As filed with the Securities and Exchange Commission on March 1, 1999
Securities Act registration no. 33-54822
Investment Company Act file no. 811-7360
- -------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
____________________________
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Post-effective amendment no. 12 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment no. 13 [X]
____________________________
MONETTA TRUST
(Registrant)
776-A South Naperville Road, Suite 100
Wheaton, Illinois 60187-8133 Telephone number: 630/462-9800
____________________________
Robert S. Bacarella Arthur J. Simon
Monetta Trust 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)
____
___ on ____ pursuant to rule 485(b)
__X_ 60 days after filing pursuant to rule 485(a)(1)
____ on _April 30, 1999________________ 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 previously elected to register under the Securities Act of
1933 an indefinite number of its shares of beneficial interest, without
par value, of each of the following series: Mid-Cap Equity Fund; Monetta
Large-Cap Equity Fund; Monetta Balanced Fund; Monetta Intermediate Bond
Fund; Monetta Government Money Market Fund; and Monetta Small-Cap Equity
Fund. Registrant's Rule 24f-2 Notice for its fiscal year ended
December 31, 1997 was filed on March 26, 1998.
<PAGE>
MONETTA TRUST
Cross-reference sheet pursuant to rule 495(a) of Regulation C
<TABLE>
<CAPTION>
Item Location or caption*
- - ------------ ----------------------------
<C> <S>
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 Fund; Fund Expenses
(g) Management of the Funds
5A Supplement dated February 14, 1997 to prospectus dated
February 3, 1997
6(a) Other Information
(b) Not Applicable
(c)-(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
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Item Location or caption*
- - --------- ----------------------------
<C> <S>
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 Asset Value
20 Tax Status
21(a) Distributor
(b) Not Applicable
(c) Distributor
22(a)-(b) Performance Information
23 Front Cover
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
Item Location or caption/*/
- - -------- ---------------------------------
<C> <S>
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
</TABLE>
- - -----------------------------
/*/ References are to captions within the part of the registration statement
to which the particular item relates except as otherwise indicated.
iii
<PAGE>
Prospectus April 30, 1999
Monetta Family of Mutual Funds
No-Load
Monetta Fund
Small-Cap Equity Fund
Mid-Cap Equity Fund
Large-Cap Equity Fund
Balanced Fund
Intermediate Bond Fund
Government Money Market Fund
1-800-MONETTA
www.monetta.com
[INSERT MONETTA LOGO'S]
The Securities and Exchange Commission has not approved any Fund's Shares as an
investment or determined whether this prospectus is accurate or complete.
Anyone who tells you otherwise is committing a crime.
Table of Contents
Summary of the Funds XX
Performance XX
Fees and Expenses XX
Investment Objectives And Strategies XX
Investment Risks XX
Investment Restrictions XX
Management XX
Capital Structure XX
Other XX
Financial Highlights XX
Shareholder Information XX
REFERENCE INFORMATION
<TABLE>
<CAPTION>
INVESTMENT
COMPANY ACT FUND LISTING
ENTITY FILE No. FUND NAME No. TICKER NAME
<S> <C> <C> <C> <C> <C>
Monetta Fund, Inc. 811-4466 MONETTA 013 MONTX Monetta
Monetta Trust: 811-7360
SMALL-CAP 045 MSCEX SmCapEq
MID-CAP 040 MMCEX MidCap
LARGE-CAP 043 MLCEX LgCapEq
BALANCED 044 MBALX Balance
INTERMEDIATE BOND 041 MIBFX (Not Listed)
GOV'T MONEY MARKET 042 MONXX (Not Listed)
</TABLE>
MINIMUM INVESTMENT:
Initial Investment: $250
Subsequent Investments: No Minimum
Automatic Investment Plan-Subsequent Investment: $25
PLANS AVAILABLE:
Individual Retirement Accounts: Regular, Roth, Education, and Simple
Profit Sharing, 401K and 403B
FUND SUMMARY
Fund Fund's goals? Fund's main investment
strategies?
Monetta Fund, Inc. Long-term capital Common stocks of growing
Small-Cap Equity Fund growth. companies with market capital-
Mid-Cap Equity Fund ization in the following range:
Large-Cap Equity Fund Monetta-$50 Million-$1 Billion
Small-Cap - Under $1 Billion
Mid-Cap-$1 Billion-$5 Billion
Large-Cap-$5 Billion and over
Balanced Fund Capital Common stocks of growing companies
appreciation. and marketable debt securities.
Preservation of
capital.
Intermediate Preservation of Marketable and debt securities.
Bond Fund capital.
Government Money Safety of capital, Securities issued or guaranteed
Market Fund liquidity. by the U.S. Government or its
agencies.
Fund Income Dividend Capital Gains
Distribution
Monetta Fund, Inc. Annually (if any) Annually (if any)
Small-Cap Equity Fund
Mid-Cap Equity Fund
Large-Cap Equity Fund
Balanced Fund Quarterly Annually (if any)
Intermediate Monthly Annually (if any)
Bond Fund
Government Money Daily N/A
The Funds' daily net asset value per share is calculated as of the close of
trading on the New York Stock Exchange.
Detailed information about the Fund's investments is available in the Annual
and Semi-Annual Reports to shareholders and may be obtained at no cost by
calling 1-800-MONETTA. These reports discuss relevant market condition and
investment strategies used by the Fund's investment adviser that significantly
affected the Fund's performance during the most recent fiscal period.
FUND SUMMARY(cont'd)
Principal Risks Of Investing In The Funds
You could lose money on your investment in the Fund, or the Fund could
underperform other investments, if any of the following occurs:
Monetta Fund . The stock market goes down.
Small-Cap Equity Fund . Small-Cap growth stocks fall out of favor with
the stock market.
. The market continues indefinitely to undervalue
the stocks in the Fund's portfolio.
. The stocks in the Fund's portfolio turn out not
to be undervalued even though the market rebounds.
. Poor liquidity in the small-cap sector of the
stock market.
Mid-Cap Equity Fund . The stock market goes down.
. Mid-Cap growth stocks fall out of favor with
the stock market.
. The market continues indefinitely to undervalue
the stocks in the Fund's portfolio.
. The stocks in the Fund's portfolio turn out not
to be undervalued even though the market rebounds.
Large-Cap Fund . The stock market goes down.
. Large-Cap growth stocks fall out of favor with
the stock market.
. The market continues indefinitely to undervalue
the stocks in the Fund's portfolio.
. The stocks in the Fund's portfolio turn out not
to be undervalued even though the market rebounds.
Balance Fund . The stock market goes down.
. Long-term interest rates go up.
. Growth stocks fall out of favor with the stock
market.
. The market continues indefinitely to undervalue
the stocks in the Fund's portfolio.
. The stocks in the Fund's portfolio continue
to be undervalued even though the market rebounds.
Intermediate Bond Fund . Interest Rates rise in general.
. The difference in interest rates of Corporate
Bonds and US Treasury widens.
. Credit ratings of individual securities are
lowered.
Government Money Market Fund . Not insured or guaranteed by the Federal Deposit
Insurance Corporation.
. Short-term interest rate fluctuation.
What are the main risks of
investing in the Funds and
are the Funds an appropri-
ate investment for you? All investments, including those in mutual funds,
have risks. No investment is suitable for
everyone. 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 the stock market.
The Balanced Fund is designed for long-term
investors who can accept risks associated
with the stock market asset value
fluctuations from interest rate changes and credit
risks associated with fixed income investments
and risks associated with the stock market.
The Intermediate Bond Fund is designed for
investors who want high income with less net
asset value fluctuation (from interest rate
changes) than with a longer-term fund and can
accept the credit and other risks of high and
upper-medium quality securities.
The Government Money Market Fund* is designed
for investors who seek income with minimum risk
other than the risk of changes in yield caused by
fluctuations in current levels of interest
rates. Because the Government Money Market Fund
can invest in U. S. Government Securities that
are not backed by the U. S. Treasury, risks are
greater than a fund whose securities are backed
by the full faith and credit of the U.S. Treasury.
*An investment in the Monetta Government Money Market Fund is not ensured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to loose money by investing in the fund.
PERFORMANCE
The following information on fund performance will help you understand how
returns on your investments may vary from year to year. Please note that past
performance does not predict future performance.
Performance Information is as of December 31, 1998.
MONETTA FUND
[GRAPH DEPICTING 5 YEAR ANNUAL TOTAL RETURNS FOR MONETTA FUND; UPDATED FIGURES
NOT YET AVAILABLE]
During the periods shown in the above chart, the highest return for a quarter
was XX(quarter ended XXXX) and the lowest return for a quarter was XX(quarter
ended XXXX).
<TABLE>
<CAPTION>
Average Annual Total Returns
1 Year 5 Years 10 Years
<S> <C> <C> <C>
Monetta Fund (9.0%) 7.0% 11.5%
Russell 2000* (2.5)% 11.9% 12.9%
</TABLE>
*Russell 2000 index is an unmanaged index generally representative of the U.S.
Stock Market.
SMALL-CAP FUND
[GRAPH DEPICTING 1 YEAR ANNUAL TOTAL RETURNS FOR MONETTA SMALL-CAP FUND;
UPDATED FIGURES NOT YET AVAILABLE]
During the periods shown in the above chart, the highest return for a quarter
was XX(quarter ended XXXX) and the lowest return for a quarter was XX
(quarter ended XXXX).
<TABLE>
<CAPTION>
Average Annual Total Returns
Since Inception
1 Year 2/1/97
<S> <C> <C>
Monetta Small-Cap Fund (2.8)% 20.6%
Russell 2000** (2.5)% 8.5%
</TABLE>
**Russell 2000 index is an unmanaged index generally representative of the US
Stock Market.
MID-CAP FUND
[GRAPH DEPICTING 5 YEAR ANNUAL TOTAL RETURNS FOR MONETTA MID-CAP FUND; UPDATED
FIGURES NOT YET AVAILABLE]
During the periods shown in the above chart, the highest return for a quarter
was XX (quarter ended XXXX) and the lowest return for a quarter was XX
(quarter ended XXXX).
<TABLE>
<CAPTION>
Average Annual Total Returns
Since Inception
1 Year 3 Year 3/1/93
<S> <C> <C> <C>
Monetta Mid-Cap Fund (0.9)% 15.1% 18.9%
S&P 400* 18.3% 18.7% 18.5%
</TABLE>
*S&P 400 stock index is the Standard & Poor's 400 stock index, which is an
unmanaged index generally representative of the U.S. Stock Market.
LARGE-CAP FUND
[GRAPH DEPICTING 3 YEAR ANNUAL TOTAL RETURNS FOR MONETTA LARGE-CAP FUND;
UPDATED FIGURES NOT YET AVAILABLE]
During the periods shown in the above chart, the highest return for a quarter
was XX (quarter ended XXXX) and the lowest return for a quarter was XX
(quarter ended XXXX).
<TABLE>
<CAPTION>
Average Annual Total Returns
Since Inception
1 Year 2 Years 9/1/95
<S> <C> <C> <C>
Monetta Large-Cap Fund 9.0% 17.5% 20.7%
S&P 500** 28.7% 31.0% 28.9%
</TABLE>
**S&P 500 stock index is the Standard & Poor's 500 stock index, which is an
unmanaged index generally representative of the U.S. Stock Market.
BALANCED FUND
[GRAPH DEPICTING 3 YEAR ANNUAL TOTAL RETURNS FOR MONETTA BALANCED FUND; UPDATED
FIGURES NOT YET AVAILABLE]
During the periods shown in the above chart, the highest return for a quarter
was XX (quarter ended XXXX) and the lowest return for a quarter was XX
(quarter ended XXXX).
<TABLE>
<CAPTION>
Average Annual Total Returns
Since Inception
1 Year 2 Year 9/1/95
<S> <C> <C> <C>
Monetta Balanced Fund 8.6% 14.7% 18.5%
Lipper Balanced Fund ** 15.1% 17.7% 16.7%
</TABLE>
**Lipper Balanced Fund (Information not yet available)
INTERMEDIATE BOND FUND
[GRAPH DEPICTING 5 YEAR ANNUAL TOTAL RETURNS FOR MONETTA INTERMEDIATE BOND
FUND; UPDATED FIGURES NOT YET AVAILABLE]
During the periods shown in the above chart, the highest return for a quarter
was XX (quarter ended XXXX) and the lowest return for a quarter was XX
(quarter ended XXXX).
<TABLE>
<CAPTION>
Average Annual Total Returns
Since Inception
1 Year 5 Year 3/1/93
<S> <C> <C> <C>
Monetta Intermediate Bond Fund 8.38% 7.38% 7.73%
Lehman Gov't/Corp
Interm. Bond Index* 8.44% 6.60% 6.53%
</TABLE>
*Lehman Government/Corporate Intermediate Bond Index is an unmanaged index
generally representative of the U.S. Bond Market.
GOV'T MONEY MARKET FUND
[GRAPH DEPICTING 5 YEAR ANNUAL TOTAL RETURNS FOR MONETTA GOVERNMENT MONEY
MARKET FUND; UPDATED FIGURES NOT YET AVAILABLE]
During the periods shown in the above chart, the highest return for a quarter
was XX (quarter ended XXXX) and the lowest return for a quarter was XX
(quarter ended XXXX).
<TABLE>
<CAPTION>
Average Annual Total Returns
Since Inception
1 Year 5 Year 3/1/93
<S> <C> <C> <C>
Monetta Government
Money Market Fund 5.24%** 5.07%** 4.74%**
Lipper U.S. Gov't
Money Mkt. Avg.* 4.89% 4.72% 4.41%
</TABLE>
** Total returns are not of waived fees.
*Lipper U.S. Government Money Market Average (Information not yet available)
FEES AND EXPENSES
The following fee table shows the expenses incurred by the Funds for the year
ended December 31, 1998.
FEE TABLE
<TABLE>
<CAPTION>
Gov't
Inter. Money
Monetta Small-Cap Mid-Cap Large-Cap Balanced Bond Market
Fund Fund Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C> <C>
Shareholder Fees
(fees paid directly from your account)
Maximum Sales Fee
(Load) on Purchases N/A N/A N/A N/A N/A N/A N/A
Maximum Sales Fee
(Load) on
Reinvested Dividends N/A N/A N/A N/A N/A N/A N/A
Maximum Deferred
Sales Fee (Load) N/A N/A N/A N/A N/A N/A N/A
Redemption Fee N/A N/A N/A N/A N/A N/A N/A
Telephone Exchange Fee $5.00 $5.00 $5.00 $5.00 $5.00 $5.00 $5.00
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
Management Fees (a) 1.00% 0.75% 0.75% 0.75% 0.40% 0.15% 0.00%
Marketing (12b-1) Fees N/A 0.25% 0.25% 0.25% 0.25% 0.25% 0.00%
Other Expenses 0.36% 0.39% 0.21% 0.86% 0.19% 0.15% 0.32%
Total Annual Fund
Operating Expenses 1.36% 2.39% 1.21% 1.86% 0.84% 0.55% 0.32%
Gross Operating expenses
(if fees had not been waived)
Management Fees (a) 0.35% 0.25%
Marketing (12b-1) Fees 0.25% 0.10%
Other Expenses 0.15% 0.33%
Total Annual Fund Operating Expenses 0.75% 0.68%
</TABLE>
(a) The Advisor generally pays all of the operating expenses of each Fund
except the fees and expenses of the Funds' transfer agent and custodian,
certain board members and the 12b-1 fees. Operating expenses do not include
taxes or interest, if any. Costs relating to purchases and sales of portfolio
securities, including brokerage commissions are not included in operating
expenses.
Example
This example converts the total operating expenses percent to a dollar amount.
By doing so, you are able to compare the cost of investing in our funds versus
other mutual funds. Although your actual costs and returns can be higher or
lower, the example makes the following assumptions:
. You invest $10,000 for the various periods shown
. Your investment investment earns a 5% annual return
. Expenses remain the same
. All income dividends and capital gains distributions are reinvested
. Redemption of your shares are at the end of each period
<TABLE>
<CAPTION>
One Three Five Ten
Year Years Years Years
<S> <C> <C> <C> <C>
Monetta Fund, Inc. $143 $444 $767 $1,681
Monetta Small Cap Equity Fund 251 772 1,319 2,810
Monetta Mid-Cap Equity Fund 127 396 684 1,506
Monetta Large-Cap Equity Fund 195 604 1,038 2,244
Monetta Balanced Fund 88 276 479 1,065
Monetta Intermediate Bond Fund 58 181 315 707
Monetta Government Money Market Fund 34 106 184 416
</TABLE>
INVESTMENT OBJECTIVES AND STRATEGIES
The Funds' investment objectives differ principally in the types of securities
selected for investment and the 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 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 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. 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.
In its investments in equity securities, the Monetta Fund, Small-Cap Fund, Mid-
Cap Fund, Large-Cap Fund, and Balanced Fund each pursue a selling discipline to
preserve capital gains and limit losses. When the security is purchased, the
Advisor determines the price it wants to sell it at (on both the upside and
downside). A security will normally 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 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.
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 smaller companies with market
capitalization of less than $1 billion. 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. 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. Under normal market conditions, the
Fund invests 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.
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.
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.
*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.
