<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
MONETTA TRUST
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[Monetta Letterhead]
December __, 1996
Dear Shareholder:
SPECIAL MEETING OF SHAREHOLDERS -- JANUARY 28, 1997
Enclosed is the proxy statement and proxy card for a special meeting of the
shareholders of Monetta Mid-Cap Equity Fund, Monetta Large-Cap Equity Fund,
Monetta Balanced Fund, Monetta Intermediate Bond Fund and Monetta Government
Money Market Fund (collectively the "Funds"), each a series of Monetta Trust
(the "Trust") which has been called for January 28, 1997. Your vote is
important and must be counted, no matter how many or how few shares you own.
The board of trustees of the Trust is asking shareholders to approve a
Service and Distribution Plan pursuant to SEC rule 12b-1 which will allow the
Funds to compensate broker-dealers, third party record-keepers and others for
services they provide to holders of shares of the Funds and in connection with
the distribution of Funds' shares. Shareholders are also being asked to approve
a new investment advisory agreement with Monetta Financial Services Inc., the
Trust's investment adviser, which will reduce the amount of compensation paid to
the investment advisor by the maximum amount of payments under the Service and
Distribution Plan. In other proposals, shareholders are being asked to consider
the election of trustees and to ratify the selection of the Trust's independent
public accountants.
THE BOARD OF TRUSTEES OF THE TRUST UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR
THE PROPOSALS SET FORTH IN THE NOTICE OF A SPECIAL MEETING OF THE SHAREHOLDERS.
YOUR VOTE IS IMPORTANT - PLEASE RETURN THE PROXY CARD PROMPTLY
Your vote is extremely important and I urge you to complete and return
promptly the proxy card in the enclosed envelope. If you have any questions,
please call 1-800-666-3882.
Sincerely,
Robert S. Bacarella
President
<PAGE>
MONETTA TRUST
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 207
Wheaton, Illinois 60187
1-800-MONETTA (1-800-666-3882)
________________________________
NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON
JANUARY 28, 1997
To the shareholders:
A special meeting of the shareholders of Monetta Mid-Cap Equity Fund,
Monetta Large-Cap Equity Fund, Monetta Balanced Fund, Monetta Intermediate Bond
Fund and Monetta Government Money Market Fund (each a "Fund" and collectively
the "Funds"), each a series of Monetta Trust (the "Trust"), will be held at
Wheaton Park District Community Center, 1777 South Blanchard, Wheaton, Illinois,
on Tuesday, January 28, 1997 at 9:00 a.m., Central time.
The shareholder meeting has been called for the following purposes:
1. To elect seven (7) trustees to the board of trustees of the Trust
(PROPOSAL 1);
2. To approve or disapprove a proposed Service and Distribution Plan for
each Fund adopted pursuant to Rule 12b-1 (PROPOSAL 2);
3. To approve or disapprove a proposed reduction in each Fund's
investment advisory fee contained in a new investment advisory
agreement between the Trust, on behalf of each Fund, and Monetta
Financial Services, Inc., each Fund's investment advisor (PROPOSAL 3);
4. To ratify or reject the selection of KPMG Peat Marwick LLP as the
Trust's independent public accountants (PROPOSAL 4); and
5. To transact such other business as may properly come before the
meeting or any adjournments thereof.
You are entitled to vote at the meeting and any adjournment thereof if you
owned shares in the Funds at the close of business on December 2, 1996. Please
complete, date, sign and return the enclosed proxy card in the enclosed postage
paid envelope.
By order of the board of trustees,
Robert S. Bacarella
President
Wheaton, Illinois
December __, 1996
<PAGE>
MONETTA TRUST
MONETTA MID-CAP EQUITY FUND
MONETTA LARGE-CAP EQUITY FUND
MONETTA BALANCED FUND
MONETTA INTERMEDIATE BOND FUND
MONETTA GOVERNMENT MONEY MARKET FUND
PROXY STATEMENT
GENERAL INFORMATION
WHAT IS HAPPENING?
The board of trustees has determined that it is in the best interest of the
Trust and its shareholders to adopt a Service and Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended (the
"1940 Act"). Under the Plan the Trust will be able to compensate certain
financial intermediaries to distribute shares of the Funds and provide support
services to existing shareholders, and to pay for other distribution-related
expenses. The Plan sets a cap on the amount of assets of each Fund that can be
spent pursuant to the Plan.
The board has also determined that as a consequence of adopting the Plan
the services provided and expenses assumed by Monetta Financial Services, Inc.
("MFSI"), each Fund's investment adviser, will be reduced. The board has
therefore also proposed a new Investment Advisory Agreement between the Trust
and MFSI to reduce the amount of compensation paid to MFSI by the amount of
compensation which will be paid under the proposed Plan.
WHY AM I BEING ASKED TO VOTE ON THESE PROPOSALS?
The 1940 Act requires approval by the board of trustees and shareholders of
a mutual fund of both the proposed Rule 12b-1 Plan as well as the new Investment
Advisory Agreement which will lower the investment advisory fee.
WHO IS ASKING FOR MY VOTE?
The board of trustees of Monetta Trust (the "Trust") is soliciting proxies
from the shareholders of the Trust for use at a meeting of shareholders of the
Trust (the "Meeting") to be held on Tuesday, January 28, 1997 and at any
adjournment of that meeting, for the purposes set forth in the accompanying
Notice of Meeting of Shareholders. This proxy statement is first being mailed to
shareholders on or about December __, 1996.
HOW WILL THIS AFFECT ME?
There should be no immediate effect on you. The amounts paid under the
Plan will be offset by the reduction in the management fee, so the overall
expenses of the Funds will not be changed. The board of trustees believes that
adoption of the Plan will make it more attractive for shares of the Funds to be
sold through broker-dealers and other intermediaries that are playing an
increasingly important role in the distribution of shares of mutual funds.
Increased assets in the Funds, if it occurs, would tend to result in somewhat
lower expense ratios.
<PAGE>
WHO IS ELIGIBLE TO VOTE?
Shareholders of record (the "Shareholders") at the close of business on
December 2, 1996 are entitled to participate in the meeting and to cast one
vote for each share held. The Trust currently issues shares in five series:
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 ("Bond Fund") and Monetta Government Money Market Fund
("Money Market Fund") (Each a "Fund" and collectively the "Funds"). As of
December 2, 1996 the Funds had the following numbers of shares outstanding:
Fund Number of Shares
---- ----------------
Mid-Cap Fund _________
Large-Cap Fund _________
Balanced Fund _________
Bond Fund _________
Money Market Fund _________
If the accompanying proxy card is executed properly and returned, your
shares of each Fund will be voted at the meeting in accordance with the
instructions on the proxy card. If no instructions are specified, the shares
will be voted in favor of the seven nominees for trustee named herein and for
the approval of the remaining proposals as listed in the accompanying Notice of
a Special Meeting of Shareholders. You may revoke a proxy at any time prior to
the time it is voted by writing to the Secretary of the Trust, by delivery of a
later-dated proxy or by attending and voting at the meeting.
HOW DO THE TRUSTEES SUGGEST THAT I VOTE?
Vote "FOR" the proposals. After careful consideration, the trustees,
including all of the trustees who are not affiliated with MFSI, unanimously
recommend that you vote "FOR" the new Service and Distribution Plan and the new
investment advisory agreement.
WHO IS PAYING THE COST OF THE PROXY SOLICITATION AND SHAREHOLDER MEETING?
MFSI will pay all costs of the shareholder meeting and the proxy
solicitation.
WHAT IF I HAVE OTHER QUESTIONS?
We will be happy to answer your questions about the Proposals and this
proxy solicitation. Please call us at 1-800-666-3882.
DOES THIS AFFECT MONETTA FUND, INC.?
This proxy statement is being sent to you by Monetta Trust. The changes
described here, including the new investment advisory agreement and the proposed
12b-1 Plan, apply only to Monetta Trust. Monetta Fund, Inc. is not affected by
these changes.
THE MOST RECENT ANNUAL AND SEMI-ANNUAL REPORTS OF THE TRUST ARE AVAILABLE,
WITHOUT CHARGE, BY WRITING TO MONETTA TRUST AT 1776-A SOUTH NAPERVILLE ROAD,
SUITE 207, WHEATON, ILLINOIS 60187, OR BY CALLING 1-800-666-3882.
* * * YOUR VOTE IS IMPORTANT * * *
PLEASE SIGN AND MAIL THE ENCLOSED PROXY CARD
PROMPTLY IN ORDER TO BE REPRESENTED AT THE MEETING
2
<PAGE>
PROPOSAL 1
ELECTION OF TRUSTEES
WHY ARE SHAREHOLDERS BEING ASKED TO VOTE ON THIS PROPOSAL?
