINANCE, 6.690%
DUE 04/30/00 152
110,000 PACIFIC GAS & ELECTRIC, 8.750%
DUE 01/01/01 118
150,000 FIRST CHICAGO CORP., 11.250%
DUE 02/20/01 172
50,000 AMERICAN STANDARD, 9.875%
DUE 06/01/01 52
300,000 CHASE MANHATTAN, 9.750%
DUE 11/01/01 336
150,000 SMITHKLINE BEECH, 6.625%
DUE 01/28/02 151
175,000 ASSOCIATES CORP NA, 6.875%
DUE 06/20/02 178
50,000 DAYTON HUDSON, 9.750%
DUE 07/01/02 56
100,000 NATIONAL RURAL UTILITY, 6.500%
DUE 09/15/02 101
100,000 IBM CORP., 7.250%
DUE 11/01/02 105
100,000 RJR NABISCO INC., 8.625%
DUE 12/01/02 106
100,000 ONT-GLOBAL BOND, 7.375%
DUE 01/27/03 105
125,000 TEXACO CAPITAL, 8.500%
DUE 02/15/03 138
100,000 WEBB, DEL E., 9.750%
DUE 03/01/03 103
100,000 SALOMON INC., 6.750%
DUE 01/15/06 101
100,000 BANK UNITED CORP., 8.875%
DUE 05/01/07 109
100,000 LCI INT'L. INC., 7.250%
DUE 06/15/07 104
2,489
U.S. GOVERNMENT AGENCIES - 9.1%
250,000 HUD HOUSING URBAN DEVELOPMENT
6.360% DUE 08/01/04 254
100,000 FEDERAL HOME LOAN BANK
6.440% DUE 11/28/05 103
357
MORTGAGE OBLIGATIONS - 0.3%
12,845 GNMA, 8.500%
DUE 07/15/21 14
VARIABLES DEMAND NOTES - 0.9%
35,000 WARNER LAMBERT - 5.64% 35
TOTAL INVESTMENTS - 98.3%
(COST $3,807) (A) 3,864
OTHER ASSETS AND LIABILITIES - 1.7% 69
NET ASSETS - 100.0% $3,933
</TABLE>
(A)COST IS IDENTICAL FOR BOOK AND TAX PURPOSES; THE AGGREGATE GROSS UNREALIZED
APPRECIATION IS $57, AND AGGREGATE GROSS UNREALIZED DEPRECIATION IS LESS THAN
$1 THOUSAND, RESULTING IN NET UNREALIZED APPRECIATION OF $57 (IN THOUSANDS).
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
PAGE 22
SCHEDULE OF INVESTMENTS DECEMBER 31, 1997
MONETTA GOVERNMENT MONEY MARKET FUND
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT (IN THOUSANDS)
<TABLE>
<CAPTION>
GOVERNMENT OBLIGATIONS - 99.6%
FEDERAL HOME LOAN BANK DISC. NOTES-54.3%
<S> <C>
325,000 DUE 01/05/98 $ 325
210,000 DUE 01/26/98 209
230,000 DUE 02/05/98 229
700,000 DUE 02/17/98 695
385,000 DUE 02/24/98 382
310,000 DUE 03/02/98 307
280,000 DUE 03/18/98 277
2,424
FEDERAL NATIONAL MORTGAGE ASSOC. DISC. NOTE - 23.8%
640,000 DUE 01/16/98 638
425,000 DUE 02/05/98 423
1,061
FEDERAL HOME LOAN MORTGAGE
CORP. DISCOUNT NOTE - 21.5%
340,000 DUE 01/21/98 339
627,000 DUE 03/06/98 621
960
TOTAL INVESTMENTS - 99.6% 4,445
(COST $4,445) (A)
OTHER ASSETS LESS LIABILITIES - 0.4% 19
NET ASSETS - 100.0% $4,464
</TABLE>
(A) COST IS IDENTICAL FOR BOOK AND TAX PURPOSES.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
PAGE 23
STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
SMALL-CAP MID-CAP
MONETTA EQUITY EQUITY
FUND FUND FUND
ASSETS:
<S> <C> <C> <C>
INVESTMENTS AT MARKET VALUE (COST: $142,485;
$2,444; $20,107; $4,067;$11,664; $3,807;
$4,445) (NOTE 1) $165,710 $2,561 $22,148
CASH 0 4 5
Interest and dividends
receivable 119 1 13
Receivable for securities sold 497 0 0
Total Assets 166,326 2,566 22,166
Liabilities:
Payables:
Custodial bank 438 0 0
Investment advisory fees (Note 2) 166 1 14
Distribution and service 0 1 39
charges payable
Investments purchased 2,173 42 195
Fund shares redeemed 0 0 0
Accrued expenses 134 4 10
Total Liabilities 2,911 48 258
Net assets $163,415 $2,518 $21,908
Analysis of net assets:
Paid in capital (b) 134,815 2,371 18,098
Accumulated undistributed
net investment income 0 0 0
Accumulated undistributed
net realized gain 5,375 30 1,769
Net unrealized appreciation
on investments 23,225 117 2,041
Net Assets $163,415 $2,518 $21,908
Net asset value, offering price, and redemption
price per share (9,460 shares of capital stock
and 181; 1,463; 319; 856; 377; 4,464 shares of
beneficial interest issued and outstanding
respectively)
$17.27 $13.90 $14.98
</TABLE>
See accompanying notes to financial statements.
(a) Rounds to less than $1,000.
(b) Amount for Monetta Fund represents $95 of $0.01 par value and $134,720 of
additional paid in capital, 100 million
shares are authorized. Each fund of Monetta Trust has an unlimited number
of no par value share of beneficial interest authorized.
Page 24
<TABLE>
<CAPTION>
Large-Cap Intermediate Government
Equity Balanced Bond Money Market
Fund Fund Fund Fund
<S> <C> <C> <C>
$4,266 $12,015 $3,864 $4,445
5 115 1 23
5 64 73 (a)
0 0 0 0
4,276 12,194 3,938 4,468
0 0 0 0
2 4 1 0
5 11 2 0
0 117 0 0
0 1 0 0
4 7 2 4
11 140 5 4
$4,265 $12,054 $3,933 $4,464
3,796 11,251 3,875 4,464
0 2 (a) 0
270 450 1 0
199 351 57 0
$4,265 $12,054 $3,933 $4,464
$13.36 $14.08 $10.45 $1.00
</TABLE>
Page 25
STATEMENTS OF OPERATIONS DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
Small-Cap Mid-Cap
Monetta Equity Equity
Fund Fund* Fund
<S> <C> <C> <C>
Investment income and expenses:
Investment income:
Interest $ 956 $ 4 $ 83
Dividend 481 2 110
Other income 622 0 2
Total Investment Income 2,059 6 195
Expenses:
Investment advisory fee (Note 2) 1,665 7 153
Distribution expense 0 2 46
Custodial fees and bank cash 52 4 10
management fee
Transfer and shareholder servicing 738 4 42
agent fee
Other 0 0 0
Total Expenses 2,455 17 251
Expenses waived and reimbursed 0 0 0
Expenses net of waived and reimbursed 2,455 17 251
expenses
Net investment income (loss) (396) (11) (56)
Realized and unrealized gain on investments:
Realized gains on investments:
Proceeds from sales 208,690 1,389 26,852
Cost of securities sold 177,021 1,249 20,468
Net realized gain on investments 31,669 140 6,384
Net unrealized appreciation (depreciation) on investments:
Beginning of period 18,128 0 3,183
End of period 23,225 117 2,041
Net change in net unrealized appreciation (depreciation) on
investments during the period 5,097 117 (1,142)
Net realized and unrealized gain on 36,766 257 5,242
investments
Net increase in net assets from $36,370 $246 5,186
operatations
</TABLE>
* For period from 2/1/97 through 12/31/97.
See accompanying notes to financial statements.
(a) Rounds to less than $1,000.
Page 26
<TABLE>
<CAPTION>
Large-Cap Intermediate Government
Equity Balanced Bond Money Market
Fund Fund Fund Fund
<C> <C> <C> <C>
$ 21 $ 205 $ 202 $ 288
33 35 0 0
0 (a) (a) (a)
54 240 202 288
28 34 11 14
9 20 7 5
4 8 2 3
15 22 7 19
(a) (a) 0 0
56 84 27 41
0 0 (7) (20)
56 84 20 21
(2) 156 182 267
4,061 8,877 2,702 28,385
3,230 7,706 2,684 28,385
831 1,171 18 0
210 115 (13) 0
199 351 57 0
(11) 236 70 0
820 1,407 88 0
$818 $1,563 $270 $267
</TABLE>
Page 27
STATEMENTS OF CHANGES IN NET ASSETS DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
Small-Cap Mid-Cap
Monetta Equity Equity
Fund Fund Fund
1997 1996 1997** 1997 1996
From investment activities:
Operations:
<S> <C> <C> <C> <C> <C>
Net investment income (loss) $ (396) $ (1,489) $ (11) $ (56) $ 52
Net realized gain (loss) on 31,669 (1,995) 140 6,384 423
investments
Net change in net unrealized appreciation
(depreciation) on investments
during the period 5,097 8,722 117 (1,142) 2,890
Net increase (decrease) in net assets
from operations 36,370 5,238 246 5,186 3,365
Distribution from net investment
income 0 0 0 (a) (52)
Distribution from short-term
capital gains, net (b) (15,860) 0 (99) (1,696) 0
Distribution from net (6,981) 0 0 (3,032) 0
realized gains
Increase (decrease) in net assets
from investment activities 13,529 5,238 147 458 3,313
From capital transactions (Note 3):
Proceeds from shares sold 13,641 19,940 2,498 5,590 5,820
Net asset value of shares issued
through dividend reinvestment 22,534 (a) 95 4,686 50
Cost of shares redeemed (97,806) (176,381) (222) (6,164) (6,061)
Increase (decrease) in net assets
from capital transactions (61,631) (156,441) 2,371 4,112 (191)
Total increase (decrease)
in net assets (48,102) (151,203) 2,518 4,570 3,122
Net assets at beginning
of period 211,517 362,720 0 17,338 14,216
Net assets at end of period* $163,415 $211,517 $2,518 $21,908 17,338
</TABLE>
See accompanying notes to financial statements.
(a) Rounds to less than $1,000.
(b) Distributions of short-term capital gains are included as ordinary income
for tax purposes.
* Including undistributed net investment income at the beginning and end of
the period of $1 thousand and $0, respectively, for the Mid-Cap Equity Fund,
and $0 and $2 thousand, respectively, for the Balanced Fund.
** For period from 2/1/97 through 12/31/97.
Page 28
<TABLE>
<CAPTION>
Large-Cap Intermediate Government
Equity Balanced Bond Money Market
Fund Fund Fund Fund
1997 1996 1997 1996 1997 1996 1997 1996
<S> <C> <C> <C> <C> <C> <C> <C>
$ (2) $ 5 $ 156 $ 13 $ 182 $ 190 $ 267 $ 292
831 160 1,171 76 18 (4) 0 0
(11) 147 236 94 70 (4) 0 0
818 312 1,563 183 270 182 267 292
0 (4) (154) (13) (181) (190) (267) (292)
(296) 0 (676) 0 (14) (17) 0 0
(275) (141) (56) (61) (a) 0 0 0
247 167 677 109 75 (25) 0 0
2,135 1,496 9,742 1,941 1,371 653 6,338 15,949
559 144 618 72 170 175 252 268
(964) (591) (1,319) (196) (452) (1,623) (8,358) (14,378)
1,730 1,049 9,041 1,817 1,089 (795) (1,768) 1,839
1,977 1,216 9,718 1,926 1,164 (820) (1,768) 1,839
2,288 1,072 2,336 410 2,769 3,589 6,232 4,393
$4,265 $2,288 $12,054 $2,336 $3,933 $2,769 $4,464 $6,232
</TABLE>
Page 29
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997
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:
Small-Cap Equity Fund. The primary objective of this fund is capital
appreciation. The Fund typically invests in companies with a market
capitalization of less than $1 billion.
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 is 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.
(b) Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires the Funds' management to make estimates and
assumptions that affect reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the results of operations during the reporting period. Actual
results could differ from those estimates.
Page 30
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997
(c) 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.
(d) 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. Bond Discount/Premium is
amortized on a straight-line basis over the life of each applicable security.
Other income primarily represents income received, as a member of a class of
plaintiffs, from the favorable settlement of class action suits, which arose in
connection with security holdings of the Funds in prior periods.
(e) 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.
For federal income tax purposes, a net operating loss is offset against net
short-term gains. During the year, Monetta Fund, Inc., Monetta Large-Cap
Equity Fund, Monetta Mid-Cap Equity Fund, and Monetta Small-Cap Equity Fund had
net operating losses of $396,527; $1,798; $55,953; and $11,097; which were
offset against short-term gains. This created a permanent book and tax
difference as these losses have been reclassified from undistributed net
investment income to accumulated net realized gains.
Distributions from net realized gains for book purposes may include short-term
capital gains, which are included as ordinary income for tax purposes.
For the year ended December 31, 1997, the Monetta Fund, Inc., paid capital
gains of $6,588,219, which are taxed at a rate of 28%, and $392,868, which are
taxed at a rate of 20%; Monetta Large-Cap Equity Fund paid capital gains of
$173,032, which are taxed at a rate of 28%, and $102,371, which are taxed at a
rate of 20%; Monetta Mid-Cap Equity Fund paid capital gains of $1,666,014,
which are taxed at a rate of 28%, and $1,366,393, which are taxed at a rate of
20%; Monetta Balanced Fund paid capital gains of $45,619, which are taxed at a
rate of 28%, and $10,262, which are taxed at a rate of 20%; and Monetta
Intermediate Bond Fund paid capital gains of $154, which are taxed at a rate of
20%.
Page 31
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997
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 advisor, Monetta
Financial Services, Inc. ("Advisor"). For the twelve months ended December 31,
1997, remuneration required to be paid to all interested director or trustee
has been absorbed by the Advisor. Fees paid to outside Directors or Trustees
have been absorbed by the respective Funds.
Each Fund pays an investment advisory fee to the Advisor, based on that
Fund's individual net assets, payable monthly at the annual rate of 1% for
Monetta Fund, 0.75% for Small-Cap, Mid-Cap, and Large-Cap Equity Funds; 0.40%
for Balanced Fund; 0.35% for Intermediate Bond Fund; and 0.25% for the
Government Money Market Fund. From these fees the Advisor pays all the Fund's
ordinary operating expenses other than the advisory fee, distribution charges
(Trust only) and charges of the Fund's custodian and transfer agent.
Investment advisory fees waived for the twelve months ended December 31, 1997
for the Intermediate Bond Fund were $6,929 of total fees of $11,485.
Investment advisory fees waived and expenses paid by the Advisor through
December 31, 1997 for the Government Money Market Fund were $13,868 and $6,008,
respectively. Additionally, brokerage commissions of $7,750; $750; $50; and
$100 were paid by the Monetta Fund, the Mid-Cap Equity Fund, the Large-Cap
Equity Fund and the Balanced Fund, respectively, to Monetta Investment
Services, L.L.C. (formerly Monetta Brokerage, Inc.) during the twelve months
ended December 31, 1997.
<TABLE>
<CAPTION>
Shares Owned by the Advisor
Shares % of Fund
<S> <C> <C>
Monetta Fund 3,338 0.04
Small-Cap Fund 17,946 9.91
Mid-Cap Fund 9,407 0.64
Large-Cap Fund 12,850 4.03
Balanced Fund 59,914 7.00
Intermediate Bond Fund 78,755 20.92
Government Money Market Fund 512,032 11.47
</TABLE>
Page 32
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997
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>
Small- Mid- Large-
Cap Cap Cap Inter. Money
Monetta Equity Equity Equity Balanced Bond Market
(In Thousands) Fund Fund* Fund Fund Fund Fund Fund
<C> <C> <C> <C> <C> <C> <C> <C>
1996 Beginning Shares 23,265 1,188 101 39 350 4,393
Shares sold 1,270 436 123 157 64 15,949
Shares issued upon
dividend reinvestment 0 3 12 6 17 268
Shares redeemed (11,183) (457) (49) (17) (160) (14,378)
Net increase (decrease) in
shares outstanding (9,913) (18) (86) (146) (79) (1,839)
1997 Beginning shares 13,352 0 1,170 187 185 271 6,232
Shares sold 752 190 341 161 723 133 6,338
Shares issued upon
dividend reinvestment 1,289 7 315 42 43 17 252
Shares redeemed (5,933) (16) (363) (71) (95) (44) (8,358)
Net increase (decrease) in
shares outstanding (3,892) 181 293 132 671 106 (1,768)
Ending shares 9,460 181 1,463 319 856 377 4,464
</TABLE>
*Inception date February 1, 1997
4. PURCHASES AND SALES OF INVESTMENT SECURITIES:
The cost of purchases and proceeds from sales of securities for the
twelve months ended December 31, 1997, excluding short-term securities
were: Monetta Fund $147,063,889 and $208,690,377; Small-Cap Fund $3,569,614
and $1,388,673; Mid-Cap Fund $25,355,859 and $26,851,639; Large-Cap Fund
$5,182,296 and $4,061,223; Balanced Fund $26,512,475 and $8,876,986; and
Intermediate Bond Fund $6,082,855 and $2,701,992. The cost of purchases
and proceeds from the sales of government securities included in the
preceding numbers were as follows: Balanced Fund $3,603,212 and $1,931,063;
and Intermediate Bond Fund $1,670,617 and $2,020,879.
5. DISTRIBUTION PLAN:
The Trust and its shareholders have adopted a service and distribution
plan (the "Plan") pursuant to Rule 12b-1 under the Investment Company Act
of 1940. The Plan permits the participating Funds to pay certain expenses
associated with the distribution of their shares. Annual fees under the
Plan of up to .25% for the Small-Cap, Mid-Cap, Large-Cap, Balanced, and
Intermediate Funds and up to .10% for the Government Money Market Fund are
accrued daily. The distributor is Funds Distributor, Inc.
Page 33
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997
6. FINANCIAL HIGHLIGHTS:
MONETTA FUND
Financial highlights for Monetta Fund for a share of capital stock outstanding
throughout the period is presented below:
1997 1996 1995 1994
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Net asset value at beginning $ 15.842 $ 15.591 $ 14.515 $ 15.539
of period
Net investment income (loss) (.041) (.079) .029 (.026)
Net realized and unrealized gain (loss)
on investments 4.223 .330 4.075 (.938)
Total from investment operations: 4.182 .251 4.104 (.964)
Less:
Distributions from net investment 0 0 (.028) 0
income
Distributions from short-term (1.910) 0 (3.000) (.060)
capital gains, net (a)
Distributions from net realized (.840) 0 0 0
gains
Total distributions (2.750) 0 (3.028) (.060)
Net asset value at end of period $ 17.274 $ 15.842 $ 15.591 $ 14.515
Total return 26.18% 1.60% 28.02% (6.21)%
Ratio to average net assets:
Expenses* 1.48% 1.38% 1.36% 1.35%
Net investment income* (0.24)% (.51)% .18% (.15)%
Avg. comm. paid-per equity
trade (b) $ 0.062 $ 0.063
Portfolio turnover 97.8% 204.8% 272.0% 191.3%
Net assets ($ millions) $ 163.4 $ 211.5 $ 362.7 $ 364.9
</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.
(a) Distributions of short-term capital gains are included as ordinary income
for tax purposes.
(b)Represents the average commissions paid on equity transactions entered into
during the period where commissions were applicable. This disclosure is not
applicable for periods prior to 1996.
The per share ratios are calculated using the weighted average number of
shares outstanding during the period, except distributions which are based on
shares outstanding at record date.
Page 34
<TABLE>
<CAPTION>
1993 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C>
$15.992 $15.731 $10.963 $10.441 $9.933 $9.649
(.28) .006 .081 .103 .219 .106
.105 .855 6.037 1.106 1.274 2.158
.077 .861 6.118 1.209 1.493 2.264
0 (.006) (.081) (.103) (.219) (.106)
(.475) (.594) (1.208) (.584) (.766) (1.874)
(.055) 0 (.061) 0 0 0
(.530) (.600) (1.350) (.687) (.985) (1.980)
$15.539 $15.992 $15.731 $10.963 $10.441 $9.933
0.49% 5.49% 55.90% 11.37% 15.20% 23.07%
1.38% 1.45% 1.42% 1.50% 1.57% 1.50%
(.19)% .16% .93% 1.09% 2.18% .96%
226.9% 126.6% 153.8% 206.5% 258.4% 170.4%
$524.3 $408.0 $57.1 $6.1 $3.5 $2.6
</TABLE>
Page 35
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997
Financial highlights for each Fund of the Trust for a share outstanding
throughout the period are as follows:
Small-Cap
Equity Fund
(Inception 2/1/97)
<TABLE>
<CAPTION>
1997
<S> <C>
Net asset value at beginning of period $ 10.000
Net investment income (loss) (0.148)
Net realized and unrealized gain (loss) on investments 4.878
Total from investment operations 4.730
Less:
Distributions from net investment income 0
Distributions from short-term capital gains, net (a) (.830)
Distributions from net realized gains 0
Total distributions (.830)
Net asset value at end of period $ 13.900
Total return* 47.17%
Ratios to average net assets:
Expenses 1.75%
Net investment income (1.13)%
Avg. comm paid-per equity trade (b) $ 0.056
Portfolio turnover 138.8%
Net assets ($ thousands) $2,518
</TABLE>
* Ratios and total return for the year of inception are calculated from the
date of inception to the end of the period.
(a) Distributions of short-term capital gains are included as ordinary income
for tax purposes.
(b)Represents the average commissions paid on equity transactions entered into
during the period where commissions were applicable. This disclosure is not
applicable for periods prior to 1996.
The per share ratios are calculated using the weighted average number of
shares outstanding during the period, except distributions which are based on
shares outstanding at record date.