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.
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 will be sold by the fund as soon as possible. The 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 in 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. In order to help maintain the stable $1.00 net asset
value, the average days to maturity of the securities can not be greater than
90 days.
The U. S. Government Securities in which the Fund is permitted to invest
include:
(1) bills, notes, bonds, and other debt securities issued by and are direct
obligations of the U. S. Treasury;
(2) repurchase agreements for U. S. Government Securities.
(3) 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 (GNMA)
. Farmers Home Administration
. Federal Home Loan Mortgage Corporation
. Federal National Mortgage Association (FNMA)
INVESTMENT RISKS
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 is 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.
Portfolio Turnover
The Monetta Fund and Small-Cap Fund normally execute an above average amount of
equity trading. Their annual portfolio turnover rates exceed 100%, and in some
years may exceed 200%*. The Mid-Cap Fund, Large-Cap Fund, and Balanced Fund
also have above average trading activity which results in the turnover rate to
normally range between 100% to 200%. This increase brokerage commission
expenses for the fund. To the extent that the trading results in a net
realized gains, the shareholder will be taxed on the distributions.
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 detail 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 in excess of 5% of the market value, or 10% at cost,
of its total assets, or pledge, mortgage, or hypothecate its assets
(and no borrowing may be undertaken except from banks as a temporary
measure for extraordinary or emergency purposes.)
*A portfolio turnover rate of 200% is equivalent to the Fund buying and selling
all of the securities in its portfolio twice in the course of a year.
MANAGEMENT
Management Of The Funds
The Board of Directors of the Fund, the Trustees of the Trust, Investment
Advisor and the Funds management and administrative teams are instrumental in
the management of the funds.
Board of Directors
The Board of Directors of Monetta Fund and the Board of Trustees of the Trust
oversee the management of the funds and meets at least quarterly to review
reports about fund operations. Although the Directors and Trustee do not
manage the funds, it has hired the investment advisor to do so.
At the recommendation of the Advisor, the Board approves the transfer agent,
custodial bank and Distributor on an annual basis.
More than 40% of the Directors and Trustee are independent of the Funds'
Investment Advisor.
Investment Advisor
The investment advisor is Monetta Financial Services, Inc. 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
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 receives a monthly fee from each Fund based on that Fund's average
net assets, computed and accrued daily. The annual management fee rate paid to
the Advisor by each Fund is listed in the "Fees and Expenses" section of this
prospectus. Out of that fee, the Advisor pays for all the expenses to manage
and operate the fund except for transfer agent, custodial, brokerage expenses
and fees and expenses of the independent Directors and Trustees. Legal counsel
fees for the independent Directors are reviewed by the Board to determine if
the expense is to be borne by the funds or the Advisor. All such legal
expenses incurred through December 31, 1998 were absorbed by the Advisor.
Investment Team
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, Mr. Timothy Detloff, Mr. Kevin Moore and Mr. Gary
Schaefer comprise the investment team. Mr. Bacarella is the Lead Manager for
all the funds except the Small-Cap Fund. The lead manager for the Small-Cap
Fund is Mr. Detloff. Although Mr. Bacarella is the Lead Manager for the
Intermediate Bond and Government Money Market Fund, Mr. Schaefer is responsible
for the day to day investment decisions.
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 te Monetta Fund
since it began operations. Mr. Bacarella was Director - Pension Fund
Investments for Borg-Warner Corporation until 1989. He received his Bachelors
Degree in Finance and Accounting from St. Joseph's College and his MBA from
Roosevelt University.
Mr. Detloff joined the Advisor in January 1996 as an Analyst. He has been Lead
Manager of the Small-Cap Fund and Co-Manager of the other equity funds since
June 1997. Prior to joining the Advisor, Mr. Detloff was an analyst for Amoco
Corp. since 1987. He received his Bachelor's Degree in Accounting from
Northern Illinois University and his MBA from the University of Illinois.
Mr. Moore joined the Advisor as senior analyst in October 1995. He has served
as co-manager of the Large-Cap Fund and Balanced Fund since May 1996 and the
Mid-Cap Fund since December 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. He has
his Bachelor of Arts Degree from Greenville College, MBA from the University of
Michigan and he is a Charted Financial Analyst.
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.
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 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.
Administrative Team
The administrative team of the advisor, is responsible for the daily
accounting function for each of the funds. It also prepares and files
all necessary regulatory filings.
CAPITAL STOCK
Although Monetta Fund, Inc. and Monetta Trust are separate legal entities, the
Prospectus is issued on a combined base for convenience and to avoid
redundancy.
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.
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 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.
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., ceases to be the Advisor. The Advisor has the right
to use the name for other enterprises, including other investment companies.
OTHER
LEGAL PROCEEDINGS
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.
YEAR 2000 ISSUES
The Funds could be adversely affected if the computer systems used by the
Advisor and other service providers, do not properly process and calculate
data-related information before and after year 2000. While year 2000-related
computer problems could have a negative impact on the Funds and your
investment, the Advisor, Monetta Financial Services, Inc., is working to avoid
these problems and to obtain assurances from other service providers that they
are taking similar steps.
SHAREHOLDER INFORMATION
Purchase of Fund Shares
New Account Existing Account Exchange
By Telephone: N/A With a bank transfer*, how- With telephone
1-800-241-9772 ever, your financial institu- exchange privilege,
8 a.m. to 5 p.m. tion must be an ACH member you may exchange
(Central Time) (minimum of $25) shares between
Monetta account
(minimum of $250,
$5.00 fee).
By Mail: Enclose a Enclose your check or money Enclosed written
c/o Firstar signed and order with an investment instructins to
Mutual Fund completed slip (see your current exchange your
Services application account statement) or a shares between
P.O. Box 701 form with a signed letter indicating Monetta account.
Milwaukee, WI check or your name, address and
53201-0701 money order account number.
payable to
monetta Funds.
By Wire:
A wire transfer N/A Deliver the following wire N/A
fee of $15.00 instructions to your bank:
will be deducted 1.) Firstar Bank-Milwaukee N.A.
from your 2.) ABA No. 0750-00022
account in 3.) Acct No. 112-952-137
addition to any 4.) Fund Name
fees your bank 5.) Your Name
may charge you. 6.) Your Monetta Account
No.
Redemption can not be made within the first 15 days that a new account is
opened.
The minimum initial investment in any Fund is $250.
Systematic withdrawl are available for accounts over $10,000 (minimum
withdrawal amount $500).
Purchase and redemption request received by the transfer agent prior to the
market close (New York Stock Exchange) will receive that days price.
*The initial selection of this option requires 15 business days to become
effective.
Redemption of Shares
New Account Existing Account Exchange
By Telephone:
1-800-241-9772 N/A With telephone redemption With telephone
8 a.m. to 5 p.m. priviledge, you may exchange priviledge,
(Central Time) redeem shares from your you may exchange
account the funds will shares between Monetta
be sent directly to you accounts (minimum of
or a designated financial $250, $5.00 fee).
institution.
By Mail:
c/o Firstar N/A Enclose signed written Enclose written
Mutual Fund instructions, including instructions to
Services account number, amount exchange your shares
P.O. Box 701 or number of shares between Monetta
Milwaukee, WI (redemptions of $50,000 accounts.
53201-0701 or more require a
signature guarantee).
Checks written on
the Gov't Money Market
Fund must be at least $500
to a maximum of $50,000.
($20 fee for an NSF check)
By Wire: N/A Available through Available throgh
preestablished broker preestablished broker
dealer agreements. dealer agreements.
Your completed redemption request must be received by the Transfer Agent before
the close of regular session trading on the New York Stock Exchange to receive
the net asset value calculated that day.
FINANCIAL HIGHLIGHTS
The following information for a share outstanding throughout each period
through 1998 has been audited by KPMG L.L.P., independent auditors. The
audited financial statements for 1998 of the Monetta Fund are contained in its
1998 Annual Report to Shareholders which may be obtained upon request at no
charge.
<TABLE>
<CAPTION>
Monetta Fund
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net asset value at
beginning of period $17.274 $15.842 $15.591 $14.515 $15.539
Net investment income (loss) (0.104) (0.041) (0.079) 0.029 (0.026)
Net realized and unrealized gain
(loss) on investments (1.554) 4.223 0.330 4.075 (0.938)
Total from investment
operations: (1.658) 4.182 0.251 4.104 (0.964)
Less:
Distributions from net investment
income 0.000 0.000 0.000 (0.028) 0.000
Distributions from short-term
capital gains, net (a) (0.283) (1.910) 0.000 (3.000) (0.060)
Distributions from net
realized gains (0.369) (0.840) 0.000 0.000 0.000
Total distributions (0.652 (2.750) 0.000 (3.028) (0.060)
Net asset value at end of period $14.964 $17.274 $15.842 $15.591 $14.515
Total return (9.03%) 26.18% 1.60% 28.02% (6.21%)
Ratio to average net assets:
Expenses 1.36% 1.48% 1.38% 1.36% 1.35%
Net investment income (0.64%) (0.24%) (0.51%) 0.18% (0.15%)
Portfolio turnover 107.5% 97.8% 204.8% 272.0% 191.3%
Net assets ($ millions) $124.7 $163.4 $211.5 $362.7 $364.9
</TABLE>
(a) Distributions of short-term capital gains are included as ordinary income
for tax purposes.
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.
The following information for a share outstanding throughout each period
through 1998 has been audited by KPMG L.L.P., independent auditors. The
audited financial statements for 1998 of the Monetta Trust are contained in its
1998 Annual Report to Shareholders which may be obtained upon request at no
charge
<TABLE>
<CAPTION>
Small-Cap
Equity Fund
2/1/97
Through
1998 12/31/97
<S> <C> <C>
Net asset value at beginning of
period $13.900 $10.000
Net investment income (loss) (0.272) (0.148)
Net realized and unrealized
gain (loss) on investments (0.136) 4.878
Total from investment operations (0.408) 4.730
Less:
Distributions from net
investment income 0 0.000
Distributions from short-term
capital gains, net (a) (0.096) (0.830)
Distributions from net
realized gains 0 0.000
Total distributions (0.096) (0.830)
Net asset value at end of period $13.396 $13.900
Total return* (2.81%) 47.17%
Ratios to average net assets:
Expenses* 2.39% 1.75%
Net investment income* (2.04%) (1.13%)
Portfolio turnover 200.4% 138.8%
Net assets ($ thousands) $3,980 $2,518
</TABLE>
*Ratios and total return of the year of inception and calculated from the
date of inception of the end of the period.
(a) Distributions of short-term capital gains are included as ordinary income
for tax purposes.
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.
<TABLE>
<CAPTION>
Mid-Cap
Equity Fund
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of
period $14.975 $14.814 $11.962 $12.199 $12.537
Net investment income (loss) 0.022 (0.045) 0.044 0.059 0.071
Net realized and unrealized
gain (loss) on investments (0.266) 4.296 2.852 2.874 0.193
Total from investment operations (0.244) 4.251 2.896 2.933 0.264
Less:
Distributions from net
investment income (0.022) 0.000 (0.044) (0.050) (0.069)
Distributions from short-term
capital gains, net (a) (0.477) (1.452) 0.000 (2.990) (0.533)
Distributions from net
realized gains (0.661) (2.638) 0.000 (0.130) 0.000
Total distributions (1.160) (4.090) (0.044) (3.170) (0.602)
Net asset value at end of period $13.571 $14.975 $14.814 $11.962 $12.199
Total return* (0.85%) 29.14% 24.20% 24.54% 2.17%
Ratios to average net assets:
Expenses* 1.21% 1.26% 1.23% 1.25% 1.30%
Net investment income* 0.15% (0.28%) 0.32% 0.44% 0.57%
Portfolio turnover 237.6% 137.8% 93.3% 254.4% 210.0%
Net assets ($ thousands) $18,920 $21,908 $17,338 $14,216 $11,736
</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.
The per share ratios are calculated using the weighted average number of shares
outstanding during the period, except distributions that are based on shares
outstanding at record date.
<TABLE>
<CAPTION>
Large-Cap
Equity Fund
9/1/95
Through
1998 1997 1996 12/31/95
<S> <C> <C> <C> <C>
Net asset value at beginning of
period $13.359 $12.266 $10.571 $10.000
Net investment income (loss) (0.068) (0.007) 0.023 0.005
Net realized and unrealized
gain (loss) on investments 1.074 3.250 2.928 0.570
Total from investment operations 1.006 3.243 2.951 0.575
Less:
Distributions from net
investment income 0.000 0.000 (0.023) (0.004)
Distributions from short-term
capital gains, net (a) (0.714) (1.113) (1.188) 0.000
Distributions from net
realized gains (0.214) (1.037) (0.045) 0.000
Total distributions (0.928) (2.150) (1.256) (0.004)
Net asset value at end of period $13.437 $13.359 $12.266 $10.571
Total return* 8.99% 26.64% 28.20% 5.74%
Ratios to average net assets:
Expenses* 1.86% 1.51% 1.51% 0.69%
Net investment income* (0.52%) (0.05%) 0.31% 0.05%
Portfolio turnover 207.5% 123.2% 152.7% 38.2%
Net assets ($ thousands) $4,185 $4,265 $2,288 $1,072
</TABLE>
*Ratios and total return of the year of inception are calculated from the
date of inception of the end of the period.
(a) Distributions of short-term capital gains are included as ordinary income
for tax purposes.
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.
<TABLE>
<CAPTION>
Balanced
Fund
9/1/95
Through
1998 1997 1996 12/31/95
<S> <C> <C> <C> <C>
Net asset value at beginning of
period $14.078 $12.643 $10.605 $10.000
Net investment income (loss) 0.290 0.264 0.132 0.009
Net realized and unrealized
gain (loss) on investments 0.838 2.398 2.598 0.602
Total from investment operations 1.128 2.662 2.730 0.611
Less:
Distributions from net
investment income (0.286) (0.224) (0.132) (0.004)
Distributions from short-term
capital gains, net (a) (0.389) (0.927) (0.560) (0.002)
Distributions from net
realized gains (0.055) (0.076) 0.000 0.000
Total distributions (0.730) (1.227) (0.692) (0.006)
Net asset value at end of period $14.476 $14.078 $12.643 $10.605
Total return* 8.59% 21.21% 25.94% 6.16%
Ratios to average net assets:
Expenses* 0.84% 1.02% 1.40% 0.91%
Net investment income* 2.06% 1.88% 1.54% 0.08%
Portfolio turnover 127.7% 115.9% 117.8% 54.8%
Net assets ($ thousands) $14,489 $12,054 $2,336 $410
</TABLE>
*Ratios and total return of the year of inception are calculated from the
date of inception of the end of the period.
(a) Distributions of short-term capital gains are included as ordinary income
for tax purposes.
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.
<TABLE>
<CAPTION>
Intermediate Bond Fund
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of
period $10.445 $10.208 $10.244 $9.624 $10.345
Net investment income 0.592 0.599 0.612 0.655 0.589
Net realized and unrealized gain
(loss) on investments 0.269 0.278 0.019 0.740 (.690)
Total from investment operations 0.861 0.877 0.631 1.395 (0.101)
Less:
Distributions from net
investment income (0.577) (0.592) (0.612) (0.655) (0.580)
Distributions from short-term
capital gains, net (a) (0.038) (0.047) (0.055) (0.120) (0.040)
Distributions from net realized
gains (0.039) (0.001) 0.000 0.000 0.000
Total distributions (0.654) (0.640) (0.667) (0.775) (0.620)
Net asset value at end of period $10.652 $10.445 $10.208 $10.244 $9.624
Total return 8.38% 8.91% 6.46% 14.84% (1.04%)
Ratios to average net assets:
Expenses - Net 0.55% 0.65% 0.55% 0.27% 0.28%
Expenses - Gross (b) 0.75% 0.87% 0.85% 0.75% 0.88%
Net investment income-Net 5.59% 5.82% 5.75% 5.94% 5.94%
Net investment income-Gross (b) 5.39% 5.60% 5.45% 5.46% 5.34%
Portfolio turnover 52.0% 96.7% 28.9% 75.1% 94.5%
Net assets ($ thousands) $6,676 $3,933 $2,769 $3,589 $3,010
</TABLE>
(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.
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.
<TABLE>
<CAPTION>
Government Money Market Fund
1998 1997 1996 1995 1994
<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 0.051 0.050 0.049 0.059 0.040
Net realized and unrealized gain
(loss) on investments 0.000 0.000 0.000 0.000 0.000
Total from investment operations
Less:
Distributions from net
investment income (0.051) (0.050) (0.049) (0.059) (0.040)
Distributions from short-term
capital gains, net (a) 0.000 0.000 0.000 0.000 0.000
Distributions from net realized
gains 0.000 0.000 0.000 0.000 0.000
Total distributions (0.051) (0.050) (0.049) (0.059) (0.040)
Net asset value at end of period $1.000 $1.000 $1.000 $1.000 $1.000
Total return 5.24% 5.15% 5.06% 5.87% 4.04%
Ratios to average net assets:
Expenses - Net 0.32% 0.39% 0.31% 0.07% 0.0%
Expenses - Gross (b) 0.68% 0.76% 0.67% 0.59% 0.66%
Net investment income-Net 5.11% 5.02% 4.95% 5.69% 4.04%
Net investment income-Gross (b) 4.76% 4.65% 4.59% 5.17% 3.39%
Portfolio turnover N/A N/A N/A N/A N/A
Net assets ($ thousands) $4,095 $4,464 $6,232 $4,393 $3,315
</TABLE>
(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.