The Agreement and Declaration of Trust and the Investment Company Act of
1940, as amended, (the "1940 Act") require that at least two-thirds of the board
of trustees holding office shall have been elected by the shareholders. At
present more than two-thirds of the board were elected by shareholder vote, but
to avoid the necessity and expense of calling a future meeting of the
shareholders to elect trustees at a time when this requirement is not met, the
Shareholders are being asked to elect those individuals who have been nominated
for the office of trustee.
HOW DOES THE BOARD OF TRUSTEES RECOMMEND THAT I VOTE?
VOTE "FOR" THE ELECTION OF THE NOMINATED TRUSTEES. The board of trustees,
including all of the trustees who are not interested persons as defined by the
1940 Act, have nominated the trustees discussed below and recommend them to the
Shareholders of the Trust for their approval.
WHAT INFORMATION SHOULD I KNOW ABOUT THE NOMINATED TRUSTEES?
At the Meeting, Shareholders will be asked to elect seven (7) trustees.
Each of the nominees listed below has consented to serve as a trustee of the
Trust if elected at the Meeting. If a designated nominee declines or otherwise
becomes unavailable for election, however, the proxy confers discretionary power
on the persons named therein to vote in favor of a substitute nominee or
nominees. Each of the nominees has been a trustee since the Trust's inception
in March, 1993, except Mr. Bakos who became a trustee in November 1996 and
Mr. Pisterzi who will become a trustee upon the approval of a plurality of the
shareholders of the Trust.
Set forth below is a list of the nominees together with certain other
information.
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATIONS
NAME AGE WITH TRUST AND OTHER AFFILIATIONS
- ---- --- ---------- ----------------------
<S> <C> <C> <C>
Robert S. Bacarella* 47 Trustee and Chairman, Chief
President Executive Officer and
Director, MFSI, since
October 1, 1996;
President and Director,
MFSI, 1984 to September
1996; Secretary,
Treasurer and Director,
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* 49 Trustee Division Placement
Manager, Sears, Roebuck
& Co., since 1969;
Director and Vice
President, MFSI,
1984-1991.
John L. Guy, Jr. 44 Trustee President, Heller First
Capital Corporation,
since May 1995; Senior
Vice President and
Treasurer, Heller
Financial Inc., (August
1992-May 1995); Senior
Vice President,
Director Internal Audit
(November 1989-August
1992).
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATIONS
NAME AGE WITH TRUST AND OTHER AFFILIATIONS
- ---- --- -------------- -----------------------
<S> <C> <C> <C>
Mark F. Ogan 54 Trustee President, DuPage
Capital Management,
Ltd., since April 1995;
President and Secretary,
Salida Corp. (formerly
Pollenex Corp.),
February 1993 to April
1995; Vice President,
Sunbeam-Oster Corp. May
1992 to December 1992;
President, Sunbeam-Oster
Household Products
Group, May 1991 to May
1992; Vice President,
Business Development and
Corporate Strategy,
Sunbeam-Oster Co.,
October 1990 - May 1991.
Albert A. Pisterzi 56 Vice President President and Director,
MFSI, since October 1,
1996; Vice President,
MFSI, January 1995 to
September 1996; prior
thereto, Director of
Marketing, Harris
Associates L.P.
September 1988 to
January 1995.
Richard D. Russo 44 Trustee Attorney at law-Richard
Russo & Associates,
President of Associated
Legal Services
Chartered, a
Professional
Corporation, 1985 to
Present.
William M. Valiant* 71 Trustee Retired; Director, MFSI,
since February, 1991;
Director, MBI, since
1988; Vice President and
Treasurer, Borg-Warner
Corporation, until July
1990.
</TABLE>
* Messrs. Bacarella, Bakos and Valiant are "interested persons" of the
Trust, as defined in the 1940 Act, as officers of the Trust and as officers and
directors (and, in the case of Messrs. Bacarella and Bakos, as shareholders) of
MFSI.
During 1995 the Trust held four (4) regular meetings and one (1) special
meeting of the board of trustees as well as one meeting of the audit committee.
Each trustee attended at least 75% of the meetings of the board during 1995,
including meetings of committees of which that trustee was a member; except for
Mr. Valiant who attended two meetings of the board and Mr. Guy who attended
three meetings of the board and the meeting of the audit committee.
Robert S. Bacarella and Richard D. Russo serve as members of the Executive
Committee of the board of trustees of the Trust. The Executive Committee is
authorized to exercise all of the powers of the board during intervals between
board meetings. The Executive Committee held monthly meetings during 1995.
4
<PAGE>
Shares owned by the trustees at October 31, 1996 were as follows:
<TABLE>
<CAPTION>
MID-CAP FUND LARGE-CAP FUND BALANCED FUND BOND FUND MONEY MARKET FUND
----------------- ----------------- ----------------- ----------------- ------------------
NUMBER % OF NUMBER % OF NUMBER % OF NUMBER % OF NUMBER % OF
OF OUT- OF OUT- OF OUT- OF OUT- OF OUT-
TRUSTEE SHARES STANDING SHARES STANDING SHARES STANDING SHARES STANDING SHARES STANDING
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Robert S. Bacarella (1) 35,828 3.02% 12,442 9.40% 33,720 27.60% 75,891 29.34% 1,475,717 22.13%
John W. Bakos 35 * 0 0.00% 0 0.00% 0 0.00% 0 0.00%
John L. Guy, Jr. 183 * 0 0.00% 0 0.00% 0 0.00% 0 0.00%
Mark F. Ogan 1,695 * 0 0.00% 0 0.00% 0 0.00% 0 0.00%
Albert A. Pisterzi 0 0.00% 0 0.00% 0 0.00% 0 0.00% 0 0.00%
Richard D. Russo 2,146 * 0 0.00% 0 0.00% 0 0.00% 0 0.00%
William M. Valiant 8,949 * 0 0.00% 0 0.00% o 0.00% 0 0.00%
</TABLE>
Note 1 The share ownership for Mr. Bacarella includes the following shares
owned by MFSI over which Mr. Bacarella exercises voting control:
7,347 shares of Mid-Cap Fund; 10,004 shares of Large-Cap Fund;
28,805 shares of Balanced Fund; 72,474 shares of Intermediate
Bond Fund; and 1,306,475 shares of Government Money Market Fund.
The share ownership for Mr. Bacarella also includes the following
shares held in a 401k Plan for the employees of MFSI for which
Mr. Bacarella is the Trustee of the plan and therefore has voting
control: 21,332 shares of Mid-Cap Fund; 1,349 shares of Large-Cap
Fund; 1,225 shares of Balanced Fund; 3,417 shares of Intermediate
Bond Fund; and 22,982 shares of Government Money Market Fund.
* Less than 1% of the outstanding shares.
The following table sets forth compensation paid to the trustees of the
Trust by the Trust and the Fund Complex to which the Trust belongs, during 1995.
<TABLE>
<CAPTION>
COMPENSATION RECEIVED TOTAL COMPENSATION RECEIVED
NAME OF TRUSTEE FROM THE TRUST FROM THE MONETTA FAMILY OF FUNDS (2)
--------------- --------------------- ------------------------------------
<S> <C> <C>
Robert S. Bacarella (1) $ 0 $ 0
John W. Bakos(1) 0 0
John L. Guy, Jr. 100 100
Mark F. Ogan 400 2400
Richard Russo 300 300
William Valiant 200 200
</TABLE>
(1) Trustees who are employees of MFSI receive no compensation from the
Trust.
(2) The Monetta Family of Funds consists of the Trust and Monetta Fund,
Inc. Neither Monetta Fund nor the Trust offers any retirement or
deferred compensation plan to Board Members.
WHAT IS THE REQUIRED VOTE?
A Plurality of the shares of the Trust present at the meeting in person or
by proxy, provided a quorum is present, is required to elect directors.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE SEVEN TRUSTEES NOMINATED
FOR ELECTION TO THE TRUST'S BOARD.
5
<PAGE>
PROPOSAL 2
SERVICE AND DISTRIBUTION PLAN
WHY ARE SHAREHOLDERS BEING ASKED TO VOTE ON THIS PROPOSAL?
The board of trustees has determined that it is in the best interest of the
Trust and its shareholders to adopt a Service and Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the 1940 Act. Under the Plan the Trust will be
able to compensate certain financial intermediaries to distribute shares of the
Funds and provide support services to existing shareholders. Rule 12b-1
requires that any plan which is adopted for a Fund, pursuant to Rule 12b-1, be
approved by a majority of the outstanding shareholders of that Fund.
HOW DOES THE BOARD OF TRUSTEES RECOMMEND THAT I VOTE?
VOTE "FOR" THE SERVICE AND DISTRIBUTION PLAN. The board of trustees,
including all of the trustees who are not interested persons as defined by the
1940 Act, have approved the Service and Distribution Plan and recommends it to
the Shareholders of the Funds for their approval. For information about the
board's deliberations and reasons for its recommendations, please see "What
factors did the board of trustees consider in approving the Service and
Distribution Plan?" near the end of this proposal 2.