Page 36
Mid-Cap Large-Cap
Equity Fund Equity Fund
<TABLE>
<CAPTION>
3/1/93 9/1/95
Through Through
1997 1996 1995 1994 12/31/93 1997 1996 12/31/95
<C> <C> <C> <C> <C> <C> <C> <C>
$14.814 $11.962 $12.199 $12.537 $10.000 $12.266 $10.571 $10.000
(.045) .044 .059 .071 .006 (.007) .023 .005
4.296 2.852 2.874 .193 3.531 3.250 2.928 .570
4.251 2.896 2.933 .264 3.537 3.243 2.951 .575
0 (.044) (.050) (.069) (.006) 0 (.023) (.004)
(1.452) 0 (2.990) (.533) (.994) (1.113) (1.188) 0
(2.638) 0 (.130) 0 0 (1.037) (.045) 0
(4.090) (.044) (3.170) (.602) (1.000) (2.150) (1.256) (.004)
$14.975 $14.814 $11.962 $12.199 $12.537 $13.359 $12.266 $10.571
29.14% 24.20% 24.54% 2.17% 35.40% 26.64% 28.20% 5.74%
1.26% 1.23% 1.25% 1.30% 1.12% 1.51% 1.51% 0.69%
(.28)% 0.32% 0.44% 0.57% 0.07% (.05)% 0.31% 0.05%
$0.068 $0.066 $0.058 $0.051
137.8% 93.3% 254.4% 210.0% 128.1% 123.2% 152.7% 38.2%
$21,908 $17,338 $14,216 $11,736 $9,841 $4,265 $2,288 $1,072
</TABLE>
Page 37
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997
Monetta Trust Continued:
<TABLE>
<CAPTION>
Balanced
Fund
9/1/95
Through
1997 1996 12/31/95
<S> <C> <C> <C>
Net asset value at beginning of period $12.643 $10.605 $10.000
Net investment income .264 .132 .009
Net realized and unrealized gain (loss)
on investments 2.398 2.598 .602
Total from investment operations 2.662 2.730 .611
Less:
Distributions from net investment income (.224) (.132) (.004)
Distributions from short-term
capital gains, net (a) (.927) (.560) (.002)
Distributions from net realized gains (.076) 0 0
Total distributions (1.227) (.692) (.006)
Net asset value at end of period $14.078 $12.643 $10.605
Total return* 21.21% 25.94% 6.16%
Ratios to average net assets:
Expenses - Net 1.02% 1.40% 0.91%
Expenses - Gross (b) N/A N/A N/A
Net investment income 1.88% 1.54% 0.08%
Net investment income - gross (b) N/A N/A N/A
Avg. comm paid-per equity trade (c) $0.060 $0.056
Portfolio turnover 115.9% 117.8% 54.8%
Net assets ($ thousands) $12,054 $2,336 $410
</TABLE>
* Ratios and total return for year of inception are calculated from date of
inception to the end of the period.
(a) Distributions of short-term capital gains are included as ordinary income
for tax purposes.
(b) Ratios of expenses and net income adjusted to reflect investment advisory
fees and charges of the Trust's custodian and transfer agent assumed by the
investment advisor.
(c)Represents the average commissions paid on equity transactions entered into
during the period where commissions were
applicable. This disclosure is not applicable for periods prior to 1996.
The per share rates are calculated using the weighted average number of
shares outstanding during the period, except distributions which are based
on shares outstanding at record date.
Page 38
Intermediate Government Money
Bond Fund Market Fund
<TABLE>
<CAPTION>
3/5/93 3/1/93
Through Through
1997 1996 1995 1994 12/31/93 1997 1996 1995 1994 12/31/93
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$10.208 $10.244 $9.624 $10.345 $10.000 $1.000 $1.000 $1.000 $1.000 $1.000
.599 .612 .655 .589 .357 .050 .049 .059 .040 .023
.278 .019 .740 (.690) .447 0 0 0 0 0
.877 .631 1.395 (.101) .804 .050 .049 .059 .040 .023
(.592) (.612) (.655) (.580) (.357) (.050) (.049) (.059) (.040) (.023)
(.047) (.055) (.120) (.040) (.102) 0 0 0 0 0
(.001) 0 0 0 0 0 0 0 0 0
(.640) (.667) (.775) (.620) (.459) (.050) (.049) (.059) (.040) (.023)
$10.445 $10.208 $10.244 $9.624 $10.345 $1.000 $1.000 $1.000 $1.000 $1.000
8.91% 6.46% 14.84% (1.04)% 8.17% 5.15% 5.06% 5.87% 4.04% 2.21%
0.65% 0.55% 0.27% 0.28% 0.28% 0.39% 0.31% 0.07% 0.0% 0.03%
0.87% 0.85% 0.75% 0.88% 0.75% 0.76% 0.67% 0.59% 0.66% 0.69%
5.82% 5.75% 5.94% 5.94% 4.13% 5.02% 4.95% 5.69% 4.04% 2.32%
5.60% 5.45% 5.46% 5.34% 3.66% 4.65% 4.59% 5.17% 3.39% 1.66%
N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
96.7% 28.9% 75.1% 94.5% 32.3% N/A N/A N/A N/A N/A
$3,933 $2,769 $3,589 $3,010 $2,959 $4,464 $6,232 $4,393 $3,315 $1,859
</TABLE>
Page 39
Annual Report
December 31, 1997
MONETTA FAMILY OF MUTUAL FUNDS
Monetta Fund, Inc.
Monetta Small-Cap Equity Fund
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
Monetta Family of Mutual Funds
1776-A South Naperville Road
Suite 100
Wheaton, Illinois 60187
1-800-MONETTA (666-3882)
www.monetta.com
Distributed by Funds Distributor, Inc.
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 year ended December 31, 1997:
Schedule of Investments at December 31, 1997
Statement of Assets and Liabilities at December 31, 1997
Statement of Operations for the year ended December 31, 1997
Statement of Changes in Net Assets for the year ended
December 31, 1997 and the year ended December 31, 1996
C-1
<PAGE>
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, 1997.
Schedules II, III, IV and V - 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.
1.1 Amended and restated charter of registrant (2)
1.2 Articles supplementary dated February 4, 1992 (2)
1.3 Articles of amendment dated February 14, 1992 (2)
2 Bylaws of registrant (amended and restated 11/10/88) (2)
3 None
4 Form of stock certificate (2)
5 Investment Advisory Agreement with Monetta Financial Services, Inc.
dated November 10, 1988 (2)
6 Distribution Agreement with Funds Distributor, Inc. (2)
7 None
8 Custody agreement with Firstar Trust Company (formerly First
Wisconsin Trust Company) (2)
9 Transfer Agent Agreement dated October 28, 1995 (2)
10 Opinion of counsel (2)
11 Consent of independent auditors
12 None
13 Subscription agreement (2)
14.0 Monetta Funds Traditional, ROTH and Education Prototype Plan,
disclosure statement and application
14.2 Monetta prototype defined contribution retirement plan (2)
14.3 Monetta prototype section 403(b)(7) retirement plan (2)
15 None
C-2
<PAGE>
16 Schedule for computation of performance quotations (1)
17 Financial Data Schedule
- - ------------
(1) Incorporated by reference to the exhibit of the same number filed with
post-effective amendment no. 4 to the Registration Statement.
(2)
Incorporated by reference to the exhibit of the same number filed with
post-effective amendment no. 17 to the Registration Statement
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 December 31, 1997 there were 33405 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.
C-3
<PAGE>
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, Chairman, President and Director; and Maria C.
DeNicolo, Chief Financial Officer, Secretary, Treasurer and Director. The
information in the Statementof Additional Information under the heading
"Directors/Trustees and Officers"
describing the principal occupations and other affiliations of Mr. Bacarella,
and Ms. DeNicolo is incorporated herein
by reference.
Item 29. Principal Underwriters
- - ------- ----------------------
(a) Funds Distributor, Inc. (the "Distributor") also acts as
principal
underwriter for the following investment companies.
BJB Investment
Burridge Funds
Foreign Fund, Inc.
Fremont Mutual Funds, Inc.
Harris Insight Funds Trust
HT Insight Funds, Inc. d/b/a Harris Insight Funds
The JPM Advisor Funds
The JPM Institutional Funds
The JPM Pierpont Funds
LKCM Fund
The Munder Funds Trust
The Munder Funds, Inc.
The PanAgora Institutional Funds
RCM Capital Funds, Inc.
RCM Equity Funds, Inc.
St. Clair Money Market Fund
Skyline Funds
Waterhouse Investors Cash Management Fund, Inc.
Funds Distributor is registered with the Securities and Exchange Commission as
a broker-dealer and is a member of the National Association of Securities
Dealers. Funds Distributor is an indirect wholly-owned subsidiary of Boston
Institutional Group, Inc., a holding company all of whose outstanding shares
are owned by key employees.
(b) The information required by this Item 29(b) with respect to each
director, officer, or partner of Funds Distributor is incorporated by reference
to Schedule A of Form BD filed by Funds Distributor with the Securities and
Exchange Commission pursuant to the Securities Act of 1934 (File No. 8-20518).
C-4
<PAGE>
(c) Not applicable
Item 30. Location of Accounts and Records
- - ------- --------------------------------
Robert S. Bacarella
Monetta Fund, Inc.
1776-A South Naperville Road,
Suite 100
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-5
<PAGE>
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the registrant certifies that it meets all of
the requirements for effectiveness of this registration statement pursuant to
rule 485(b) under the Securities Act of 1933 and has duly caused this amendment
to its registration statement to be signed on its behalf by the undersigned
duly authorized officer of Monetta Fund, Inc.
MONETTA FUND, INC.
By: /s/ Robert S. Bacarella
------------------------------
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
---- ----- ----
<C> <S> <C>
/s/ Robert S. Bacarella Director and President )
- - -------------------------- (principal executive officer) )
Robert S. Bacarella )
)
)
)
/s/ John W. Bakos Director )
- - -------------------------- )
John W. Bakos )
)
)
)
/s/ Paul W. Henry Director )
- - -------------------------- )
Paul W. Henry )
)
) February
) 12, 1998
/s/ Mark F. Ogan Director )
- - -------------------------- )
Mark F. Ogan )
)
)
)
/s/ John L. Guy, Jr. Director )
- - -------------------------- )
John L. Guy, Jr. )
)
)
)
/s/ Maria Cesario DeNicolo Treasurer )
- - -------------------------- (principal financial officer) )
Maria Cesario DeNicolo )
</TABLE>
<PAGE>
*************
Index of Exhibits Filed with this Amendment
-------------------------------------------
Exhibit
Number Exhibit Page
- ------- ----------------- -----
11 Consent of Independent Auditors
14.0 Monetta Funds Traditional IRA, ROTH IRA and Education IRA
Supplement
27 Financial Data Schedule
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> This schedule contains summary financial information extracted from
the
audited Annual Report of the Registrant dated December 31, 1997 and is
qualified
in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<CAPTION>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> Dec-31-1997
<INVESTMENTS-AT-COST> 142,485
<INVESTMENTS-AT-VALUE> 165,710
<RECEIVABLES> 616
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 166,326
<PAYABLE-FOR-SECURITIES> 2,173
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 738
<TOTAL-LIABILITIES> 2,911
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 136,304
<SHARES-COMMON-STOCK> 9,460
<SHARES-COMMON-PRIOR> 13,352
<ACCUMULATED-NII-CURRENT> (1,886)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 5,772
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 23,225
<NET-ASSETS> 163,415
<DIVIDEND-INCOME> 481
<INTEREST-INCOME> 956
<OTHER-INCOME> 622
<EXPENSES-NET> 2,455
<NET-INVESTMENT-INCOME> (396)
<REALIZED-GAINS-CURRENT> 31,669
<APPREC-INCREASE-CURRENT> 5,097
<NET-CHANGE-FROM-OPS> 36,370
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 22,841
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 752
<NUMBER-OF-SHARES-REDEEMED> 5,933
<SHARES-REINVESTED> 1,289
<NET-CHANGE-IN-ASSETS> 48,102
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (3,056)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,665
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,455
<AVERAGE-NET-ASSETS> 166,296
<PER-SHARE-NAV-BEGIN> 15.84
<PER-SHARE-NII> (.04)
<PER-SHARE-GAIN-APPREC> 4.22
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 2.75
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.27
<EXPENSE-RATIO> 1.48
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
- --
</TABLE>
[KPMG PEAT MARWICK LLP LETTERHEAD]
CONSENT OF INDEPENDENT AUDITORS
To the Board of Trustees and Shareholders
of Monetta Fund, Inc.
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 23, 1998
<PAGE>
<PAGE>
[ARTICLE] 6
[LEGEND] This schedule contains summary financial information extracted from
the
audited Annual Report of the Registrant dated December 31, 1997 and is
qualified
in its entirety by reference to such financial statements.
[/LEGEND]
[MULTIPLIER] 1,000
<TABLE>
<CAPTION>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1997
[PERIOD-START] JAN-01-1997
[PERIOD-END] Dec-31-1997
[INVESTMENTS-AT-COST] 142,485
[INVESTMENTS-AT-VALUE] 165,710
[RECEIVABLES] 616
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 166,326
[PAYABLE-FOR-SECURITIES] 2,173
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 738
[TOTAL-LIABILITIES] 2,911
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 136,304
[SHARES-COMMON-STOCK] 9,460
[SHARES-COMMON-PRIOR] 13,352
[ACCUMULATED-NII-CURRENT] (1,886)
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 5,772
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 23,225
[NET-ASSETS] 163,415
[DIVIDEND-INCOME] 481
[INTEREST-INCOME] 956
[OTHER-INCOME] 622
[EXPENSES-NET] 2,455
[NET-INVESTMENT-INCOME] (396)
[REALIZED-GAINS-CURRENT] 31,669
[APPREC-INCREASE-CURRENT] 5,097
[NET-CHANGE-FROM-OPS] 36,370
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 22,841
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 752
[NUMBER-OF-SHARES-REDEEMED] 5,933
[SHARES-REINVESTED] 1,289
[NET-CHANGE-IN-ASSETS] 48,102
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] (3,056)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 1,665
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 2,455
[AVERAGE-NET-ASSETS] 166,296
[PER-SHARE-NAV-BEGIN] 15.84
[PER-SHARE-NII] (.04)
[PER-SHARE-GAIN-APPREC] 4.22
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 2.75
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 17.27
[EXPENSE-RATIO] 1.48
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
- --
TRADITIONAL IRA
ROTH IRA
EDUCATION IRA
LOGO January 1, 1998
1776-A S. Naperville Road, Suite 100 - Wheaton, Illinois, 60187-8133
1-800-MONETTA www.monetta.com
HOW TO OPEN A MONETTA IRA ACCOUNT
Fill out the appropriate application form at the back of this booklet and mail
it, together with your check, to Firstar Trust Company at the address shown on
the application.
If you and your spouse are each setting up an IRA, separate accounts will be
required for each, even if your spouse's contribution to his or her IRA is
based on your compensation (see below). Have your spouse complete a separate
application form and return it, along with yours, to Firstar Trust Company.
If you intend to make an IRA contribution for more than one year at this time,
please indicate the years and the amount for each year. Note that Roth IRAs
and Education IRAs are not available for 1997.
MINIMUM CONTRIBUTION
The initial contribution must be at least $250. Your initial contribution may
be divided among the Funds as long as at least $250 is invested in any Fund.
Subsequent investments have no minimium. You are not required to
make a contribution every year.
CUSTODIAN FEES
Acceptance fee ..........................................no charge
Transfer to Successor Trustee ..............................$15.00
Transfer from Prior Trustee .............................no charge
Annual maintenance fee .....................................$12.50
Distribution(s)
(single annual charge for any number of distributions) .....$15.00
Refund of Excess Contribution ..............................$15.00
Systematic Withdrawal Plan Distributions ................no charge
Telephone Exchanges (unless declined) ..........$5.00 per exchange
Note: Each IRA account is subject to the above fees, including accounts
for spouses and each of multiple accounts for the same participant
except that there is a $25.00 maximum annual fee per depositor.
The $12.50 annual maintenance fee will be charged to each account if not
paid before October 15. No maintenance fee will be charged the first year
if the account is opened between November 1 and December 31 of that year.
This booklet is authorized for distribution only when preceded or
accompanied by a current Monetta Trust and Monetta Fund, Inc. Prospectus.
1
<PAGE>
TYPES OF IRAS
TRADITIONAL IRA
You qualify to make contributions in any year when you have earnings from
employment or self-employment. You qualify even if you are also covered by
a retirement program of your employer or a Keogh plan. However, if you
and/or your spouse are active participants in such a plan, your deduction
for your Traditional IRA contribution may be reduced or eliminated depending
on your income. Beginning in 1998, even if your spouse is covered by an
employer-sponsored retirement plan, you may be able to deduct some or all of
your contributions to an IRA if you are not covered by an employer plan and
if the modified adjusted gross income of you and your spouse does not exceed
$160,000 (for 1998). A Traditional IRA is any IRA that is not a Roth IRA,
SIMPLE IRA or Education IRA. See the Disclosure Statement, Part I, Section
(2), "Deductible Contributions" and "Nondeductible Contributions" for more
information.
The maximum amount you may contribute to your Traditional IRA for a taxable
year is $2,000 or 100% of your earnings from employment or self employment,
whichever is less. Alimony and separate maintenance payments are treated as
earnings for this purpose.
You may not contribute to your Traditional IRA for any year if you are over
age 70 1/2 before the end of the year.
If your spouse has less than $2,000 in earned income and you file a joint
return, you may jointly contribute up to the lesser of $4,000 or 100% of
your combined earned income. The contribution may be divided between your
IRA and your spouse's IRA in any way you decide, so long as the portion
allocated to either one does not exceed $2,000.
SEP-IRA
Your employer may set up a simplified employee pension plan (SEP) and
contribute to a Traditional IRA which you have established and the IRA of
each other eligible employee. The maximum contribution for each eligible
employee is $30,000 or 15% of his or her compensation, whichever is less.
The employer contribution must be based on a written formula, which cannot
discriminate in favor of officers, shareholders, or self-employed or highly
compensated individuals.
You can have a Regular IRA, even if you have a SEP-IRA, too. See Disclosure
Statement, Part I, Section 1(c), "Simplified Employee Pension Plan (SEP-
IRA)" for more details.
If you or your employer are interested in establishing a SEP-IRA, call 1-
800-MONETTA for the necessary plan document and materials for all eligible
employees.
SIMPLE-IRA
Up until 1997, employers with up to 25 employees could allow eligible
employees to elect to have a portion of their pay withheld and contributed
to a special type of SEP-IRA called a "salary reduction SEP," or SAR-SEP.
Beginning in 1997, no new SAR-SEPs can be established; and a new type of
IRA, called a SIMPLE-IRA, has been made available in its place for employers
with up to 100 employees. In a SIMPLE-IRA, you can elect to have up to
$6,000 of your compensation in any year withheld and deposited in an IRA,
and your employer must generally make an additional contribution to your
account as well. SIMPLE-IRAs are otherwise very similar to SEP-IRAs. See
Disclosure Statement, Section 1(d), "SIMPLE-IRAs" for more details.
The Monetta Funds IRA Application and form of IRA custodial account included
with these materials cannot be used to open a SIMPLE-IRA. If you or your
employer are interested in establishing a SIMPLE-IRA, call 1-800-MONETTA for
the necessary forms.
ROTH IRA
Beginning in 1998, regardless of your age, you may be able to establish and
contribute to a new individual retirement account or annuity called a Roth
IRA. Unlike a Traditional IRA, you cannot deduct contributions to a Roth
IRA. But, if you satisfy the requirements, earnings grow tax free and
withdrawals are tax free. See Disclosure Statement, Part II, "Monetta Funds
Roth Individual Retirement Accounts."
2
<PAGE>
Generally, you can contribute to a Roth IRA for a year if you have taxable
compensation and your modified AGI is less than the amount shown in the
following table:
Filing Status Modified AGI less than
Married, filing jointly $160,000
Married, filing separately $ 15,000
(and living with spouse during the year)
Single, head of household or $110,000
Married, filing separately
(and not living with spouse at any time during the year)
You may be able to move (roll over) amounts from either a Traditional IRA or
another Roth IRA into a Roth IRA. You must include in your gross income
amounts you withdraw from a Traditional IRA that you would have to include
in income if you had not rolled them over into a Roth IRA.
You CANNOT roll over amounts from a Traditional IRA into a Roth IRA during a
year if:
1) Your modified AGI (explained in Disclosure Statement, Part II,
Section (2), "Modified Adjusted Gross Income" earlier) for the
year is more than $100,000, or
2) You are married and filing a separate return for the year. See
Disclosure Statement, Part II, Section (3), "Rollover to Roth
IRAs."
A Roth IRA that holds assets that have been rolled over from a Traditional
IRA is a Roth conversion IRA. You must establish separate Roth IRAs for
assets rolled over from a Traditional IRA for each year and your direct
contributions to a Roth IRA or a rollover from a Roth IRA.
EDUCATION IRA
Beginning in 1998, you may be able to contribute up to $500 each year to an
education individual retirement account ("Education IRA") for a child under
age 18. Contributions to an Education IRA are not deductible. But if you
meet the requirements, earnings grow tax free and withdrawals are tax free.
See Disclosure Statement, Part III, "Monetta Funds Education Individual
Retirement Accounts."
Any individual (including the child) can contribute to a child's Education
IRA if the individual's modified adjusted gross income (defined below) is
less than $110,000 ($160,000 on a joint return). The $500 maximum
contribution for each child is gradually reduced if the individual's
modified adjusted gross income is between $95,000 and $110,000 (between
$150,000 and $160,000 on a joint return). See Contributions, below.
There is no limit on the number of Education IRAs that can be established
designating the same child as the beneficiary. However, total contributions
in all Education IRAs for the child during any tax year cannot be more than
$500.
No contributions can be made to an Education IRA on behalf of a child if any
amount is contributed during the tax year to a qualified state tuition
program on behalf of the same child.