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.
ADDITIONAL INFORMATION
.Annual and Semi-Annual Reports
.Statement of Additional Information
These reports contain more detailed information about the Funds' investments
and the factors that significantly affected performance during the most recent
fiscal year. In addition, the Statement of Additional Information is
incorporated by reference into this Prospectus, making the SAI a legal part of
this Prospectus.
Information about the funds, including these reports, can be obtained without
charge (except where noted) upon request.
MONETTA SEC
.In Person 1776-A South Naperville Road Public Reference Room
Suite 100 Washington, D.C.
Wheaton, IL 60187-8133
.By Telephone 1-800-MONETTA 1-800-SEC-0330
1-800-684-3416 (TDD) (Location/Hours/Fees Only)
.By Mail 1776-A South Naperville Road Public Reference Section
Suite 100 Washington, D.C. 20549-6009
Wheaton, IL 60187-8133 (Payment of duplication fee
required with request)
.By Internet: http://www.monetta.com http://www.sec.gov
INVESTMENT COMPANY ACT FILE NO: Monetta Fund 811-4466
Monetta Trust 811-7360
Monetta Family of Mutual Funds POSTAGE
1776-A South Naperville Road, Suite 100
Wheaton, IL 60187-8133
Share Purchase Application
<PAGE>
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 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.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
APRIL 30, 1999
MONETTA FAMILY OF MUTUAL FUNDS
MONETTA FUND, INC.
MONETTA TRUST, INCLUDES THE FOLLOWING SERIES:
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
This Statement of Additional Information (SAI) is not a Prospectus,
however, it provides you with additional information that should be read in
conjunction with the Funds' Prospectus dated April 30, 1999. A copy of the
Prospectus may be obtained by contacting us at the address or telephone
number listed on the back cover or visit our web site at www.monetta.com.
This Statement of Additional Information incorporates by reference certain
information that appears in the Funds' Annual and Semi-Annual Reports,
which may be obtained without charge by calling 1-800-MONETTA.
TABLE OF CONTENTS PAGE
. THE FUNDS' HISTORY ...........................................X
. INFORMATION ABOUT THE FUNDS ..................................X
Investment Guidelines ...................................X
Investment Strategies and Risks .........................X
Investment Restrictions .................................X
. DIRECTORS, TRUSTEES AND OFFICERS .............................X
. SIGNIFICANT SHAREHOLDERS .....................................X
. SERVICE PROVIDERS ............................................X
Investment Advisor and Administrator ....................X
Distributor .............................................X
Transfer Agent and Custodian ............................X
Legal Counsel ...........................................X
Independent Auditors ....................................X
. 12b-1 PLAN ...................................................X
. BROKERAGE ALLOCATION .........................................X
. CAPITAL STOCK ...............................................X
. SHAREHOLDER INFORMATION ......................................X
. TAXATION OF THE FUNDS ........................................X
. PERFORMANCE INFORMATION ......................................X
. FINANCIAL STATEMENTS .........................................X
. APPENDIX I - FIXED INCOME SECURITIES RATINGS .................X
THE FUNDS' HISTORY
Monetta Fund, Inc. ("Fund" or the "registrant") is an open-end, diversified
management investment company that was organized in 1985 as a Maryland
corporation. The inception date of the Monetta Fund is 05/06/86.
Monetta Trust ("TRUST" or the "registrant") is also an open-end,
diversified management investment company that was organized as a
Massachusetts Trust in 1992. The following funds are each a series of
Monetta Trust:
<TABLE>
<CAPTION>
INCEPTION DATE
<S> <C>
Monetta Small-Cap Equity Fund 02/01/97
Monetta Mid-Cap Equity Fund 03/01/93
Monetta Large-Cap Equity Fund 09/01/95
Monetta Balanced Fund 09/01/95
Monetta Intermediate Bond Fund 03/05/93
Monetta Government Money Market Fund 03/01/93
</TABLE>
INFORMATION ABOUT THE FUNDS
INVESTMENT GUIDELINES
Each Fund's investment objectives, as stated in the Prospectus, 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.
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. This means that the approval of the lesser of (i)
67% of the Fund's shares present at a meeting, if more than 50% of all of
the shares outstanding are present or (ii) more than 50% of all of the
Fund's outstanding shares is required.
Since each of the Funds are registered under The Investment Company Act of
1940 as diversified open-ended investment companies, each Fund agrees that
it will not own more than 5% of its total assets in a single issue
security. This applies only to 75% of the total assets. That is to say
that if it does own more than 5% of its total assets in individual
securities, the total of those over 5% cannot exceed 25%.
Within the restrictions outlined here and in the Prospectus, the Advisor
has full discretion on the investment decision of the Funds.
INVESTMENT STRATEGIES AND RISKS
The following is a detailed description, along with associated risks, of
the various securities that some or all of the Funds may invest in.
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-sized 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.* 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 and is
generally referred to as its investment value. The investment value of the
convertible security will typically fluctuate inversely with changes in
prevailing interest rates. However, at the same time, the convertible
security will be influenced by its conversion value, which is the market
value of the underlying common stock that would be obtained upon
conversion. Conversion value fluctuates directly with the price of the
underlying common stock.
*Yields on debt securities available for purchase by a Fund vary over time,
no specific yield on shares of a Fund can be assured.
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 tend to be more sensitive to interest rate and economic
changes, may be obligations of issuers who are less creditworthy than
issuers of higher quality convertible securities and 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 (see Investment Policy), the Balanced Fund
and the 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 these
funds. These funds 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. These funds 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. These funds 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,
these funds could experience delays in liquidating the loan collateral
and/or recovering the loaned securities and losses, including possible
decline in the value of the collateral or in the value of the securities
loaned during the period while seeking to enforce its rights thereto,
possible subnormal levels of income and lack of access to income during
this period and 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 30 days 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 market value at least as great as the purchase price of the
securities to be purchased will be segregated on the books of the fund and
held by the custodian throughout the period of the obligation. The use of
this investment 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 delays in both
liquidating the underlying securities and losses, including the possible
decline in the value of the collateral during the period while seeking to
enforce its rights thereto, possible below-normal levels of income and lack
of access to income during this period and expenses of enforcing its
rights.
OPTIONS ON SECURITIES AND INDICES
The Balanced Fund and the Intermediate Bond Fund may purchase and sell put
and call options on securities and indices, 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. 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 specific
multiplier for the index option. (An index is designed to reflect specific
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."
This means, 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 a 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 elects to do so. A capital gain or
loss will be realized from a closing purchase transaction if the cost of
the closing option is less or more than the premium received from writing
the option. If the premium received from a closing sale transaction is
more or less than the premium paid to purchase the option, the fund will
realize a capital gain or 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 ask 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. 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 a fund, the
fund would not be able to close out the option. If restrictions on
exercise of options were imposed, a fund might be unable to exercise an
option it had 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 at a specified price and time. A public market
exists in futures contracts covering a number of indices (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 types of futures contracts will be developed and
traded.
A fund may purchase and write call and put futures options. Futures
options possess many of the same characteristics as options on securities
and indices, as 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 may use futures contracts to hedge against, or
increase its 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 a fund's securities or the price
of the securities that a fund intends to purchase. Although other
techniques may 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 desired exposure more efficiently and cost effectively 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 desired. 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 the related securities, technical
influences in futures and futures options trading and differences between
the securities market and the securities underlying the standard contracts
available for trading. In the case of index futures contracts, for
example, the composition of the index including the issuers and the
weighting of each issue, may differ from the composition of a fund's
portfolio. 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 daily 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 a
fund seeks to close out a futures or futures option position. A fund may
be exposed to possible loss on a position during such an interval and would
continue to be required to meet margin requirements until the position was
closed. In addition, many of the types of contracts discussed above are
relatively new instruments with no significant trading history. As a
result, there can be no assurance that an active secondary market will
develop or continue to exist.
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, at market
value, to an extent greater than 10% of the Fund's total assets at cost
(and no borrowing may be undertaken except from banks as a temporary
measure for extraordinary or emergency purposes);
4) The Fund will not invest more than 5% of its total assets in the
securities of any one issuer (this limitation shall not apply to
obligations issued or guaranteed by the United States Government, its
agencies and 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 (this
limitation shall not apply to obligations issued or guaranteed by the
United States Government, its agencies and 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 less than 3
years continuous operation (including that of any 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 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 referred to as
"restricted securities" which are required to be registered under the
Securities Act of 1933 before the securities can be resold to the
public;
13) The Fund will not invest in repurchase agreements which mature in more
than seven days;
14) The Fund will not purchase shares which are not readily marketable;
15) The Fund will not make loans other than in accordance with the Fund's
investment objectives, including 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 SERIES OF FUNDS operate under the following
investment restrictions:
1) The Funds, except for the Government Money Market Fund, may not invest
more than 5% of its total assets (valued at the time of investment) in
securities of a single issuer, with respect to 75% of the value of a
Fund's total assets, except that this restriction does not apply to
U.S. Government Securities;
For the Government Money Market Fund, the fund may not 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) The Funds may not 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) The Funds may not 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 the Government Money Market Fund, to repurchase
agreements;
4) The Funds may not make loans, but this restriction shall not prevent
the funds from buying bonds, debentures or other debt obligations that
are publicly distributed or privately placed with financial
institutions, investing in repurchase agreements or 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*);
For the Government Money Market Fund, the above restriction shall not
prevent the fund from purchasing U.S. Government Securities or entering
into repurchase agreements;
5) The funds may not borrow money except 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;
For the Balanced Fund and the Intermediate Bond Fund only, the funds may
not borrow money in connection with transactions for options, futures and
options on futures;
6) The funds may not 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;**{
7) The funds may not purchase and sell real estate or interests in real
estate, although the funds may invest in marketable securities of
enterprises that invest in real estate or interests in real estate;
8) The funds may not purchase and sell commodities or commodity contracts,
except futures and options on futures;
For the Balanced Fund and the Intermediate Bond Fund, these funds may not
enter into any futures and options on futures;
9) The funds may not make margin purchases of securities, except for use of
such short-term credits as are needed for clearance of transactions in
connection with transactions in options, futures, and options on futures;
For the Balanced Fund and the Intermediate Bond Fund, these funds may not
make margin purchase of securities for contracts on option, futures and
options on futures;
10) The funds may not 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;
11) The funds may not issue any senior security except to the extent permitted
under the Investment Company Act of 1940.
**The funds do not currently intend to invest in restricted securities.
Each of the above noted restriction 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 these non-fundamental restrictions,
a fund may not:
1) Invest in companies for the purpose of management or the exercise of
control;
2) Invest more than 5% of its total assets (valued at time of investment)
in securities of issuers with less than three years' operation
including any predecessors;
3) Acquire securities of other registered investment companies, except in
compliance with the Investment Company Act of 1940 and any applicable
state laws;
4) Invest more than 10% of its net assets (valued at the time of such
investment) in illiquid securities, including repurchase agreements
maturing in more than seven days.
DIRECTORS, TRUSTEES AND OFFICERS
The following table lists the Board of Directors of the Monetta Fund and
Trustees of the Monetta Trust.
The individuals marked by an asterisk (*) are considered interested persons
(as defined in the Investment Company Act of 1940) as a result of their
affiliation with various entities, including the Monetta Fund, the Advisor
and the Monetta Trust.
The address for each Board member and Trustee listed below is 1776-A South
Naperville Road, Suite 100, Wheaton, IL 60187.
<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* 49 Director Trustee Chairman, Chief Executive
and and Officer, and President of
President President MFSI since April 1997;
Chairman and Chief
Executive Officer of
MFSI, October 1, 1996,
to April 1997; President,
September 1996; Director,
MFSI, since 1984; Secretary,
Treasurer, and Director,
MIS LLC., (formerly Monetta
Brokerage,Inc.), since 1987;
President and Director, Fund
since 1985; President and
Trustee, Trust since 1993.
John W. Bakos* 51 Director Trustee Division Placement
Manager, Sears, Roebuck &
Co., since 1969; Director
and Vice President, MFSI,
1984 to 1991.
John L. Guy Jr. 46 Director Trustee President, Heller Small
Business Lending Corp.
(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 56 Director Trustee President, DuPage Capital
Management, Ltd., since
1995; President and
Secretary Salida Corp.
(formerly Pollenex Corp.),
February 1993 to April 1995.
Paul W. Henry* 56 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, Vice
President, MFSI,
1984 to 1991.
William M. Valiant 73 N/A Trustee Director, MFSI, February
1991 to 1997; Director, MIS,
1988 to 1997; Vice President
and Treasurer, Borg-Warner
Corporation, retired,
July 1990.
William R. Bacarella 47 Vice Vice Vice Pres., Fund and Trust,
Pres. Pres. since May 1997; President,
MIS LLC (formerly Monetta
Brokerage, Inc.), since
June 1995.
Maria Cesario DeNicolo 49 CFO CFO Chief Financial Officer,
Treasurer Treasurer MFSI, since May 1997;
and and Secretary, MFSI, since
Secretary Secretary October 1996; Treasurer,
MFSI, since February 1994;
Controller, MFSI, since June
1992; Secretary, Trust, since
1993; Treasurer, Trust,
since 1994; Treasurer,
Fund, since 1993; Chief
Chief Financial Officer,
MIS LLC,(formerly Monetta
Brokerage,Inc.), since
1995; Sole proprietor,
Cesario DeNicolo CPA
and Associates, May 1990
to June 1993.
Christina M. Curtis 36 Asst. Asst. Asst. Secretary, Fund and
Secretary Secretary Trust since November, 1998;
Asst. Secretary, MFSI
since Octoer 1996.
</TABLE>
Mr. Bacarella and Mr. Bakos serve as members of the Executive Committee of the
Monetta Fund and Monetta Trust. The Executive Committee, which meet between
regular meetings of the respective Boards, are authorized to exercise all of
the Boards' powers.
The following table sets forth compensation paid by the Monetta Fund and the
Monetta Trust to their respective Directors and Trustees during 1998:
<TABLE>
<CAPTION>
Compensation Compensation Compensation
Received From Received From Received From
NAME OF PERSON the Fund the Trust Fund Complex
<S> <C> <C> <C>
Robert S. Bacarella(1) $XXX $XXX $XXX
John W. Bakos(1) XXX XXX XXX
John L. Guy, Jr. XXX XXX XXX
Paul W. Henry(1) XXX XXX XXX
Mark F. Ogan XXX XXX XXX
William Valiant XXX XXX XXX
</TABLE>
(1) Directors and/or Trustees who are interested persons, including
all employees of MFSI, receive no compensation from Fund or the
Trust. Compensation reflected above is for the period of January
through December, 1998.
(2) The Monetta Fund Complex consists of the Monetta Fund, Inc. and the
series of funds of the Monetta Trust. Neither the Monetta Fund nor
the Monetta Trust offers any retirement or deferred compensation
benefits to the members of the Boards of Directors.
SIGNIFICANT SHAREHOLDERS
At February 28, 1998, the Advisor and the Directors and Officers of the Monetta
Fund, as a group, owned beneficially less than XX% of the issued and
outstanding shares of common stock of the Monetta Fund. In addition, the Funds
are unaware of any shareholders, beneficial or of record, who owned more than
5% of a Fund's outstanding shares as of that date.
Shares of the Trust owned by the Advisor, Trustees and Officers, as of February
28, 1998, were as follows:
<TABLE>
<CAPTION>
Advisor Trustees & Officers
Shares % of Funds Shares % of Funds
<S> <C> <C> <C> <C>
Small-Cap Fund XXX 0.00 XXX 0.00
Mid-Cap Fund XXX 0.00 XXX 0.00
Large-Cap Fund XXX 0.00 XXX 0.00
Balanced Fund XXX 0.00 XXX 0.00
Intermediate Bond Fund XXX 0.00 XXX 0.00
Government Money Market Fund XXX 0.00 XXX 0.00
</TABLE>
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: XXX shares of the Small-Cap Fund; XXX shares of Mid-Cap Fund, XXX
shares of the Large-Cap Fund; XXX shares of the Balanced Fund; XXX shares of
the Intermediate Bond Fund; and XXX 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: XXX shares of the
Small-Cap Fund; XXX shares of the Mid-Cap Fund; XXX shares of the Large-Cap
Fund; XXX shares of the Balanced Fund; XXX shares of the Intermediate Bond
Fund; and XXX shares of the Government Money Market Fund.
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.
SERVICE PROVIDERS
The Funds utilize the services of various providers to conduct the daily
activities of the Funds. Each of the service providers described below
fulfills a specific function and is necessary to ensure the efficient operation
to the Funds.
INVESTMENT ADVISOR AND ADMINISTRATOR
The investment advisor and administrator for the Monetta Fund and Monetta Trust
is Monetta Financial Services, Inc., ("MFSI"). Under separate Investment
Advisory Agreements, dated November 10, 1988 and February 1, 1997 respectively,
the Advisor provides various services to the Monetta Fund and Trust. A
description of the responsibilities of the Advisor appears in the "Management"
section of the Prospectus.