WHAT ARE THE TERMS OF THE SERVICE AND DISTRIBUTION PLAN?
At the Meeting, Shareholders of each Fund will be asked to approve the
Service and Distribution Plan (the "Plan") adopted pursuant to Rule 12b-1 under
the 1940 Act for each Fund. At a meeting of the board held on November 7, 1996,
the trustees, including all trustees who are not "interested persons" of the
Trust, unanimously approved and voted to recommend that the Shareholders of each
Fund adopt the Plan. A copy of the Plan is attached to this proxy statement as
Exhibit A.
The Plan provides that the Trust, on behalf of each Fund, will be able to
compensate certain service organizations and distributors with which the Trust
has entered into agreements, for services to Fund shareholders up to the
following rates:
(i) for Money Market Fund, 0.10% of the average daily net asset value of
Money Market Fund; and
(ii) for each Fund other than Money Market Fund, 0.25% of the average
daily net asset value.
In addition to the Service Fees described above, a Fund may pay pursuant to the
Plan certain other expenses related to the distribution of its shares,
including, but not limited to: advertising, direct mail and promotional
expenses; the fees and expenses of the Fund's distributor; compensation to and
expenses, including overhead and telephone and other communication expenses, of
a distributor, service organization and selected dealers and their affiliates
who engage in or support the distribution of shares or who service shareholder
accounts, fulfillment expenses, including the costs of printing 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; provided that the aggregate amounts
paid by a Fund pursuant to the Plan may not exceed 0.25% of the average net
assets of a Fund annually, or 0.10% of average net assets in the case of
Government Money Market Fund.
Service and Distribution-related expenses in excess of these overall limits
may be paid by the Funds' investment adviser or distributor from their own
resources.
6
<PAGE>
Because of the proposed reduction in management fees, implementation of the
Plan is expected to have no effect on a Fund's overall expenses. See Proposal 3
"What are the terms of the New Advisory Agreement? - Summary."
If approved by Shareholders, the Plan will be effective February 1, 1997.
The Plan will continue in effect after the first anniversary of its effective
date only so long as such continuance is approved at least annually by vote of a
majority of the board, including a majority of trustees who are not "interested
persons" of the Trust or a distributor or service provider with whom the Trust
does business, cast in person at a meeting called for the purpose of voting on
such continuance. The Plan may be terminated without penalty by vote of a
majority of trustees who are not interested persons or a majority of the
outstanding shares of a Fund.
WHAT FACTORS DID THE BOARD OF TRUSTEES CONSIDER IN APPROVING THE SERVICE AND
DISTRIBUTION PLAN?
The trustees have determined that there is a reasonable likelihood that the
adoption of the Plan for a Fund will benefit that Fund and its Shareholders. In
reaching that conclusion, the trustees considered a number of factors. The
trustees obtained information from MFSI, were advised by counsel, and met with
representatives of MFSI regarding the proposed plan and available alternatives.
In considering the proposed Plan, the trustees took into account that
certain services furnished by MFSI under the present Investment Advisory
Agreement would be performed by various service organizations, which would be
compensated by the Funds pursuant to the Plan. The board considered the extent
to which the Plan would provide incentives for broker-dealers and other
financial intermediaries and their representatives to provide personal and/or
account maintenance services to the shareholders of each Fund, and they
concluded that there is a reasonable likelihood that the Plan will encourage the
provision of such personal services to the shareholders of the Funds.
The trustees considered the apparent intensifying competition among
financial intermediaries, the emerging significance of mutual fund
"supermarkets" and the enhanced levels of shareholder and investor services
furnished by certain of such intermediaries and "supermarkets." They considered
the extent to which "service fees" and "12b-1 fees" are prevalent in the
industry and important sources of compensation for such financial
intermediaries, supermarkets and their representatives. In this regard, the
trustees considered the likelihood that the shareholders of the Funds would be
disadvantaged and not receive the same degree of personal and/or account
maintenance services from such financial representatives if the Trust and MFSI
do not provide reasonably competitive compensation for such services. The
trustees also considered whether the adoption of the Plan would facilitate
access by the Funds and the shareholders to these intermediaries and
"supermarkets." The trustees determined that there is a reasonable likelihood
that the adoption of the Plan will facilitate access to, and the furnishing of,
levels of personal and/or account maintenance services which are competitive
with those furnished to shareholders of other funds offered through such
intermediaries, supermarkets and their representatives.
The trustees considered the possible effects on the asset base and growth
of the Funds and the consequences to shareholders if financial intermediaries
and their representatives are not furnished with reasonable compensation for
furnishing personal or account maintenance services to the shareholders. The
Trustees determined that there is a significant likelihood that without a
reasonable services compensation plan the assets of the Funds would not
experience reasonable growth or would actually shrink with the result that
expense ratios would not decrease as much as, or would increase more than, would
otherwise be the case.
The trustees also considered the availability of reasonable alternatives to
the Plan and the relative collateral benefits to MFSI, as investment adviser of
the Funds. The trustees recognized that the maintenance or growth of the asset
base of each Fund would benefit MFSI by preserving or increasing the assets upon
which MFSI's advisory fees are based, but the trustees concluded that such
benefits to MFSI are not disproportionate to the benefits to the Funds and their
shareholders.
7
<PAGE>
The trustees compared the maximum amounts payable under the Plan with other
similar mutual funds and concluded that the maximum payments under the Plan are
comparable to fees payable by other similarly distributed funds. The trustees
noted that the proposed reduction in the rates of fees provided for in the New
Advisory Agreement (see proposal 3) equaled the maximum amount of annual
payments provided for in the proposed Plan. The trustees concluded that the
adoption of the Plan should have little or no effect on the total annual
expenses payable by each Fund.
After consideration of the factors stated above, the board concluded that
(i) the Plan will encourage the provision of personal services to the
shareholders of each Fund; (ii) the adoption of the Plan will facilitate access
to, and the furnishing of, levels of personal and/or account maintenance
services which are competitive with those furnished to shareholders of other
funds offered through financial intermediaries, mutual fund supermarkets and
their representatives; (iii) without a reasonable services compensation plan,
the assets of the Funds would not experience reasonable growth or would actually
shrink with the result that expense ratios would not decrease as much as, or
would increase more than, would otherwise be the case; (iv) the benefits to MFSI
are not disproportionate to the benefits to the Funds and their shareholders;
and (v) there is a reasonable likelihood that the adoption of the Plan by a Fund
will benefit that Fund and its shareholders.
WHAT IS THE REQUIRED VOTE?
The favorable vote of a majority of the outstanding voting securities of a
Fund, as defined in the 1940 Act, is required to approve the proposed Plan for
that Fund. As defined in the 1940 Act, a "majority of the outstanding voting
securities" means the lesser of (a) 67% of a Fund's shares present at a meeting
of shareholders if the owners of more than 50% of the shares of that Fund then
outstanding are present in person or by proxy or (b) more than 50% of that
Fund's outstanding shares.
For information on what happens if the Plan is not approved by the
shareholders of a fund, see "PROPOSAL 3 - INVESTMENT ADVISORY AGREEMENT - What
is the required vote and what happens if the Service and Distribution Plan or
the New Advisory Agreement is not approved?"
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR APPROVAL OF THE SERVICE AND
DISTRIBUTION PLAN FOR EACH FUND.
PROPOSAL 3
INVESTMENT ADVISORY AGREEMENT
WHY ARE SHAREHOLDERS BEING ASKED TO VOTE ON THIS PROPOSAL?
MFSI is the investment adviser and manager of the Funds pursuant to an
Investment Advisory Agreement (the "Old Advisory Agreement") with the Trust, on
behalf of each Fund, dated January 19, 1993. The board of trustees has approved
a new advisory agreement (the "New Advisory Agreement") that would reduce the
management fees paid to MFSI to offset the additional expense that each Fund
will incur if the Service and Distribution Plan is approved. A copy of the
proposed New Advisory Agreement is attached to this Proxy statement as Exhibit
B. The 1940 Act requires that the New Advisory Agreement be approved by the
holders of a majority of each Fund's outstanding voting securities.
HOW DOES THE BOARD OF TRUSTEES RECOMMEND THAT I VOTE?
VOTE "FOR" THE NEW ADVISORY AGREEMENT. The board of trustees, including all
of the trustees who are not interested persons as defined by the 1940 Act, have
approved the New Advisory Agreement and recommends it to the Shareholders of
each Fund for their approval. For information about the board's
8
<PAGE>
deliberations and reasons for its recommendations, please see "What factors did
the board of trustees consider in approving the New Advisory Agreements?" near
the end of this proposal 3.
WHAT ARE THE TERMS OF THE NEW ADVISORY AGREEMENT?
SUMMARY
- -------
The New Advisory Agreement is different from the Old Advisory Agreement in
two ways:
1. Under the New Advisory Agreement, each Fund would pay the
fees and amounts payable under the Service and Distribution
Plan.