ROLLOVERS AND TRANSFERS
TRADITIONAL IRA ROLLOVERS. If you receive a distribution from the qualified
retirement plan of a former employer, you may be eligible to roll over the
distribution to a Traditional IRA free of tax. You may, under certain
circumstances, make a rollover again to the profit sharing or pension plan
of a new employer. If you want to have that right, however, your rollover
IRA derived from an employer's qualified plan must be kept separate from any
other Traditional IRA you may have. Qualified retirement plans are required
to withhold 20% of most distributions to you for payment of income taxes
unless your plan balance is transferred directly to an IRA or another
qualified plan. This means that a direct transfer may be preferable to a
rollover for moving your qualified plan balance to a Monetta Traditional
IRA. See "Transfer From a Qualified Retirement Plan to a Monetta
Traditional IRA" below.
You may also make a rollover to a Monetta Traditional IRA from another
Traditional IRA. However, a rollover of the same funds from one Traditional
IRA to another may be made no more than once during a 12-month period. An
amount withdrawn from a SIMPLE-IRA during the first two years of
participation may only be rolled over into another SIMPLE-IRA.
3
<PAGE>
Any rollover must be made within 60 days after receipt of the distribution
from your employer's qualified plan or your previous Traditional IRA;
otherwise, the distribution will be subject to income tax for the year you
receive it.
See Disclosure Statement, Part I, Section 1(b), "Rollovers to Traditional
IRAs."
You may retain part of your rollover but the part retained will be a taxable
distribution and may be subject to the penalty tax on premature
distributions. See Disclosure Statement, Part I, Section (2), "Penalty Tax
on Premature Distributions."
ROTH IRA ROLLOVERS. You can withdraw all or part of the assets from a Roth
IRA and reinvest them (within 60 days) in another Roth IRA. If properly
(and timely) rolled over, the 10% additional tax on early withdrawals will
not apply. You must roll over into the second Roth IRA the same property
you received from the first one. You can roll over part of the withdrawal
and keep the rest of it. The amount you keep is a distribution. See
Disclosure Statement, Part II, Section 3, "Roth IRA Rollovers and
Transfers."
You can take a distribution from a Roth IRA and roll part or all of it over
into another Roth IRA only once in any 1-year period. The 1-year period
begins on the date you receive the distribution, not on the date you roll
over into the second Roth IRA.
EDUCATION IRA ROLLOVERS. Any amount withdrawn from an Education IRA and
rolled over to another Education IRA for the benefit of the same designated
beneficiary or certain members of the designated beneficiary's family is not
taxable. An amount is rolled over if it is paid to another Education IRA
within 60 days after the date of the withdrawal.
Only one rollover per Education IRA is allowed during a 12-month period
ending on the date of the payment or distribution.
TRANSFER FROM A QUALIFIED RETIREMENT PLAN TO A MONETTA TRADITIONAL IRA
You may also make a direct transfer of funds from your employer's qualified
retirement plan to a Monetta Traditional IRA. Retirement plans are required
to transfer distributions directly to a Traditional IRA if the employee
directs, and are also required to withhold 20% of the distribution for taxes
if a distribution is not transferred directly to a Traditional IRA or
another employer's plan. Generally speaking, these rules regarding direct
transfers apply to any distribution that could be rolled over into a
Traditional IRA.
The procedure for making a direct transfer from an employer's retirement
plan into a Monetta Traditional IRA is the same as the procedure for a
direct transfer from another IRA, discussed below.
TRANSFER TO A MONETTA IRA FROM ANOTHER IRA
Instead of receiving a rollover distribution, you may also make a direct
transfer of funds from another IRA to a Monetta IRA of the same type. The
12-month restriction on IRA rollovers does not apply to direct transfers.
The transfer must be direct from your existing IRA to a Monetta IRA of the
same type without your having physical contact with the funds transferred.
To make a transfer:
1) Follow the procedure for opening an account.
2) Complete the attached Transfer Form to instruct your present
custodian or trustee to transfer the assets of your present account to
Firstar Trust Company as successor custodian. Have your signature guaranteed
if a guarantee is required by your present custodian.
3) Send the completed transfer form, along with the Monetta IRA
application form, to Firstar Trust Company.
4) Firstar Trust Company and your present custodian or trustee will
complete the details of transferring your funds to your Monetta IRA.
TELEPHONE EXCHANGE PLAN
Contributions to your IRA are invested at your election in Monetta Fund,
Monetta Small-Cap Equity Fund, Monetta Mid-Cap Equity Fund, Monetta Large-
Cap Equity Fund, Monetta Balanced Fund, Monetta Intermediate
4
<PAGE>
Bond Fund, or Monetta Government Money Market Fund. A telephone exchange
privilege is available among these funds by making your election on the
IRA application.
TAX BENEFITS
You may be able to deduct part or all of the yearly contributions to your
Traditional IRA from your gross income, depending on whether you and/or your
spouse are active participants in a retirement program of your employer or a
Keogh plan, and depending on your income. See the Disclosure Statement,
Part I, Section (2), "Deductible Contributions." You may claim such a
deduction even if you do not itemize your deductions. Contributions to a
Roth IRA or an Education IRA are not deductible. The Monetta Funds
Traditional IRA is in the form of IRS Form 5305-A, which is automatically
deemed acceptable by the Internal Revenue Service. The Monetta Funds Roth
IRA is in the form of IRS Form 5305-RA and the Monetta Funds Education IRA
is in the form of IRS Form 5305-EA. The approval by the IRS relates only to
the form of the accounts and not to the merits of using the account as a
retirement plan.
WHEN CAN AN ACCOUNT BE OPENED?
You can open your account and make a contribution for any year at any time
up to the due date of your federal income tax return for that year
(excluding extensions). Rollovers and direct transfers from other IRAs or
retirement plans can be made at any time during the year, so long as a
rollover contribution is made within 60 days after the distribution from the
other IRA or retirement plan is received by you. A distribution from a
qualified plan may be subject to income tax withholding even if the
distribution is rolled over to an IRA. This withholding may be avoided by
electing to have your employer plan make a "direct rollover" to a Monetta
Traditional IRA. See "Traditional IRA Rollovers" and "Transfer From a
Qualified Plan to a Monetta Traditional IRA," above.
DO I PAY TAX ON DIVIDENDS AND DISTRIBUTIONS?
No, all dividends and distributions accumulate in your IRA tax-free. Tax is
paid when you (or your beneficiary) withdraw your retirement benefits from a
Traditional IRA. See the Disclosure Statement, Part I, Section (4), "Income
and Penalty Taxes." If you satisfy the requirements, earnings and
withdrawals from a Roth IRA or an Education IRA are tax free. See
Disclosure Statement, Part II, Section 4, "Roth IRA Distributions."
WHEN MAY I MAKE WITHDRAWALS
Withdrawals from a Traditional IRA or a Roth IRA can start after age 59 1/2.
Withdrawals from a Traditional IRA must start by April 1 after the end of
the year in which you (or your spouse, in the case of a spousal account)
reach age 70 1/2. Withdrawals can be made in a lump sum or in installments.
You may also purchase an annuity contract from an insurance company with
your Traditional IRA account. The Internal Revenue Code imposes complex
limits on the length of time over which withdrawals from a Traditional IRA
can be made. See the Disclosure Statement, Part I, Section (3),
"Distributions from your Traditional IRA." Withdrawals from a Traditional
IRA are subject to tax as ordinary income, except for any portion rolled
over to another Traditional IRA or considered to be a return of
nondeductible contributions. See Disclosure Statement, Part I, Section (4),
"Income and Penalty Taxes." Withdrawals from a Roth IRA after you attain
age 59 1/2 are not subject to federal income tax. See Disclosure Statement,
Part II, Section (4) "Roth IRA Distributions"
Withdrawals from an Education IRA for qualified higher education expenses
are not subject to federal income tax. A portion of the withdrawals in a
year from an Education IRA in excess of qualified higher education expenses
in that year may be taxable and may be subject to a 10 percent additional
tax unless on account of the designated beneficiary's disability or death or
a scholarship payment received by the designated beneficiary. See
Disclosure Statement, Part II, Sections (3) and (4), "Education IRA
Distributions" and "Taxation of Education IRA Distribution."
WHAT IF I MAKE TRADITIONAL IRA OR ROTH IRA WITHDRAWALS BEFORE AGE 59 1/2
A withdrawal can be made without the 10% additional tax from a Traditional
IRA before age 59 1/2 only in case of death or permanent disability, in the
case of certain periodic payments, or to pay certain medical expenses
(including medical insurance premiums if you are unemployed), certain higher
education expenses or expenses to buy, build or rebuild a main home for a
first-time home buyer. Otherwise, a withdrawal from a Traditional IRA
before age 59 1/2 is a premature withdrawal and is subject to both the
regular federal income tax and to an additional tax of 10% of the portion
that is included in your income. However, a distribution is not excepted
from the 10% additional tax if it is made within 5 years of the first year
for which a contribution or a rollover contribution was first made to your
Roth IRA. But neither the regular income tax nor the 10% additional tax
applies to any portion rolled over to another IRA or considered as a return
of your nondeductible contributions. If you make a withdrawal from a
5
<PAGE>
SIMPLE-IRA during the first two years of your participation, the additional
tax is 25% instead of 10%. Withdrawals from a Roth IRA before age 59 1/2
are not subject to federal income tax if made on account of the Depositor's
disability or death or if for expenses to buy, build or rebuild a main home
for a first-time home buyer.
HOW ARE DISTRIBUTIONS MADE AFTER MY DEATH?
If you die on or after April 1 of the year after you reach age 70 1/2, the
remaining balance of your Traditional IRA will continue to be distributed to
your designated beneficiary at least as rapidly as under the method of
distribution in effect before your death.
If you die before April 1 of the year after you reach age 70 1/2, the entire
balance of your Traditional IRA account must be distributed by December 31
of the year in which the 5th anniversary of your death occurs. However,
distribution need not be made within this 5-year period if your beneficiary
receives payments over a period measured by his or her life or life
expectancy beginning no later than December 31 of the year following the
year in which you die. If the beneficiary is your spouse, those installment
payments don't have to begin until the later of December 31 of the year
following the year in which you die or December 31 of the year in which you
would have reached age 70 1/2.
In addition, a distribution need not be made within 5 years of your death if
your spouse is your beneficiary and he or she elects to treat the entire
interest in the IRA (or the remaining part of such interest if distribution
has already begun) as his or her own IRA subject to the regular IRA
distribution requirements. In such a case, your spouse will be considered
to be the covered individual under the IRA and may make his or her own
contributions to the IRA, if otherwise eligible.
If you die before the entire Traditional or Roth IRA account has been
distributed to you and your spouse is not your beneficiary, no additional
cash contributions or rollover contributions may be accepted by the IRA.
You have the right to elect the manner in which your life expectancy and the
life expectancy of your beneficiary will be calculated. This election must
generally be made by the April 1 of the year following the year in which you
reach age 70 1/2, and can have a significant effect on your tax and estate
planning. Once made, this election cannot be changed.
If the designated beneficiary of a Monetta Education IRA attains age 30 or
dies his or her remaining account balance must be distributed within 30 days
to his estate.
You should consult a qualified tax advisor before deciding who should be
your IRA beneficiary and how to calculate life expectancies, particularly if
you have a large estate or a substantial balance in your IRA.
THE MONETTA IRA PLAN IS SPONSORED BY MONETTA FUND AND MONETTA TRUST. THIS
BRIEF OUTLINE OF THE PLAN IS NOT INTENDED AS A FULL EXPLANATION OF THE
INDIVIDUAL RETIREMENT PLAN, BUT WE HOPE THAT WE HAVE ANSWERED SOME OF THE
QUESTIONS THAT OCCUR TO YOU.
WE URGE YOU TO READ THE ENCLOSED MATERIAL THOROUGHLY.
6
<PAGE>
MONETTA FUNDS INDIVIDUAL RETIREMENT ACCOUNT
Disclosure Statement
(January 1, 1998)
This Disclosure Statement is being given to you to assure that you are
informed and understand the nature of an Individual Retirement Account
("IRA"). This disclosure statement explains the rules governing IRAs.
YOUR RIGHT TO REVOKE THIS IRA. You may revoke this IRA at any time within
seven days after the later of the date you received this Disclosure
Statement or the day you established this IRA. For purposes of revocation,
it will be assumed that you received the Disclosure Statement no later than
the date of your check or transfer direction with which you opened your IRA.
To revoke the IRA, you must either mail or deliver a notice of revocation to
the following address:
Firstar Trust Company, Custodian
Monetta Funds
P. O. Box 701
Milwaukee, Wisconsin 53201-0701
If a notice of revocation is mailed, it will be deemed mailed on the date of
the postmark (or if sent by certified or registered mail, the date of
certification or registration) if it is deposited in the mail in the United
States, first class postage prepaid and properly addressed. If you revoke
your IRA, you are entitled to a return of the entire amount contributed.
I. TRADITIONAL INDIVIDUAL RETIREMENT ACCOUNTS
(1) ELIGIBILITY FOR TRADITIONAL IRA
IN GENERAL. There are several types of Traditional IRAs. For example,
there is a "Regular IRA" to which you may make contributions for yourself or
for your spouse. There is a "Rollover IRA" which you can set up to receive
assets from a qualified plan, annuity or another Traditional IRA. There is a
SEP-IRA (which is also known as a Simplified Employee Pension Plan) to which
your employer can make contributions under a Simplified Employee Pension
Plan for you. Finally, there is a SIMPLE-IRA (also known as a Salary
Incentive Match Plan IRA) which an employer can use for a salary reduction
plan. Following is a general description of the rules which apply to each
of these types of IRAs and who is eligible to establish them.
(a) Regular Traditional IRA. You may contribute up to the lesser of
$2,000 or 100% of your compensation if you have not reached age 70 1/2
during the taxable year. You may make this contribution even if you or your
spouse is an active participant in a qualified employer plan. However, as
explained below, the amount of the contribution which you may deduct may be
limited. Compensation includes wages, salary, commissions, bonuses, tips,
etc.; but does not include income from interest, dividends, or other
earnings or profits from property or amounts not includible in your gross
income.
If your spouse's compensation in a year is less than $2,000, your spouse may
still be able to make a contribution to an IRA if you file a joint income
tax return for the year. Under such an arrangement, you and your spouse may
qualify for a total contribution equal to the lesser of $4,000 (beginning in
1997) or 100% of your combined compensation for the taxable year. You can
determine how to divide the contribution between the two accounts but you
cannot contribute more than $2,000 annually into either one. While you
cannot contribute to your Regular Traditional IRA in the taxable year in
which you reach 70 1/2, you can still contribute to your spouse's IRA if he
or she has not reached 70 1/2. A spousal IRA does not involve the creation
of a joint account. The account of each spouse is separately owned and
treated independently from the account of the other spouse.
For years prior to 1997, the maximum combined contribution to your IRA and
your spouse's IRA was $2,250; and a spousal IRA could be established only if
your spouse either had no earned income for the year or elected to be
treated as having no earned income for this purpose. Your spouse's election
for years prior to 1997 is made by claiming a spousal IRA deduction on your
tax return.
(b) Rollovers To Traditional IRAs. All or a portion of certain
distributions from qualified retirement plans, annuities, and other
Traditional IRAs may be "rolled over" tax-free without regard to the limits
on annual contributions to a Regular Traditional IRA, but no deduction is
allowed with respect to such a contribution. There are three basic types of
rollovers: rollovers from a qualified pension or profit-sharing plan,
rollovers from another Traditional IRA, and rollovers from a tax-sheltered
annuity. ALL DISTRIBUTIONS MUST BE ROLLED OVER WITHIN 60 DAYS AFTER YOU
RECEIVE THE DISTRIBUTION TO RECEIVE TAX-FREE TREATMENT.
FROM A QUALIFIED PLAN. In general, you may roll over any portion of a
distribution that you receive from a qualified employer-sponsored pension or
profit-sharing plan (including a 401(k) plan), except that you cannot roll
over (1) one of a series of substantially equal periodic payments (such as
an annuity), (2) a minimum distribution required to be made after you reach
the age of 70 1/2, or (3) the portion of a distribution that represents the
return of your own after-tax contributions. If you receive a distribution
of property rather than cash, you can sell the property and roll over the
sale proceeds, as long as you complete the rollover within 60 days from the
original date of distribution.
7
<PAGE>
If you make a rollover from a qualified employer plan to a Traditional IRA,
you may, in turn, under certain circumstances, make a rollover from the
Traditional IRA into the qualified plan of a subsequent employer. To
preserve that right, however, you must keep the rollover Traditional IRA
separate from any other IRA you may have since you cannot make a rollover to
an employer plan from a Traditional IRA to which you have made yearly
contributions.
Instead of receiving a distribution from a qualified plan and rolling it
over, you may also direct the trustee or custodian of any qualified
retirement plan (a "plan") to transfer a distribution from the plan directly
to a Traditional IRA. If a distribution from a plan can be rolled over, the
plan is required by law to transfer the distribution directly to a
Traditional IRA or another plan, if you so direct. If you do not direct the
distribution from a plan to be transferred directly to a Traditional IRA or
another plan, the plan making the distribution will be required to withhold
20% of the distribution for the payment of income taxes, even if you
subsequently complete a rollover of the distribution within 60 days of the
distribution.
Rollover amounts you receive from a qualified employer plan may not be
deposited in your spouse's IRA; but if you should die while still a
participant in a qualified plan, in certain cases your spouse may be allowed
to make a tax-free rollover to an IRA. The amount of the death payout
rolled over by a spouse into an IRA may not subsequently be rolled over into
another employer's qualified plan or annuity. Beneficiaries other than your
spouse are not allowed to roll over distributions they receive after your
death.
FROM ANOTHER IRA. In general, any distribution or withdrawal that you
receive from a Traditional IRA can be rolled over into another Traditional
IRA within 60 days, except that (1) you cannot roll over the minimum
distributions you are required to receive after age 70 1/2, (2) you can only
make a rollover from one IRA to another once in any twelve-month period, and
(3) a distribution from a SIMPLE-IRA that is made within the first two years
after you first begin to participate in the SIMPLE-IRA can only be rolled
over to another SIMPLE-IRA. You may also request the trustee or custodian
of a Traditional IRA to make a direct transfer to the trustee or custodian
of another Traditional IRA. Such direct transfers are not limited to one in
a twelve month period. Unlike the trustees of qualified retirement plans,
trustees of IRAs are not legally required to make direct transfers, but most
of them do. Your spouse may generally roll over distributions that he or
she receives from your IRA after your death, but no beneficiaries other than
your spouse may do so.
ROLLOVERS FROM TAX SHELTERED ANNUITIES. Tax-sheltered annuity plans,
sometimes called "403(b) plans," are a retirement benefit offered by certain
governmental and not-for-profit employers, such as schools and hospitals.
If you receive a distribution from a tax sheltered annuity plan other than
in the form of an annuity, it may generally be rolled over to an IRA under
rules similar to those that apply to distributions from qualified employer
plans, as described above. As with a rollover distribution from an employer
plan, you should keep a rollover from a tax-sheltered annuity plan in a
separate IRA account and not make any other contributions to it (including
rollovers from other types of plans) if you wish to preserve the right to
roll over to another tax-sheltered annuity plan in the future.
Distributions from other types of governmental retirement plans may or may
not be eligible for a rollover depending on whether the employer has chosen
to comply with IRS guidelines. Distributions from voluntary deferred
compensation plans maintained by government and not-for-profit employers,
sometimes known as "Section 457 plans," are NOT eligible for a rollover to
an IRA.
Strict requirements must be met to qualify for tax-free rollover treatment.
You should consult your personal tax advisor in connection with rollovers to
and from your IRA.
(c) Simplified Employee Pension Plan (SEP-IRA). An employer may adopt a
SEP-IRA and contribute to your SEP-IRA even if you are covered by another
retirement plan. The Code permits an employer to contribute to your SEP-IRA
up to 15% of your compensation (computed without regard to the contribution)
or $30,000 (or such other amount as may be prescribed by the Secretary of
the Treasury), whichever is less. The contributions are deductible by the
employer and are generally not includible in your income until you receive
distributions. Employer contributions must be made under a written
allocation formula which cannot discriminate in favor of so-called "highly
compensated employees" (as defined in the Code). Employer contributions are
considered discriminatory unless they bear a uniform relationship to the
first $160,000 of each participant's compensation (in 1998).
An employer must cover each employee who has attained age 21 and has
performed service for the employer during at least three of the immediately
preceding five calendar years, and has received at least $400 in
compensation in the tax year, employees covered by certain collective
bargaining agreements, and certain nonresident aliens may be excluded.
"Leased employees" (i.e., those individuals who are not the employer's
employees but are hired through a "leasing organization," are under the
primary direction or control of the employer, and who provide services on a
substantially full-time basis for at least one year) must be treated as
regular employees for the purposes of making SEP-IRA contributions, unless
the leasing organization provides prescribed minimum pension benefits to the
leased employees. Any SEP-IRA contribution made by the leasing organization
attributable to services performed for the employer may be used to reduce
the employer's contribution to a leased employee's SEP-IRA.
If the SEP-IRA is part of a top-heavy plan as defined in the Code, the
employer must make a minimum contribution to each non-key employee's SEP-IRA
for each year that the plan is top-heavy. Generally, a plan is top-heavy if
the aggregate of the accounts of key employees as defined in Code Section
416 (i.e., certain officers, owners, and highly compensated individuals)
exceeds 60% of the aggregate of the accounts of all employees. If the
employer maintains more than one plan, such plans may, or under certain
circumstances must, be aggregated for purposes of determining whether the
SEP-IRA is top-heavy.
8
<PAGE>
Generally, the minimum contribution required to be
made to the SEP-IRA of each non-key employee in a top-heavy year is 3% of
the employee's compensation.