Robert S. Bacarella owns 71% of the outstanding voting stock of the Advisor.
Paul W. Henry and John W. Bakos each own 3% of the outstanding voting stock of
the Advisor.
The Advisor owns 99% of the common stock of Monetta Investment Services, L.L.C.
(or "MIS), a registered broker-dealer, and as a result of his ownership
interest in the Advisor, Mr. Bacarella has a 71% beneficial ownership interest
in MIS. The Investment Advisory Agreements, between the Funds and the Advisor,
authorize MIS to act as a broker for the purchase and/or sale of securities by
the Funds.
For the services provided to the Funds, the advisor is paid a monthly fee based
on a percentage of the average net assets of each Fund. Investment management
fees paid by each Fund, for the fiscal years ended December 31, 1998, 1997 and
1996, are as follows:
INVESTMENT MANAGEMENT FEES
<TABLE>
<CAPTION>
FUND 1998 1997 1996
<S> <C> <C> <C>
Monetta Fund $XXX $1,664,886 $2,946,088
Monetta Trust-
Mid-Cap Fund XXX 153,402 162,014
Small-Cap Fund XXX 6,627 N/A
Large-Cap Fund XXX 28,120 14,030
Balanced Fund XXX 33,561 5,316
Intermediate Bond Fund XXX 11,485 19,829
Government Money Market Fund XXX 13,868 20,637
</TABLE>
Investment management fees waived for the Intermediate Bond Fund and the
Government Money Market Fund, for the fiscal years ended December 31, 1998,
1997 and 1996, are as follows:
<TABLE>
<CAPTION>
__________Waived Fees___________
FUND 1998 1997 1996
<S> <C> <C> <C>
Intermediate Bond Fund $XXX $6,929 $9,915
Government Money Market Fund XXX 13,868 20,637
</TABLE>
In addition, custodian and transfer agent charges of $XXX, $6,008 and $800, for
the fiscal years ended December 31, 1998, 1997 and 1996, respectively, were
absorbed by the Advisor for the Government Money Market Fund.
DISTRIBUTOR
The shares of each Fund are offered for sale on a continuous basis through
Funds Distributor, Inc., ("Distributor"), a registered broker-dealer, pursuant
to written Distribution Agreements with the Monetta Fund and the Monetta 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 Series of the Monetta Trust to the extent available
within the limits of the Distribution and Service Plan (12b-1 plan) and (ii) to
the extent Fund assets are not available under the Plan, by the Advisor.
For the Monetta Fund, the Advisor pays all the fees and expenses of the
Distributor.
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.
The Distributor's principal business locations 60 State Street, Suite 1300,
Boston, MA 02109.
TRANSFER AGENT AND CUSTODIAN
Firstar Mutual Funds Services, LLC, 615 East Michigan Street, 3rd Floor,
Milwaukee, Wisconsin 53202, acts as the transfer agent and Firstar Bank,
Milwaukee, N.A. (same location) 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.
LEGAL COUNSEL
The legal counsel for the Fund and the Trust is Sonnenschein Nath & Rosenthal,
8000 Sears Towers, Chicago, Illinois 60606.
INDEPENDENT AUDITORS
The independent auditors for the Funds are KPMG Peat Marwick LLP, 303 East
Wacker Drive, Chicago, Illinois 60601. The independent auditors 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 business advisory services when engaged to do so by the Funds.
RULE 12B-1 PLAN
Effective February 1, 1997, the Monetta Trust adopted a Service and
Distribution Plan ("12b-1 Plan") pursuant to Rule 12b-1 under the 1940
Investment Company Act. The maximum aggregate amount a fund may pay for
service fees and other distribution related expenses, as a percentage of the
Fund's average net assets, is as follows:
<TABLE>
<CAPTION>
FUND % OF COMPENSATION
<S> <C>
Mid-Cap Fund .0025%
Small-Cap Fund .0025%
Large-Cap Fund .0025%
Balanced Fund .0025%
Intermediate Bond Fund .0025%
Government Money Market Fund .0010%
</TABLE>
Any excess fees and or expenses incurred, for such service and distribution
activities, may be paid directly by the Advisor.
The principal types of activities, for which 12b-1 payments have been made
and/or incurred, for the Monetta Trust, during the fiscal year ended December
31, 1998, are as follows:
Servicing of shareholder accounts $XXX
Advertising XXX
Mailing expenses XXX
Promotional expenses XXX
Registration expenses XXX
Printing/Distribution expenses,
non-shareholders XXX
Commissioner expenses XXX
The 12b-1 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 12b-1 Plan or any agreement related to the
12b-1 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 12b-1 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.
BROKERAGE ALLOCATION
The Advisor has discretion to select brokers, dealers and markets in which to
execute portfolio transactions. The main objective 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.
All securities transactions, of the Intermediate Bond Fund and the Government
Money Market Fund, in 1998, 1997 and 1996, respectively, were executed on a
principal basis.
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 judgment of the usefulness of
research and other information provided by a broker to the Advisor in managing
the Funds' investment portfolios. In some cases, such information, including
data or recommendations concerning particular securities, relates to the
specific transaction placed with the broker. In general, however, 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 furnished in
connection with brokerage transactions. 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 Boards that other clients of the
Advisor might also benefit from the information obtained for the Funds, in the
same manner that the Funds might also benefit from the information obtained by
the 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
funds. MFSI has adopted guidelines to avoid any conflict of interest between
the interests of Monetta Trust, Monetta Fund, individually managed accounts,
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 Monetta
Trust have each determined that portfolio brokerage transactions for their
respective Funds may be executed through 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 and Monetta Trust,
including a majority of the Directors and Trustees who are not "interested"
Directors and 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.
For the fiscal years ended December 31, 1998, 1997 and 1996, aggregate
brokerage commissions of each Fund were as follows:
<TABLE>
<CAPTION>
FUND 1998 1997 1996
<S> <C> <C> <C>
Monetta Fund XXX XXX XXX
Monetta Trust- XXX XXX XXX
Mid-Cap Fund XXX XXX XXX
Large-Cap Fund XXX XXX XXX
Small-Cap Fund XXX XXX N/A
Balanced Fund XXX XXX XXX
</TABLE>
Of the aggregate broker commissions paid by the Funds for the fiscal year ended
December 31, 1998, the following amounts were paid to MIS:
<TABLE>
<CAPTION>
1998 COMMISSIONS
AMOUNT % OF TOTAL
<S> <C> <C>
Monetta Fund XXX 0.00%
Monetta Trust-
Mid-Cap Fund XXX 0.00%
Large-Cap Fund XXX 0.00%
Small-Cap Fund XXX 0.00%
Balanced Fund XXX 0.00%
</TABLE>
CAPITAL STOCK AND OTHER SECURITIES
. MONETTA FUND
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 pre-emptive, conversion or exchange rights. The obligations and
liabilities associated with ownership, or shares, in the Fund are limited to
the extent of the shareholder's investment in the Fund. Voting rights are non-
cumulative so that the holders of more than 50% of the shares voting in any
election may, if they so choose, to elect all of the Directors of the Fund.
. MONETTA TRUST
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 of 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 as a result of an unsatisfied liability of another Fund of the
Trust is also believed to be remote since it would also 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 investment 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 Investment Company
Act or other applicable laws. 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 the two-thirds of the outstanding shares of the Trust. A
trustee may be removed with our without cause upon the written declaration of a
majority of the Trustees.
BUYING AND SELLING SHARES
Detailed information regarding the purchase, redemption and exchange of Fund
shares is contained in the Funds' Prospectus, which is available free of charge
by calling our toll-free number (1-800-MONETTA).
The Funds reserve 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 ("SEC"),
or the NYSE is closed for other than customary weekend and holiday closings,
(b) the SEC has by order permitted such suspension or (c) an emergency, as
determined by the SEC, exists making disposal of portfolio securities or
valuation of net assets of such Fund not reasonably practicable.
The Monetta Fund and the Monetta Trust have each elected to be governed by Rule
18f-1 under the 1940 Investment Company 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.
VALUATION OF FUNDS' SHARES
Each Fund's net asset value is determined on days on which the 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:
1) 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 ask quotations. All other over-the-counter securities for which
reliable quotations are available are valued at the mean of the latest bid and
ask 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.
2) VALUATION OF GOVERNMENT MONEY MARKET FUND - Government Money Market Fund
values its portfolio by the "amortized cost method" by which it attempts to
maintain its net asset value at $1.00 per share. This involves valuing an
instrument at its cost and thereafter assuming a constant amortization to
maturity of any discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the instrument. Although this method
provides certainty in valuation, it may result in periods during which value,
as determined by amortized cost, is higher or lower than the price the Fund
would receive if it sold the instrument. Other assets are valued at a fair
value determined in good faith by the Board of Trustees.
In connection with the Government Money Market Fund's use of amortized cost and
the maintenance of the Fund's per-share net asset value of $1.00, the Trust has
agreed (i) to seek to maintain a dollar-weighted average portfolio maturity
appropriate to the Fund's objective of maintaining relative stability of
principal and not in excess of 90 days, (ii) not to purchase a portfolio
instrument with a remaining maturity of greater than thirteen months and (iii)
to limit its purchase of portfolio instruments to those instruments that are
denominated in U.S. dollars which the Board of Trustees determines represent
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
of Directors.
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 may 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 (i) selling portfolio
instruments prior to maturity to realize capital gains or losses (ii) shorten
average portfolio maturity (iii) increasing, reducing, or suspending dividends
or distributions from capital or capital gains or (iv) redeeming shares in
kind. The Board might also establish a net asset value per share by using
market values, which may result in a duration of net asset value from $1.00 per
share.
TAXATION OF THE FUNDS
Each Fund intends to continue to qualify as a "regulated investment company"
under Subchapter M of the Internal Revenue Code of 1986 (the "Code"), as
amended. Such qualification exempts the Funds from federal income taxes to the
extent that is distributes substantially all of its net investment income and
net realized capital gains to the shareholders.
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) - 1)
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.
The Intermediate Bond Fund's yield for the 30 days ended December 31, 1998, was
5.23 %.
CURRENT OR EFFECTIVE YIELD
The 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
Effective Yield = (1 + Net Change in Account Value) 365/7 - 1
---------------------------------
Beginning Account Value
In addition to fluctuations reflecting changes in net income of the Fund
resulting from changes in income earned on its portfolio securities and in its
expenses, the Fund's yield also would be affected if the Fund were to restrict
or supplement its dividends in order to maintain its net asset value at $1.00
(See "Shareholder Information" in the Prospectus and "Valuation of Fund Shares"
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, 1998, the Government Money Market Fund's
current seven-day yield was 5.08% and the effective yield was 5.21%.
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:
ERV = P(1+T)n
P = the amount of an assumed initial investment of $1,000 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 $1,000 investment held until the
end of such period.
ADVERTISING INFORMATION
In advertising and sales literature, a Fund may compare its yield and
performance with that of other mutual funds, indices or averages of other
mutual funds, indices of related financial assets or data and other competing
investment and deposit products available from or through other financial
institutions. The composition of these indices 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 indices 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 indices or averages
listed above and (iii) descriptions of the Fund's or a portfolio manager's
economic and market outlook.
A Fund's performance is a result of conditions in the securities markets,
portfolio management and operating expenses. Although information such as
that described above may be useful in reviewing a Fund's performance and in
providing some basis for comparison with other investment alternatives, it
is not necessarily indicative of future performance and should not be used
for comparison with other investments using different reinvestment
assumptions or time periods.
The Funds may also compare their performances to various stock indices
(groups of unmanaged common stocks), including Standard & Poor's 500 Stock
Index, the Value Line Composite Average the Russell Indices, the Nasdaq
Composite Index, 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 any
other 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.
FINANCIAL STATEMENTS
The financial statements for the Fund and Trust, including the Statement of
Assets and Liabilities and the Statement of Operations for the fiscal year
ended December 31, 1998, and the Statements of Changes in Net Assets for the
fiscal years ended December 31, 1998, and 1997, are included in the Annual
Reports to shareholders for the fiscal year ended December 31, 1998. The
report on the financial highlights for the Fund and the Trust are included
in the Annual Reports to shareholders for the fiscal year ended December 31,
1998, each such Annual Report incorporated herein by reference.
You may receive copies of the reports without charge upon request to
Monetta at the address and phone number shown on the back cover of this
Statement of Additional Information.
APPENDIX I - FIXED INCOME SECURITIES RATINGS
GENERAL RATINGS INFORMATION
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. Rating 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 rating used by Moody's and S&P.
BOND RATINGS
Ratings by Moody's
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 are not unlikely to impair the fundamentally strong
position of such bonds.
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.
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.
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.
Bonds rated Ba are judged to have speculative elements and 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 periods of significant economic change over the future. Uncertainty
of position characterizes bonds in this class.
Bonds rated B generally lack characteristics of a desirable investment.
Assurance of interest and principal payments or of maintenance of other
terms of the contract over any length of time may be minimal.
Bonds rated Caa are of poor quality. Such issues may be in default or there
may be present negative elements 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
Debt rated AAA has the highest rating available. Ability to pay interest
and repay principal is extremely strong.
Debt rated AA has a very strong ability to pay interest and repay principal
and differs only minimally from the highest rated issues.
Debt rated A has a strong ability to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes
in economic conditions than debt in higher rated categories.
Debt rated BBB is regarded as having an adequate ability to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions are more likely to lead to a
weakened ability to pay interest and repay principal for debt in this
category than for debt in higher rated categories.
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 and major risk exposures to adverse
conditions.
NOTE: These ratings may be modified by the addition of a plus (+)
or minus (-) sign to show relative standing within the major rating
categories.
Commercial Paper Ratings
Ratings by Moody's
The rating Prime-1 (P-1) is the highest commercial paper rating assigned by
Moody's. Among the factors considered by Moody's in assigning ratings are
the following:
(1) evaluation of the management of the issuer;
(2) economic evaluation of the issuer's industry or industries and an
appraisal of speculative type risks which may be inherent in certain
areas;
(3) evaluation of the issuer's products in relation to competition and
customer acceptance;
(4) liquidity;
(5) amount and quality of long-term debt;
(6) trend of earnings over a period of ten years;
(7) financial strength of a parent company and the relationships which
exist with the issuer;
(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 possess
above average long-term fundamental operating and financing capabilities
combined with ongoing excellent liquidity characteristics.
Paper rated A-1 must have the following characteristics:
1) liquidity ratios are adequate to meet cash requirements,
2) long-term senior debt is rated A or better,
3) the issuer has access to at least two additional channels of borrowing,
4) 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.
Monetta Fund, Inc.
Monetta Trust
1776-A South Naperville Road
Suite 100
Wheaton, IL 60187
1-800-MONETTA
www.monetta.com
<PAGE>
Monetta Family of Mutual Funds
No-Load
Monetta Fund
Small-Cap Equity fund
Mid-Cap Equity Fund
Large-Cap Equity Fund
Balanced Fund
Intermediate Bond Fund
Government Money Market Fund
1-800-MONETTA
www.monetta.com
Annual Report
December 31, 1998
<TABLE>
<CAPTION>
Table of Contents
Performance Highlights
<S> <C>
Monetta Fund 4
Monetta Small-Cap Equity Fund 5
Monetta Mid-Cap Equity Fund 6
Monetta Large-Cap Equity Fund 7
Monetta Balanced Fund 8
Monetta Intermediate Bond Fund 9
Monetta Government Money Market Fund 10
Independent Auditors Report 11
Schedule of Investments
Monetta Fund 12
Monetta Small-Cap Equity Fund 14
Monetta Mid-Cap Equity Fund 15
Monetta Large-Cap Equity Fund 16
Monetta Balanced Fund 17
Monetta Intermediate Bond Fund 19
Monetta Government Money Market Fund 19
Financial Statements
Statements of Assets & Liabilities 20
Statements of Operations 21
Statements of Changes in Net Assets 22
Notes to Financial Statements 24
</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 not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other Government
Agency. Although the Fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to loose money by investing in the Fund.
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
Dear Fellow Shareholders: January 15, 1999
The financial markets continued their winning streak in 1998, especially in the
larger capitalization stocks. The markets moved higher primarily due to low
interest rates and continued steady economic growth, in spite of international
turbulence, presidential impeachment proceedings and economic concerns.
In 1998, large capitalization stocks outperformed both mid and small
capitalization stocks. In fact, the 30% performance variance between the S&P
500 (Large-Cap) and Russell 2000 (Small-Cap) indices was the widest in 68
years! The primary reason for this variance was that large-cap securities
possessed desirable investment characteristics in a slower growth economic
environment as their earnings are more predictable and stable.
The best industry sectors in 1998 were computer peripherals, networking,
specialty retail and biotechnology. Of course, we cannot forget the emerging
internet stocks, which posted astounding returns in 1998.
The majority of small-cap managers posted negative returns in 1998, and
unfortunately, our two small-cap funds were no exception. Our Large-Cap Fund
benefited from the preference for larger company stocks in 1998. Our fixed
income funds posted strong returns due to the high-quality emphasis of our
government/corporate investments.