2. To offset the amounts payable under the Service and Distribution
Plan, the management fees payable by each Fund under the New Advisory
Agreement are lower than the fees payable under the Old Advisory
Agreement, by the same amount as the maximum amount payable under the
Plan.
There would be no net change in the Funds' expenses as the result of
adoption of the Plan and approval of the New Advisory Agreement. Shown below is
a comparison of each Fund's annual operating expenses (shown as a percentage of
average net assets), under the Old Advisory Agreement and under the New Advisory
Agreement and Service and Distribution Plan:
<TABLE>
<CAPTION>
GOVERNMENT
LARGE-CAP INTERMEDIATE MONEY MARKET
MID-CAP FUND FUND BALANCED FUND BOND FUND FUND
----------------------------------------------------------------------------------------------------------
Old New Old New Old New Old New Old New
------ ------ ------- ------- ------- ------ ----------- ----------- -------------- -----------
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MANAGEMENT FEES (a) 1.00% .75% 1.00% .75% .65% .40% .60% .35% .35% .25%
12B-1 FEES .00 .25 .00 .25 .00 .25 .00 .25 .00 .10
OTHER EXPENSES (b) .22 .22 .46 .46 .78 .78 .23 .23 .32 .32
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
TOTAL OPERATING EXPENSES 1.22% 1.22% 1.46% 1.46% 1.43% 1.43% .83% .83% .67% .67%
</TABLE>
(a) The Advisor pays all of the ordinary operating expenses of each Fund, except
the fees and expenses of a Fund's transfer agent and custodian, and of the
non-interested board members, and, under the New Advisory Agreement,
expenses under the Plan. Ordinary operating expenses do not include taxes or
interest, if any, or costs relating to purchases and sales of portfolio
securities, including brokerage commissions.
(b) During the six months ended June 30, 1996, MFSI voluntarily waived part or
all of its management fee for both the Intermediate Bond Fund and Government
Money Market Funds. Additionally, MFSI absorbed some of the custodial fees
for the Government Money Market Fund. As of the date of this Proxy
Statement, the waiver of management fees for the Government Money Market
Fund continues in effect, subject to review and possible termination by MFSI
at the beginning of each quarter. After allowing for the waiver of fees, the
Intermediate Bond Fund and the Government Money Market Fund had actual
annualized Total Operating Expenses of .53% and .32%, respectively.
The information in the table under the caption "Old" is for the six months ended
June 30, 1996 and has been annualized.
DETAILED EXPLANATION
- --------------------
Under the New Advisory Agreement MFSI will continue to furnish investment
supervision to each Fund and will be responsible for overall management of each
Fund's business affairs; MFSI will also furnish office space, facilities,
equipment and personnel to the Funds. Each Fund's responsibility for the
9
<PAGE>
cost of its custodian and transfer agent remains unchanged. Each Fund will also
continue to pay the fees of MFSI pursuant to the New Advisory Agreement and the
fees of trustees not affiliated with MFSI. In addition, under the New Advisory
Agreement, each Fund will pay all expenses pursuant to the Service and
Distribution Plan discussed above.
The New Advisory Agreement reduces the fees MFSI receives for its services,
to offset the Service and Distribution Plan costs that will be borne by the
Funds. Under the New Advisory Agreement, MFSI shall receive from each Fund a
monthly fee based on the Fund's average daily net assets. The rates of fee under
the New Advisory Agreement and the Old Advisory Agreement are shown in the table
above.
The Funds paid aggregate management fees in 1995 and the six months ended
June 30, 1996 as shown in the table below. Also shown below are the aggregate
amounts those fees would have been if the New Advisory Agreement had been in
place throughout the periods indicated. However, the decrease in the advisory
fee shown below would be offset by amounts payable under the Service and
Distribution Plan, so that there will be no overall reduction, or increase, in
expenses.
<TABLE>
<CAPTION>
OLD AGREEMENT NEW AGREEMENT
------------------------- -------------------------
SIX MONTHS SIX MONTHS
1995 ENDED 6/30/96 1995 ENDED 6/30/96
-------- ------------- -------- -------------
<S> <C> <C> <C> <C>
MID-CAP FUND $134,677 $77,523 $101,008 $58,142
LARGE CAP FUND 2,844(a) 6,184 2,133 4,638
BALANCED FUND 570(a) 1,574 351 969
INTERMEDIATE BOND FUND 19,834 11,138 11,583 6,505
GOVERNMENT MONEY MARKET FUND 12,563 9,239 11,306 8,315
</TABLE>
(a) for the period beginning 9/1/95.
The New Advisory Agreement is for an initial term beginning February 1,
1997 and expiring January 31, 1999. The New Advisory Agreement will continue
from year to year after the expiration of its initial term only so long as such
continuation is approved at least annually by (1) the board of trustees or the
vote of a majority of the outstanding voting securities of the Fund, and (2) a
majority of the trustees who are not interested persons of any party to the
agreement, cast in person at a meeting called for the purpose of voting on such
approval. The board of trustees approved the New Advisory Agreement on [November
7, 1996]. The New Advisory Agreement may be terminated as to a Fund at any time,
without penalty, by either the Trust, a vote of a majority of the outstanding
shares of that Fund or MFSI upon sixty days written notice, and is automatically
terminated in the event of its assignment as defined in the 1940 Act.
Under both the Old and New Agreements, MFSI shall not be liable for any
loss suffered by the Trust or its shareholders as a consequence of any act or
omission in connection with investment advisory or portfolio services under
agreement, except by reason of willful misfeasance, bad faith or gross
negligence on the part of MFSI in the performance of its duties or by reason of
reckless disregard by MFSI of its obligations and duties under the agreement.
The Old Advisory Agreement for each of Mid-Cap Fund, Intermediate Bond Fund
and Government Money Market Fund was approved by shareholders of those Funds on
January 19, 1993 and on November 2, 1995 by the board of trustees of the Trust.
The Old Advisory Agreement for each of
10
<PAGE>
Large Cap Fund and Balance Fund was last approved by Shareholders of those Funds
on June 13, 1995 for an initial term of two years.
WHAT FACTORS DID THE BOARD OF TRUSTEES CONSIDER IN APPROVING THE NEW ADVISORY
AGREEMENTS?
The decision to propose the New Advisory Agreement was driven by the
decision to propose adoption of the Service and Distribution Plan. As discussed
above, the board determined that adoption of the Plan was reasonably likely to
benefit a Fund and its shareholders by encouraging the provision of services to
Fund shareholders and providing incentives for sales of Fund shares through
financial intermediaries. The board considered that, under the Old Advisory
Agreement, all expenses of shareholder servicing were paid by MFSI in return for
its comprehensive fee and that MFSI had borne any expenses relating to
distribution of Fund shares from its own resources. The board and MFSI agreed
that MFSI should not be compensated for services provided by others and paid for
by the Funds. Therefore, MFSI proposed, and the board agreed, that MFSI's
compensation should be reduced by the maximum amount that the Fund may pay under
the Service and Distribution Plan.
On November 7, 1996 the board of trustees including all of the trustees
who are not affiliated with MFSI, met to review the terms of the New Advisory
Agreement and to consider its possible effects on the Funds. In deciding to
prepare the New Advisory Agreement, the board considered the services performed
by MFSI. The board noted that each of the Funds has enjoyed better than average
investment performance under MFSI's management, comparing the performance of
each Fund to an appropriate market index and to groups of generally comparable
mutual funds as shown by various ratings and rankings by third parties.
The board also discussed the level of profit realized or loss suffered by
MFSI from its relationship to the Funds, concluding that, at their present
levels of assets, none of the Funds were profitable to MFSI. In considering
profitability, the board took into account benefits to MFSI other than its
management fee, including the extent to which brokerage commissions paid by the
Funds were used to acquire research used by MFSI in serving the Funds and MFSI's
other clients and brokerage commissions received by an affiliate of MFSI on Fund
portfolio transactions. See "Other Information - Portfolio Transactions."
The board also considered whether the fees and expense ratios of the Fund,
as proposed under the New Agreement, would be competitive with the fees and
expense ratios of similar funds.
After consideration of the above, and such other factors and information as
they deemed relevant, the board of trustees, including all trustees who are not
"interested persons" of the Trust or MFSI (as such term is defined by the 1940
Act), unanimously approved the New Advisory Agreement for each Fund and voted to
recommend its approval by the Funds' shareholders.
WHAT INFORMATION SHOULD I KNOW ABOUT MFSI?
MFSI is controlled by Robert S. Bacarella, who owns 71% of its outstanding
shares. Mr. Bacarella is MFSI's chairman and chief executive officer. Albert A.
Pisterzi is president and chief operating officer of MFSI.
MFSI has been in the business of investment management since 1986, managing
assets for mutual funds, individuals, pension plans and other investors. At
September 30, 1996, MFSI managed assets of more than $333 million.