(d) SIMPLE-IRAs. For years before 1997, employers with up to 25 eligible
employees could establish a SEP which would allow employees to elect to have
a portion of their pay withheld and contributed to a special type of SEP-IRA
called a "salary reduction SEP," or SAR-SEP. New SAR-SEPs cannot be
established after 1996, however, SAR-SEPs that were in existence on December
31, 1996, can remain in existence and continue to receive contributions in
future years, including contributions for new employees. Beginning in 1997,
employers with up to 100 eligible employees can establish SIMPLE plans and
make contributions to SIMPLE-IRAs. In a SIMPLE-IRA, you can elect to have
up to $6,000 of your compensation in any year reduced and deposited in an
IRA and your employer must generally make an additional contribution to
match the amount that you have withheld, up to a maximum of 3% of your
compensation. The employer may elect to lower the maximum matching
contribution to as low as 1% in some years but may not lower the maximum
match in more than two years out of every five. The employer may also elect
to make a contribution equal to 2% of compensation for all eligible
employees in any year instead of making matching contributions. All
employees who have been paid at least $5,000 in two prior years and expect
to be paid $5,000 in the current year must be eligible to participate
(excluding nonresident aliens and union workers whose collective bargaining
agreement does not provide for them to participate). SIMPLE-IRAs are
otherwise very similar to SEP-IRAs.
Although SEP-IRAs and SIMPLE-IRAs are primarily intended to be adopted by
employers for the benefit of their employees, these types of IRAs can also
be established by a self-employed person for his own benefit, which may
enable him to make a larger deductible contribution than would be permitted
using a regular traditional IRA. The rules governing SEP-IRAs and SIMPLE-
IRAs are complex. We suggest that you discuss them with your tax advisor.
You may contribute to a Regular Traditional IRA even if you participate in a
SEP-IRA or SIMPLE-IRA (although the deductibility of your contribution may
be limited as described below). Except when otherwise noted, your SEP-IRA
or SIMPLE-IRA generally is subject to the rules governing a Traditional IRA.
Your rights to withdraw amounts held in a SEP-IRA or SIMPLE-IRA cannot be
restricted by your employer.
(2) CONTRIBUTIONS TO TRADITIONAL IRA
IN GENERAL. As explained in this part, the amount of your Regular
Traditional IRA contributions which you can deduct is subject to limits.
All contributions and transfers to your Monetta Traditional IRA must be in
cash, except that a rollover contribution may be made either in cash or in
shares of the Monetta Funds. Contributions to your or your spouse's Regular
Traditional IRA may be made up to the due date for filing your tax return
for the taxable year (excluding extensions thereof) for which the
contributions are made even if you file before the due date. In making
contributions, you must indicate the tax year to which the contribution
applies. If no tax year is designated, the custodian will assume that the
contribution is intended to apply to the calendar year in which it is
received. The time limit for designating the applicable tax year is April
15. Contributions made by an employer to your SEP-IRA or SIMPLE-IRA for a
year may be made no later than the due date of your employer's tax return
(including extensions) for the year. In making a SEP-IRA or SIMPLE-IRA
contribution, the tax year to which the contribution relates must also be
specified or it will be deemed to relate to the calendar year in which it is
received. In a SEP-IRA or SIMPLE-IRA, this designation of the tax year of a
contribution must be made by the due date for contributions described above.
DEDUCTIBLE CONTRIBUTIONS. If you are single and are not an "active
participant" in a retirement plan maintained by your employer, you can
deduct the full amount of your Traditional IRA contribution up to the lesser
of $2,000 or 100% of your compensation for the year. If you are married,
you can, generally, deduct the full amount of your Traditional IRA
contribution so long as you are not an "active participant" in a retirement
plan maintained by your employer. Employer plans include qualified pension,
profit-sharing, stock bonus or money purchase plans, 401(k) plans, SEP-IRAs,
SIMPLE-IRAs, qualified annuity plans, tax-sheltered annuities, and pension
or retirement plans of governmental agencies (but not voluntary deferred
compensation plans known as "Section 457 plans"). In general, you are
considered to be an active participant in an employer plan if an employer
contribution or forfeiture was credited to your account during the year in
the case of a defined contribution plan or, in the case of a defined benefit
plan, you are eligible to participate even if you choose not to, did not
make a minimum required contribution or did not perform the minimum service
required to accrue a benefit for the year. You are considered to be an
active participant in a plan if you make a contribution to the plan during a
year even if your employer does not. For active participation, it does not
matter whether any interest you have in a plan is vested or unvested.
If you are an active participant in a plan, the amount of the deduction you
can claim for an IRA contribution is reduced or totally denied depending
upon the amount by which your modified adjusted gross income for the year
exceeds the "applicable dollar amount." For 1998, the applicable dollar
amount is $30,000 for a single person and $50,000 for married individuals
filing a joint tax return. If you are married but are filing separate tax
returns, your applicable dollar amount is $0. Your modified adjusted gross
income for a taxable year is the adjusted gross income on your federal tax
return for that year reduced by any income resulting from an IRA (other than
a Roth IRA) or the conversion of an IRA (other than a Roth IRA) to a Roth
IRA and increased by any foreign-earned income exclusion, foreign housing
exclusion or deduction, exclusion of adoption expenses and exclusion of
series EE bond interest shown on Form 8815.
If your modified adjusted gross income exceeds your applicable dollar amount
you may not deduct any portion of your Traditional IRA contribution.
However, if you are married and filing jointly, and your modified adjusted
gross income exceeds the applicable amount by between $0 and $10,000, you
9
<PAGE>
can claim a tax deduction for part of your maximum contribution. To
determine the amount of the deduction, follow these steps. First, determine
the amount of the contribution you can make ("contribution limit"). If, for
example, you have compensation in excess of $2,000, your contribution limit
is a $2,000 contribution to your Regular Traditional IRA. Next, subtract
your modified adjusted gross income from your applicable dollar amount.
Multiply this difference by 20 percent and round the result up to the next
higher multiple of $10 to determine the amount of your IRA contribution
which is deductible.
EXAMPLE. Depositor who is not married participates in an employer
sponsored retirement plan and has modified adjusted income of $24,000
for the tax year. Depositor makes a contribution of $2,000 to his
Regular Traditional IRA for the year. His deductible amount is
.20 ($30,000 - $24,000) = $1,200. The remainder of his IRA
contribution is non-deductible.
Beginning in 1998, even if your spouse is covered by an employer-sponsored
retirement plan, you may be able to deduct all of your contributions to an
IRA if you are not covered by an employer plan. The deduction is still
limited to $2,000, which must be reduced if your modified adjusted gross
income on a joint return is more than $150,000 but less than $160,000. Your
deduction is eliminated on a joint return if your modified adjusted income
is $160,000 or more. Modified adjusted gross income is your adjusted gross
income before taking any deduction for your IRA contributions, foreign
earned income exclusion, foreign housing exclusion or deduction or exclusion
of series EE bond interest as shown on Form 8815.
Your reduction is calculated by subtracting $150,000 from your modified
adjusted gross income and dividing the result by $10,000 and multiplying the
result by your contribution amount. The amount you can deduct is your
contribution limit minus the amount of your reduction. See IRS Publication
590 for further information about how to calculate the deductible amount.
NONDEDUCTIBLE CONTRIBUTIONS. Even though you may not be entitled to claim a
deduction for contributions to your Regular Traditional IRA, you are still
allowed to make the contributions to the extent described in "Regular
Traditional IRA" above. To the extent that the amount of your contribution
exceeds the deduction limit, it is considered a nondeductible contribution.
Earnings on these contributions are not taxed until distributed, just like
the earnings on deductible contributions. It may, therefore, be worthwhile
making nondeductible contributions.
You are required to report the amount of your nondeductible contributions on
Form 8606 and attach it to your federal income tax return. If you overstate
the amount of your nondeductible contributions on Form 8606, you may be
liable for a tax penalty of $100 per overstatement.
(3) DISTRIBUTIONS FROM YOUR TRADITIONAL IRA
DISTRIBUTION DURING YOUR LIFE. The law permits distributions to be made
from a Traditional IRA at any time after you attain age 59 1/2 without
payment of a 10% additional tax and requires that distributions commence no
later than April 1 following the calendar year in which you attain age 70
1/2. Distributions may be in the form of a single payment or, in accordance
with regulations, in substantially equal monthly, quarterly, or annual
payments over your life or the joint lives of you and your designated
beneficiary, or over a period certain not extending beyond your life
expectancy or the joint and last survivor life expectancy of you and your
designated beneficiary. You may also purchase an individual retirement
annuity contract from an insurance company with all or part of your
Traditional IRA account which would permit you to receive payments for life.
However, if your beneficiary is not your spouse, the law imposes an
additional requirement called the minimum distribution incidental benefit
requirement. In general, this requirement puts a further limit on the
maximum payout period which applies if your beneficiary is 10 or more years
younger than you. This further limit is based on a table in the income tax
regulations; and if this limit applies to you, you should consult your tax
advisor to determine your minimum distribution.
If you direct distributions over your life or the joint lives of you and
your designated beneficiary, the Custodian will use your Traditional IRA
balance to purchase an immediate annuity contract from an insurance company
you choose and your payments will be made under the annuity. You must
provide a completed annuity application from the insurance company of your
choosing.
Any distribution instruction for your Traditional IRA must specify the
reason for the distribution. Examples of such reasons are: premature
distributions (i.e., distributions before age 59 1/2), rollovers,
disability, death, normal (59 1/2 or over), excess contribution returns, and
other.
DISTRIBUTIONS AFTER YOUR DEATH. If you die after the April 1 after you
reach age 70 1/2 but before the entire amount of your Traditional IRA has
been distributed to you, the balance of your Traditional IRA must be
distributed to your designated beneficiary at least as rapidly as under the
method of distribution in effect before your death.
If you die before the April 1 following the year in which you reach age 70
1/2, the entire balance of the account must be distributed by December 31 of
the year in which the 5th anniversary of your death occurs. However,
distribution need not be made within this 5-year period if your beneficiary
receives payments over a period measured by his or her life or the life
expectancy beginning no later than December 31 of the year following the
year in which you die. If the beneficiary is your spouse, those installment
payments don't have to begin until the later of December 31 of the year
10
<PAGE>
following the year in which you die or December 31 of the year in which you
would have reached age 70 1/2. In addition, a distribution need not be made
within 5 years of your death if your spouse is your beneficiary and he or
she elects to treat the entire interest in the Traditional IRA (or the
remaining part of such interest if distribution has already begun) as his or
her own Traditional IRA subject to the IRA distribution requirements. In
such a case, your spouse will be considered to be the covered individual
under the IRA and may make Regular IRA contributions to it. If you die
before the entire Traditional IRA has been distributed to you and your
spouse is not your beneficiary, no additional cash contributions or rollover
contributions may be accepted by the IRA.
CALCULATIONS OF LIFE EXPECTANCY. As discussed above, the minimum amount
that you or your beneficiary must withdraw from your IRA is in many cases
determined by your life expectancy or your beneficiary's life expectancy.
In general, life expectancies are determined based on actuarial tables
issued by the IRS in the year and are recalculated in each year in which you
or your beneficiary is required to receive a distribution. If you die
before reaching age 70 1/2 and your beneficiary is your surviving spouse,
your spouse will also generally redetermine his or her life expectancy for
each year. Recalculating your or your spouse's life expectancy each year
will ordinarily result in a lower required annual distribution. However, it
can also result in an acceleration of the amount that must be distributed,
and the tax that must be paid, when you or you and your primary beneficiary
die. To avoid this, you (or your surviving spouse) may elect, instead, to
calculate your life expectancy at the time that you are required to begin
receiving mandatory distributions. This election must be made before the
date on which mandatory distributions must begin, and can't be changed after
that date. Accordingly, if you have a substantial balance in your account,
it is very important that you consult a qualified tax advisor BEFORE you are
required to begin receiving distributions.
An employer cannot prohibit withdrawals from a SEP-IRA or a SIMPLE-IRA.
Generally, SEP-IRAs or SIMPLE-IRAs are subject to the same distribution
rules as Traditional IRAs.
(4) INCOME AND PENALTY TAXES
INCOME TAX TREATMENT. Income tax on deductible contributions made to a
Traditional IRA and on earnings on both deductible and nondeductible IRA
contributions is generally deferred until you receive distributions. If you
have made both deductible and nondeductible contributions to one or more
Traditional IRAs you maintain, a portion of each distribution you receive
from any Traditional IRA (whether or not it is the one to which you made
nondeductible contributions) will be considered to be a return of
nondeductible contributions and, therefore, not included in your income for
tax purposes. The balance of each distribution will be taxed as ordinary
income regardless of its original source. The amount of any distribution
which is considered to be a return of nondeductible contributions (and,
therefore, not taxed) is determined by multiplying the amount of the
distribution by a fraction. The numerator of the fraction is the aggregate
amount of nondeductible contributions you have made to all of your IRAs over
the years, and the denominator is the balance in all your IRAs at the end of
the year (after adding back any distributions you received during the year).
The aggregate amount which can be excluded from income for all years cannot
exceed the amount of nondeductible contributions that you made in those
years.
Taxable distributions from your account are taxed as ordinary income
regardless of their original source. They are not eligible for special tax
treatment that may apply to lump sum distributions from qualified employer
plans.
ADDITIONAL TAX ON PREMATURE DISTRIBUTIONS. Your Traditional IRA is intended
to provide income for you upon retirement. Accordingly, the law generally
imposes an additional tax on premature distributions. If you receive a
taxable distribution from the IRA before reaching age 59 1/2 and do not roll
it over, a nondeductible 10% additional tax will be imposed on the portion
of the distribution which is included in your gross income. (If you
withdraw funds from a SIMPLE-IRA within the first two years after you begin
to participate, the additional tax is 25% rather than 10%.) This additional
tax is in addition to any income tax you must pay on the distribution
itself. The additional tax does not apply to the extent that the
distribution is considered a return of nondeductible contributions or a
return of an excess contribution which is permitted tax-free (see below).
The additional tax also will not apply if the distribution is made due to
your permanent disability or death or if the distribution is one of a series
of substantially equal periodic payments made over your life (or life
expectancy) or over the joint lives (or life expectancies) of you and your
beneficiary. Beginning in 1997, the penalty does not apply to certain
withdrawals used to pay medical insurance premiums after you have been
unemployed for at least 12 weeks, or certain large medical bills. Beginning
in 1998, the 10% penalty tax does not apply to the qualified higher
education expenses or for qualified first-time home buyer distributions.
You do not have to pay the additional 10% tax on amounts you withdraw from a
Traditional IRA up to the amount that you pay for unreimbursed medical
expenses that are more than 7 1/2% of your adjusted gross income. You may
not have to pay the 10% excise tax on amounts you withdraw from your
Traditional IRA that do not exceed the amount you paid during the year for
medical insurance for yourself, your spouse and your dependents if you
(1) lost your job, (2) received unemployment compensation for 12 consecutive
weeks, (3) made the withdrawals during the year you received the
unemployment compensation or the following year, and (4) make the
withdrawals no later than 60 days after you have been reemployed. A
distribution which a qualified first-time homebuyer uses to buy, build, or
rebuild the main home of a first-time homebuyer is not subject to the 10%
additional tax. A qualified first-time home buyer may be the person for whom
the Traditional IRA was set up, the spouse of that person, or the child,
grandchild, or ancestor of that person or that person's spouse.
CONTRIBUTION LIMIT. The contribution limit for Roth IRAs depends on whether
you contribute only to Roth IRAs or to both Traditional IRAs and Roth IRAs.
If you contribute only to Roth IRAs, the contribution limit is the lesser of
$2,000 or your taxable compensation. If your modified AGI is above a
certain amount, you may have to reduce this limit, as explained later in
Contribution limit reduced. If you contribute to both Roth IRAs and
Traditional IRAs established for your benefit, the contribution limit for
11
<PAGE>
Roth IRAs must be reduced by all contributions for the year to all
Traditional IRAs. If your modified AGI is above a certain amount, you may
have to reduce this limit as explained next.
PENALTY TAX FOR EXCESS CONTRIBUTIONS. Contributions to an IRA above the
permissible limits are nondeductible and are subject to an annual
nondeductible excise tax of 6% of the amount of such excess contributions
for each year that the excess is not withdrawn or eliminated. The tax is
paid by the person to whom a deduction is allowed or, in the case of a
Rollover IRA, by the person for whose benefit it is established. If the
person who contributed the excess takes no deduction for it and withdraws
the excess amount plus the net earnings attributable to such excess on or
before the due date (including extensions) for filing the Federal income tax
return for the year for which the contribution was made, the 6% excise tax
will not be applied but the 10% tax on premature distributions will be
applied to the amount of net earnings. Generally, if the excess is
withdrawn after the due date (including extensions) for filing the tax
return for the year for which the contribution was made, not only will the
excess contribution be subject to the 6% excise tax, but the amount of such
excess and the net income attributable to it will also be includible in
income; and if you have not attained the age of 59 1/2 or are not disabled,
you will also be subject to the previously mentioned 10% penalty tax on
premature distributions. The law provides, however, that if an individual
has made a contribution to an IRA for a year which does not exceed $2,000
(excluding rollover amounts), all or part of which is an excess contribution
for which he did not claim a deduction, and he does not correct the excess
contribution before the due date (including extensions) for filing his tax
return for the year, he nevertheless may withdraw the excess amount
contributed (without the net income attributable thereto) at any time
without incurring the 10% penalty tax on premature distributions or being
required to include the amount withdrawn in income. The 6% excise tax will
be imposed even in this special situation for the year of the excess
contribution and each subsequent year until the excess is withdrawn or
eliminated.
The rules discussed above generally apply to SEP-IRAs and SIMPLE-IRAs as
well. The law also allows you to withdraw tax-free and without penalty an
excess contribution, regardless of the amount, made with respect to a
rollover contribution (including an attempted rollover contribution), if the
excess contribution occurred because you reasonably relied on erroneous
information required to be supplied by the plan, trust or institution making
the distribution that was the subject of the rollover.
As an alternative to withdrawing excess contributions made to an IRA, such
amounts may be eliminated by making reduced contributions; however, you will
be required to pay the 6% excise tax on the amount of the excess for the
year of the contribution and for each subsequent year until the amount of
the excess is deducted in a later year for which you have not contributed
the maximum deductible amount. If a contribution is made to your account in
an amount less than the permissible limit in order to correct an excess
contribution for a previous year for which you did not claim a deduction,
you may, under certain circumstances, taking into account the limits on
contributions, be allowed to treat the amount of the reduction in the
current year's contribution as an additional contribution for the current
taxable year.
PENALTY TAX FOR UNDER-DISTRIBUTION. If after April 1 following the year in
which you attain age 70 1/2, the amount distributed from your Traditional
IRA is less than the minimum amount required by law to be distributed, a 50%
excise tax may be imposed on any such deficiency. The minimum amount
required by law to be distributed is generally based on your life expectancy
or the joint and survivor life expectancy of you and your beneficiary.
However, if your beneficiary is not your spouse, the law imposes an
additional requirement which is called the minimum distribution incidental
benefit requirement. In general, this requirement is designed to prevent
you from naming a beneficiary who is much younger than yourself in order to
extend your payout period. You should consult your tax advisor to determine
your maximum distribution.
The Internal Revenue Service may waive the penalty tax for under-
distribution if the deficiency was due to reasonable error and reasonable
steps are being taken to correct the deficiency.
PROHIBITED TRANSACTIONS AND PLEDGING ACCOUNT ASSETS. If during any taxable
year you or another disqualified person engages in a so-called "prohibited
transaction" with respect to your IRA, the account will lose its tax-exempt
status. In this event, the fair market value of all account assets, valued
as of the first day of such taxable year, will be deemed distributed to you
and includible in your gross income. These prohibited transactions would
include you or another disqualified person borrowing money from your
account, selling property to it, receiving unreasonable compensation for
managing it, using it as security for a loan and buying property for
personal use with IRA funds. For example, if you pledge your account or any
portion thereof as security for a loan, such pledged portion will be deemed
distributed to you and, to the extent that it does not represent a return of
nondeductible contributions, is includible in your gross income. If you
have not yet attained age 59 1/2, the 10% or 25% penalty tax on premature
distributions discussed above will also apply. If your spouse engages in a
prohibited transaction with respect to his or her account, the results will
be the same. Examples of disqualified persons who cannot have dealings with
your IRA include your fiduciary and members of your family (spouse,
ancestor, lineal descendant and any spouse of a lineal descendant).
Generally, SEP-IRAs and SIMPLE-IRAs are subject to the same tax treatment as
Traditional IRAs. However, the excise tax on early distributions from a
SIMPLE-IRA, which occur within the two-year period beginning on the first
day on which the individual first participated in his or her employer's
SIMPLE plan, is 25% instead of 10%. Also, if a rollover distribution (or
transfer) from a SIMPLE-IRA to an IRA which is not a SIMPLE-IRA within the
two-year period beginning on the first day on which the individual first
participated in his or her employer's SIMPLE plan, the additional tax on
premature distributions is increased from 10% to 25% of the amount
distributed (or transferred).
12
<PAGE>
II. MONETTA FUNDS ROTH INDIVIDUAL RETIREMENT ACCOUNTS
(1) ELIGIBILITY FOR ROTH IRA
IN GENERAL. Beginning in 1998, regardless of your age, you may be able to
establish and contribute to a new kind of individual retirement account or
annuity called a Roth IRA. Unlike a Traditional IRA, you cannot deduct
contributions made to a Roth IRA. But if you satisfy the requirements,
earnings grow tax free and withdrawals are tax free.
You can contribute to a Roth IRA if you have taxable compensation and your
modified adjusted gross income is less than the amount shown for your filing
status below. You may also contribute to a Roth IRA for your spouse
provided that the contributions satisfy the spousal IRA limit and your
modified adjusted gross income is less than the amount shown below.
(2) CONTRIBUTIONS TO ROTH IRA
For the purpose of determining whether you (and your spouse) are eligible to
contribute to a Roth IRA, compensation includes wages, salaries, tips,
professional fees, bonuses, and other amounts received for providing
personal services. It also includes commissions, self-employment income,
and taxable alimony and separate maintenance payments.