History suggests that the huge disparity between small and large company
performance will eventually narrow. 1998 was a reminder that a sound
investment approach includes a basket of investments across the small and large
capitalization sectors. It is for this reason that we offer a family of seven
mutual funds for your diversification needs.
Investment Outlook
Entering 1998, "experts" forecasted modest stock market gains after the strong
returns that were posted in 1997. They were partially right as small-cap
stocks performed poorly. However, large-cap stocks exceeded even the most
optimistic forecasts.
Our outlook for the U.S. economy and the stock market in 1999 is cautiously
optimistic. Low interest rates, benign inflation and the elimination of the
annual government deficit are strong positive signals for continued economic
growth in 1999. However, the Asian economies are suffering and now Latin
America is beginning to show serious signs of weakness. The United States has
been a bastion of relative prosperity, but there is the continued concern that
foreign economic weakness will eventually spill into the U.S.
Our investment strategy is unwavering, and we will continue to focus on
identifying strong companies with solid and predictable earnings growth. We
like the technology sector, which is expected to provide strong unit growth and
productivity gains in 1999 and into the year 2000. Other attractive areas are
the healthcare and specialty retail sectors where growth is steady and earnings
visibility good.
Our equity mutual funds are all growth funds which invest in rapidly growing
companies. We are especially excited about the prospects for a potential
rebound in the small-cap sector. We offer two small-cap mutual funds which
provide investors with an opportunity to invest in this exciting investment
class. Many of these small companies have the potential to grow into
recognizable large-cap companies in the years to come.
As always, we want to thank you for your investment and/or interest in the
Monetta Family of Funds.
Best personal regards,
Robert S. Bacarella
President and Founder
<Page 3>
Monetta Fund Period ended 12/31/98
Investment Objective: Market Capitalization Range: Total Net Assets:
Capital Appreciation/Income $50 million - $1 billion $124.7 million
<TABLE>
<CAPTION>
PERFORMANCE:
Average Annual Total Return
1 Year 5 Year 10 Year
<S> <C> <C> <C>
Monetta Fund (9.0)% 7.0% 11.5%
Russell 2000* (2.5)% 11.9% 12.9%
</TABLE>
*Source Frank Russell Company
[Performance Graph Appears Here]
<TABLE>
<CAPTION>
Measurement Period Monetta Russell
(Fiscal Period Covered) Equity Fund 2000
<S> <C> <C>
3/89 10,312 10,770
6/89 11,136 11,456
9/89 11,664 12,230
12/89 11,523 11,624
3/90 12,140 11,367
6/90 13,576 11,806
9/90 10,958 8,909
12/90 12,832 9,357
3/91 15,209 12,139
6/91 15,665 11,951
9/91 17,785 12,926
12/91 20,004 13,666
3/92 20,132 14,691
6/92 18,848 13,688
9/92 19,408 14,081
12/92 21,102 16,182
3/93 19,703 16,873
6/93 19,849 17,242
9/93 21,393 18,749
12/93 21,207 19,241
3/94 20,647 18,731
6/94 19,528 18,001
9/94 20,903 19,251
12/94 19,889 18,891
3/95 21,806 19,762
6/95 23,313 21,614
9/95 26,218 23,749
12/95 25,463 24,263
3/96 25,855 25,501
6/96 26,656 26,777
9/96 26,608 26,868
12/96 25,874 28,266
3/97 23,995 26,804
6/97 28,929 31,149
9/97 34,712 35,784
12/97 32,650 34,586
3/98 36,241 28,064
6/98 32,991 36,290
9/98 25,238 28,978
12/98 29,700 33,704
</TABLE>
The graph above to the right compares the change in value of a $10,000
investment in the Monetta Fund and the Russell 2000 Stock Index, with dividend
and capital gains reinvested. The Russell 2000 Stock Index is a broad measure
representative of the general market. Since the NASDAQ Composite 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 at the end of 10 years per the
NASDAQ Composite would be $57,499. Please refer to footnote at bottom of Page
2.
<TABLE>
<CAPTION>
PORTFOLIO COMPOSITION
<S> <C>
Consumer Related - 38.9%
Technology - 18.9%
Medical - 18.2%
Industrial - 14.9%
S/T Investments(A) - 5.4%
Financial - 3.7%
</TABLE>
(A) Short-term investments net of other assets and liabilities
TOP 5 EQUITY HOLDINGS:
<TABLE>
<CAPTION>
% of Net Assets
<S> <C>
Consolidated Graphics, Inc. 5.4%
AeroFlex, Inc. 5.0%
Medicis Pharmaceutical Corp. - CL A 4.5%
D&K Healthcare Resources, Inc. 4.4%
VDI Media 3.4%
Total Top 5 Holdings 22.7%
</TABLE>
COMMENTARY
The Monetta Fund posted a return in 1998 of negative 9.0% versus the Russell
2000 benchmark return of negative 2.5%. Over the previous two year period, the
Monetta Fund reported an annualized return of 7.1%, which is in line with the
Russell 2000 return of 9.2% during this same period.
Within the small-cap sector in 1998, performance was differentiated in great
part by the size of company invested in. Generally, small-cap funds which
invested in the largest companies did much better than funds which gravitated
towards the smaller companies. The Monetta Fund had a much lower market
capitalization than the average small-cap fund in 1998, which helps explain why
the Monetta Fund lagged in 1998.
Without question, 1998 was a difficult year for small-cap equities. The
majority of small-cap equity funds posted negative returns in 1998, whereas
large-cap equity funds posted very strong returns. One industry pundit
recently stated that, "There are three sure things in life: death, taxes and
the cheapness of small-cap stocks relative to large caps." Report after report
states that small-cap equities over a host of valuation parameters are at or
near all-time lows. On a brighter note, a number of industry experts feel that
1999 will mark a turnaround in the small-cap sector.
We are excited about our portfolio of companies as we enter 1999. Our five
largest companies in the Monetta Fund are demonstrating extremely high growth
rates along with consistent and predictable earnings growth. Our portfolio
composition continues to favor the high growth segments, including consumer
discretionary, medical and technology.
We are managing the Monetta Fund with the same investment disciplines that we
outlined two years ago in our Annual Report. Our focus on early-stage growth
companies with strong fundamentals at reasonable valuation levels served us
very well in 1997 when we outperformed our index and peers significantly.
Unfortunately, in 1998 the smaller companies within the small-cap sector
significantly underperformed, impacting our relative performance for the year.
We feel that by consistently applying our investment disciplines, we will best
position ourselves to provide solid long-term returns to our shareholders. We
look forward to reporting our progress to you in the quarters and years to
come.
<Page 4>
Monetta Small-Cap Equity Fund Period ended 12/31/98
Investment Objective: Market Capitalization Range: Total Net Assets:
Capital Appreciation under $1 billion $4.0 million
<TABLE>
<CAPTION>
PERFORMANCE:
Average Annual Total Return
Since Inception
1 Year 2/1/97
<S> <C> <C>
Monetta Small-Cap Equity Fund (2.8)% 20.6%
Russell 2000* (2.5)% 8.5%
</TABLE>
*Source Frank Russell Company.
[Performance Graph Appears Here]
<TABLE>
<CAPTION>
Small-Cap Russell
Month Fund 2000
<S> <C> <C>
12/96 10,000 10,000
3/97 9,490 9,297
6/97 11,820 10,804
9/97 15,089 12,412
12/97 14,716 11,996
3/98 15,956 12,203
6/98 15,317 12,588
9/98 12,237 10,051
12/98 14,278 11,690
</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.
<TABLE>
<CAPTION>
PORTFOLIO COMPOSITION
<S> <C>
Consumer Related - 36.4%
Medical - 21.1%
Technology - 20.9%
Industrial - 13.5%
S/T Investments (A) - 5.9%
Financial - 2.2%
</TABLE>
(A) Short-term investments net of other assets and liabilities
TOP 5 EQUITY HOLDINGS:
<TABLE>
<CAPTION>
% of Net Assets
<S> <C>
Aeroflex, Inc. 5.7%
D&K Healthcare Resources, Inc. 5.6%
Consolidated Graphics, Inc. 5.1%
VDI Media 4.8%
MAXIMUS, Inc. 4.7%
Total Top 5 Holdings 25.9%
</TABLE>
COMMENTARY
The Monetta Small-Cap Equity Fund posted respectable results in 1998, recording
a negative 2.8% one-year return, compared to the Russell 2000 benchmark return
of negative 2.5%. Inception-to-date, the Monetta Small-Cap Equity Fund posted
an annualized return of 20.6% versus the Russell 2000 benchmark return of 8.5%.
As we have explained in previous communications to our shareholders, the
Monetta Small-Cap Equity Fund is an extremely focused portfolio of small-cap
equities. We generally hold only 25-35 positions in the Fund. This
concentration has served us well to-date as we have handily outpaced the
Russell 2000 benchmark return since the Funds inception on February 1, 1997.
You will notice that four of the top five holdings are also held in the Monetta
Fund. Aeroflex is a rapidly growing technology company which supplies Lucent,
Motorola and other recognizable large technology companies. D&K Healthcare is
a pharmaceutical distributor which is posting very strong results as it takes
market share away from the larger distributors. Consolidated Graphics is a
printing company which is growing organically and through acquisition. In
1998, they easily beat aggressive earnings targets and are expected to continue
this performance in 1999.
VDI Media provides video duplication and editing services to the major
advertising agencies and movie studios. While it posted very strong growth in
1998, the stock was a poor performer, in large part due to its small size. We
look for this stock to break out in 1999 as they accelerate their growth.
Lastly, MAXIMUS provides program management and consulting services to federal
and state governments. This company is expected to continue to benefit from
the outsourcing of traditional government functions to the
private sector.
As was detailed in our comments on the Monetta Fund, the small-cap sector
performed poorly in 1998. Despite the rapid growth enjoyed in 1998 by our
portfolio of companies, the investment community chose to focus on larger
companies . Many studies point out that historically small-cap stocks have
outperformed large-cap stocks. Unfortunately, there can be spells during which
time small-cap stocks lag. Meanwhile, we are attempting to identify the small-
cap stocks which will benefit most when the investment community begins to
focus on this sector.
<Page 5>
Monetta Mid-Cap Equity Fund Period ended 12/31/98
Investment Objective: Market Capitalization Range: Total Net Assets:
Capital Appreciation $1 billion - $5 billion $18.9 million
<TABLE>
<CAPTION>
PERFORMANCE:
Average Annual Total Return
Since Inception
1 Year 5 Year 3/1/93
<S> <C> <C> <C>
Monetta Mid-Cap Equity Fund (0.9)% 15.1% 18.9%
S&P 400* 18.3% 18.7% 18.5%
</TABLE>
*Source Lipper Analytical Services, Inc.
[Performance Graph Appears Here]
<TABLE>
<CAPTION>
Measurement Period Mid-Cap S&P 400
(Fiscal Year Covered) Fund
<S> <C> <C>
3/1/93 10,000 10,000
3/93 11,670 10,220
6/93 11,880 10,445
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
3/98 30,239 24,787
6/98 29,362 24,257
9/98 22,920 20,800
12/98 27,408 26,472
</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. Please refer to
footnote at bottom of Page 2.
<TABLE>
<CAPTION>
PORTFOLIO COMPOSITION
<S> <C>
Consumer Related - 42.0%
Technology - 26.3%
Medical - 13.7%
Financial - 10.6%
Industrial - 5.8%
S/T Investements (A) - 1.6%
</TABLE>
(A) Short-term investments net of other assets and liabilities
TOP 5 EQUITY HOLDINGS:
<TABLE>
<CAPTION>
% of Net Assets
<S> <C>
Consolidated Graphics, Inc. 5.4%
Outback Steakhouse, Inc. 4.9%
VDI Media 4.1%
Platinum Technology, Inc. 4.0%
Newcourt Credit Group, Inc. 3.7%
Total Top 5 Holdings 22.1%
</TABLE>
COMMENTARY
The Monetta Mid-Cap Equity Fund declined 0.9% in 1998 versus the S&P 400 index
return of 18.3%. The Monetta Mid-Cap Equity Fund has posted a five-year
annualized return of 15.1%, which is in line with the S&P 400 index return of
18.7%.
The 1998 underperformance occurred almost entirely in the second half of the
year. In an effort to control risk, the Fund was underweighted in technology
due to concerns of slowing demand overseas. The market dismissed these
concerns and bid up technology stocks dramatically in the second half of 1998,
causing a large portion of our negative variance.
The Fund's underperformance in 1998 was frustrating given its solid long-term
track record. We have always managed the fund to provide competitive returns
while minimizing risk. The markets indifference to certain industry groups,
and infatuation with others, caused 1998 to be a difficult year if you were not
invested fully in the proper sectors, as the divergence in returns between
sectors was extreme. We have not changed the investment philosophy which has
provided competitive long-term returns. However, we are currently being more
diligent in matchingindustry weightings in the Fund more closely to their
respective S&P 400 index industry weightings. As evidence of this, in late
1998, we increased our exposure in the technology and biotechnology areas.
In addition, with investors' increasing concern over trading liquidity, we
are putting more emphasis on those companies which are at the higher end of
the mid-cap capitalization range. As a result, the average market
capitalization of the portfolio has increased from approximately $1.2 billion
to $3.5 billion.
The mid-cap sector underperformed large-caps in 1998. Many industry observers
feel that, due to the relative higher valuations in the large-cap sector, more
money will flow into the mid-cap sector in 1999. This would certainly be
welcome news for mid-cap investors.
<Page 6>
Monetta Large-Cap Equity Fund Period ended 12/31/98
Investment Objective: Market Capitalization Range: Total Net Assets:
Capital Appreciation $5 billion + $4.2 million
<TABLE>
<CAPTION>
PERFORMANCE:
Average Annual Total Return
Since Inception
1 Year 2 Year 9/1/95
<S> <C> <C> <C>
Monetta Large-Cap Equity Fund 9.0% 17.5% 20.7%
S&P 500* 28.7% 31.0% 28.9%
</TABLE>
*Source Lipper Analytical Services, Inc.
[Performance Graph Appears Here]
<TABLE>
<CAPTION>
Measurement Period Large-Cap S&P 500
(Fiscal Year End) Fund
<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
3/98 18,413 20,745
6/98 18,008 21,433
9/98 14,165 19,307
12/98 18,716 23,441
</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>
PORTFOLIO COMPOSITION
<S> <C>
Consumer Related - 33.0%
Technology - 28.9%
Financial - 14.6%
Medical - 11.1%
Industrial - 8.1%
S/T Investments (A) - 4.3%
</TABLE>
(A) Short-term investments net of other assets and liabilities
TOP 5 EQUITY HOLDINGS:
<TABLE>
<CAPTION>
% of Net Assets
<S> <C>
MCI Worldcom, Inc. 5.1%
Cisco Systems, Inc. 4.4%
Int'l. Business Machine Corp. 4.4%
FDX Corp. 4.3%
Lucent Technologies, Inc. 4.0%
Total Top 5 Holdings 22.2%
</TABLE>
COMMENTARY
The Monetta Large-Cap Equity Fund appreciated 9.0% during 1998, while posting a
stellar fourth quarter return of 32.1%. The S&P 500 index posted a 28.7%
return in 1998. For the three year period ending December 31, 1998, the
Monetta Large-Cap Equity Fund has provided an annualized return of 20.9%.
The Fund's performance for 1998 lagged the S&P 500 index return which was
powered by a narrow band of stocks that performed extremely well in 1998. As
we reported to you in our 1998 Semi-Annual Report, our focus on risk control
caused us to avoid many of the "nifty-fifty" stocks, which performed very well.
In the third quarter of 1998, we decided that investors would continue to
gravitate toward the handful of premier blue-chip companies whose stocks were
performing well. Therefore, we concentrated our portfolio in these strong
companies whose valuations were high, but provided above-average earnings
stability and predictability. This proved to be the correct strategy, as our
superior fourth quarter return indicates.
In 1998, the stock market handsomely rewarded companies in strong sectors that
posted earnings which exceeded expectations. Historically, sound companies
with good franchise value were treated harshly for any misstep. We expect
these trends to continue in 1999, placing extreme value on proper stock
selection.
We will continue our investment strategy of emphasizing premier growth stocks
in the most attractive industries. Although valuation levels appear high by
historical standards, we believe the underlying demand for these securities
should continue to remain strong.
<Page 7>
Monetta Balanced Fund Period ended 12/31/98
Investment Objective: Market Capitalization Range: Average Maturity:
Capital Appreciation $50 million 8.2 Years
Total Net Assets:
$14.5 million
<TABLE>
<CAPTION>
PERFORMANCE:
Average Annual Total Return
Since Inception
1 Year 2 Year 9/1/95
<S> <C> <C> <C>
Monetta Balanced Fund 8.6% 14.7% 18.5%
Lipper Balanced Fund Index* 15.1% 17.7% 16.7%
</TABLE>
*Source Lipper Analytical Services, Inc.