MFSI also serves as investment advisor to Monetta Fund, Inc., a mutual fund
with an investment objective similar to that of Mid-Cap Fund and Large-Cap Fund,
but investing in small capitalization companies. At September 30, 1996, Monetta
Fund, Inc. had total assets of approximately $269 million. The annual rate of
management fee paid by Monetta Fund, Inc. is 1% of average daily net assets.
11
<PAGE>
WHAT IS THE REQUIRED VOTE AND WHAT HAPPENS IF THE SERVICE AND DISTRIBUTION PLAN
OR THE NEW ADVISORY AGREEMENT IS NOT APPROVED?
The favorable vote of a majority of the outstanding voting securities of a
Fund, as defined in the 1940 Act, is required to approve the New Advisory
Agreement for that Fund. As defined in the 1940 Act, a "majority of the
outstanding voting securities" means the lesser of (a) 67% of the Fund's shares
present at a meeting of shareholders if the owners of more than 50% of the
shares of the Fund then outstanding are present in person or by proxy or (b)
more than 50% of the Fund's outstanding shares.
The New Advisory Agreement and the Service and Distribution Plan will only
be implemented for a Fund if both are approved by shareholders of that Fund. If
either the New Advisory Agreement or the Plan is not approved by shareholders
of a Fund (or neither one is approved), the Old Advisory Agreement will remain
in effect for that Fund.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR APPROVAL OF THE NEW ADVISORY
AGREEMENT FOR EACH FUND.
PROPOSAL 4
SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
WHY ARE SHAREHOLDERS BEING ASKED TO VOTE ON THIS PROPOSAL?
The 1940 Act requires that the selection of an independent public
accountant be submitted to a vote of the shareholders for ratification or
rejection at the next meeting of the shareholders.
HOW DOES THE BOARD OF TRUSTEES RECOMMEND THAT I VOTE?
VOTE "FOR" THE RATIFICATION OF THE SELECTION OF THE INDEPENDENT PUBLIC
ACCOUNTANTS. The board of trustees, including all of the trustees who are not
interested persons as defined by the 1940 Act, recommend that the Shareholders
of the Trust ratify their selection of KPMG Peat Marwick LLP ("KPMG") as the
Trust's independent public accountants.
WHAT INFORMATION SHOULD I KNOW ABOUT KPMG?
KPMG has no direct or material indirect interest in the Trust. A
representative of KPMG is not expected to be present at the Meeting, will have
the opportunity to make a statement if desired and will be available to respond
to appropriate questions.
WHAT IS THE REQUIRED VOTE?
The favorable vote of a majority of the shares of the Trust present at the
meeting in person or by proxy, provided a quorum is present, is required to
ratify the selection of KPMG as independent accountants for the Trust.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
SELECTION OF KPMG AS THE TRUST'S INDEPENDENT PUBLIC ACCOUNTANTS.
OTHER MATTERS
The management of the Trust is not aware of any other matters to be
presented before the meeting. If any other matters should be properly presented,
your proxy, if signed and returned, will give discretionary authority to the
persons designated in it to vote according to their best judgment.
12
<PAGE>
OTHER INFORMATION
EXECUTIVE OFFICERS OF THE TRUST
The officers of the Trust are:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
POSITIONS HELD PRINCIPAL OCCUPATIONS
NAME AGE WITH TRUST AND OTHER AFFILIATIONS
- ---- --- -------------- ----------------------
Robert S. Bacarella 47 Trustee and Chairman, Chief Executive Officer
President and Director, MFSI, since October
1, 1996; President and Director,
MFSI, 1984 to September 1996;
Secretary, Treasurer and
Director, Monetta Brokerage,
Inc., since 1987; President and
Director, Monetta Fund, Inc.
(registered investment company)
since 1985. President and
Director, Moretta Trust
(registered investment company)
since 1993.
Albert A. Pisterzi 56 Vice President President and Director, MFSI,
since October 1, 1996, Vice
President, MFSI, January 1995 to
September 1996; prior thereto,
Director of Marketing, Harris
Associates L.P. September 1988
to January 1995.
John P. Rozinsky 58 Vice President Vice President, MFSI, since May
1991; Director, MFSI, May 1991 to
February 1994; Secretary, MFSI,
1991 - 1996; Treasurer, MFSI,
1991 - 1994; Vice President,
Monetta Trust, since 1993;
Trustee, Monetta Trust, 1993 to
November 1996; Vice President and
Director, MBI, since January
1990; Vice President, Monetta
Fund, Inc., since 1985; Director,
Monetta Fund, Inc., 1985 to
November 1996.
Maria Cesario DeNicolo 47 Secretary and Secretary, MFSI since October
Treasurer 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, MBI, since 1995; Sole
proprietor, Cesario DeNicolo
C.P.A. and Associates, since May
1990 to June 1993.
</TABLE>
13
<PAGE>
SHARE OWNERSHIP
Shares owned by MFSI, trustees and officers at October 31, 1996 were as follows:
<TABLE>
<CAPTION>
MFSI TRUSTEES & OFFICERS (1)
------------------ -----------------------
% OF % OF
SHARES FUND SHARES FUND
------ ---- ------ ----
<S> <C> <C> <C> <C>
MID-CAP FUND 7,347 0.62% 41,972 3.54%
LARGE-CAP FUND 10,004 7.56% 2,438 1.84%
BALANCED FUND 28,805 23.58% 4,918 4.02%
INTERMEDIATE BOND FUND 72,474 28.02% 3,417 1.32%
GOVERNMENT MONEY MARKET FUND 1,306,475 19.59% 170,685 2.56%
</TABLE>
Note 1 The share ownership for the trustees and officers as a group excludes
the following shares owned by MFSI over which Mr. Bacarella exercises
voting control; 7,347 shares of Mid-Cap Fund; 10,004 shares of Large-
Cap Fund; 28,805 shares of Balanced Fund; 72,474 shares of
Intermediate Bond Fund; and 1,306,475 shares of Government Money
Market Fund. The share ownership for the trustees and officers as a
group does include the following shares held in a 401k Plan for the
employees of MFSI for which Mr. Bacarella is the Trustee of the plan
and has voting control; 21,332 shares of Mid-Cap Fund; 1,349 shares of
Large-Cap Fund; 1,225 shares of Balanced Fund; 3,417 shares of
Intermediate Bond Fund; and 22,982 shares of Government Money Market
Fund.
No person was known by the Trust to own of record or "beneficially"
(within the meaning of that term as defined in rule 13d-3 under the Securities
Exchange Act of 1934) 5% or more of the outstanding shares of any Fund other
than MFSI or the trustees and officers as a group, as of October 31, 1996.
PORTFOLIO TRANSACTIONS
MFSI has discretion to select brokers and dealers to execute portfolio
transactions initiated by MFSI 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, MFSI 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, MFSI 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 MFSI. MFSI 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. MFSI 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 MFSI exercises investment discretion.
It is possible
14
<PAGE>
that certain of the services received by MFSI attributable to a particular
transaction will benefit one or more other accounts for which investment
discretion is exercised by MFSI.
In valuing research services, MFSI makes a judgment of the usefulness of
research and other information provided by a broker to MFSI 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 MFSI in advising the Funds.
MFSI 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 board recognizes that it is important for MFSI, in
performing its responsibilities to the Funds, to continue to receive and
evaluate the broad spectrum of economic and financial information that many
securities brokers have customarily furnished in connection with brokerage
transactions, and that in compensating brokers for their services, it is in the
interest of the Funds to take into account the value of the information received
for use in advising the Funds. The extent, if any, to which the obtaining of
such information may reduce the expenses of MFSI in providing management
services to the Funds is not determinable. In addition, it is understood by the
respective board that other clients of MFSI might also benefit from the
information obtained for the Funds, in the same manner that the Funds might also
benefit from the information obtained by MFSI in performing services for others.
Although investment decisions for the Funds are made independently from
those for other investment advisory clients of MFSI, it may develop that the
same investment decision is made for a Fund and one or more other advisory
clients. If a Fund and other clients purchase or sell the same class of
securities on the same day, the transactions will be allocated as to amount and
price in a manner considered equitable to each.
The board of trustees of the Trust has determined that portfolio brokerage
transactions for the Trust may be executed through a broker-dealer affiliated
with MFSI if, in the judgment of MFSI, the use of the affiliated is likely to
result in prices and execution at least as favorable to the Funds as those
available from other qualified brokers and, if, in such transaction, the
affiliated broker charges the Fund commission rates consistent with those
charged by the affiliated broker to comparable unaffiliated customers in similar
transactions. The board of trustees of the Trust, including a majority of the
trustees who are not "interested" trustees, has adopted procedures which are
reasonably designed to provide that any commissions, fees or other remuneration
paid to the affiliated broker are consistent with the foregoing standard. The
Funds will not effect principal transactions with the affiliated broker.