MODIFIED ADJUSTED GROSS INCOME. Your modified adjusted gross income is as
shown on your federal income tax return, for the year with respect to which
the contribution to the Roth IRA is made, modified as follows:
(1) Subtract any income resulting from a rollover from a Traditional
IRA into a Roth IRA or a conversion of a Traditional IRA to a
Roth IRA.
(2) Add the following deduction and exclusions:
(a) Foreign earned income exclusion.
(b) Foreign housing exclusion or deduction.
(c) Exclusion of series EE bond interest shown on Form 8815.
(d) Exclusion of adoption expenses.
CONTRIBUTION LIMIT. The contribution limit for Roth IRAs depends on whether
you contribute only to Roth IRAs or to both Traditional IRAs and Roth IRAs.
If you contribute only to Roth IRAs, the contribution limit is the lesser of
$2,000 or your taxable compensation. If your modified adjusted gross income
is above a certain amount, you may have to reduce this limit, as explained
below.
If you contribute to both Roth IRAs and Traditional IRAs established for
your benefit, the contribution limit for Roth IRAs must be reduced by all
contributions for the year to all Traditional IRAs.
If your modified adjusted gross income is above a certain amount, your
contribution limit is gradually reduced. Read the next section to see if
this applies to you.
CALCULATING YOUR REDUCED CONTRIBUTION LIMIT. If your modified adjusted
gross income is within the range shown in the following table for your
filing status, you must calculate your reduced contribution limit.
If your filing status is: And your modified AGI is between:
Married filing jointly $150,000 and $160,000
Married filing separately
and you lived with your $0 and $15,000
spouse during the year
Single, head of household, $95,000 and $110,000
or married filing separately
and you did not live with
your spouse at any time
during the year.
REDUCED CONTRIBUTION LIMIT.
(1) Start with your modified adjusted gross income.
(2) Subtract from the amount in (1)
(a) $150,000 if filing a joint return.
(b) $0 if married filing a separate return, and you lived with
your spouse at any time during the year.
(c) $95,000 if single, head of household, or married filing
separate return, and you lived apart from your spouse the
entire year.
(3) Divide the result in (2) by $15,000 ($10,000 if filing a joint
return).
(4) Multiply your contribution limit (before reduction by this
adjustment but after reduction for any contributions to
Traditional IRAs) by the result in (3).
13
<PAGE>
(5) Subtract the result in (4) from your contribution limit before
this reduction. The result is your reduced contribution limit.
Round your reduced contribution limit up to the nearest $10. If
your reduced contribution limit is more than $0, but less than $200,
increase the limit to $200.
EXAMPLE. You are a single individual with taxable compensation of
$113,000. You want to make the maximum allowable contribution to your Roth
IRA for 1998. Your modified adjusted gross income for 1998 is $100,000.
You have not contributed to any Traditional IRA, so your contribution limit
before the modified adjusted gross income reduction is $2,000. You figure
your reduced Roth IRA contribution of $1,340 as follows:
(1) Modified AGI = $100,000
(2) $100,000 - $95,000 = $5,000
(3) $5,000 / $15,000 = .3333
(4) $2,000 X .3333 = $667
(5) $2,000 - $667 = $1,333
Rounded up to the nearest $10, your Roth IRA contribution limit
is $1,340.
You can make contributions to a Roth IRA for a year at any time during the
year or by the due date of your return for that year (not including
extensions). You can make Roth IRA contributions regardless of your age.
EXCESS CONTRIBUTIONS. If you make contributions which are larger than your
contribution limit to a Roth IRA, you will be subject to a 6% penalty tax
applied to your excess contributions. Excess contributions are (1) the
amount over your contribution limit that you contribute for the current tax
year plus (2) any excess contributions for the preceding year reduced by any
distributions out of your Roth IRAs for the that year, plus your
contribution limit for that year minus contributions to your Roth IRAs for
the year. Any contribution that is withdrawn on or before the due date
(including extensions) for filing your tax return for the year is treated as
an amount not contributed if you also withdraw any earnings on the
contributions. Rollover contributions to your Roth IRA from a Traditional
IRA or a Roth IRA are not considered contributions for the purpose of
determining excess contribution.
(3) ROTH IRA ROLLOVERS AND TRANSFERS
ROLLOVERS TO ROTH IRAS. You may be able to rollover amounts from either a
Traditional IRA or another Roth IRA to a Roth IRA.
You cannot rollover amounts from a Traditional IRA into a Roth IRA during a
year if your modified adjusted gross income (as explained above) for the
year is more than $100,000, or if you are married and filing a separate
return for the year.
You can withdraw all or part of the assets from a Traditional IRA and
redeposit them (within 60 days) in a Roth IRA. If properly (and timely)
rolled over, the 10% additional tax on early withdrawals will not apply.
You must roll over into the Roth IRA the same property you received from the
Traditional IRA. You can roll over part of the withdrawal from an IRA into
a Roth IRA and keep the rest of it. The amount you keep will generally be
taxable (except for the part that is considered a return of nondeductible
contributions) and may be subject to the 10% tax on early withdrawals.
Amounts that must be distributed from a Traditional IRA during a particular
year under the required distribution rules (discussed above) are not
eligible to be rolled over to a Roth IRA. Also, if you inherited a
Traditional IRA from someone other than your spouse, you cannot roll it over
although you may be able to arrange to do a trustee transfer.
You must include in your gross income amounts that you withdraw from a
Traditional IRA that you would have to include in income if you had not
rolled them over into a Roth IRA.
If you roll over into a Roth IRA an amount you withdraw from a Traditional
IRA before 1999, any withdrawal that you must include in income is included
ratably over the 4-year period beginning in the year of withdrawal.
The conversion of a Traditional IRA to a Roth IRA is treated as a rollover
from a Traditional IRA into a Roth IRA.
ROLLOVER FROM A ROTH IRA. You can withdraw all or part of the assets from a
Roth IRA and reinvest them (within 60 days) in another Roth IRA. If
properly (and timely) rolled over, the 10% additional tax on early
withdrawals will not apply. You must roll over into the recipient Roth IRA
the same property you received from the first one. You can roll over part
of the withdrawal and keep the rest of it. The amount you keep is a
distribution.
You can take a distribution from a Roth IRA and roll part or all of it over
into another Roth IRA only once in any 1-year period. The 1-year period
begins on the date you receive the distribution, not on the date you roll it
over into the recipient Roth IRA.
14
<PAGE>
TRANSFER TO A ROTH IRA. You can transfer contributions made to a
Traditional IRA into a Roth IRA without having to include them in your gross
income if all of the following apply:
(1) You transfer the contributions by the due date (not including
extensions) for filing your federal tax return for the year you
made the contributions to the Traditional IRA.
(2) You also transfer any earnings on the contributions.
(3) You do not claim a deduction for the contributions.
(4) ROTH IRA DISTRIBUTIONS
DISTRIBUTIONS FROM A ROTH IRA. You do not include qualified distributions
from your Roth IRA in your gross income. You may have to include part of
other distributions in your income.
A qualified distribution generally is any payment or distribution:
(1) Made on or after the date you reach age 59 1/2,
(2) Made because you are disabled,
(3) Made to a beneficiary or to your estate after your death, or
(4) That is a qualified special purpose distribution.
A distribution is not a qualified distribution if either of the following
applies:
(1) It is made within the 5-tax-year period beginning with the first
tax year for which a contribution was made to the Roth IRA set
up for your benefit.
(2) In the case of a distribution allocable to an allowable rollover
from an IRA other than a Roth IRA (or income earned on the
amount rolled over), it is made within the 5-tax-year period
beginning with the tax year in which you made the rollover
contribution.
A qualified special purpose distribution is a qualified first-time homebuyer
distribution used to buy, build, or rebuild the main home of a first-time
homebuyer who is either the person for whom the Roth IRA was set up, the
spouse of that person, or the child, grandchild, or ancestor of that person
or that person's spouse.
You are not required to take distributions from your Roth IRA at any
particular age.
TAXATION OF ROTH IRA DISTRIBUTIONS. Part of any distribution that is not a
qualified distribution may be taxable. To figure the taxable part, add the
distribution to all previous distributions from the Roth IRA. Subtract from
that total all contributions made to the Roth IRA. The result, if greater
than zero, is the taxable part of the distribution.
For this purpose, all your Roth IRAs are treated as one account.
III. MONETTA FUNDS EDUCATION INDIVIDUAL RETIREMENT ACCOUNTS
(1) ELIGIBILITY FOR EDUCATION IRA
Beginning in 1998, you may be able to contribute to up to $500 each year to
an Education individual retirement account ("Education IRA") for a child
under age 18. The $500 limit applies to all of a child's Education IRA
contributions from all sources for a tax year. Contributions to an
Education IRA are not deductible. All contributions to an Education IRA
must be made in cash before the beneficiary reaches age 18. Amounts
deposited in an Education IRA grow tax free until distributed.
Any individual (including the child) can contribute to a child's Education
IRA if the individual's modified adjusted gross income is not more than
$110,000 ($160,000 on a joint return). The $500 maximum contribution for
each child is gradually reduced if the individual's modified adjusted gross
income is between $95,000 and $110,000 (between $150,000 and $160,000 on a
joint return).
No contributions can be made to an Education IRA on behalf of a beneficiary
if any amount is contributed during the tax year to a qualified state
tuition program on behalf of the same child.
If your modified adjusted gross income is between $95,000 and $110,000
(between $150,000 and $160,000 for married taxpayers filing jointly), the
$500 maximum contribution for each child is gradually reduced. If your
modified adjusted income is $110,000 or more ($160,000 or more for married
taxpayers filing jointly), you cannot contribute to anyone's Education IRA.
EXAMPLE. Paul, a single individual, had modified adjusted gross
income of $96,500 for the year. For Paul, the maximum contribution
for each child is reduced to $450, calculated as follows:
(1) $96,500 - $95,000 = $1500
(2) $1,500 * $15,000 = 10% (denominator $10,000 for
married persons filing jointly)
(3) 10% X $500 = $50
(4) $500 - $50 = $450 Paul's maximum contribution for each
child
15
<PAGE>
Your modified adjusted gross income for the purpose of determining the
maximum contribution limit is the adjusted gross income shown on your
federal income tax return, increased by the following exclusions from your
income:
(1) Foreign earned income of U.S. citizens or residents living
abroad.
(2) Housing costs of U.S. Citizens or residents living abroad.
(3) Income from sources within: Puerto Rico, Guam, American Samoa,
or The Northern Mariana Islands.
EXCESS CONTRIBUTIONS. A 6% penalty tax applies to:
(1) Contributions that are more than $500 to an Education IRA for
the tax year for a designated beneficiary, and
(2) Any contributions to the Education IRA if any amount is also
contributed to a qualified state tuition program on behalf of
the same beneficiary in the same tax year.
The penalty does not apply if the excess contributions (and any earnings on
them) are withdrawn before the tax return for the year is due.
(2) EDUCATION IRA DISTRIBUTIONS
If, for a year withdrawals from an Education IRA are not more than a child's
qualified higher education expenses at an eligible educational institution,
the child will not owe federal income tax on the withdrawals. Qualified
higher education expenses are expenses for: (1) tuition, (2) fees, (3)
books, (4) supplies and (5) equipment. The term also includes: amounts
contributed to a qualified state tuition program (See IRS Publication 525)
and room and board if the designated beneficiary is at least a half-time
student at an eligible educational institution. A student is enrolled as
least half-time if he or she is enrolled for at least half the full time
academic workload for the course of study the student is pursuing as
determined under the standards of the institution where the student is
enrolled. Room and board is limited to the school's posted room and board
charge for students living on-campus, or $2,500 each year for students
living off-campus and not at home.
An eligible educational institution is any college, university, vocational
school, or other postsecondary educational institution eligible to
participate in the student aid programs administered by the Department of
Education. It includes virtually any accredited public, nonprofit, or
proprietary (privately owned profit-making) postsecondary institution.
Any balance remaining in an Education IRA when the designated beneficiary
attains age 30 must be distributed to the designated beneficiary within 30
days of such date.
(3) TAXATION OF EDUCATION IRA DISTRIBUTION
Generally, if the total withdrawals for a tax year are more than the
qualified higher education expense, a portion of the amount withdrawn is
taxable to the beneficiary.
The taxable portion is the amount that represents earnings that have
accumulated tax free in the account. Calculate the taxable amount as shown
in the following steps.
(1) Multiply the amount withdrawn by a fraction, the numerator of
which is the total contributions in the account and the
denominator of which is the total balance in the account before
the withdrawal(s).
(2) Subtract the amount figured in (1) from the total amount
withdrawn during the year. This is the amount of earnings
included in the withdrawals(s).
(3) Multiply the amount of earnings figured in (2) by a fraction,
the numerator of which is the qualified higher education
expenses paid during the year and the denominator of which is
the total amount withdrawn during the year.
(4) Subtract the amount figured in (3) from the amount figured in
(2). This is the amount the beneficiary must include in income.
EXAMPLE. You receive a $6,000 distribution from an Education IRA to
which $10,000 has been contributed. The balance in the Education IRA
before the withdrawal was $12,000. You had $4,500 of qualified higher
education expenses for the year. Using the steps above, figure the
taxable portion of your withdrawal as follows.
(1) $6,000 X $10,000 * $12,000 = $5,000
(2) $6,000 - $5,000 = $1,000
(3) $1,000 X $4,500 * $6,000 = $750
(4) $1,000 - $750 = $250 that you must include in income as
withdrawn earnings not used for the expenses of higher
education.
16
<PAGE>
Generally, if you receive a taxable distribution, you must pay a 10% additional
tax on the amount included in income. However, the 10% additional tax does
not apply to distributions that are:
(1) Made to the designated beneficiary of the Education IRA or to
the estate of the designated beneficiary on or after the death
of the designated beneficiary.
(2) Made because the designated beneficiary is disabled.
(3) Made because the designated beneficiary received a qualified
scholarship excludable from gross income, an educational
assistance allowance, or payment for the designated
beneficiary's educational expenses that is excludable from gross
income under any law of the United States to the extent the
distribution is not more than the scholarship, allowance, or
payment.
The 10% additional tax also does not apply to a distribution that is a
return of an excess contribution. For the additional tax not to apply, the
distribution must be made before the due date of the contributor's tax
return (including extensions) and it must include any net income
attributable to that contribution. That net income also must be included in
the contributor's gross income for the tax year the contribution was made.
(4) ROLLOVERS AND OTHER TRANSFERS
Any amount withdrawn from an Education IRA and rolled over to another
Education IRA for the benefit of the same designated beneficiary or certain
members of the designated beneficiary's family is not taxable. An amount is
rolled over if it is paid to another Education IRA within 60 days after the
date of the withdrawal. Only one rollover per Education IRA is allowed
during a 12-month period ending on the date of the payment or distribution.
The designated beneficiary can be changed from one child to a member of that
child's family without triggering any tax consequences as provided in the
Education IRA. Members of the designated beneficiary's family include the
designated beneficiary's:
(1) Children and their descendants.
(2) Stepchildren and their descendants.
(3) Brothers and sisters and their children.
(4) Parents and grandparents.
(5) Stepparents.
(6) Spouses of all the family members listed above.
The transfer of a designated beneficiary's interest in an Education IRA to
his or her spouse or former spouse under a divorce or separation instrument
is not a taxable transfer. After such a transfer, the interest will be
treated as an Education IRA in which the spouse or former spouse is the
designated beneficiary.
The tax treatment of transfers because of the designated beneficiary's death
depends on whether you are the surviving spouse or another designated
beneficiary. If your spouse was a designated beneficiary of an Education
IRA and you receive the Education IRA as a result of the death of your
spouse, you can treat the Education IRA as your own. If you are someone
other than the surviving spouse and you receive an Education IRA as the
result of the death of the IRA holder, the distribution to you is taxable at
its fair market value. You cannot treat the Education IRA as your own.
The Hope credit and lifetime learning credit cannot be claimed for a
student's qualified higher education expenses in the same tax year in which
the student takes a tax-free withdrawal from an Education IRA. However, the
student may waive the tax-free treatment of the Education IRA distribution
and elect to pay any tax that would otherwise be owed on the distribution so
that the student or the student's parents may claim a Hope credit or
lifetime learning credit for qualified higher education expenses paid in the
same tax year.
IV. INVESTMENT AND HOLDING OF IRA CONTRIBUTIONS
Contributions to your IRA, and the earnings thereon, are invested in shares
of the Monetta Fund, the Monetta Small-Cap Equity Fund, the Monetta Mid-Cap
Equity Fund, the Monetta Large-Cap Equity Fund, the Monetta Balanced Fund,
the Monetta Intermediate Bond Fund, or the Monetta Government Money Market
Fund (collectively "the Funds") according to the directions you give the
Custodian.
The assets in your account are held in a custodial account exclusively for
your benefit and the benefit of such beneficiaries as you may designate in
writing delivered to the Custodian. The balance in your IRA represents a
separate account which is clearly identified as your property and generally
may not be combined for investment with the property of another individual.
Your right to the entire balance in your account is nonforfeitable. No part
of the assets of your account may be invested in life insurance contracts or
in collectibles, such as works of art, antiques, coins, stamps, etc.
17
<PAGE>
V. MISCELLANEOUS
FEDERAL INCOME TAX WITHHOLDING. Taxable from an IRA to the covered
individual or to a beneficiary are subject to Federal income tax withholding
unless the covered individual or beneficiary elects to have no withholding
apply. The current withholding rate required by the Internal Revenue Code
is 10%. Additional information concerning withholding and election forms
will be available no later than at the time a distribution is requested.
FEDERAL ESTATE AND GIFT TAXES. Generally, your IRA will be included in your
estate for Federal estate tax purposes. If your spouse is your beneficiary,
your IRA may qualify for a deduction for purposes of that tax. An election
under an IRA to have a distribution payable to a beneficiary on the death of
the covered individual will not be treated as a gift subject to Federal gift
tax.
REPORTS TO THE INTERNAL REVENUE SERVICE. You are not required to file Form
5329 with the IRS unless you owe one of the IRA penalty taxes. These are
the taxes on excess contributions, premature distributions, prohibited
transactions, and under distributions after age 70 1/2 which may apply to
your IRA.
FINANCIAL INFORMATION. The growth in value of the mutual fund shares held
in your account can neither be guaranteed nor projected.
PLAN SPONSOR. Monetta Fund and Monetta Trust are the sponsors of the
Monetta IRA and perform most of the ministerial functions in connection with
the maintenance of the accounts established under the Monetta IRA.
CUSTODIAN FEES. Firstar Trust Company, as the Custodian of your IRA,
currently charges an annual maintenance fee of $12.50 per account, per fund,
in which you have an investment. You should refer to the fee schedule for
other fees which may be applicable. Note that IRAs for spouses require
separate accounts, even if only one spouse makes the contributions. Each
spouse's account is subject to the above fees.
The $12.50 annual maintenance fee will be deducted from your account if not
paid before October 15. No maintenance fee will be charged the first year
if the account is opened between November 1 and December 31 of that year.
The Custodian may change any of the above fees from time to time.
REQUIREMENTS FOR AN IRA. An IRA must be a trust or custodial account
created in the United States for the exclusive benefit of the depositor and
his beneficiaries, and the trust or custodial account agreement must meet
the following requirements: (1) annual contributions must be limited as
described above, (2) the trustee or custodian must either be a bank or
another financial institution that has been approved by the IRS, (3) no part
of the IRA can be invested in life insurance contracts, (4) the interest of
the depositor must be nonforfeitable, (5) the assets of the IRA cannot be
commingled with other property except in a common trust fund or common
investment fund, and (6) the IRA must satisfy the minimum distribution
requirements summarized above. The Monetta Traditional IRA is in the form
of IRS Form 5305-A, which is automatically deemed acceptable by the IRS as
to form. The Monetta Funds Roth Individual Retirement Custodial Account
uses IRS Form 5305-RA and the Monetta Funds Education Individual Retirement
Custodial Account uses IRS Form 5305-EA. The approval by the IRS relates
only to the form of the account and not to the merits of using the account
as a retirement plan. An employer that wants to establish a Monetta Funds
SEP-IRA or a SIMPLE-IRA may obtain the applicable IRS Forms by calling 1-
800-MONETTA.
ADDITIONAL INFORMATION. You may obtain additional information regarding the
taxation of IRAs from any district office of the Internal Revenue Service.
18
<PAGE>
Form 5305A
(January 1998)
Department of the Treasury
Internal Revenue Service
MONETTA FUNDS INDIVIDUAL RETIREMENT
CUSTODIAL ACCOUNT
(Under Section 408(a) of the Internal Revenue Code)
(January 1998)
I
The Custodian may accept additional cash contributions on behalf of the
Depositor for a tax year of the Depositor. The total cash contributions are
limited to $2,000 for the tax year unless the contribution is a rollover
contribution described in section 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or
an employer contribution to a simplified employee pension plan as described in
section 408(k).
II
The Depositor's interest in the balance in the custodial account is
nonforfeitable.
III
1. No part of the custodial funds may be invested in life insurance
contracts, nor may the assets of the custodial account be commingled with other
property except in a common trust fund or common investment fund (within the
meaning of section 408(a)(5)).
2. No part of the custodial funds may be invested in collectibles (within
the meaning of section 408(m)) except as otherwise permitted by section
408(m)(3), which provides an exception for certain gold, silver, and platinum
coins, coins issued under the laws of any state, and certain bullion.
IV
1. Notwithstanding any provision of this agreement to the contrary, the
distribution of the Depositor's interest in the custodial account shall be made
in accordance with the following requirements and shall otherwise comply with
section 408(a)(6) and Proposed Regulations section 1.408-8, including the
incidental death benefit provisions of Proposed Regulations section
1.401(a)(9)-2, the provisions of which are incorporated by reference.
2. Unless otherwise elected by the time distributions are required to
begin to the Depositor under paragraph 3 or to the surviving spouse under
paragraph 4, other than in the case of a life annuity, life expectancies shall
be recalculated annually. Such election shall be irrevocable as to the
Depositor and the surviving spouse and shall apply to all subsequent years.