<TABLE>
<CAPTION>
Measurement Period Monetta Lipper
(Fiscal Year End) Balanced Balanced
<S> <C> <C>
9/95 10,000 10,239
12/95 10,616 10,697
3/96 11,131 10,936
6/96 11,913 11,158
9/96 12,547 11,453
12/96 13,369 12,093
3/97 13,358 12,150
6/97 14,642 13,460
9/97 16,431 14,325
12/97 16,205 14,549
3/98 17,321 15,698
6/98 16,923 15,932
9/98 15,004 15,009
12/98 17,602 16,737
</TABLE>
The graph above to the right compares the change in value of a $10,000
investment in the Monetta Balanced Fund to the Lipper Balanced Fund Index with
dividends and capital gains reinvested. Please refer to footnote at bottom of
Page 2.
<TABLE>
<CAPTION>
PORTFOLIO COMPOSITION
<S> <C>
Fixed Income (A) - 33.6%
Consumer Related - 27.9%
Technology - 21.2%
Medical - 6.9%
Industrial - 6.4%
Financial - 4.0%
</TABLE>
(A) Fixed income net of other assets and liabilities
TOP 5 EQUITY HOLDINGS:
<TABLE>
<CAPTION>
% of Net Assets
<S> <C>
Tyco Int'l Ltd. 2.6%
Int'l Business Machine Corp. 2.6%
MCI Worldcom, Inc. 2.5%
Intel Corp. 2.5%
Merrill Lynch & Co., Inc. 2.3%
Total Top 5 Holdings 12.5%
</TABLE>
COMMENTARY
The Monetta Balanced Fund posted an 8.6% return in 1998, finishing the year
with a strong 17.3% return in the fourth quarter. The average 1998 return of
the Lipper Analytical Service, Inc., Balance Fund category was 13.5%. From
inception, September 1, 1995 through December 31, 1998, the Fund's average
annual return was 18.5% versus the Lipper Balance Fund Index of 16.7%
While the Fund posted a respectable return, the Fund's overall performance was
negatively affected by its balanced weightings in the small, mid and large
capitalization areas of the market due to the significant underperformance of
small-cap stocks in 1998. In fact, the 30% return disparity between large-cap
and small-cap stocks was the widest since 1930.
Given the relative attractiveness of small-cap securities, we are hesitant to
significantly shift the equity group weightings. However, we have lightened
our exposure somewhat to the smallest companies in the small-cap sector, as it
appears likely that when investors begin to focus on the small-cap sector, they
will gravitate toward the larger companies within the group.
A number of holdings across market capitalization sectors posted strong results
in the fourth quarter. Small and mid-cap contributors include Consolidated
Graphics, Medicis Pharmaceutical and QRS Corp. Strong performers in the large-
cap area included AirTouch Communications, Best Buy Company and Federal Express
Corp.
The Monetta Balanced Fund is unique in its exposure to small- and mid-cap
equities, as many balanced funds ignore these sectors completely. We are
optimistic that our approach will pay off handsomely should investor interest
returns to these groups.
We intend to maintain an overall portfolio mix of 65% stocks and 35% bonds.
The fixed income position of the Fund has an average maturity of approximately
eight years and is invested in investment grade
securities.
<Page 8>
Monetta Intermediate Bond Fund Period ended 12/31/98
Investment Objective: 30-Day SEC Yield: Average Maturity: Total Net Assets:
Capital Appreciation/Income 5.23% 4.7 Years $6.7 million
<TABLE>
<CAPTION>
PERFORMANCE:
Average Annual Total Return
Since Inception
1 Year 5 Year 3/1/93
<S> <C> <C> <C>
Monetta Intermediate
Bond Fund 8.38% 7.38% 7.73%
Lehman Gov't/Corp
Interm. Bond Index* 8.44% 6.60% 6.53%
</TABLE>
*Source Lipper Analytical Services, Inc.
[Performance Graph Appears Here]
<TABLE>
<CAPTION>
Measurement Period Monetta Intermediate Lehman
(Fiscal Year Covered) Bond Fund
<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
3/98 14,443 13,546
6/98 14,748 13,800
9/98 15,382 14,420
12/98 15,431 14,463
</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.
<TABLE>
<CAPTION>
PORTFOLIO COMPOSITION
<S> <C>
Corporate Bonds - 71.5%
US Treasury - 14.4%
Government Agencies - 9.5%
Government Obligations - 9.5%
S/T Investments (A) - 3.0%
Preferred Stock - 1.6%
</TABLE>
(A) Short-term investments net of other assets and liabilities
MATURITY PROFILE:
<TABLE>
<CAPTION>
% of Net Assets
<S> <C>
1 Year of Less 5.1%
1-3 Years 23.1%
4-6 Years 43.4%
7-10 Years 28.2%
Over 10 Years 0.2%
Total 100.0%
</TABLE>
COMMENTARY
The Monetta Intermediate Bond Fund appreciated 8.38% in 1998 versus an average
return of 7.25% of Lipper Analytical Services, Intermediate Investment Grade
Debt Funds category ranking the fund in the top 26th percentile out of 239
funds. For the five years ending December 31, 1998, the Fund generated a
cumulative return of 42.8%, ranking it in the top 10 percentile of its Lipper
category out of 109 funds.
The Fund's performance benefited from its emphasis on a high quality corporate
investment portfolio and a shorter average maturity of 4.7 years. The Fund's
appreciation in 1998 was particularly significant considering that the
corporate credit sector underperformance was the worst of any other period
since the inception of the benchmark fixed income indices in 1973.
Last year was plagued by concern over the slowing economic conditions in Asia,
Russia, and Latin America. The Federal Reserve took on the role of the world's
Central Banker with a series of three short-term interest rate cuts in the
second half of the year, which helped stabilize the markets. The 30-year
Treasury yield reached a low of 4.70% before ending the year at 5.10%. At one
point, the yield difference between the two-year note and 30-year bond was only
12 basis points.
Looking into 1999, we believe that the higher yielding sectors of the corporate
bond market will be the initial performance leaders. We expect the Fed will
resume an easing monetary policy, and that bond yields will remain at or below
current levels.
We feel that the inordinately wide corporate spreads are an opportunity to add
incremental yield to the portfolio. As the markets continue to stabilize and
the economic outlook clears, the lower-investment-grade sectors may warrant
consideration for capital appreciation opportunities.
The Fund will continue to follow the same course that has made it a strong
performer since its inception over five years ago - overweight higher yielding
corporate sectors and minimize duration or maturity risk.
<Page 9>
Monetta Government Money Market Fund Period ended 12/31/98
Investment Objective: 7-Day Yield: Average Days to Maturity:
Income and Capital Preservation 5.08% 40 Days
Total Net Assets:
$4.1 million
<TABLE>
<CAPTION>
PERFORMANCE:
Average Annual Total Return
Since Inception
1 Year 5 Year (3/1/93)
<S> <C> <C> <C>
Monetta Government Money
Market Fund 5.24%** 5.07%** 4.74%**
Lipper US Gov't Money
Market Funds Avg.* 4.89% 4.72% 4.41%
</TABLE>
*Source Lipper Analytical Services, Inc.
[Performance Graph Appears Here]
<TABLE>
<CAPTION>
Measurement Period Money Market Lipper Average
(Fiscal Year Covered)
<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
3/98 12,599 12,433
6/98 12,760 12,585
9/98 12,927 12,738
12/98 13,091 12,894
</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 4.73%, versus 5.08% on
December 31, 1998. 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>
PORTFOLIO COMPOSITION
<S> <C>
Government Agency - 98.6%
S/T Investments Net (A) - 1.4%
</TABLE>
(A) Short-term investements net of other assets and liabilities
ALLOCATION:
<TABLE>
<CAPTION>
<S> <C>
Government Agencies 98.6%
Short Term Investments-Net 1.4%
Total 100.0%
</TABLE>
COMMENTARY
The Monetta Government Money Market Fund posted an impressive return of 5.24%
in 1998 versus an average return of 4.89% for the Lipper U.S. Government Fund
category. This performance ranked the Fund 5th of 113 Funds in this Lipper
category for the one year period ended December 31, 1998. For the five year
period ending December 31, 1998, the Fund ranked 6th of 85 Funds.
The Fund's positive relative performance was due in large part to the over-
weighting of agency discount notes versus short governments and bills. Money
market yields declined steadily over the last year as evidenced by the 60-89
day Federal Farm Credit yield curve which declined from 5.52% on December 31,
1997 to 4.72% on December 31, 1998.
We are not expecting any Federal Reserve easing in the first quarter but
anticipate slower growth as the year develops and expect easing initiatives to
resume in the Spring.
At this time, we do not expect the short end of the yield curve to change
materially and do not anticipate any major changes in security selection or
maturity risk.
The Monetta Government Money Market Fund is the most conservative of the
Monetta Family of Mutual Funds. It's primary objectives are the preservation
of capital and liquidity. The investment emphasis is on stability and current
income.
<Page 10>
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, 1998, 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 five-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, 1998, 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, 1998, 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 five-year period then ended, in conformity with
generally accepted accounting principles.
KPMG LLP
Chicago, Illinois
January 15, 1999
<Page 11>
Schedule of Investments December 31, 1998
MONETTA FUND
Shares or Quoted
Principal Market Value
Amount (In Thousands)
<TABLE>
<CAPTION>
COMMON STOCKS - 94.6%
<S> <C>
Consumer Related - 38.9% $48,401
Broadcasting/Cable TV - 5.4%
*60,000 Metro Networks, Inc. $2,558
*443,300 VDI Media 4,211
6,769
Food Processing - 0.8%
*35,000 Celestial Seasonings, Inc. 974
Recreation/Entertainment - 1.7%
*85,000 Avis Rent-A-Car, Inc. 2,056
Restaurants/Lodging - 2.6%
*80,000 Outback Steakhouse, Inc. 3,190
Retail Manufacturers & Distribution - 2.3%
*110,000 Home Products Int'l, Inc. 1,093
*65,000 Performance Food Group Co. 1,828
2,921
Retail Trades - 2.1%
*150,000 Just For Feet, Inc. 2,606
Miscellaneous - 24.0%
*411,600 APAC Teleservices, Inc 1,557
*50,000 Big Flower Holdings, Inc. 1,103
*37,300 BHI Corp. 1,147
*100,000 Consolidated Graphics, Inc. 6,756
*90,000 FirstService Corp. 1,075
*70,000 F.Y.I., Inc. 2,240
*43,700 HA-LO Industries, Inc. 1,644
*102,600 MAXIMUS, Inc. 3,796
*100,000 Modis Professional Services 1,450
*36,000 QRS Corp. 1,728
230,000 Schawk, Inc. 3,191
20,000 Valassis Communications, Inc. 1,033
*351,700 Vestcom Int'l, Inc. 3,165
29,885
Financial Related - 3.7% $4,662
Financial Services - 3.7%
*60,000 LaSalle Partners, Inc. $1,767
*90,000 CNA Surety Corp. 1,417
*52,800 Trammell Crow Co. 1,478
4,662
Industrial Related - 14.9% $18,685
Chemicals - 0.9%
48,000 Cambrex Corp. $1,152
Energy Resources & Services - 1.5%
*75,000 Hanover Compressor Co. 1,927
Industrial & Electronics Products - 9.1%
*75,000 AFC Cable Systems, Inc. 2,522
65,000 Applied Power, Inc. - CL A 2,454
*77,500 JPM Co. 1,085
80,000 Spartech Corp. 1,760
*62,500 SPS Technologies, Inc. 3,539
11,360
Transportation - 2.3%
*75,000 Carey International, Inc. 1,312
*37,000 Expeditors Int'l of
Washington, Inc. 1,554
2,866
Miscellaneous - 1.1%
*80,000 Waste Industries, Inc. 1,380
Medical Related - 18.2% $22,757
Medical Supplies - 0.5%
*20,000 Conmed Corp. $660
Medical Technology - 2.5%
50,000 ADAC Laboratories 998
*80,000 SteriGenics Int'l, Inc. 2,080
3,078
<Page 12>
Pharmaceuticals - 11.2%
*200,500 D & K Healthcare
Resources, Inc. 5,464
78,500 Jones Pharma, Inc. 2,865
*95,000 Medicis Pharmaceutical
Corp. - CL A 5,664
13,993
Physician Services - 3.6%
*130,000 Castle Dental Centers, Inc. 796
*35,300 Henry Schein, Inc. 1,580
*55,000 MedQuist, Inc. 2,172
4,548
Miscellaneous - 0.4%
*10,000 FPIC Insurance Group, Inc. 478
Technology Related - 18.9% $23,473
Computer Software and Systems - 2.2%
*30,000 Apex PC Solutions, Inc. $866
*100,000 Platinum Technology, Inc. 1,913
2,779
Computer/Office Equipment - 3.7%
*80,000 CHS Electronics, Inc. 1,355
*150,000 ScanSource, Inc. 3,225
4,580
Semiconductors - 5.0%
*410,700 Aeroflex, Inc. 6,212
Telecommunications/Equipment - 6.9%
*120,000 Brightpoint, Inc. 1,650
*120,000 Comdial Corp. 1,058
*50,000 Dycom Industries, Inc. 2,856
*82,200 Quanta Services, Inc. 1,814
25,000 Superior Telecom, Inc. 1,181
8,559
Miscellaneous - 1.1%
*10,000 Catalina Marketing Corp 684
*25,000 USWeb Corp. 659
1,343
Total Common Stocks
(Cost $95,489) (a) 117,978
Variable Demand Notes - 1.6%
1,413,900 Firstar Bank Milwaukee,
N.A. - 5.3% 1,414
269,200 General Mills - 5.23% 269
271,000 Pitney Bowes - 5.23% 271
36,000 Sara Lee - 5.23% 36
Total Variable Demand Notes 1,990
Commercial Paper - 5.2%
1,500,000 Albertson's - 5.23%
Due 01/12/99 1,498
1,000,000 Allstate - 5.15%
Due 01/11/99 999
1,000,000 Central Illinois Light Co. - 5.15%
Due 01/06/66 999
1,500,000 General Mills - 5.25%
Due 01/04/99 1,499
1,500,000 Met Life Funding - 5.38%
Due 01/19/99 1,496
Total Commercial Paper 6,491
Total Short-Term Investments 8,481
Total Investments - 101.4%
(Cost $103,970) (a) 126,459
Other Assets Less Liabilities - (1.4%) (1,770)
Net Assets - 100% $124,689
</TABLE>
(a) For tax purposes, cost is $104,046; the aggregate gross unrealized
appreciation is $26,095, and aggregate gross unrealized depreciation is $3,606,
resulting in net unrealized appreciation of $22,489 (in thousands).
See accompanying notes to financial statements.
*Non-income producing security
<Page 13>
Schedule of Investments December 31, 1998
MONETTA SMALL-CAP EQUITY FUND
Shares or Quoted
Principal Market Value
Amount (In Thousands)
<TABLE>
<CAPTION>
COMMON STOCKS - 94.1%
<S> <C>
Consumer Related - 36.4% $1,452
Broadcasting/Cable TV - 8.0%
*3,000 Metro Networks, Inc. $128
*20,000 VDI Media 190
318
Recreation/Entertainment - 3.6%
*6,000 Avis Rent-A-Car, Inc. 145
Retail Manufacturers & Distribution - 2.5%
*10,000 Home Products Int'l, Inc. 99
Miscellaneous - 22.3%
*3,000 Consolidated Graphics, Inc. 203
*3,000 HA-LO Industries, Inc. 113
*5,000 MAXIMUS, Inc. 185
*3,000 QRS Corp. 144
6,000 Schawk, Inc. 83
*18,000 Vestcom Int'l, Inc. 162
890
Financial Related - 2.2% $88
Financial Services - 2.2%
*3,000 LaSalle Partners, Inc. $88
Industrial Related - 13.5% $536
Industrial & Electronics Products - 10.4%
*4,000 AFC Cable Systems, Inc. $134
5,000 Spartech Corp. 110
*3,000 SPS Technologies, Inc. 170
414
Transportation - 3.1%
*7,000 Carey Int'l, Inc. 122
Medical Related - 21.1% $838
Medical Technology - 3.3%
*5,000 SteriGenics Int'l, Inc. $130
Pharmaceuticals - 14.7%
*8,200 D & K Healthcare Resources, Inc 223
5,000 Jones Pharma, Inc. 183
*3,000 Medicis Pharmaceutical
Corp. - CL A 179
585
Physician Services - 3.1%
*20,000 Castle Dental Centers, Inc. 123
Technology Related - 20.9% $832
Computer/Office Equipment - 7.3%
*7,000 CHS Electronics, Inc. $119
*8,000 ScanSource, Inc. 172
291
Semiconductors - 5.7%
*15,000 Aeroflex, Inc. 227
Telecommunications/Equipment - 7.9%
*10,000 Brightpoint, Inc. 137
*8,000 Quanta Services, Inc. 177
314
Total Common Stocks
(Cost $2,991 ) (a) 3,746
Variable Demand Notes - 5.6%
150,000 Firstar Bank Milwaukee,
N.A. - 5.30% 150
59,100 General Mills - 5.23% 59
10,000 Pitney Bowes - 5.23% 10
2,000 Sara Lee - 5.23% 2
Total Variable Demand Notes 221
Total Investments - 99.7%
(Cost $3,212 ) (a) 3,967
Other Assets Less Liabilities - 0.3% 13
Net Assets - 100% $3,980
</TABLE>
(a) For tax purposes, cost is $3,219; the aggregate gross unrealized
appreciation is $798, and aggregate gross unrealized depreciation is $43,
resulting in net unrealized appreciation of $755 (in thousands).