Notwithstanding this authorization, no Fund executed transactions through the
affiliated broker during 1995 or the six months ended June 30, 1996.
SOLICITATION OF PROXIES
Proxies will be solicited by the board of trustees, and the cost of
solicitation will be paid by MFSI. Additional solicitation may be made by mail,
personal interview, telephone and telegraph by officers of the Trust or by
principals or employees of MFSI, none of whom will receive any additional
compensation for that service. The Trust has also engaged Shareholder
Communications Corporation ("SCC") to render proxy solicitation services at a
fee estimated at $7,500 plus certain expenses, all of which will be paid by
MFSI. As the meeting date approaches, certain shareholders of the Funds may
receive a call from a representative of SCC if the Trust has not yet received
their vote. Authorization to permit SCC to execute proxies may be obtained by
telephonic or electronically transmitted instructions from shareholders of the
Funds. Proxies that are obtained telephonically will be recorded in accordance
with the procedures set forth below. Management of the Trust believes that these
procedures are reasonably designed to ensure that the identity of the
shareholder casting the vote is, and that the voting instructions of the
shareholder are, accurately determined. The Trust has been advised by counsel
15
<PAGE>
that these procedures are consistent with the requirements of applicable laws.
If these procedures were subject to a successful legal challenge, such votes
would not be counted at the meeting.
In all cases where a telephonic proxy is solicited, the SCC representative
is required to ask the shareholder for such shareholder's full name, address,
social security or employer identification number, title (if the person giving
the proxy is authorized to act on behalf of an entity, such as a corporation),
the number of shares owned and to confirm that the shareholder has received the
Proxy Statement in the mail. If the information solicited agrees with the
information provided to SCC by the Trust, then the SCC representative has the
responsibility to explain the process, read the proposals listed on the proxy
card, and ask for the shareholder's instructions on each proposal. The SCC
representative, although he or she is permitted to answer questions about the
process, is not permitted to recommend to the shareholder how to vote, other
than to read any recommendation set forth in the proxy statement. SCC will
record the shareholder's instructions on the card. Within 72 hours, SCC will
send the shareholder a letter or mailgram which confirms the shareholder's vote
and asks the shareholder to call SCC immediately if the shareholder's
instructions are not correctly reflected in such confirmation.
If a shareholder wishes to participate in the meeting of shareholders, but
does not wish to give a proxy by telephone, such shareholder may still submit
the proxy card originally sent with the Proxy Statement or attend in person. Any
proxy given by a shareholder, whether in writing or by telephone, is revocable.
A shareholder may revoke the accompanying proxy or a proxy given telephonically
at any time prior to its use by filing with the Trust a written revocation or
duly executed proxy bearing a later date. In addition, any shareholder who
attends the Meeting in person may vote by ballot at the Meeting, thereby
canceling any proxy previously given.
The Trust will inquire of any record holder known to be a broker, bank or
other nominee as to whether other persons were the beneficial owners of shares
held of record by such persons. If so, the Trust will supply additional copies
of solicitation materials for forwarding to beneficial owners, and MFSI will
reimburse the nominee for reasonable out-of-pocket costs.
QUORUM; VOTING AT THE MEETING AND ADJOURNMENT
A quorum of shareholders is required to take action at the meeting. Thirty
percent of the shares entitled to vote at the meeting, represented in person or
by proxy, will constitute a quorum. Abstentions and "broker non-votes" (as
hereinafter defined) are counted for purposes of determining whether a quorum
is present, but do not represent votes cast with respect to any proposal.
"Broker non-votes" are shares held by a broker or nomineee for which an executed
proxy is received by the Trust, but which are not voted as to one or more
proposals because instructions have not been received from the beneficial owners
or persons entitled to vote and the broker or nomineee does not have
discretionary voting power. The inspectors of election will determine whether or
not a quorum is present at the meeting.
In the event that sufficient votes to approve any proposal are not
received, the persons named as proxy agents may propose one or more adjournments
of the meeting to permit further solicitation of proxies. Any decision to
adjourn the meeting will be made by vote of the shares present at the meeting,
in person or by proxy, whether or not a quorum is present. Proxies will be
voted in favor of adjournment as to any item of business for which there are not
enough shares present at the meeting to take action. If sufficient shares are
present to constitute a quorum for purposes of an item of business, but
insufficient votes have been cast in favor of the item to approve it, proxies
will be voted in favor of adjournment only if the board of trustees determines
that adjournment and additional solicitation is reasonable and in the best
interest of the shareholders of the Funds, taking into account the nature of the
proposal, the percentage of votes actually cast, the percentage of negative
votes, the nature of any further solicitation that might be made and the
information provided to shareholders about the reasons for additional
solicitation. A vote may be taken on any of the proposals in this proxy
statement for any Fund prior to any adjournment if sufficient votes have been
received for approval with respect to that Fund.
16
<PAGE>
SHAREHOLDER MEETINGS AND PROPOSALS
Pursuant to Massachusetts law, the Declaration and Agreement of Trust and
Bylaws of the Trust, the Trust is not required to hold an annual meeting of
shareholders. Future meetings of shareholders will be held when and as
determined necessary by the board of trustees and in accordance with the 1940
Act. A shareholder desiring to submit a proposal for presentation at a meeting
of shareholders should send the proposal to the offices of the Trust, 1776-A
South Naperville Road, Suite 207, Wheaton, Illinois 60187
IF YOU CANNOT BE PRESENT IN PERSON, PLEASE FILL IN, SIGN AND RETURN THE
ENCLOSED PROXY PROMPTLY. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
BY ORDER OF THE BOARD OF TRUSTEES:
Robert S. Bacarella
President
17
<PAGE>
EXHIBIT A
MONETTA TRUST
SERVICE AND DISTRIBUTION PLAN
This Service and Distribution Plan (the "Plan") is adopted by Monetta
Trust, a Massachusetts business trust (the "Company"), with respect to the
Monetta Small-Cap Fund, Monetta Mid-Cap Fund, Monetta Large-Cap Fund, Monetta
Balanced Fund, Monetta Intermediate Bond Fund and Monetta Government Money
Market Fund (each, a "Fund" and collectively, the "Funds"), each of which is a
series of the Trust, pursuant to Rule 12b-1 (the "Rule") under the Investment
Company Act of 1940, as amended (the "1940 Act"), subject to the following terms
and conditions:
SECTION 1. PAYMENTS BY THE FUNDS.
(a) Compensation to Service Organizations. Any officer of the Trust is
authorized to execute and deliver, in the name and on behalf of the Trust,
written agreements in substantially the form attached hereto or in any other
form duly approved by the Board of Trustees of the Trust ("Servicing
Agreements") with financial institutions such as banks, securities dealers or
other industry professionals, including, but not limited to, investment
advisers, accountants, and estate planning firms ("Service Organizations") who
perform services for the holders of each Fund's shares. Such Servicing
Agreements shall require the Service Organizations to provide services on behalf
of the applicable Fund as set forth therein to their customers who beneficially
own Fund shares in consideration of fees ("Service Fees") to be paid by the
Trust on behalf of the Fund, computed daily and paid monthly in the manner set
forth in the Servicing Agreements, at an annual rate not to exceed (i) for
Monetta Government Money Market Fund, 0.10% of the average daily net asset value
of Monetta Government Money Market Fund shares held by a Service Organization on
behalf of its customers and (ii) for each Fund other than Monetta Government
Money Market Fund, 0.25% of the average daily net asset value of shares of that
Fund held by a Service Organization on behalf of its customers. Service Fees in
excess of the limits provided in the preceding sentence, if any, shall not be
paid by the Trust on behalf of a Fund, but may be paid by the Funds' investment
adviser or distributor as provided in Section 2 of this Plan.
(b) Distribution-Related Expenses. In addition to the Service Fees
described in subparagraph (a), above, a Fund shall pay other distribution-
related expenses, including but not limited to: advertising, direct mail and
promotional expenses; the fees and expenses of the Fund's distributor pursuant
to the distribution agreement among the Trust, the distributor and the Funds'
investment adviser; compensation to and expenses, including overhead and
telephone and other communication expenses, of a distributor, service
organization and selected dealers and their affiliates who engage in or support
the distribution of shares or who service shareholder accounts, fulfillment
expenses, including the costs of printing 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; provided that in no event shall the sum of the Service
Fees paid by a Fund pursuant to subparagraph (a) and distribution-related
expenses paid by that Fund pursuant to this subparagraph (b) exceed the annual
rate shown below, in each case expressed as a percentage of the Fund's average
daily net assets:
<PAGE>
FUND LIMIT ON PLAN EXPENSES
Monetta Small-Cap Equity Fund 0.25%
Monetta Mid-Cap Equity Fund 0.25%
Monetta Large Cap Equity Fund 0.25%
Monetta Balanced Fund 0.25%
Monetta Intermediate Fund 0.25%
Monetta Government Money Market Fund 0.10%
Distribution-related expenses in excess of the overall limit on plan expenses
shown in foregoing table may be paid by the Funds' investment adviser or
distributor from their own resources, but shall be deemed to have been paid
pursuant to this Plan.