The life expectancy of a nonspouse beneficiary may not be recalculated.
3. The Depositor's entire interest in the custodial account must be, or
begin to be, distributed by the Depositor's required beginning date, (April 1
following the calendar year end in which the Depositor reaches age 70 1/2). By
that date, the Depositor may elect, in a manner acceptable to the Custodian, to
have the balance in the custodial account distributed in:
(a) A single sum payment.
(b) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the life of the Depositor.
(c) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the joint and last survivor lives
of the Depositor and his or her designated beneficiary.
(d) Equal or substantially equal annual payments over a specified period
that may not be longer than the Depositor's life expectancy.
(e) Equal or substantially equal annual payments over a specified period
that may not be longer than the joint life and last survivor expectancy of the
Depositor and his or her designated beneficiary.
4. If the Depositor dies before his or her entire interest is distributed
to him or her the entire remaining interest will be distributed as follows:
(a) If the Depositor dies on or after distribution of his or her interest
has begun, distribution must continue to be made in accordance with paragraph
3.
(b) If the Depositor dies before distribution of his or her interest has
begun, the entire remaining interest will, at the election of the Depositor or
if the Depositor has not so elected at the election of the beneficiary or
beneficiaries, either
(i) Be distributed by December 31 of the year containing the fifth
anniversary of the Depositor's death, or
19
<PAGE>
(ii) Be distributed in equal or substantially equal payments over
the life or life expectancy of the designated beneficiary or beneficiaries
starting by December 31 of the year following the year of the Depositor's
death. If, however, the beneficiary is the Depositor's surviving spouse, then
this distribution is not required to begin before December 31 of the year in
which the Depositor would have turned age 70 1/2.
(c) Except where distribution in the form of an annuity meeting the
requirements of section 408(b)(3) and its related regulations has irrevocably
commenced, distributions are treated as having begun on the Depositor's
required beginning date, even though payments may actually have been made
before that date.
(d) If the Depositor dies before his or her entire interest has been
distributed and if the beneficiary is other than the surviving spouse, no
additional cash contributions or rollover contributions may be accepted in the
account.
5. In the case of a distribution over life expectancy in equal or
substantially equal annual payments, to determine the minimum annual payment
for each year, divide the Depositor's entire Interest in the Custodial account
as of the close of business on December 31 of the preceding year by the life
expectancy of the Depositor (or the joint life and last survivor expectancy of
the Depositor and the Depositor's designated beneficiary, or the life
expectancy of the designated beneficiary, whichever applies). In the case of
distributions under paragraph 3, determine the initial life expectancy (or
joint life and last survivor expectancy) using the attained ages of the
Depositor and designated beneficiary as of their birthdays in the year the
Depositor reaches age 70 1/2. In the case of a distribution in accordance with
paragraph 4(b)(ii), determine life expectancy using the attained age of the
designated beneficiary as of the beneficiary's birthday in the year
distributions are required to commence.
6. The owner of two or more individual retirement accounts may use the
"alternative method" described in Notice 88-38, 1988-1 C.B. 524 to satisfy the
minimum distribution requirements described above. This method permits an
individual to satisfy these requirements by taking from one individual
retirement account the amount required to satisfy the requirement for another.
V
1. The Depositor agrees to provide the Custodian with information
necessary for the Custodian to prepare any reports required under section
408(i) and Regulations section 1.408-5 and 1.408-6.
2. The Custodian agrees to submit reports to the Internal Revenue Service
and the Depositor prescribed by the Internal Revenue Service.
VI
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through III and this sentence will be controlling.
Any additional articles that are not consistent with section 408(a) and related
regulations will be invalid.
VII
This agreement will be amended from time to time to comply with the
provisions of the Code and related regulations. Other amendments may be made
with the consent of the persons whose signatures appear below.
VIII
1. Definitions.
(a) "Custodian" means Firstar Trust Company.
(b) "Investment Company" shall mean an investment company as defined in
Internal Revenue Code Section 851(a), shares of which Monetta Fund or Monetta
Trust have agreed to offer for investment under this Account. "Investment
Company Shares" or "Shares" shall mean shares of beneficial interest or capital
stock of the Investment Company.
2. Investment of Account Assets.
(a) Each contribution forwarded by the Depositor to the Custodian shall
identify the Depositor's account number and be accompanied by a statement
signed by the Depositor identifying the Investment Company Shares in which that
contribution is to be invested. The Custodian may return to the Depositor,
without liability for interest or any other earnings thereon, any contributions
which are not accompanied by adequate account identification or an appropriate
signed statement directing investment of those contributions.
(b) Contributions shall be invested in whole and fractional Investment
Company Shares at the price and in the manner in which such shares are then
being publicly offered by the Investment Company. All distributions received
on Investment Company Shares held in the Custodial Account shall be reinvested
in like Shares and credited to such Account. If any distribution of Investment
Company Shares may be received at the election of the shareholder in additional
like Shares or in cash or other property, the Custodian shall elect to receive
such distribution in additional like Investment Company Shares.
20
<PAGE>
(c) All Investment Company Shares acquired by the Custodian shall be
registered in the name of the Custodian or its registered nominee. The
Depositor shall be the beneficial owner of all Investment Company Shares held
in the Custodial Account and the Custodian shall not vote any of such shares
except upon written direction of the Depositor. The Custodian agrees to
forward to every Depositor a then current Prospectus, reports, notices,
proxies, and related proxy soliciting materials applicable to Investment
Company Shares received by the Custodian.
(d) The Depositor may, at any time, by a manually signed direction
delivered to the Custodian, redeem any number of Investment Company Shares held
for his account and reinvest the proceeds in the Shares of any other Investment
Company. Telephone redemptions and reinvestments shall be done at the price
and in the manner in which such Shares are then being redeemed or offered by
the respective Investment Companies.
3. Amendment and Termination.
(a) Monetta Trust may, with the written approval of the Custodian, amend
the Custodial Account in whole or in part (including retroactive amendments) by
delivering to the Depositor written notice of such amendment setting forth the
substance and effective date of the amendment. The Depositor shall be deemed
to have consented to any such amendments not objected to in writing by the
Depositor within thirty (30) days of receipt of the notice, provided that no
amendment shall cause or permit any part of the assets of the Custodial Account
to be diverted to purposes other than for the exclusive benefit of the
Depositor or his beneficiaries, nor shall any amendment be made except in
accordance with the applicable law and regulations affecting this Custodial
Account.
(b) The Depositor may, at any time, terminate the Custodial Account by
delivering to the Custodian a written notice of such termination setting forth
the effective date thereof, together with any required withholding information.
(c) The Custodial Account created by this Agreement shall automatically
terminate upon distribution to the Depositor or the beneficiary designated
under Paragraph 6 of Article VIII hereof of the entire balance in the Custodial
Account.
(d) The Custodian may be removed by the Depositor at any time upon thirty
(30) days written notice to the Custodian. The Custodian may elect to
terminate the Custodial Account upon thirty (30) days written notice to the
Depositor.
(e) In the event that the assets of any Investment Company in which the
Custodial Account is invested are transferred to or acquired by any other
investment company or other commingled investment fund which is a permissible
investment for an individual retirement account, by merger or otherwise, the
Custodian may make such amendments to this Agreement or take such other action
as it may determine to be necessary or appropriate to accomplish such
transaction and the exchange of Investment Company Shares for shares or other
appropriate units of ownership in such successor fund. The consent of the
Depositor shall not be required for any such amendment or action, but the
Depositor shall be promptly notified thereof and shall have the right to
withdraw the funds in the Custodial Account without fee, charge, load, or
penalty of any kind.
4. Taxes and Custodial Fees.
Any income taxes or other taxes of any kind whatsoever that may be levied or
assessed upon or in respect of the assets of the Custodial Account, or the
income arising therefrom; any transfer taxes incurred; all other administrative
expenses incurred by the Custodian in the performance of its duties, including
fees for legal services rendered to the Custodian; and the Custodian's
compensation shall be paid from the Custodial Account. Unusual administrative
responsibilities not contemplated by the fee schedule will result in such
additional charges as will reasonably compensate the Custodian for the services
performed.
The custodian fee listed in the fee schedule will be deducted by the
Custodian from the initial contribution received from the Depositor. The
annual maintenance fee will be deducted on the last business day in September
for each year and enough fund shares will be redeemed to cover this fee. Fees,
as listed on the fee schedule, will be deducted from the refund or redemption
proceeds at the time of distribution or redemption and the remaining balance
will be remitted to the Depositor in the case of distribution or will be
reinvested in accordance with the Depositor's instructions.
5. Reports and Notices.
(a) The Custodian shall keep adequate records of transactions it is
required to perform hereunder. No later than sixty (60) days after the close
of each calendar year, or after the Custodian's resignation or removal pursuant
to Article VIII, Paragraph 3, the Custodian shall render to Depositor a written
report or reports reflecting the transactions effected by it during such period
and the assets and liabilities of the Custodial Account at the close of the
period.
(b) All communications or notices required or permitted to be given
herein shall be deemed to be given upon receipt by the Custodian at P. O. Box
701, Milwaukee, Wisconsin 53201-0701; the Investment Company and Monetta Fund
and/or Monetta Trust at P. O. Box 701, Milwaukee, Wisconsin 53201-0701; or the
21
<PAGE>
Depositor at his most recent address shown in the Custodian's records. The
Depositor agrees to advise the Custodian promptly, in writing, of any change of
address.
6. Designation of Beneficiary.
The Depositor shall have the right, by written notice to the Custodian, to
designate a beneficiary or beneficiaries, primary and contingent, to receive
any benefit to which such Depositor may be entitled in the event of his death
prior to the complete distribution of such benefit. In the event the Depositor
has not filed a beneficiary designation or otherwise designated any
beneficiaries, or if all beneficiaries shall predecease the Depositor, the
following persons shall take as beneficiary in the order named:
(a) Spouse of the Depositor if living at the time of the Depositor's
death;
(b) If the spouse shall predecease the Depositor, then in equal shares to
any children surviving the Depositor and to the descendants then living of a
deceased child, by the right of representation, or
(c) If the Depositor shall leave neither spouse nor descendants
surviving, then to the personal representative of the Depositor's estate.
The determination of the Custodian as to the person entitled to receive any
distribution from the Custodial Account following the death of the Depositor,
if made in good faith, shall be conclusive and binding on all persons claiming
an interest in the Depository Account, provided that nothing provided herein
shall be construed to preclude the Custodian from filing an action in the
nature of interpleader or other appropriate proceeding in a court of competent
jurisdiction to determine the person entitled to receive such distribution.
Any expenses incurred by the Custodian in determining the person entitled to
receive a distribution from the Custodial Account, including, without
limitation, attorneys fees in any such action, shall be reimbursed from the
Custodial Account.
7. Inalienability of Benefits.
The benefits provided hereunder shall not be subject to alienation,
assignment, garnishment, attachment, execution, or levy of any kind and any
attempt to cause such benefits to be so subjected shall not be recognized
except to the extent as may be required by law.
8. Rollover Contributions.
The Custodian may receive rollover contributions as described in section
408(d)(3) or any other applicable provisions of the Code, and regulations
promulgated thereunder. If any property is transferred to the Custodian as a
rollover contribution, such property shall be sold by the Custodian and the
proceeds reinvested as provided in section 2 of this Article VIII. The
Custodian reserves the right to refuse to accept any contributions which are
not in the form of cash.
9. Conflict in Provisions.
To the extent that any of the provisions of Article VIII shall conflict with
the provisions of Articles IV, V, or VII, the provisions of Article VIII shall
prevail to the extent not inconsistent with Section 408(a) and related
regulations.
10. Status of Depositors.
Neither the Depositor nor any other person shall have any legal or equitable
right against the Custodian or the Investment Company except as provided
herein. The Depositor agrees to indemnify and hold the Custodian harmless from
and against any liability that the Custodian may incur in the administration of
the Account unless arising from the Custodian's own negligence or misconduct.
11. Loss of Exemption.
If the Custodian receives notice that the Depositor's Account has lost its
tax-exempt status under section 408 of the Code for any reason, including by
reason of a transaction prohibited by section 4975 of the Code, the Custodian
shall distribute to the Depositor the entire balance in the Account, in cash or
in kind, in the sole discretion of the Custodian, no later than 90 days after
the date the Custodian receives such notice.
12. Applicable State Law.
This Custodial Account shall be construed, administered, and enforced
according to the laws of the State of Wisconsin except to the extent Federal
law supersedes Wisconsin law.
22
<PAGE>
13. Distributions to Surviving Spouse.
If distributions from the Custodial Account are to be made to the
Depositor's surviving spouse or to a trust of which the Depositor's surviving
spouse is the income beneficiary, the amount which the surviving spouse (or
such trust) is entitled to receive in each year shall not be less than the
income of the Custodial Account (or of the portion of the Custodial Account
with respect to which the surviving spouse or such trust is the beneficiary)
for such year, as determined under section 2056(b)(7) of the Code.
14. Minimum Distributions; Election not to Recalculate Life Expectancies.
The following provisions supplement the provisions of Article IV with
respect to minimum required distributions and shall control over the provisions
of Article IV in the event of any inconsistency. All paragraph references in
this paragraph 14 are to paragraphs of Article IV unless otherwise provided.
(a) If the Depositor fails to withdraw the entire balance in the
Custodial Account by the April 1 of the year following the year in which he
attains age 70 1/2, he shall be deemed to have elected to receive payments
under paragraph 3(d) or if he has a designated beneficiary (as determined under
Part D of Proposed Regulations section 1.401(a)(9)-1) under paragraph 3(e). A
beneficiary shall be deemed to have elected the method described in paragraph
4(b)(ii) if either he withdraws the minimum amount required for the first year
under the method described in paragraph 4(b)(ii) and does not specifically
elect the method described in paragraph 4(b)(i) by the end of such year, or if
the date specified in paragraph 4(b)(i) occurs first and he has not withdrawn
the entire balance in the Custodial Account by that time; otherwise, the
beneficiary shall be deemed to have elected the method described in paragraph
4(b)(i).
(b) If there is more than one beneficiary entitled to receive
distributions on equal priority upon the death of the Depositor or a prior
beneficiary, then, to the extent permitted by Proposed Regulations section
1.401(a)(9)-1, Q&A H-2, and subject to such requirements and limitations as the
Custodian may establish, the Custodial Account may be divided into separate
accounts for purposes of Article IV and this paragraph.
(c) Notwithstanding the references to "equal or substantially equal"
payments, if the Depositor or a beneficiary is receiving distributions under
paragraph 3(d), 3(e), or 4(b)(ii), he may withdraw amounts that exceed the
minimum amount required by paragraph 5 in any year, provided that any excess
shall not be credited against the minimum amount required to be withdrawn in
subsequent years. Withdrawals may also be made at irregular intervals provided
that the minimum amount required for each year shall be withdrawn by the last
day of such year, except that the minimum amount for the year in which the
Depositor attains age 70 1/2, but no subsequent year, may be withdrawn by April
1 of the following year.
(d) In lieu of the methods of recalculating life expectancies annually as
specified in paragraph 2, the Depositor may elect for purposes of paragraph
3(c) or 3(d), and the Depositor's surviving spouse may elect for purposes of
paragraph 4(b)(ii), to have his life expectancy, or his and his designated
beneficiary's joint and last survivor life expectancy, or the surviving
spouse's life expectancy, initially calculated in the year specified in
paragraph 5 and thereafter reduced by one year in each subsequent year. All
elections described in this paragraph 14(d) shall be made in writing in
accordance with procedures established by the Custodian and the Proposed
Regulations or successors thereto. Such elections must be made and, if made,
shall be irrevocable after the date upon which distributions are required to
commence under paragraph 3 or 4(b)(ii).
(e) All references to the Proposed Regulations section 1.401(a)(9)-1 and
1.401(a)(9)-2 contained in Article IV and this paragraph 14 include the
applicable provisions of Proposed Regulations section 1.408-8 applying such
Proposed Regulations to individual retirement accounts, any subsequent
amendments to any such Proposed Regulations, and the applicable provisions of
the permanent Regulations, when issued, all of which are incorporated by
reference and shall control over any contrary provision of this Agreement.
Reference to specific provisions of the Proposed Regulations shall not be
construed to limit reference to other provisions where appropriate in the
interpretation of Article IV and this paragraph 14.
23
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
24
<PAGE>
MONETTA FUNDS IRA APPLICATION
COMPLETE THIS APPLICATION AND SEND ALONG WITH YOUR CHECK MADE PAYABLE TO
FIRSTAR TRUST COMPANY, TO: FIRSTAR TRUST COMPANY, Attn: Monetta Funds, P.O.
Box 701, Milwaukee, Wisconsin, 53201-0701.
1. IRA APPLICANT
Name of Individual: Social Security No.:
----------------------------------- ----------------------------------
Street Address: Birth Date:
----------------------------------- ----------------------------------
City: State: Zip Code:
---------------------- ---------- ------------------
Home Phone: ( ) Business Phone: ( )
---------------------------------- ----------------------------------
2. CONTRIBUTION IS FOR CURRENT YEAR UNLESS YOU SPECIFY DIFFERENT YEAR BELOW
Contribution is for year_____. If no year is indicated, current year will
be assumed.
3. CONTRIBUTION TYPE (Check one. For contributions which are not Regular, see
Section I(2) of the IRA Disclosure Statement for special instructions.)
A Rollover consists of a qualifying distribution which is paid to you
from an employer's qualified plan or from another IRA, to be deposited in
your Monetta Traditional IRA within 60 days.
[ ] Regular [ ] Rollover [ ] Transfer [ ] SEP [ ] Direct transfer
If your contribution is a rollover or direct transfer, check one box to
indicate the source of the funds: [ ] an employer's qualified plan or an
IRA derived from a rollover from such a plan; [ ] an IRA to which you
contributed [ ] a SEP-IRA or [ ] a tax-sheltered annuity (403(b)) plan
or an IRA derived from a rollover from such a plan
4. INVESTMENT OF CONTRIBUTIONS
(1) If you do not choose a Fund, all of your contributions will be
invested in the Monetta Government Money Market Fund.
(2) Initial Investment Minimums: $250 Per Fund Account.
(3) Subsequent Investment Minimums: No minimum.
(4) There is an Annual Maintenance Fee charged by the Custodian of $12.50
per Fund account. This fee is paid automatically by redeeming
shares from your account unless you add the fee to your
contribution check or enclose a separate check for your fee made
payable to Firstar Trust Company. Please see the Plan Booklet for
further information on Custodian Fees.
FUND DOLLAR AMOUNT TO BE INVESTED
MONETTA FUND $________
MONETTA SMALL-CAP EQUITY FUND $________
MONETTA MID-CAP EQUITY FUND $________
MONETTA LARGE-CAP EQUITY FUND $________
MONETTA BALANCED FUND $________
MONETTA INTERMEDIATE BOND FUND $________
MONETTA GOVERNMENT MONEY MARKET FUND $________
Total Contributions $________
Total Fees ($12.50 per Fund Account)* $________
Total $________
*Limited to $25.00 per Participant per year
Application continued on reverse.
25
<PAGE>
5. TELEPHONE EXCHANGE The telephone exchange privilege offered by the
Monetta Funds is automatically available unless you check the box below.
The exchange privilege authorizes the Funds and their transfer agent to
act on telephone instructions from any person to make an exchange.
[ ] I do not authorize telephone exchanges
6. BENEFICIARY DESIGNATION I hereby designate the following as my
Beneficiary(ies) under my Monetta Funds Individual Retirement Custodial
Account (IRA):
Name Relationship
________________________________ ________________________________
Street Address Social Security No.
________________________________ _________________________________
City State Zip Code Birth Date
_____________________ __________ ______________ _______________
Every payment under my Monetta Funds IRA by reason of my death shall be
made to my beneficiary if he or she is living at the time of my death. If a
beneficiary who is alive at the time of the Depositor's death dies before his
or her benefit is distributed, such benefit shall be distributed to the
beneficiary's estate.
A Beneficiary Designation shall be valid only if dated, signed and filed
with the Custodian under the Monetta Funds IRA before my death. I understand
that I may change my beneficiary designation by completing a "Change of
Beneficiary" form that I can obtain by calling 1-800-MONETTA and returning it
to the Custodian.
SIGNATURE OF APPLICANT:
I hereby adopt the Monetta Funds IRA. I appoint Firstar Trust Company as
Custodian and agree to be bound by the provisions of Monetta Funds IRA. I
certify that the foregoing information is correct and that I received a copy of
the Monetta Funds IRA, the Disclosure Statement relating to the Monetta Funds
IRA fees, as well as a copy of the current prospectus(es) of the Fund(s) in
which my initial investment is to be made. The terms, provisions and
limitations of the Monetta Funds IRA, as amended from time to time, are
controlling and shall always govern all rights of myself, my Beneficiaries and
all persons claiming under, by or through them, or any of them.
Date Signature of Applicant
___________________ ______________________________________________
THIS DOCUMENT WILL BE RETAINED BY FIRSTAR TRUST COMPANY.
7. DEALER INFORMATION
Dealer Name Representative's Name (Last,First,MI)
__________________________ ________________________________________
Dealer Head Office Representative's Branch Office
__________________________ ________________________________________
Address Address
__________________________ ________________________________________
City, State, Zip City, State, Zip
__________________________ ________________________________________
Telephone Number Telephone Number
__________________________ ________________________________________
Rep's A.E. Number
________________________________________
B.N.O______________________
Internal Use Only
26
<PAGE>
TRANSFER FORM
COMPLETE THIS FORM
TO TRANSFER AN EXISTING IRA OR PLAN BALANCE
TO A MONETTA FUNDS IRA
PART I (To be completed by investor and mailed to Firstar Trust Company,
Attention: Monetta Funds, P.O. Box 701, Milwaukee, Wisconsin 53201-0701.
If you are opening a new account, enclose a Monetta Funds IRA
application.)