See accompanying notes to financial statements.
*Non-income producing security
<Page 14>
Schedule of Investments December 31, 1998
MONETTA MID-CAP EQUITY FUND
Shares or Quoted
Principal Market Value
Amount (In Thousands)
<TABLE>
<CAPTION>
COMMON STOCKS - 98.4%
<S> <C>
Consumer Related - 42.0% $7,956
Broadcasting/Cable TV - 5.2%
4,000 Media General, Inc. - CL A $212
*80,900 VDI Media 769
981
Recreation/Entertainment - 3.7%
*16,000 Galileo Int'l, Inc. 696
Restaurants/Lodging - 6.1%
*23,000 Outback Steakhouse, Inc. 917
*5,000 U.S. Foodservice 245
1,162
Retail Trades - 10.1%
*4,000 Best Buy Company, Inc. 246
*7,000 Dollar Tree Stores, Inc. 306
*35,000 Just For Feet, Inc. 608
10,000 Flowers Industries, Inc. 239
10,000 Intimate Brands, Inc. 299
*4,000 Starbucks Corp. 224
1,922
Miscellaneous - 16.9%
*100,000 APAC Teleservices, Inc. 378
*15,000 Consolidated Graphics, Inc. 1,013
*10,000 MAXIMUS, Inc. 370
*25,000 Modis Professional Services 363
40,000 Schawk, Inc. 555
10,000 Valassis Communications, Inc. 516
3,195
Financial Related - 10.6% $2,012
Financial Services - 10.6%
10,000 Aflac, Inc. $440
10,000 Conseco, Inc. 305
5,000 City National Corp. 208
*7,000 Fiserv, Inc. 360
*20,000 Newcourt Credit Group, Inc. 699
2,012
Industrial Related - 5.8% $1,097
Energy Resources & Services - 1.6%
10,000 NIPSCO Industries, Inc. $304
Industrial & Electronics Products - 4.2%
*5,000 Solectron Corp. 465
*5,800 SPS Technologies, Inc. 328
793
Medical Related - 13.7% $2,595
Pharmaceuticals - 11.3%
*7,000 Agouron Pharmaceuticals, Inc. $411
*4,000 Biogen, Inc. 332
4,500 McKesson Corp. 356
*9,000 Medicis Pharmaceutical
Corp. - CL A 537
*8,000 Watson Pharmaceuticals, Inc. 503
2,139
Physician Services - 2.4%
*5,000 Genzyme Corp. 249
*7,000 Total Renal Care Holdings, Inc. 207
456
Technology Related - 26.3% $4,958
Computer Software and Systems - 13.6%
*4,000 At Home Corp. - Ser. A $297
4,000 Ceridian Corp. 279
*5,000 NCR Corp. 209
6,000 Network Associates, Inc. 398
*15,000 Novell, Inc. 272
*40,000 Platinum Technology, Inc. 765
10,000 Unisys Corp. 344
2,564
Computer/Office Equipment - 3.0%
*20,000 CHS Electronics, Inc. 338
*3,000 Jabil Circuit, Inc. 224
562
Telecommunications/Equipment - 5.5%
*4,000 Comverse Technology, Inc. 284
*10,000 Qwest Communications, Inc. 500
4,000 Symbol Technologies 256
1,040
<Page 15>
Miscellaneous - 4.2%
10,000 Reynolds & Reynolds - CL A 229
*5,000 Sterling Commerce, Inc. 225
10,000 Snyder Communications, Inc. 338
792
Total Common Stocks
(Cost $16,166 ) (a) 18,618
Variable Demand Notes - 6.0%
625,100 Firstar Bank Milwaukee,
N.A. - 5.30% 625
211,700 Pitney Bowes - 5.23% 212
303,700 Sara Lee - 5.23% 303
Total Variable Demand Notes 1,140
Commercial Paper - 25.6%
1,000,000 AIG Funding - 4.9%
Due 01/04/99 1,000
1,000,000 Anheuser Busch - 4.95%
Due 01/04/99 1,000
500,000 Carolina Power & Light - 5.40%
Due 01/28/99 498
750,000 Coca Cola - 5.20%
Due 01/11/99 749
800,000 Ford Motor Credit - 5.40%
Due 01/19/99 798
800,000 General Motors Accept. Corp
5.40% Due 01/25/99 797
Total Commercial Paper 4,842
Total Short-Term Investments 5,982
Total Investments -130.0 %
(Cost $22,148) (a) 24,600
Other Assets Less Liabilities - (30.0%) (5,680)
Net Assets - 100% $18,920
</TABLE>
(a) For tax purposes, cost is $22,161; the aggregate gross unrealized
appreciation is $2,741, and aggregate gross unrealized depreciation is $289,
resulting in net unrealized appreciation of $2,452 (in thousands).
See accompanying notes to financial statements.
*Non-income producing security.
MONETTA LARGE-CAP EQUITY FUND
Shares or Quoted
Principal Market Value
Amount (In Thousands)
<TABLE>
<CAPTION>
COMMON STOCKS - 95.7%
<S> <C>
Consumer Related - 33.0% $1,381
Broadcasting/CableTV - 6.9%
*3,000 Clear Channel Communications $164
2,000 Time Warner, Inc. 124
288
Retail Trades - 20.5%
*2,000 Best Buy Company, Inc. 123
2,000 Dayton Hudson Corp. 109
2,000 Gap, Inc. 112
2,500 Home Depot, Inc. 153
*2,500 Kohls Corp. 154
*1,500 Starbucks Corp. 84
1,500 WalMart Stores 122
857
Miscellaneous - 5.6%
*1,200 General Electric Co. 123
1,500 Tyco Int'l, Ltd. 113
236
Financial Related - 14.6% $610
Financial Services - 14.6%
1,000 American Int'l Group $97
1,000 American Express 102
2,500 Citigroup, Inc. 124
2,000 Merrill Lynch & Co., Inc. 133
3,000 Paychex, Inc. 154
610
Industrial Related - 8.1% $342
Chemicals - 2.3%
2,000 Monsanto Corp. $95
Energy Resources & Services - 1.6%
1,500 Schlumberger Ltd. 69
Transportation - 4.2%
*2,000 FDX Corporation 178
Medical Related - 11.1% $463
Pharmaceuticals - 11.1%
1,500 Cardinal Health, Inc. $114
2,000 Schering - Plough Corp. 110
1,500 Warner - Lambert Co. 113
*2,000 Watson Pharmaceuticals, Inc. 126
463
<Page 16>
Technology Related - 28.9% $1,209
Computer Software and Systems - 11.2%
*2,000 Cisco Systems, Inc. $185
1,000 Int'l Business Machines Corp. 185
*700 Microsoft Corp. 97
467
Semiconductors - 2.8%
1,000 Intel Corp. 119
Telecommunications/Equipment - 14.9%
*1,500 Air Touch Communications, Inc. 108
2,000 GTE Corporation 135
1,500 Lucent Technologies, Inc. 165
*3,000 MCI Worldcom, Inc. 215
623
Total Common Stocks
(Cost $3,168) (a) 4,005
Variable Demand Notes - 3.8%
30,700 Firstar Bank Milw., N.A. - 5.30% 31
55,600 General Mills - 5.30% 55
72,700 Pitney Bowes - 5.23% 73
Total Variable Demand Notes 159
Total Investments - 99.5%
(Cost $3,327) (a) 4,164
Other Assets Less Liabilities - 0.5% 21
Net Assets - 100% $4,185
</TABLE>
(a) Cost is identical for book and tax purposes; the
aggregate gross unrealized appreciation is $871, and aggregate gross unrealized
depreciation is $34, resulting in net unrealized appreciation of $837 (in
thousands).
See accompanying notes to financial statements.
*Non-income producing security
MONETTA BALANCED FUND
Shares or Quoted
Principal Market Value
Amount (In Thousands)
<TABLE>
<CAPTION>
COMMON STOCKS - 66.4%
<S> <C>
Consumer Related - 27.9% $4,039
Broadcasting/Cable TV - 5.0%
*5,000 Clear Channel Communications $272
*4,000 Metro Networks, Inc. 171
*30,000 VDI Media 285
728
Recreation/Entertainment - 0.8%
*5,000 Avis Rent-A-Car, Inc. 121
Restaurants/Lodging - 2.2%
*8,000 Outback Steakhouse, Inc. 319
Retail Trades - 8.5%
*3,000 Best Buy Company, Inc. 184
5,000 Dayton Hudson Corp. 271
*7,000 Just For Feet, Inc. 122
3,000 Home Depot, Inc. 184
*4,000 Starbucks Corp. 224
3,000 WalMart Stores 244
1,229
Miscellaneous - 11.4%
*25,000 APAC Teleservices, Inc. 95
*3,000 Consolidated Graphics, Inc. 203
*3,500 MAXIMUS, Inc. 130
*5,000 QRS Corp. 240
5,000 Schawk, Inc. 69
5,000 Tyco Int'l, Ltd. 377
5,000 Valassis Communications, Inc. 258
*30,000 Vestcom Int'l, Inc. 270
1,642
Financial Related - 4.0% $581
Financial Services - 4.0%
5,000 Citigroup, Inc. $247
5,000 Merrill Lynch & Co., Inc. 334
581
Industrial Related - 6.4% $931
Energy Resources & Services - 1.0%
3,000 Schlumberger Ltd. $138
<Page 17>
Industrial & Electronics Products - 3.6%
*6,000 AFC Cable Systems, Inc. 202
*7,000 JPM Co. 98
*4,000 SPS Technologies, Inc. 226
526
Transportation - 1.8%
*3,000 FDX Corporation 267
Medical Related - 6.9% $995
Medical Technology - 1.3%
*7,000 SteriGenics Int'l, Inc. $182
Pharmaceuticals - 5.6%
3,000 Cardinal Health, Inc. 228
*8,000 D&K Healthcare Resc. Inc. 218
*3,000 Medicis Pharm. Corp. - CL A 179
2,500 Warner-Lambert Co. 188
813
Technology Related - 21.2% $3,076
Computer Software and Systems - 4.5%
2,000 Int'l Business Machines Corp. $369
*1,000 Microsoft Corp. 139
*3,000 Infoseek Corp. 148
656
Computer/Office Equipment - 1.5%
*10,000 ScanSource, Inc. 215
Semiconductors - 4.5%
*20,000 Aeroflex, Inc. 302
3,000 Intel Corp. 356
658
Telecommunications/Equipment - 10.7%
*4,000 AirTouch Communications, Inc. 289
4,000 GTE Corporation 270
2,500 Lucent Technologies, Inc. 275
*7,000 Quanta Services, Inc. 154
*4,000 Qwest Communications Int'l 200
*5,000 MCI Worldcom, Inc. 359
1,547
Total Common Stocks
(Cost $7,676 ) (a) 9,622
Variable Demand Notes - 0.2%
24,000 Firstar Bank Milw., N.A. - 5.30% 24
Corporate Bonds - 26.8%
300,000 Bank United Corp
8.875% Due 05/01/07 321
450,000 Chase Manhattan Corp
9.750% Due 11/01/01 499
500,000 Dupont
8.250% Due 09/15/06 594
500,000 General Motors
7.100% Due 03/15/06 544
550,000 Eli Lilly
8.375% Due 02/07/05 627
500,000 Merck & Co Inc.
6.750% Due 09/19/05 537
300,000 ONT- Global Bond
7.375% Due 01/27/03 326
400,000 Worldcom, Inc.
7.550% Due 04/01/04 434
Total Corporate Bonds 3,882
Government Obligations - 2.0%
275,000 HUD Housing Urban Development
6.410% Due 08/01/05 292
Mortgage Obligations - 2.7%
400,000 Green Tree Home Imprv. Mortg.
6.780% Due 06/15/28 397
Total Investments - 98.1%
(Cost $12,150 ) (a) 14,217
Other Assets Less Liabilities - 1.9% 272
Net Assets - 100% $14,489
</TABLE>
(a) Cost is identical for book and tax purposes; the aggregate gross unrealized
appreciation is $2,216, and aggregate gross unrealized depreciation is $149,
resulting in net unrealized appreciation of $2,067 (in thousands).
See accompanying notes to financial statements.
*Non-income producing security
<Page 18>
Schedule of Investments December 31, 1998
MONETTA INTERMEDIATE BOND FUND
Shares or Quoted
Principal Market Value
Amount (In Thousands)
<TABLE>
<CAPTION>
Preferred Stock - 1.6%
<S> <C>
4,000 SI Financing - 9.50% 06/30/26 $106
Treasury Notes - 14.4%
200,000 5.500% Due 4/15/00 202
175,000 8.875% Due 05/15/00 185
200,000 6.625% Due 04/30/02 211
350,000 6.000% Due 07/31/02 365
963
Corporate Bonds - 71.5%
260,000 Pacific Gas & Electric - 8.750%
01/01/01 277
150,000 First Chicago Corp. - 11.250%
02/20/01 167
300,000 Chase Manhattan Corp. - 9.750%
11/01/01 333
300,000 Santa Fe Pacific - 8.375%
11/01/01 321
100,000 RJR Nabisco Inc. - 8.625%
12/01/02 102
125,000 Texaco Capital - 8.500%
02/15/03 140
100,000 Webb, Del E. - 9.750%
3/1/03 102
350,000 U.S. Central Credit - 6.000%
05/21/03 361
250,000 John Deere Credit - 6.125%
05/30/03 251
150,000 National Rural Utility - 6.000%
01/15/04 155
300,000 Worldcom, Inc. - 7.550%
04/01/04 325
300,000 Money Store - 8.375%
04/15/04 335
170,000 Commercial Credit Co. - 7.875%
07/15/04 187
225,000 Eli Lilly - 8.375%
02/07/05 257
250,000 Union Pacific Co. - 7.600%
05/01/05 269
225,000 Merck & Co , Inc. - 6.750%
09/19/05 242
100,000 Salomon, Inc. - 6.750%
1/15/06 104
250,000 Bank United Corp. - 8.875%
05/01/07 267
300,000 LCI Int'l, Inc. - 7.250%
06/15/07 309
250,000 Calenergy Co., Inc. - 7.630%
10/15/07 268
4,772
U.S. Government Agencies - 5.4%
250,000 FHLB 4.90% Due 02/10/19 249
100,000 FHLB 6.44% Due 11/28/20 107
356
Government Obligations - 3.9%
250,000 HUD 6.36% Due 08/01/04 263
Mortgage Obligations - 0.2%
12,678 GNMA, 8.50% Due 07/15/21 14
Variable Demand Notes - 1.1%
46,000 Firstar Bank Milw., N.A .- 5.30% 46
29,700 General Mills - 5.23% 30
Total Variable Demand Notes 76
Total Investments - 98.1%
(Cost $ 6,454) (a) 6,550
Other Assets and Liabilities - 1.9% 126
Net Assets - 100% $6,676
</TABLE>
Footnote for Intermediate Bond Fund:
(a) Cost is identical for book and tax purposes; the aggregate gross unrealized
appreciation is $101, and aggregate gross unrealized depreciation is $5,
resulting in net unrealized appreciation of $96 (in thousands). See
accompanying notes to financial statements.
*Non-income producing security
MONETTA GOVERNMENT MONEY MARKET FUND
Shares or
Principal Market Value
Amount (In Thousands)
<TABLE>
<CAPTION>
GOVERNMENT OBLIGATIONS - 98.6%
<S> <C>
Federal Home Loan Bank Discount - 54.4%
628,000 Due 01/04/99 $628
570,000 Due 01/08/99 569
265,000 Due 01/15/99 265
100,000 Due 01/20/99 100
252,000 Due 01/26/99 251
152,000 Due 02/05/99 151
265,000 Due 02/17/99 263
2,227
Federal National Mortgage Assoc.
Discount Note - 8.4%
349,000 Due 02/11/99 347
Federal Home Loan Mortgage Corp.
Discount Notes - 35.8%
684,000 Due 03/05/99 678
350,000 Due 03/10/99 347
447,000 Due 04/09/99 441
1,466
Total Investments - 98.6%
(Cost $4,040 ) (a) 4,040
Other Assets Less Liabilities - 1.4% 55
Net Assets - 100% $4,095
</TABLE>
(a) Cost is identical for book and tax purposes.
See accompanying notes to financial statements.