(c) Allocation of Expenses Among Funds. All expenses incurred by the
Trust in connection with a Servicing Agreement and the implementation of this
Plan with respect to a particular Fund shall be borne entirely by the holders of
shares of that Fund.
SECTION 2. PAYMENTS BY THE FUNDS' INVESTMENT ADVISER OR DISTRIBUTOR.
Pursuant to the Plan, the Funds' investment adviser or distributor (i) may
make payments in addition to the Service Fees to be paid by a Fund to Service
Organizations for providing the various services described in Servicing
Agreements and (ii) provide payments for sales, marketing and distribution
services and expenses, including the distribution of sales literature and
advertising provided by the distributor of Fund shares. Payments made by the
Funds' investment adviser or distributor, respectively, shall be made from their
own resources, but shall be deemed to have been paid pursuant to the Plan.
SECTION 3. APPROVAL BY SHAREHOLDERS.
The Plan will not take effect with respect to a Fund, and no amounts will
be payable in accordance with Section 1 of the Plan, until the Plan has been
approved by a vote of at least a majority of the outstanding voting securities
of the Fund.
SECTION 4. APPROVAL BY TRUSTEES.
Neither the Plan nor any related agreements will take effect with respect
to a Fund until approved by a majority vote of both (a) the full Board of
Trustees of the Trust and (b) 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 in any agreements related to it (the "Independent Trustees"),
cast in person at a meeting called for the purpose of voting on the Plan and the
related agreements.
SECTION 5. CONTINUANCE OF THE PLAN.
The Plan will continue in effect from year to year with respect to a Fund,
so long as its continuance is specifically approved annually by vote of the
Trust's Board of Trustees in the manner described in Section 4 above.
SECTION 6. TERMINATION.
The Plan may be terminated with respect to a Fund at any time, without
penalty, by vote of a majority of the Independent Trustees or by a vote of a
majority of the outstanding voting securities of the Fund.
2
<PAGE>
SECTION 7. AMENDMENTS.
The Plan may not be amended with respect to a Fund to increase materially
the amount of the fees described in Section 1 above, unless the amendment is
approved by a vote a majority of the outstanding voting securities of the Fund,
and all material amendments to the Plan must also be approved by the Trust's
Board of Trustees in the manner described in Section 4 above.
SECTION 8. SELECTION OF CERTAIN TRUSTEES.
While the Plan is in effect, the selection and nomination of the Trust's
Trustees who are not interested persons of the Trust will be committed to the
discretion of the Trustees then in office who are not interested persons of the
Trust.
SECTION 9. WRITTEN REPORTS.
In each year during which the Plan remains in effect with respect to a
Fund, the Fund's investment adviser will prepare and furnish to the Trust's
Board of Trustees, and the Board will review, at least quarterly, written
reports, complying with the requirements of the Rule, that set out the amounts
expended under the Plan relating to the Fund and the purposes for which those
expenditures were made.
SECTION 10. PRESERVATION OF MATERIALS.
The Trust will preserve copies of the Plan, any agreement relating to the
Plan and any report made pursuant to Section 9 above, for a period of not less
than six years (the first two years in an easily accessible place) from the date
of the Plan, agreement or report.
SECTION 11. MEANINGS OF CERTAIN TERMS.
As used in the Plan, the terms "interested person" and "majority of the
outstanding voting securities" will be deemed to have the same meaning that
those terms have under the 1940 Act and the rules and regulations under the 1940
Act, subject to any exemption that may be granted to the Trust under the 1940
Act by the Securities and Exchange Commission.
Dated: February 1, 1997
3
<PAGE>
EXHIBIT B
MONETTA TRUST
INVESTMENT ADVISORY AGREEMENT
This investment advisory agreement is made as of the 1st day of February,
1997, between MONETTA TRUST, a Massachusetts business trust registered under the
Investment Company Act of 1940 (the "1940 Act") as an open-end diversified
management investment company (the "Trust"), and MONETTA FINANCIAL SERVICES,
INC., a Delaware corporation registered under the Investment Advisers Act of
1940 as an investment adviser (the "Adviser").
The Trust is authorized to issue shares of beneficial interest in separate
series with each such series representing interests in a separate portfolio of
securities and other assets.
The Trust is now authorized to offer shares in six series: 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, which are referred to in this Agreement individually as a
"Fund" and together as the "Funds". The term "Funds" also means the Funds and
any other series of the Trust that has become a "Fund" under paragraph 1(b) of
this Agreement.
The Trust and the Adviser agree:
1. Appointment of Adviser. (a) The Trust appoints the Adviser to act as
manager and investment adviser to the Funds for the period and on the terms
provided in this Agreement. The Adviser accepts that appointment and agrees to
provide the services described in this Agreement, for the compensation provided
in paragraph 6.
(b) If the Trust establishes one or more series of shares other than
the Funds with respect to which it wants to appoint the Adviser as manager and
investment adviser under this Agreement, it shall notify the Adviser in writing,
indicating the advisory fee which will be payable with respect to the additional
series of shares. If the Adviser is willing to accept that appointment, it
shall notify the Trust in writing, whereupon such series of shares shall become
a Fund hereunder.
2. Services of Adviser. (a) The Adviser shall manage the investment and
reinvestment of the assets of each Fund and the general business affairs of each
Fund and of the Trust, subject to the supervision of the board of trustees of
the Trust. The Adviser shall give due consideration to the investment policies
and restrictions and the other statements concerning each Fund in the Trust's
Agreement and Declaration of Trust, bylaws and registration statements under the
1940 Act and the Securities Act of 1933 (the "1933 Act"), and to the provisions
of the Internal Revenue Code applicable to the Trust as a regulated investment
company. The Adviser shall be deemed for all purposes to be an independent
contractor and not an agent of the Trust or the Funds, and unless otherwise
expressly provided or authorized, shall have no authority to act or represent
the Trust or the Funds in any way.
(b) The Adviser shall place all orders for the purchase and sale of
portfolio securities for the account of each Fund with brokers or dealers
selected by the Adviser, although each Fund will pay the brokerage commissions
on its portfolio transactions in accordance with Paragraph 4. In executing
portfolio transactions and selecting brokers or dealers, the Adviser will use
its best efforts to seek on behalf of each Fund the best overall terms available
for any transaction. The Adviser shall 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, if any (for the specific transaction and
on a continuing basis).
<PAGE>
(c) To the extent contemplated by the Trust's registration statement
under the 1933 Act, in evaluating the best overall terms available, and in
selecting the broker or dealer to execute a particular transaction, the Adviser
may also consider the brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934) provided to the
Fund and/or other accounts over which the Adviser or an affiliate of the Adviser
exercises investment discretion. The Adviser is authorized to pay to a broker
or dealer who provides such brokerage and research services a commission for
executing a portfolio transaction for any Fund which is in excess of the amount
of commission another broker or dealer would have charged for effecting that
transaction if, but only if, the Adviser determines in good faith that such
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of that particular
transaction or in terms of all of the accounts over which investment discretion
is so exercised. Consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. and subject to seeking the most
favorable combination of net price and execution available, the Adviser may
consider sales of shares of a Fund as a factor in the selection of broker-
dealers to execute portfolio transactions for that Fund.
3. Services other than as Adviser. The Adviser (or an affiliate of the
Adviser) may act as broker for a Fund in connection with the purchase or sale of
securities by or to a Fund if and to the extent permitted by procedures adopted
from time to time by the board of trustees of the Trust. Such brokerage
services are not within the scope of the duties of the Adviser under this
agreement, and, within the limits permitted by law and the trustees, the Adviser
(or an affiliate of the Adviser) may receive brokerage commissions, fees or
other remuneration from a Fund or the Trust for such services in addition to its
fee for services as Adviser. Within the limits permitted by law, the Adviser
may receive compensation from the Trust for other services performed by or for
the Trust which are not within the scope of the duties of the Adviser under this
agreement.
4. Expenses to be paid by Adviser. The Adviser shall furnish to the
Trust, at its own expense, all office space, facilities, equipment and personnel
necessary to provide the services set forth in paragraph 2 above. The Adviser
shall also assume and pay all other expenses incurred by it in connection with
managing the assets of the Funds, all expenses of marketing shares of the Funds
under the 1933 Act and of qualifying and maintaining qualification or
notification of shares of the Funds under the securities laws of such United
States jurisdictions as the Funds may from time to time reasonably designate,
except to the extent such expenses are paid by a Fund pursuant to any plan as in
effect from time to time pursuant to rule 12b-1 under the 1940 Act; all expenses
in determination of daily price computations, placement of securities orders and
related bookkeeping; and all other expenses of the Funds not allocated to the
Trust pursuant to section 5.