TO: FIRSTAR TRUST COMPANY
IF THIS IS A DIRECT TRANSFER FROM AN
EMPLOYER'S QUALIFIED PLAN, SEE THE
NOTICE ON THE BACK.
The assets received are to be invested in:
[ ] My existing Monetta Fund IRA in________________ Account No._____________
(Fund name)
[ ] My new Monetta IRA. (A signed IRA Application must be completed and
returned with this Transfer Form.)
Investor's Name Daytime Phone
- --------------------------------- -----------------------------------------
Street City State Zip Code
- --------------------------------- -----------------------------------------
Investor's Signature________________________ Date____________________________
TO: NAME OF PRESENT CUSTODIAN/TRUSTEE:
- -----------------------------------------------------------------------------
Mutual Fund (if applicable)_________________________ Acct. No._______________
Address_____________________________________________ Phone No._______________
Street
__________________________ _____________ ________________________
City State Zip Code
Present Custodian/Trustee:
I have established an account under the Monetta Funds Individual Retirement
Account. Please transfer the assets (cash only) indicated below to
Firstar Trust Company as successor custodian.
[ ] All Assets [ ] $_________ only [ ] At maturity date of______________
[ ] Immediately (I am aware of any penalties which may occur)
_____________________________________________________________________________
PART II (To be completed by Firstar Trust Company)
TO: THE ABOVE-NAMED CUSTODIAN/TRUSTEE:
Firstar Trust Company accepts its appointment as custodian for the above
account. Please forward a check, as directed above by the investor, payable to:
Monetta Funds
Firstar Trust Company, FBO______________________________
Mail check and accompanying documents, if any, to:
Firstar Trust Company, P.O. Box 701, Milwaukee, Wisconsin 53201-0701
27
<PAGE>
FIRSTAR TRUST COMPANY
IMPORTANT NOTICE
TO RECIPIENTS OF DISTRIBUTIONS FROM QUALIFIED RETIREMENT PLANS:
If your IRA account with us is to be funded by the rollover of a distribution
from your employer's qualified retirement plan, the law requires that 20% of
your distribution eligible for rollover be withheld for tax purposes unless
the distribution is made payable directly to the custodian of your rollover
IRA or another qualified plan.
If you are about to receive a distribution from your employer plan which is
eligible for rollover, that distribution may take one of these three forms:
1. Your employer or plan trustee may deliver a check to you. If so, make sure
the check is payable as follows:
Monetta Funds
Firstar Trust Company, Custodian
A/O____________________________ IRA Rollover
(your name)
and deliver it along with a completed application to the following:
FIRSTAR TRUST COMPANY
P. O. BOX 701
MILWAUKEE, WI 53201
2. Your employer or plan trustee may forward your distribution directly to
us. If this occurs, follow the same instructions as above.
3. If your employer requires that an account is opened before sending the
check, make sure that you have sent a completed application to Firstar
Trust Company with the indication that you are about to receive a rollover.
4. If your employer will be wiring funds to Firstar Trust Company, the
wiring instructions are as follows:
Firstar Bank Milwaukee, N.A. FOR FURTHER CREDIT TO:
ABA No. 0750-00022 MONETTA FUNDS
FOR CREDIT TO:
FIRSTAR TRUST COMPANY ________________________________
(Your Name)
Account No. 112-952-137_______________________________
(Account Number)
28
<PAGE>
Form 5305-RA
(January 1998)
Department of
Internal Revenue Service
MONETTA FUNDS ROTH INDIVIDUAL
RETIREMENT CUSTODIAL ACCOUNT
(Under Section 408A of the Internal Revenue Code)
(January 1, 1998)
ARTICLE I
I. If this Roth IRA is not designated as a Roth Conversion IRA, then, except
in the case of a rollover contribution described in section 408A(e), the
custodian will accept only cash contributions and only up to a maximum amount
of $2,000 for any tax year of the depositor.
II. If this Roth IRA is designated as a Roth Conversion IRA, no contributions
other than IRA Conversion Contributions made during the same tax year will be
accepted.
ARTICLE II
The $2,000 limit described in Article I is gradually reduced to $0
between certain levels of adjusted gross income (AGI). For a single depositor,
the $2,000 annual contribution is phased out between AGI of $95,000 and
$110,000; for a married depositor who files jointly, between AGI of $150,000
and $160,000; and for a married depositor who files separately, between $0 and
$10,000. In the case of a conversion, the custodian will not accept IRA
Conversion Contributions in a tax year if the depositor's AGI for that tax year
exceeds $100,000 or if the depositor is married and files a separate return.
Adjusted gross income is defined in section 408A(c)(3) and does not include IRA
Conversion Contributions.
ARTICLE III
The depositor's interest in the balance in the custodial account is
nonforfeitable.
ARTICLE IV
III. No part of the custodial funds may be invested in life insurance
contracts, nor may the assets of the custodial account be commingled with other
property except in a common trust fund or common investment fund (within the
meaning of section 408(a)(5)).
IV. No part of the custodial funds may be invested in collectibles (within
the meaning of section 408(m)) except as otherwise permitted by section
408(m)(3), which provides an exception for certain gold, silver, and platinum
coins, coins issued under the laws of any state, and certain bullion.
ARTICLE V
V. If the depositor dies before his or her entire interest is distributed to
him or her and the depositor's surviving spouse is not the sole beneficiary,
the entire remaining interest will, at the election of the depositor or, if the
depositor has not so elected, at the election of the beneficiary or
beneficiaries, either:
1. Be distributed by December 31 of the year containing the fifth
anniversary of the depositor's death, or
2. Be distributed over the life expectancy of the designated
beneficiary starting no later than December 31 of the year following the year
of the depositor's death.
If distributions do not begin by the date described in (b), distribution method
(a) will apply.
VI. In the case of distribution method 1(b) above, to determine the minimum
annual payment for each year, divide the depositor's entire interest in the
custodial account as of the close of business on December 31 of the preceding
year by the life expectancy of the designated beneficiary using the attained
age of the designated beneficiary as of the beneficiary's birthday in the year
distributions are required to commence and subtract 1 for each subsequent year.
VII. If the depositor's spouse is the sole beneficiary on the depositor's
date of death, such spouse will then be treated as the depositor.
29
<PAGE>
ARTICLE VI
VIII. The depositor agrees to provide the custodian with information
necessary for the custodian to prepare any reports required under sections
408(i) and 408A(d)(3)(E), Regulations sections 1.408-5 and 1.408-6, and under
guidance published by the Internal Revenue Service.
IX. The custodian agrees to submit reports to the Internal Revenue Service
and the depositor prescribed by the Internal Revenue Service.
ARTICLE VII
Notwithstanding any other articles which may be added or incorporated,
the provisions of Articles I through IV and this sentence will be controlling.
Any additional articles that are not consistent with section 408A, the related
regulations, and other published guidance will be invalid.
ARTICLE VIII
This agreement will be amended from time to time to comply with the
provisions of the Code, related regulations, and other published guidance.
Other amendments may be made with the consent of the persons whose signatures
appear below.
ARTICLE IX
X. Definitions.
1. "Custodian" means Firstar Trust Company.
2. "Investment Company" shall mean an investment company as defined in
Internal Revenue Code Section 851(a), shares of which Monetta Fund or Monetta
Trust have agreed to offer for investment under this Account. "Investment
Company Shares" or "Shares" shall mean shares of beneficial interest or capital
stock of the Investment Company.
3. "Roth Conversion IRA." A Roth Conversion IRA is a Roth IRA that
accepts only IRA Conversion Contributions made during the same tax year.
4. "IRA Conversion Contributions." IRA Conversion Contributions are
amounts rolled over, transferred, or considered transferred from a nonRoth IRA
to a Roth IRA. A nonRoth IRA is an individual retirement account or annuity
described in section 408(a) and 408(b), other than a Roth IRA.
XI. Investment of Account Assets.
1. Each contribution forwarded by the Depositor to the Custodian shall
identify the Depositor's account number and be accompanied by a statement
signed by the Depositor identifying the Investment Company Shares in which that
contribution is to be invested. The Custodian may return to the Depositor,
without liability for interest thereon, any contributions which are not
accompanied by adequate account identification or an appropriate signed
statement directing investment of those contributions.
2. Contributions shall be invested in whole and fractional Investment
Company Shares at the price and in the manner in which such shares are then
being publicly offered by the Investment Company. All distributions received
on Investment Company Shares held in the Custodial Account shall be reinvested
in like Shares and credited to such Account. If any distribution of Investment
Company Shares may be received at the election of the shareholder in additional
like Shares or in cash or other property, the Custodian shall elect to receive
such distribution in additional like Investment Company Shares.
3. All Investment Company Shares acquired by the Custodian shall be
registered in the name of the Custodian or its registered nominee. The
Depositor shall be the beneficial owner of all Investment Company Shares held
in the Custodial Account and the Custodian shall not vote any of such shares,
except upon written direction of the Depositor. The Custodian agrees to
forward to every Depositor a then current Prospectus, reports, notices, proxies
and related proxy soliciting materials applicable to Investment Company Shares
received by the Custodian.
4. The Depositor may at any time, by a manually signed direction
delivered to the Custodian, redeem any number of Investment Company Shares held
for his account and reinvest the proceeds in the Shares of any other Investment
Company. Telephone redemptions and reinvestments shall be done at the price
and in the manner in which such Shares are then being redeemed or offered by
the respective Investment Companies.
30
<PAGE>
XII. Amendment and Termination.
1. Monetta Trust may, with the written approval of the Custodian, amend
the Custodial Account in whole or in part (including retroactive amendments) by
delivering to the Depositor written notice of such amendment setting forth the
substance and effective date of the amendment. The Depositor shall be deemed
to have consented to any such amendments not objected to in writing by the
Depositor within thirty (30) days of receipt of the notice, provided that no
amendment shall cause or permit any part of the assets of the Custodial Account
to be diverted to purposes other than for the exclusive benefit of the
Depositor or his beneficiaries, nor shall any amendment be made except in
accordance with the applicable law and regulations affecting this Custodial
Account.
2. The Depositor may at any time terminate the Custodial Account by
delivering to the Custodian a written notice of such termination setting forth
the effective date thereof, together with any required withholding information.
3. The Custodial Account created by this Agreement shall automatically
terminate upon distribution to the Depositor or the beneficiary designated
under Paragraph 6 of Article IX hereof of the entire balance in the Custodial
Account.
4. The Custodian may be removed by the Depositor at any time upon thirty
(30) days written notice to the Custodian. The Custodian may elect to
terminate the Custodial Account upon thirty (30) days written notice to the
Depositor.
5. In the event that the assets of any Investment Company in which the
Custodial Account is invested are transferred to or acquired by any other
investment company or other commingled investment fund which is a permissible
investment for an individual retirement account, by merger or otherwise, the
Custodian may make such amendments to this Agreement, or take such other
action, as it may determine to be necessary or appropriate to accomplish such
transaction and the exchange of Investment Company Shares for shares or other
appropriate units of ownership in such successor fund. The consent of the
Depositor shall not be required for any such amendment or action, but the
Depositor shall be promptly notified thereof, and shall have the right to
withdraw the funds in the Custodial Account without fee, charge, load or
penalty of any kind.
XIII. Taxes and Custodial Fees.
Any income taxes or other taxes of any kind whatsoever that may be levied
or assessed upon or in respect of the assets of the Custodial Account, or the
income arising therefrom, any transfer taxes incurred, all other administrative
expenses incurred by the Custodian in the performance of its duties, including
fees for legal services rendered to the Custodian, and the Custodian's
compensation, shall be paid from the Custodial Account. Unusual administrative
responsibilities not contemplated by the fee schedule will result in such
additional charges as will reasonably compensate the Custodian for the services
performed.
The custodian fee listed in the fee schedule will be deducted by the
Custodian from the initial contribution received from the Depositor. The
annual maintenance fee will be deducted on the last business day in September
for each year and enough fund shares will be redeemed to cover this fee. Fees
as listed on the fee schedule will be deducted from the refund or redemption
proceeds at the time of distribution or redemption and the remaining balance
will be remitted to the Depositor in the case of distribution, or will be
reinvested in accordance with the Depositor's instructions.
XIV. Reports and Notices.
1. The Custodian shall keep adequate records of transactions it is
required to perform hereunder. No later than sixty (60) days after the close
of each calendar year, or after the Custodian's resignation or removal pursuant
to Article IX, paragraph 3, the Custodian shall render to Depositor a written
report or reports reflecting the transactions effected by it during such period
and the assets and liabilities of the Custodial Account at the close of the
period.
2. All communications or notices required or permitted to be given
herein shall be deemed to be given upon receipt by the Custodian at P.O. Box
701, Milwaukee, Wisconsin 53201-0701, the Investment Company and Monetta Fund
and/or Monetta Trust at P.O. Box 701, Milwaukee, Wisconsin 53201-0701, or the
Depositor at his most recent address shown in the Custodian's records. The
Depositor agrees to advise the Custodian promptly, in writing, of any change of
address.
31
<PAGE>
XV. Designation of Beneficiary.
The Depositor shall have the right, by written notice to the Custodian,
to designate a beneficiary or beneficiaries, primary and contingent, to receive
any benefit to which such Depositor may be entitled in the event of his death
prior to the complete distribution of such benefit. In the event the Depositor
has not filed a beneficiary designation or otherwise designated any
beneficiaries, or if all beneficiaries shall predecease the Depositor, the
following persons shall take as beneficiary in the order named:
1. Spouse of the Depositor if living at the time of the Depositor's death;
2. If the spouse shall predecease the Depositor, then in equal shares to any
children surviving the Depositor and to the descendants then living of a
deceased child, by the right of representation, or
3. If the Depositor shall leave neither spouse nor descendants surviving,
then to the personal representative of the Depositor's estate.
The determination of the Custodian as to the person entitled to receive
any distribution from the Custodial Account following the death of the
Depositor, if made in good faith, shall be conclusive and binding on all
persons claiming an interest in the Depository Account, provided that nothing
provided herein shall be construed to preclude the Custodian from filing an
action in the nature of interpleader or other appropriate proceeding in a court
of competent jurisdiction to determine the person entitled to receive such
distribution. Any expenses incurred by the Custodian in determining the person
entitled to receive a distribution from the Custodial Account, including,
without limitation, attorneys fees in any such action, shall be reimbursed from
the Custodial Account.
XVI. Inalienability of Benefits.
The benefits provided hereunder shall not be subject to alienation, assignment,
garnishment, attachment, execution or levy of any kind and any attempt to cause
such benefits to be so subjected shall not be recognized except to the extent
as may be required by law.
XVII. Rollover Contributions.
The Custodian may receive rollover contributions as described in
section 408A(e) or any other applicable provisions of the Code, and regulations
promulgated thereunder. If any property is transferred to the Custodian as a
rollover contribution, such property shall be sold by the Custodian and the
proceeds reinvested as provided in section 2 of this Article IX. The Custodian
reserves the right to refuse to accept any contributions which are not in the
form of cash.
XVIII. Conflict in Provisions.
To the extent that any of the provisions of Article IX shall conflict
with the provisions of Articles V, VI, or VIII, the provisions of Article IX
shall prevail.
XIX. Status of Depositors.
Neither the Depositor nor any other person shall have any legal or
equitable right against the Custodian or the Investment Company except as
provided herein. The Depositor agrees to indemnify and hold the Custodian
harmless from and against any liability that the Custodian may incur in the
administration of the Account unless arising from the Custodian's own
negligence or misconduct.
XX. Loss of Exemption.
If the Custodian receives notice that the Depositor's Account has lost
its tax-exempt status under section 408A of the Code for any reason, including
by reason of a transaction prohibited by section 4975 of the Code, the
Custodian shall distribute to the Depositor the entire balance in the Account,
in cash or in kind, in the sole discretion of the Custodian no later than 90
days after the date the Custodian receives such notice.
XXI. Applicable State Law.
This Custodial Account shall be construed, administered and enforced
according to the laws of the State of Wisconsin except to the extent Federal
law supersedes Wisconsin law.
XXII. Distributions to Surviving Spouse.
If distributions from the Custodial Account are to be made to the
Depositor's surviving spouse, or to a trust of which the Depositor's surviving
spouse is the income beneficiary, the amount which the surviving spouse (or
such trust) is entitled to receive in each year shall not be less than the
income of the Custodial Account (or of the portion of the Custodial Account
with respect to which the surviving spouse or such trust is the beneficiary)
for such year, as determined under section 2056(b)(7) of the Code.
32
<PAGE>
MONETTA FUNDS ROTH IRA APPLICATION
COMPLETE THIS APPLICATION AND SEND ALONG WITH YOUR CHECK MADE PAYABLE TO
FIRSTAR TRUST COMPANY TO: FIRSTAR TRUST COMPANY, Attn: Monetta Funds, P.O.
Box 701, Milwaukee, Wisconsin 53201-0701
1. ROTH IRA APPLICANT
Name of Individual:_____________________ Social Security No:______________
Street Address:_________________________ Birth Date:______________________
City:______________________ State:______ Zip Code:________________________
Home Phone:( )_______________________ Business Phone:( )_____________
2. SPECIFY YEAR FOR WHICH CONTRIBUTION IS MADE.
Contribution is for year_____. If no year is indicated, year in which
Contribution is received by Firstar Trust Company will be assumed.
3. CONTRIBUTION TYPE (Check one. For contributions which are not Regular, see
the appropriate section of the IRA Disclosure Statement in the Plan Booklet
for special instructions.) A rollover consists of a qualifying distribution
which is paid to you from another IRA, to be deposited in your Monetta Roth
IRA within 60 days.
[ ] Regular [ ] Rollover from Another ROTH IRA
[ ] IRA Conversion Contribution*
(Rollover from a nonRoth IRA)
4. INVESTMENT OF CONTRIBUTIONS
(1) If you do not choose a Fund, all of your contributions will be
invested in the Monetta Government Money Market Fund.
(2) Initial Investment Minimums: $250 Per Fund Account.
(3) Subsequent Investment Minimums: no minimum.
(4) There is an Annual Maintenance Fee charged by the Custodian of $12.50
per Fund account. This fee is paid automatically by redeeming shares
from your account unless you add the fee to your contribution check or
enclose a separate check for your fee made payable to Firstar Trust
Company. Please see the Plan Booklet for further information on
Custodian Fees.
FUND DOLLAR AMOUNT TO BE INVESTED
MONETTA FUND $__________
MONETTA SMALL-CAP EQUITY FUND $__________
MONETTA MID-CAP EQUITY FUND $__________
MONETTA LARGE-CAP EQUITY FUND $__________
MONETTA BALANCED FUND $__________
MONETTA INTERMEDIATE BOND FUND $__________
MONETTA GOVERNMENT MONEY MARKET FUN $__________
Total Contributions $__________
Total Fees ($12.50 per Fund Account)** $__________
Total $__________
* Note that IRA conversion contributions for each tax year must be maintained
in a separate Monetta Roth IRA.
**Limited to $25.00 per Participant per year.
33
<PAGE>
MONETTA FUNDS ROTH IRA APPLICATION (CONTINUED)
5. TELEPHONE EXCHANGE The telephone exchange privilege offered by the Monetta
Funds is automatically available unless you check the box below. The
exchange privilege authorizes the Funds and their transfer agent to act on
telephone instructions from any person to make an exchange.
[ ] I do not authorize telephone exchanges
6. BENEFICIARY DESIGNATION I hereby designate the following as my
Beneficiary(ies) under my Monetta Funds Roth Individual Retirement Custodial
Account (Roth IRA):
Name________________________________ Relationship________________________
Street Address______________________ Social Security No._________________
City___________________ State_______ Zip Code________ Birth Date_________
Every payment under my ROTH IRA by reason of my death shall be made to my
Beneficiary if he or she is living at the time of my death. If a beneficiary
who is alive at the time of the Depositor's death dies before his or her
benefit is distributed, such benefit shall be distributed to the beneficiary's
estate.
A Beneficiary Designation shall be valid only if dated, signed and filed
with the Custodian under the Roth IRA Custodial Account before my death. I
understand that I may change my beneficiary designation by completing a "Change
of Beneficiary" form that I can obtain by calling 1-800-MONETTA and returning
it to the Custodian.
SIGNATURE OF APPLICANT:
I hereby adopt the Monetta Funds Roth IRA. I appoint Firstar Trust
Company as Custodian and agree to be bound by the provisions of the Monetta
Funds Roth IRA. I certify that the foregoing information is correct and that I
received a copy of the Monetta Funds Roth IRA, the Disclosure Statement
relating to the Monetta Funds Roth IRA fees, as well as a copy of the current
prospectus(es) of the Fund(s) in which my initial investment is to be made.
The terms, provisions and limitations of the Monetta Funds Roth IRA, as amended
from time to time, are controlling and shall always govern all rights of
myself, my Beneficiaries and all persons claiming under, by or through them, or
any of them.
Date_________________ Signature of Applicant___________________________
THIS DOCUMENT WILL BE RETAINED BY FIRSTAR TRUST COMPANY.
7. DEALER INFORMATION
Dealer Name Representative's Name (Last,First,MI)
______________________________ ______________________________________
Dealer Head Office Representative's Branch Office
______________________________ ___________________________________
Address Address
______________________________ ___________________________________
City, State, Zip City, State, Zip
______________________________ ___________________________________
Telephone Number Telephone Number
B.N. 0______________________ ___________________________________
Internal Use Only Rep's A.E. Number
34
<PAGE>
TRANSFER FORM
COMPLETE THIS FORM
TO TRANSFER AN EXISTING IRA OR PLAN BALANCE
TO A MONETTA FUNDS ROTH IRA
PART I
(To be completed by investor and mailed to Firstar Trust Company. Attention:
Monetta Funds, P.O. Box 701, Milwaukee, Wisconsin 53201-0701. If you are
opening an new account enclose a Monetta Funds IRA application.)
TO: FIRSTAR TRUST COMPANY:
The assets received are to be invested in:
[ ] My new Monetta Roth IRA. (A signed Roth IRA Application must be
completed and returned with this Transfer Form.)
[ ] My existing Monetta Fund Roth IRA.