5. Expenses to be paid by the Trust. The Trust shall pay the fees of the
Adviser pursuant to section 6; all expenses pursuant to any plan as in effect
from time to time adopted pursuant to rule 12b-1 under the 1940 Act; all charges
of depositories, custodians and other agencies for the safekeeping and servicing
of cash, securities and other property of the Funds and of their transfer agents
and registrars and their dividend disbursing and redemption agents, if any; all
compensation of trustees other than those affiliated with the Adviser and all
expenses incurred in connection with their services to the Trust; all taxes and
corporate fees payable to federal, state or other governmental agencies,
domestic or foreign; all stamp or other transfer taxes; all expenses of printing
and mailing certificates for shares of the Funds, if any; all costs of borrowing
money by the Funds; and all extraordinary expenses, including litigation
expenses, not incurred in the ordinary course of the Funds' operations. In
addition to the payment of expenses, the Trust shall also pay all brokers'
commissions and other charges relative to the purchase and sale of portfolio
securities of the Funds.
6. Compensation of Adviser. (a) For the services to be provided and the
expenses to be assumed and to be paid by the Adviser hereunder, the Trust shall
pay to the Adviser, solely out of assets of each Fund, a monthly fee, based upon
the average net assets of each Fund, which shall be computed as of the close of
business each day and accrued daily, at the annual rate set forth below:
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<PAGE>
ADVISORY FEE SCHEDULE
Fee Rate as a Percentage of Average Net Assets
----------------------------------------------
Monetta Small-Cap Equity Fund 0.75%
Monetta Mid-Cap Equity Fund 0.75%
Monetta Large Cap Fund 0.75%
Monetta Balanced Fund 0.40%
Monetta Intermediate Bond Fund 0.35%
Monetta Government Money Market Fund 0.20%
7. Limitation of expenses of any Fund. The Adviser may, from time to time,
undertake to limit the expenses of a Fund by agreeing for a stated period of
time (which may be a period containing until terminated by the Adviser on not
less than [60] days' notice to the Trust) to reimburse such Fund for sums
expended for expenses in excess of a stated amount or percentage of assets, or
assuming for a stated period of time (which may be a period containing until
terminated by the Adviser on not less than [60] days' notice to the Trust) an
obligation to pay an expense that would otherwise be paid by the Trust pursuant
to paragraph 5 of this Agreement. Any such undertaking shall be in writing and
shall be considered a part of this Agreement.
8. Services of Adviser not Exclusive. The services of the Adviser to the
Trust hereunder are not exclusive, and the Adviser is free to provide similar
services to others so long as its services under this agreement are not impaired
by such other activities.
9. Liability of Adviser. The Adviser shall not be liable to the Trust or
its shareholders for any loss suffered by the Trust or its shareholders from or
as a consequence of any act or omission of the Adviser, or of any of the
partners, employees or agents of the Adviser, in connection with or pursuant to
this agreement, except by reason of willful misfeasance, bad faith or gross
negligence on the part of the Adviser in the performance of its duties or by
reason of reckless disregard by the Adviser of its obligations and duties under
this agreement.
10. Liability of Trust. The obligations of the Trust hereunder shall not
be binding upon any of the trustees, shareholders, nominees, officers, agents or
employees of the Trust, personally, but shall bind only the assets and property
of the Trust as provided in the Agreement and Declaration of Trust of the Trust.
11. Use of Adviser's name. The Trust and the Funds may use the name
"Monetta Trust" or any other name derived from the name "Monetta" only for so
long as this agreement or any extension, renewal or amendment hereof remains in
effect, including any similar agreement with any organization which shall have
succeeded to the business of the Adviser as investment adviser. At such time as
this agreement or any extension, renewal or amendment hereof, or such other
similar agreement shall no longer be in effect, the Trust will (by amendment of
its Agreement and Declaration of Trust, if necessary) cease to use, in its name
and in the names of the Funds, any name derived from the name "Monetta", any
name similar thereto or any other name indicating that it is advised by or
otherwise connected with the Adviser, or with any organization which shall have
succeeded to the Adviser's business as investment adviser. The consent of the
Adviser to the use of such names by the Trust shall not prevent the Adviser's
permitting any other enterprise, including another investment company, to use
such name or names.
12. Duration and renewal. (a) Unless terminated as provided in section
13, this agreement shall become effective with respect to the Initial Funds on
the date hereof and, with respect to any additional Fund, on the date of receipt
by the Trust of notice from the Adviser in accordance with Paragraph 1 (b)
hereof that the Adviser is willing to serve as Adviser with respect to such
Fund. Unless terminated has herein provided, this Agreement shall remain in
full force and effect until February 1, 1999, with respect to the Funds and
shall continue in full force and effect for periods of one year thereafter with
respect to each Fund so long as such continuance with respect to any such Fund
is approved at least
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<PAGE>
annually (i) by either the trustees or by vote of a majority of the outstanding
voting shares (as defined in the 1940 Act) of such Fund, and (ii) in either
event by the vote of a majority of the trustees who are not parties to this
Agreement or "interested persons" (as defined in the 1940 Act) of any such
party, cast in person at a meeting called for the purpose of voting on such
approval.
(b) Any approval of this Agreement by the holders of a majority of the
outstanding shares (as defined in the 1940 Act) of any Fund shall be effective
to continue this Agreement with respect to any such Fund notwithstanding (i)
that this Agreement has not been approved by the holders of a majority of the
outstanding shares of any other Fund affected thereby, and (ii) that this
Agreement has not been approved by the vote of a majority of the outstanding
shares of the Trust, unless such approval shall be required by any other
applicable law or otherwise.
13. Termination. This Agreement may be terminated with respect to a Fund
at any time, without payment of any penalty, by vote of the trustees or by vote
of a majority of the outstanding shares (as defined in the 1940 Act) of that
Fund, or by the Adviser on sixty (60) days' written notice to the other party.
This Agreement shall automatically and immediately terminate in the event of its
assignment (as defined in section 2(a)(4) of the 1940 Act).
14. Amendment. This agreement may not be amended as to a Fund without the
affirmative vote (a) of a majority of those trustees who are not "interested
persons" (as defined in Section 2(a)(19) of the 1940 Act) of the Trust and (b)
of the holders of a majority of the outstanding shares of that Fund.
MONETTA TRUST
By:
--------------------------------
Robert S. Bacarella
President
MONETTA FINANCIAL SERVICES, INC.
By:
--------------------------------
Albert A. Pisterzi
President
4
<PAGE>
MONETTA TRUST
Monetta Mid-Cap Equity Fund
Monetta Large-Cap Equity Fund
Monetta Balanced Fund
Monetta Intermediate Bond Fund
Monetta Government Money Market Fund
Special Meeting of Shareholders
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned hereby appoints [Robert S. Bacarella], [Albert A.
Pisterzi] and [Maria Cesario DeNicolo] or any of them, proxy, with full power of
substitution, to represent and vote, as designated below, all shares of stock
the undersigned is entitled to vote at the Special Meeting of Shareholders of
the Trust to be held at 1777 South Blanchard, Wheaton, Illinois 60187 at 9:00
a.m. on Tuesday, January 28, 1997, or at any adjournment thereof, with respect
to the matters set forth on this proxy and described in the Notice of Special
Meeting of Shareholders, dated December_, 1996, receipt of which is hereby
acknowledged.
DATED:_________________1996
________________________________________
(Please sign exactly as appears at left)
_______________________________________
(If stock is owned by more than one
person, all owners should sign. Persons
signing as guardians, administrators,
trustees or in other capacities should
so indicate).
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Shares represented by this proxy will be voted as directed by the shareholder. Please circle your choice. IF NO DIRECTION IS
SUPPLIED, THE PROXY WILL BE VOTED FOR PROPOSALS 1,2,3 AND 4.
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS: FOR all nominees listed WITHHELD
Robert S. Bacarella, John W. Bakos, John L. Guy, (except as marked to the
Jr., Mark F. Ogan, Albert A. Pisterzi contrary below)
Richard D. Russo and William M. Valiant
(Instructions: To withhold vote for any
individual nominee, print that nominee's
name on the line below:
------------------------------
2. To approve the proposed Service and Distribution FOR AGAINST ABSTAIN
Plan adopted pursuant to Rule 12-1 of the
Investment Company Act of 1940.
3. To approve a proposed new investment FOR AGAINST ABSTAIN
advisory agreement reducing the adviser's fee
between the Trust, on behalf of each Fund, and
Monetta Financial Services, Inc., each Fund's
investment adviser.
4. To ratify the selection of KPMG Marwick LLP FOR AGAINST ABSTAIN
as independent accountants for the Trust.
5. In their discretion on such other matters as may
properly come before the meeting or any
adjournment thereof.
</TABLE>