Investor's Name___________________________ Daytime Phone___________________
Street_________________________ City____________ State______ Zip Code_______
Investor's Signature____________________________________ Date_______________
TO: NAME OF PRESENT CUSTODIAN/TRUSTEE:
_____________________________________________________________________________
Mutual Fund (if applicable)______________________ Acct. No.__________________
Address__________________________________________ Phone No.__________________
Street
_________________________________ ______________ ________________
City State Zip Code
Present Custodian/Trustee:
I have established an account under the Monetta Funds Roth Individual
Retirement Account. Please transfer the assets (cash only) indicated below to
Firstar Trust Company as successor custodian.
[ ] All Assets [ ] $_______ only [ ] At maturity date of__________
[ ] Immediately (I am aware of any penalties which may occur)
PART II (To be completed by Firstar Trust Company)
TO: THE ABOVE-NAMED CUSTODIAN/TRUSTEE:
Firstar Trust Company accepts its appointment as custodian for the above
account. Please forward a check, as directed above by the investor, payable
to:
Monetta Funds
Firstar Trust Company, FBO__________________________________
Mail check and accompanying documents, if any, to:
Firstar Trust Company, P.O. Box 701, Milwaukee, Wisconsin 53201-0701
35
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
36
<PAGE>
FORM 5305-EA
(JANUARY 1998)
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
MONETTA FUNDS EDUCATION INDIVIDUAL
RETIREMENT CUSTODIAL ACCOUNT
(Under Section 530 of the Internal Revenue Code)
(January 1, 1998)
ARTICLE I
The custodian may accept additional cash contributions. These
contributions may be from the depositor, or from any other individual, for the
benefit of the designated beneficiary, provided the designated beneficiary has
not attained the age of 18 as of the date such contributions are made. Total
contributions that are not rollover contributions described in section
530(d)(5) are limited to a maximum amount of $500 for the taxable year.
ARTICLE II
The maximum aggregate contribution that an individual may make to the
custodial account in any year may not exceed the $500 in total contributions
that the custodial account can receive. In addition, the maximum aggregate
contribution that an individual may make to the custodial account in any year
is phased out for unmarried individuals who have modified adjusted gross income
(AGI) between $95,000 and $110,000 for the year of the contribution and for
married individuals who file joint returns with modified AGI between $150,000
and $160,000 for the year of the contribution. Unmarried individuals with
modified AGI above $110,000 for the year and married individuals who file joint
returns and have modified AGI above $160,000 for the year may not make a
contribution for that year. Modified AGI is defined in section 530(c)(2).
ARTICLE III
No part of the custodial account funds may be invested in life insurance
contracts, nor may the assets of the custodial account be commingled with other
property except in a common investment fund (within the meaning of section
530(b)(1)(D)).
ARTICLE IV
1. Any balance to the credit of the designated beneficiary on the date on
which such designated beneficiary attains age 30 shall be distributed to the
designated beneficiary within 30 days of such date.
2. Any balance to the credit of the designated beneficiary shall be
distributed to the estate of the designated beneficiary within 30 days of the
date of such designated beneficiary's death.
ARTICLE V
The depositor shall have the power to direct the custodian regarding the
investment of the above-listed amount assigned to the custodial account
(including earnings thereon) in the investment choices offered by the
custodian. The responsible individual, however, shall have the power to
redirect the custodian regarding the investment of such amounts, as well as the
power to direct the custodian regarding the investment of all additional
contributions (including earnings thereon) to the custodial account. In the
event that the responsible individual does not direct the custodian regarding
the investment of additional contributions (including earnings thereon), the
initial investment direction of the depositor also will govern all additional
contributions made to the custodial account until such time as the responsible
individual otherwise directs the custodian. Unless otherwise provided in this
agreement, the responsible individual also shall have the power to direct the
custodian regarding the administration, management, and distribution of the
account.
ARTICLE VI
The "responsible individual" named by the depositor shall be a parent or
guardian of the designated beneficiary. The custodial account shall have only
one responsible individual at any time. If the responsible individual becomes
incapacitated or dies while the designated beneficiary is a minor under state
law, the successor responsible individual shall be the person named to succeed
in that capacity by the preceding responsible individual in a witnessed writing
or, if no successor is so named, the successor responsible individual shall be
the designated beneficiary's other parent or successor guardian. Unless
otherwise directed by checking the option below, at the time that the
designated beneficiary attains the age of majority under state law, the
designated beneficiary becomes the responsible individual.
_______ OPTION (THIS PROVISION IS effective only if checked): The
responsible individual shall continue to serve as the responsible individual
for the custodial account after the designated beneficiary attains the age of
majority under state law and until such time as all assets have been
distributed from the custodial account and the custodial account terminates. If
37
<PAGE>
the responsible individual becomes incapacitated or dies after the designated
beneficiary reaches the age of majority under state law, the responsible
individual shall be the designated beneficiary.
ARTICLE VII
The responsible individual ________ may or ________ may not change the
beneficiary designated under this agreement to another member of the designated
beneficiary's family described in section 529(e)(2) in accordance with the
custodian's procedures.
ARTICLE VIII
1. The depositor agrees to provide the custodian with the information
necessary for the custodian to prepare any reports required under section
530(h).
2. The custodian agrees to submit reports to the Internal Revenue Service
and the responsible individual as prescribed by the Internal Revenue Service.
ARTICLE IX
Notwithstanding any other articles which may be added or incorporated,
the provisions of Articles I through IV will be controlling. Any additional
articles that are not consistent with section 530 and related regulations will
be invalid.
ARTICLE X
This agreement will be amended from time to time to comply with the
provisions of the Code and related regulations. Other amendments may be made
with the consent of the depositor and the custodian whose signatures appear
below.
ARTICLE XI
I. Definitions.
1. "Custodian" means Firstar Trust Company.
2. "Depositor" is the person who establishes the custodial account.
3. "Designated Beneficiary" is the person on whose behalf the custodial
account has been established.
4. "Investment Company" shall mean an investment company as defined in
Internal Revenue Code Section 851(a), shares of which Monetta Fund or Monetta
Trust have agreed to offer for investment under this Account. "Investment
Company Shares" or "Shares" shall mean shares of beneficial interest or capital
stock of the Investment Company.
5. The "Responsible Individual" generally, is a parent or guardian of the
designated beneficiary. However, under certain circumstances, the responsible
individual may be the designated beneficiary.
II. Investment of Account Assets.
1. Subject to Article V, each additional contribution forwarded by the
Depositor to the Custodian shall identify the account number and be accompanied
by a statement signed by the Depositor. The Custodian may return to the
Depositor, without liability for interest thereon, any contributions which are
not accompanied by adequate account identification or an appropriate signed
statement.
2. Contributions shall be invested in whole and fractional Investment
Company Shares at the price and in the manner in which such shares are then
being publicly offered by the Investment Company. All distributions received
on Investment Company Shares held in the Custodial Account shall be reinvested
in like Shares and credited to such Account. If any distribution of Investment
Company Shares may be received at the election of the shareholder in additional
like Shares or in cash or other property, the Custodian shall elect to receive
such distribution in additional like Investment Company Shares.
3. All Investment Company Shares acquired by the Custodian shall be
registered in the name of the Custodian or its registered nominee. The
designated beneficiary shall be the beneficial owner of all Investment Company
Shares held in the Custodial Account and the Custodian shall not vote any of
such shares except upon written direction of the responsible individual. The
Custodian agrees to forward to every responsible individual a then current
Prospectus, reports, notices, proxies, and related proxy soliciting materials
applicable to Investment Company Shares received by the Custodian.
38
<PAGE>
4. The responsible individual may, at any time, by a manually signed
direction delivered to the Custodian, redeem any number of Investment Company
Shares held for the account and reinvest the proceeds in the Shares of any
other Investment Company. Telephone redemptions and reinvestments shall be
done at the price and in the manner in which such Shares are then being
redeemed or offered by the respective Investment Companies.
III. Amendment and Termination.
1. Monetta Trust may, with the written approval of the Custodian, amend the
Custodial Account in whole or in part (including retroactive amendments) by
delivering to the responsible individual written notice of such amendment
setting forth the substance and effective date of the amendment. The
responsible individual shall be deemed to have consented to any such amendments
not objected to in writing by the Depositor within thirty (30) days of receipt
of the notice, provided that no amendment shall cause or permit any part of the
assets of the Custodial Account to be diverted to purposes other than for the
exclusive benefit of the designated beneficiary or his beneficiaries, nor shall
any amendment be made except in accordance with the applicable law and
regulations affecting this Custodial Account.
2. The responsible individual may, at any time, terminate the Custodial
Account by delivering to the Custodian a written notice of such termination
setting forth the effective date thereof, together with any required
withholding information.
3. The Custodial Account created by this Agreement shall automatically
terminate upon distribution to the designated beneficiary under Article IV
hereof of the entire balance in the Custodial Account.
4. The Custodian may be removed by the responsible individual at any time
upon thirty (30) days written notice to the Custodian. The Custodian may elect
to terminate the Custodial Account upon thirty (30) days written notice to the
responsible individual.
5. In the event that the assets of any Investment Company in which the
Custodial Account is invested are transferred to or acquired by any other
investment company or other commingled investment fund which is a permissible
investment for an individual retirement account, by merger or otherwise, the
Custodian may make such amendments to this Agreement or take such other action
as it may determine to be necessary or appropriate to accomplish such
transaction and the exchange of Investment Company Shares for shares or other
appropriate units of ownership in such successor fund. The consent of the
responsible individual shall not be required for any such amendment or action,
but the responsible individual shall be promptly notified thereof and shall
have the right to withdraw the funds in the Custodial Account without fee,
charge, load, or penalty of any kind.
IV. Taxes and Custodial Fees.
Any income taxes or other taxes of any kind whatsoever that may be levied
or assessed upon or in respect of the assets of the Custodial Account, or the
income arising therefrom; any transfer taxes incurred; all other administrative
expenses incurred by the Custodian in the performance of its duties, including
fees for legal services rendered to the Custodian; and the Custodian's
compensation shall be paid from the Custodial Account. Unusual administrative
responsibilities not contemplated by the fee schedule will result in such
additional charges as will reasonably compensate the Custodian for the services
performed.
The custodian fee listed in the fee schedule will be deducted by the
Custodian from the initial contribution received from the Depositor. The
annual maintenance fee will be deducted on the last business day in September
for each year and enough fund shares will be redeemed to cover this fee. Fees,
as listed on the fee schedule, will be deducted from the refund or redemption
proceeds at the time of distribution or redemption and the remaining balance
will be remitted to the designated beneficiary in the case of distribution or
will be reinvested in accordance with the Depositor's or responsible party's,
as provided in Article V, instructions.
V. Reports and Notices.
1. The Custodian shall keep adequate records of transactions it is required
to perform hereunder. No later than sixty (60) days after the close of each
calendar year, or after the Custodian's resignation or removal pursuant to
paragraph 3 of Article XI, the Custodian shall render to Depositor a written
report or reports reflecting the transactions effected by it during such period
and the assets and liabilities of the Custodial Account at the close of the
period.
2. All communications or notices required or permitted to be given herein
shall be deemed to be given upon receipt by the Custodian at P. O. Box 701,
Milwaukee, Wisconsin 53201-0701; the Investment Company and Monetta Fund and/or
Monetta Trust at P. O. Box 701, Milwaukee, Wisconsin 53201-0701; or the
Depositor at his most recent address shown in the Custodian's records. The
responsible party agrees to advise the Custodian promptly, in writing, of any
change of address.
VI. Entitlement to Distribution.
39
<PAGE>
Nothing provided herein shall be construed to preclude the Custodian from
filing an action in the nature of interpleader or other appropriate proceeding
in a court of competent jurisdiction to determine the person entitled to
receive such distribution. Any expenses incurred by the Custodian in
determining the person entitled to receive a distribution from the Custodial
Account, including, without limitation, attorneys fees in any such action,
shall be reimbursed from the Custodial Account.
VII. Inalienability of Benefits.
The benefits provided hereunder shall not be subject to alienation, assignment,
garnishment, attachment, execution, or levy of any kind and any attempt to
cause such benefits to be so subjected shall not be recognized except to the
extent as may be required by law.
VIII. Rollover Contributions.
The Custodian may receive rollover contributions as described in
section 530(d)(5) or any other applicable provisions of the Code, and
regulations promulgated thereunder. If any property is transferred to the
Custodian as a rollover contribution, such property shall be sold by the
Custodian and the proceeds reinvested as provided in section 2 of this
Article XI. The Custodian reserves the right to refuse to accept any
contributions which are not in the form of cash.
IX. Conflict in Provisions.
To the extent that any of the provisions of Article XI shall conflict
with the provisions of Articles IV, VIII or X, the provisions of Article XI
shall prevail.
X. Status of Depositors.
Neither the Depositor nor any other person shall have any legal or
equitable right against the Custodian or the Investment Company except as
provided herein. The Depositor agrees to indemnify and hold the Custodian
harmless from and against any liability that the Custodian may incur in the
administration of the Account unless arising from the Custodian's own
negligence or misconduct.
XI. Loss of Exemption.
If the Custodian receives notice that the Account has lost its tax-exempt
status under section 530 of the Code for any reason, including by reason of a
transaction prohibited by section 4975 of the Code, the Custodian shall
distribute to the Depositor the entire balance in the Account, in cash or in
kind, in the sole discretion of the Custodian, no later than 90 days after the
date the Custodian receives such notice.
XII. Applicable State Law.
This Custodial Account shall be construed, administered, and enforced
according to the laws of the State of Wisconsin except to the extent Federal
law supersedes Wisconsin law.
XIII. Identification Numbers
The depositor's and designated beneficiary's social security numbers will
serve as their identification numbers. If the depositor is a nonresident alien
and does not have an identification number, write "Foreign" in the block where
the number is requested. The designated beneficiary's social security number
is the identification number of his or her Education IRA. An employer
identification number (EIN) is required only for an Education IRA for which a
return is filed to report unrelated business income. An EIN is required for a
common fund created for Education IRAs.
40
<PAGE>
MONETTA FUNDS EDUCATION IRA APPLICATION
COMPLETE THIS APPLICATION AND SEND ALONG WITH YOUR CHECK MADE PAYABLE TO
FIRSTAR TRUST COMPANY, TO: FIRSTAR TRUST COMPANY, Attn: Monetta Funds, P.O.
Box 701, Milwaukee, Wisconsin, 53201-0701.
1. EDUCATION IRA DEPOSITOR
Name of Individual:________________________ Social Security No.:__________
Street Address:____________________________________________________________
City:______________________ State:____________ Zip Code:_________________
Home Phone: ( )______________________ Business Phone: ( )______________
Check if Ed IRA Rollover [ ]
2. DESIGNATED BENEFICIARY
Name of Individual:________________________ Social Security No.:__________
Street Address:____________________________ Birth Date:___________________
City:________________________ State:___________ Zip Code:_________________
Home Phone: ( )____________________ Business Phone: ( )________________
3. RESPONSIBLE INDIVIDUAL
Name of Individual:________________________ Social Security No.:__________
Street Address:____________________________________________________________
City:______________________ State:__________ Zip Code:__________________
Home Phone: ( )_____________________ Business Phone: ( )________________
(1) Check here if the responsible individual is permitted to continue as
the responsible individual after the designated beneficiary attains the
age of majority under state law as provided in Article VI.
(2) (Complete) The responsible individual_____ may or_____may not change
the beneficiary designated under this agreement to another member of the
designated beneficiary's family described in section 529(e)(2) in
accordance with the custodian's procedures.
4. CONTRIBUTION IS FOR CURRENT YEAR UNLESS YOU SPECIFY DIFFERENT YEAR BELOW
Contribution is for year____. If no year is indicated, the year in which
received by Firstar Trust Company will be assumed.
5. CONTRIBUTION TYPE (Check one. For rollover contributions, see the
appropriate section of the IRA Disclosure Statement in the Plan Booklet for
special instructions.) A Rollover consists of a distribution which is paid to
you from another Education IRA, to be deposited in your Monetta Education IRA
within 60 days.
[ ] Regular [ ] Rollover [ ] Transfer [ ] Direct transfer
6. INVESTMENT OF CONTRIBUTIONS
(1)If you do not choose a Fund, all of your contributions will be invested
in the Monetta Government Money Market Fund.
(2)Initial Investment Minimums: $250 Per Fund Account.
(3)Subsequent Investment Minimums: no minimum.
(4)There is an Annual Maintenance Fee charged by the Custodian of $12.50 per
Fund account. This fee is paid automatically by redeeming shares from
your account unless you add the fee to your contribution check or enclose
a separate check for your fee made payable to Firstar Trust Company.
Please see the Plan Booklet for further information on Custodian Fees.
41
<PAGE>
FUND DOLLAR AMOUNT TO BE INVESTED
MONETTA FUND $_________
MONETTA SMALL-CAP EQUITY FUND $_________
MONETTA MID-CAP EQUITY FUND $_________
MONETTA LARGE-CAP EQUITY FUND $_________
MONETTA BALANCED FUND $_________
MONETTA INTERMEDIATE BOND FUND $_________
MONETTA GOVERNMENT MONEY MARKET FUND $_________
Total Contributions $_________
Total Fees ($12.50 per Fund Account)* $_________
Total $_________
*Limited to $25.00 per Participant
7.TELEPHONE EXCHANGE The telephone exchange privilege offered by the
Monetta Funds is automatically available unless you check the box
below. The exchange privilege authorizes the Funds and their transfer
agent to act on telephone instructions from any person to make an
exchange.
[ ] I do not authorize telephone exchanges
SIGNATURE OF DEPOSITOR AND
RESPONSIBLE INDIVIDUAL:
I hereby adopt the Monetta Funds Education Individual Retirement
Custodial Account ("Education IRA"). I appoint Firstar Trust Company as
Custodian and agree to be bound by the provisions of the Monetta
Education IRA. I certify that the foregoing information is correct and
that I received a copy of the Monetta Funds Education IRA, Disclosure
Statement relating to the Monetta Funds Education IRA fees, as well as a
copy of the current prospectus(es) of the Fund(s) in which my initial
investment is to be made. The terms, provisions and limitations of the
Education Monetta Funds IRA, as amended from time to time, are
controlling and shall always govern all rights of myself, the Designated
Beneficiary and all persons claiming under, by or through them, or any of
them.
Date_______________ Signature of Depositor____________________________
Date_______________ Signature of Responsible Individual_______________
THIS DOCUMENT WILL BE RETAINED BY FIRSTAR TRUST COMPANY.
8. DEALER INFORMATION
Dealer Name Representative's Name (Last,First,MI)
----------------------------- -----------------------------------------
Dealer Head Office Representative's Branch Office
_____________________________ ___________________________________
Address Address
_____________________________ ___________________________________
City, State, Zip City, State, Zip
_____________________________ ___________________________________
Telephone Number Telephone Number
B.N.0_________________________ ___________________________________
Internal Use Only Rep's A.E. Number
42
<PAGE>
TRANSFER FORM
COMPLETE THIS FORM
TO TRANSFER AN EXISTING EDUCATION IRA OR PLAN BALANCE
TO A MONETTA FUNDS EDUCATION IRA
PART I
(To be completed by investor and mailed to Firstar Trust Company. Attention:
Monetta Funds, P.O. Box 701, Milwaukee, Wisconsin 53201-0701. If you are
opening an new account enclose a Monetta Funds IRA application.)
TO: FIRSTAR TRUST COMPANY:
The assets received are to be invested in:
[ ] An existing Monetta Fund Education IRA for the benefit of
____________(Acct. No.)
Responsible Party's Name__________________________ Daytime Phone___________
Street______________________ City______________ State_________ Zip Code_____
Responsible Party's Signature______________________________ Date____________
[ ] A new Monetta Education IRA. (A signed Education IRA Application
must be completed and returned with this Transfer Form.)
Depositor's Name______________________ Daytime Phone_____________________
Street______________________ City___________ State_______ Zip Code_______
Depositor's Signature________________________________ Date______________
TO: NAME OF PRESENT CUSTODIAN/TRUSTEE:
- -----------------------------------------------------------------------------
Mutual Fund (if applicable)_______________________Acct. No.________________
Address___________________________________________Phone No.________________
Street
_____________________________ ____________ ______________
City State Zip Code
Present Custodian/Trustee:
I have established an account under the Monetta Funds Education
Individual Retirement Account. Please transfer the assets (cash only)
indicated below to Firstar Trust Company as successor custodian.
[ ] All Assets [ ] $_________ only [ ] At maturity date of_______
[ ] Immediately (I am aware of any penalties which may occur)
PART II
(To be completed by Firstar Trust Company)
TO: THE ABOVE-NAMED CUSTODIAN/TRUSTEE:
Firstar Trust Company accepts its appointment as custodian for the above
account. Please forward a check, as directed above by the investor, payable
to:
Firstar Trust Company, FBO__________________________________
Mail check and accompanying documents, if any, to:
Firstar Trust Company, P.O. Box 701. Milwaukee, Wisconsin 53201-0701
43
<PAGE>
TABLE OF CONTENTS PAGE
How to Open a Monetta IRA Account 1
Minimum Contribution 1
Custodian Fees 1
Types of Accounts (General Information) 2
Traditional IRA 7
Roth IRA 13
Education IRA 15
Application & Transfer Forms
Traditional IRA 25
Application 27
Transfer to Existing IRA
Roth IRA
Application 33
Transfer Traditional to Roth IRA 35
Education IRA
Application 41
Transfer Education IRA 43
MONETTA FUNDS
1776-A South Naperville Road, Suite 100
Wheaton, Illinois 60187-8133
CUSTODIAN
Firstar Trust Company
P.O. Box 701
Milwaukee, WI 53201-0701
DISTRIBUTOR:
Funds Distributor, Inc.
Boston, Massachusetts 02109
This booklet is authorized for distribution only when preceded or
accompanied by a current combined Prospectus of Monetta Fund, Inc.,
and Monetta Trust.
44
<PAGE>