<Page 19>
Statements of Assets and Liabilities December 31, 1998
(In Thousands)
<TABLE>
<CAPTION>
Small-Cap Mid-Cap Large-Cap
Monetta Equity Equity Equity
Fund Fund Fund Fund
Assets:
<S> <C> <C> <C> <C>
Investments at market value
(cost: $103,970; $3,212;
$22,148; $3,327; $12,150;
$6,454; $4,040) (Note 1) $126,459 $3,967 $24,600 $4,164
Cash 0 0 0 6
Interest and dividends
receivable 16 1 7 1
Receivable for securities
sold 3,317 47 918 113
Total Assets 129,792 4,015 25,525 4,284
Liabilities:
Payables:
Custodial bank 1,496 23 6 0
Investment advisory fees
(Note 2) 100 2 12 2
Distribution and service
charges payable 0 1 10 2
Investments purchased 3,410 0 6,570 89
Fund shares redeemed 1 0 0 0
Accrued expenses 96 9 7 6
Total Liabilities 5,103 35 6,605 99
Net Assets 124,689 3,980 18,920 4,185
Analysis of net assets:
Paid in capital (b) 114,596 3,879 16,853 3,613
Accumulated undistributed
net investment income 0 0 0 0
Accumulated undistributed
net realized gain (loss) (12,396) (654) (385) (265)
Net unrealized appreciation
on investments 22,489 755 2,452 837
Net Assets $124,689 $3,980 $18,920 $4,185
Net asset value, offering price,
and redemption price per share
(8,333 shares of capital stock
and 297; 1,394; 311; 1,001;
627; 4,095 shares of beneficial
interest issued and outstanding
respectively) $14.96 $13.40 $13.57 $13.44
</TABLE>
See accompanying notes to financial statements.
(a) Rounds to less than $1,000.
(b) Amount for Monetta Fund represents $83 of $0.01 par value and $114,513 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.
Statements of Assets and Liabilities December 31, 1998
(In Thousands)
<TABLE>
<CAPTION>
Intermediate Government
Balanced Bond Money Market
Fund Fund Fund
Assets:
<S> <C> <C> <C>
Investments at market value
(cost: $103,970; $3,212;
$22,148; $3,327; $12,150;
$6,454; $4,040) (Note 1) $14,217 $6,550 $4,040
Cash 1 2 60
Interest and dividends
receivable 113 128 0
Receivable for securities
sold 228 0 0
Total Assets 14,559 6,680 4,100
Liabilities:
Payables:
Custodial bank 0 0 0
Investment advisory fees
Note (2) 5 1 0
Distribution and service
charges payable 5 1 0
Investments purchased 55 0 0
Fund shares redeemed 1 0 0
Accrued expenses 4 2 5
Total Liabilities 70 4 5
Net Assets 14,489 6,676 4,095
Analysis of net assets:
Paid in capital (b) 13,340 6,563 4,095
Accumulated undistributed
net investment income 2 (a) 0
Accumulated undistributed
net realized gain (loss) (920) 17 0
Net unrealized appreciation
on investments 2,067 96 0
Net Assets $14,489 $6,676 $4,095
Net asset value, offering price,
and redemption price per share
8,333 shares of capital stock
and 297; 1,394; 311; 1,001;
627; 4,095 shares of beneficial
interest issued and outstanding
respectively) $14.48 $10.65 $1.00
</TABLE>
See accompanying notes to financial statements.
(a) Rounds to less than $1,000.
(b) Amount for Monetta Fund represents $83 of $0.01 par value and $114,513 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 20>
Statements of Operations December 31, 1998
(In Thousands)
<TABLE>
<CAPTION>
Small-Cap Mid-Cap Large-Cap
Monetta Equity Equity Equity
Fund Fund Fund Fund
Investment income and
expenses:
<S> <C> <C> <C> <C>
Investment income:
Interest $654 $9 $188 $28
Dividend 333 3 91 26
Other income 59 0 4 (a)
Total investment income 1,046 12 283 54
Expenses:
Investment advisory fee
(Note 2) 1,447 26 156 30
Distribution expense 0 9 52 10
Custodial fees and bank
cash management fee 47 3 10 4
Transfer and shareholder
servicing agent fee 477 44 33 31
Other 0 0 1 (a)
Total expenses 1,971 82 252 75
Expenses waived and
reimbursed 0 0 0 0
Expenses net of waived and
reimbursed expenses 1,971 82 252 75
Net investment income (loss) (925) (70) 31 (21)
Realized and unrealized gain
(loss) on investments:
Realized gain (loss) on
investments:
Proceeds from sales 294,212 6,526 81,067 10,875
Cost of securities sold 306,527 7,181 81,452 11,140
Net realized gain (loss) on
investments (12,315) (655) (385) (265)
Net unrealized appreciation on
investments:
Beginning of period 23,225 117 2,041 199
End of period 22,489 755 2,452 837
Net change in net unrealized
appreciation (depreciation)
on investments during the
period (736) 638 411 638
Net realized and unrealized
gain (loss) on investments (13,051) (17) 26 373
Net increase (decrease) in
net assets from operations $(13,976) $(87) $57 $352
</TABLE>
See accompanying notes to financial statements.
(a) Rounds to less than $1,000.
Statements of Operations December 31, 1998
(In Thousands)
<TABLE>
<CAPTION>
Intermediate Government
Balanced Bond Money Market
Fund Fund Fund
Investment income and
expenses:
<S> <C> <C> <C>
Investment income:
Interest $386 $283 $256
Dividend 36 7 0
Other income 0 (a) 0
Total investment income 422 290 256
Expenses:
Investment advisory fee
(Note 2) 58 16 12
Distribution expense 36 12 5
Custodial fees and bank
cash management fee 8 3 2
Transfer and shareholder
servicing agent fee 20 4 13
Other (a) 0 (a)
Total expenses 122 35 32
Expenses waived and
reimbursed 0 (9) (17)
Expenses net of waived and
reimbursed expenses 122 26 15
Net investment income (loss) 300 264 241
Realized and unrealized gain
(loss) on investments:
Realized gain (loss) on
investments:
Proceeds from sales 22,695 2,544 26,826
Cost of securities sold 23,614 2,482 26,826
Net realized gain(loss) on
investments: (919) 62 0
Net unrealized appreciation on
investments:
Beginning of period 351 57 0
End of period 2,067 96 0
Net change in net unrealized
appreciation (depreciation)
on investments during the
period 1,716 39 0
Net realized and unrealized
gain (loss) on investments 797 101 0
Net increase (decrease) in
net assets from operations $ 1,097 $ 365 $ 241
</TABLE>
See accompanying notes to financial statements.
(a) Rounds to less than $1,000.
<Page 21>
Statements of Changes in Net Assets December 31, 1998
(In Thousands)
<TABLE>
<CAPTION>
Small-Cap
Monetta Equity
Fund Fund
1998 1997 1998 1997*
From investment activities:
<S> <C> <C> <C> <C>
Operations:
Net investment income (loss) $(925) $(396) $(70) $(11)
Net realized gain (loss) on
investments (12,315) 31,669 (655) 140
Net change in net unrealized
appreciation (depreciation)
on investments during the
period (736) 5,097 638 117
Net increase (decrease) in net
assets from operations (13,976) 36,370 (87) 246
Distribution from net
investment income 0 0 0 0
Distribution from short-term
capital gains, net (b) (2,369) (15,860) (30) (99)
Distribution from net realized
gains (3,088) (6,981) 0 0
Increase (decrease) in net
assets from investment
activities (19,433) 13,529 (117) 147
From capital transactions
(Note 3):
Proceeds from shares sold 11,137 13,641 2,479 2,498
Net asset value of shares
issued through dividend
reinvestment 5,350 22,534 29 95
Cost of shares redeemed (35,780) (97,806) (929) (222)
Increase (decrease) in net
assets from capital
transactions (19,293) (61,631) 1,579 2,371
Total increase (decrease)
in net assets (38,726) (48,102) 1,462 2,518
Net assets at beginning
of period 163,415 211,517 2,518 0
Net assets at end of period** $124,689 $163,415 $3,980 $2,518
</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.
* For period from 2/1/97 through 12/31/97.
Statements of Changes in Net Assets December 31, 1998
(In Thousands)
<TABLE>
<CAPTION>
Mid-Cap Large-Cap
Equity Equity
Fund Fund
1998 1997 1998 1997
From investment activities:
<S> <C> <C> <C> <C>
Operations:
Net investment income (loss) $31 $ (56) $(21) $(2)
Net realized gain (loss) on
investments (385) 6,384 (265) 831
Net change in net unrealized
appreciation (depreciation)
on investments during the
period 411 (1,142) 638 (11)
Net increase (decrease) in net
assets from operations 57 5,186 352 818
Distribution from net
investment income (31) (a) 0 0
Distribution from short-term
capital gains, net (b) (741) (1,696) (208) (296)
Distribution from net realized
gains (1,028) (3,032) (62) (275)
Increase (decrease) in net
assets from investment
activities (1,743) 458 82 247
From capital transactions
(Note 3):
Proceeds from shares sold 5,180 5,590 829 2,135
Net asset value of shares
issued through dividend
reinvestment 1,770 4,686 264 559
Cost of shares redeemed (8,195) (6,164) (1,255) (964)
Increase (decrease) in net
assets from capital
transactions (1,245) 4,112 (162) 1,730
Total increase (decrease)
in net assets (2,988) 4,570 (80) 1,977
Net assets at beginning
of period 21,908 17,338 4,265 2,288
Net assets at end of period** $18,920 $21,908 $4,185 $4,265
</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.
* For period from 2/1/97 through 12/31/97.
<Page 22>
Statements of Changes in Net Assets December 31, 1998
(In Thousands)
<TABLE>
<CAPTION>
Intermediate
Balanced Bond
Fund Fund
1998 1997 1998 1997
From investment activities:
<S> <C> <C> <C> <C>
Operations:
Net investment income (loss) $300 $156 $264 $182
Net realized gain (loss) on
investments (919) 1,171 62 18
Net change in net unrealized
appreciation (depreciation)
on investments during the
period 1,716 236 39 70
Net increase (decrease) in net
assets from operations 1,097 1,563 365 270
Distribution from net
investment income (300) (154) (264) (181)
Distribution from short-term
capital gains, net (b) (395) (676) (23) (14)
Distribution from net realized
gains (56) (56) (23) (a)
Increase (decrease) in net
assets from investment
activities 346 677 55 75
From capital transactions
(Note 3):
Proceeds from shares sold 4,715 9,742 3,943 1,371
Net asset value of shares
issued through dividend
reinvestment 404 618 257 170
Cost of shares redeemed (3,030) (1,319) (1,512) (452)
Increase (decrease) in net
assets from capital
transactions (2,089) 9,041 2,688 1,089
Total increase (decrease)
in net assets 2,435 9,718 2,743 1,164
Net assets at beginning
of period 12,054 2,336 3,933 2,769
Net assets at end of period** $14,489 $12,054 $6,676 $3,933
</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.
* For period from 2/1/97 through 12/31/97.
**Including undistributed net investment income of $2 thousand for the Balanced
Fund and undistributed net investment income, which rounds to less than $1
thousand, for the Intermediate Bond Fund.
Statements of Changes in Net Assets December 31, 1998
(In Thousands)
<TABLE>
<CAPTION>
Government
Money Market
Fund
1998 1997
From investment activities:
<S> <C> <C>
Operations:
Net investment income (loss) $241 $267
Net realized gain (loss) on
investments 0 0
Net change in net unrealized
appreciation (depreciation)
on investments during the
period 0 0
Net increase (decrease) in net
assets from operations 241 267
Distribution from net
investment income (241) (267)
Distribution from short-term
capital gains, net (b) 0 0
Distribution from net realized
gains 0 0
Increase (decrease) in net
assets from investment
activities 0 0
From capital transactions
(Note 3):
Proceeds from shares sold 5,724 6,338
Net asset value of shares
issued through dividend
reinvestment 233 252
Cost of shares redeemed (6,326) (8,358)
Increase (decrease) in net
assets from capital
transactions (369) (1,768)
Total increase (decrease)
in net assets (369) (1,768)
Net assets at beginning
of period 4,464 6,232
Net assets at end of period** $4,095 $4,464
</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.
* For period from 2/1/97 through 12/31/97.
**Including undistributed net investment income of $2 thousand for the Balanced
Fund and undistributed net investment income, which rounds to less than $1
thousand, for the Intermediate Bond Fund.
<Page 23>
Notes To Financial Statements December 31, 1998
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.
The Monetta Family of Mutual 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.
(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.
<Page 24>
Notes To Financial Statements December 31, 1998
The Funds intend to utilize provisions of the federal income tax laws which
allow them to carry a realized capital loss forward for eight years following
the year of the loss and offset such losses against any future realized capital
gains. At December 31, 1998, the Funds have accumulated capital loss
carryforwards for tax purposes, which will expire on December 31, 2006, of:
Monetta Fund, Inc., $8,865,094; Monetta Small-Cap Equity Fund, $463,923;
Monetta Mid-Cap Equity Fund, $286,883; Monetta Large-Cap Equity Fund, $262,422;
and Monetta Balanced Fund, $916,270.
Net realized gains or losses differ for financial reporting and tax purposes as
a result of losses from wash sales, post October 31 losses which are not
recognized for tax purposes until the first day of the following fiscal year,
and losses and gains from real estate investment trusts.
(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.
(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-tern
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.
Distributions from net realized gains for book purposes may include short-term
capital gains, which are included as ordinary income for tax purposes.
For federal income tax purposes, a net operating loss recognized in the current
year cannot be used to offset future years' net investment income. Therefore,
$924,941, $69,638 and $20,949, of net operating loss generated by Monetta Fund,
Inc., Monetta Small-Cap Equity Fund, and Monetta Large-Cap Equity Fund,
respectively, has been reclassified from accumulated net investment loss to
capital.
For the year ended December 31, 1998, the Funds paid the following long-term
capital gains, Monetta Fund, Inc., $3,088,323; Monetta Mid-Cap Equity Fund,
$1,027,825; Monetta Large-Cap Equity Fund, $62,170; Monetta Balanced Fund,
$55,891; and Monetta Intermediate Bond Fund, $23,163.
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 twelve months ended December 31, 1998,
renumerations required to be paid to all interested directors or trustees 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 1.0% for Monetta
Fund; 0.75% for the Small-Cap, Mid-Cap, and Large-Cap Equity Funds; 0.40% for
the 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 Funds'
ordinary operating expenses other than the advisory fee, distribution charges
(Trust only) and charges of the Funds' custodian and transfer agent.
Investment advisory fees waived for the twelve months ended December 31,1998,
for the Intermediate Bond Fund were $9,430 of total fees of $16,453.
Investment advisory fees waived, 12B-1 fees waived, and expenses paid by the
Advisor through December 31, 1998, for the Government Money Market Fund were
$11,772, $4,714 and $330, respectively. Additionally, brokerage commissions of
$22,650, $800, $16,200, $900 and $4,530, were paid by the Monetta Fund, Small-
Cap Fund, Mid-Cap Fund, Large-Cap Fund, and Balance Fund, respectively to
Monetta Investment Services, L.L.C. during the year ended December 31, 1998.
<Page 25>
Notes To Financial Statements December 31, 1998
Monetta Financial Services, Inc., as of December 31, 1998 owned 60,011 shares
or 9.6% of the Intermediate Bond Fund, 18,092 or 6.1% of the Small-Cap Equity
Fund, 39,573 shares or 4.0% of the Balanced Fund, 7,395 shares or 2.4% of the
Large-Cap Equity Fund. Monetta Financial Services, Inc. owns less than 1% of
the Monetta Fund, the Mid-Cap Equity Fund, and the Government Money Market
Fund.
3. CAPITAL STOCK AND SHARE UNITS:
There are 100,000,000 shares of $0.01 par value capital stock authorized for
the 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-Cap Mid-Cap Large-Cap
Monetta Equity Equity Equity
(In Thousands) Fund Fund* Fund Fund
<S> <C> <C> <C> <C>
1997 beginning shares 13,352 0 1,170 187
Shares sold 752 190 341 161
Shares issued upon
dividend reinvestment 1,289 7 315 42
Shares redeemed (5,933) (16) (363) (71)
Net increase (decrease)
in shares outstanding (3,892) 181 293 132
1998 beginning shares 9,460 181 1,463 319
Shares sold 702 184 375 63
Shares issued upon
dividend reinvestment 412 2 144 23
Shares redeemed (2,241) (70) (588) (94)
Net increase (decrease)
in shares outstanding (1,127) 96 (69) (8)
Ending shares 8,333 297 1,394 311
</TABLE>
<TABLE>
<CAPTION>
Government
Intermediate Money
Balanced Bond Market
Fund Fund Fund
<S> <C> <C> <C>
1997 beginning shares 185 271 6,232
Shares sold 723 133 6,338
Shares issued upon
dividend reinvestment 43 17 252
Shares redeemed (95) (44) (8,358)
Net increase (decrease)
in shares outstanding 671 106 (1,768)
1998 beginning shares 856 377 4,464
Shares sold 329 369 5,724
Shares issued upon
dividend reinvestment 31 24 233
Shares redeemed (215) (143) (6,326)
Net increase (decrease)
in shares outstanding 145 250 (369)
Ending shares 1,001 627 4,095
</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, 1998, excluding short-term securities were: Monetta
Fund, $142,819,724 and $168,245,024 ; Small-Cap Fund, $7,850,947 and
$6,526,200; Mid-Cap Fund, $42,036,670 and $43,913,944; Large-Cap Fund,
$7,499,377 and $7,800,684; Balanced Fund, $19,287,727 and $17,297,243; and
Intermediate Bond Fund, $4,879,284 and $2,543,936. The cost of purchases and
proceeds from the sales of government securities included in the preceding
numbers were as follows: Balanced Fund, $0 and $2,235,159; and Intermediate
Bond Fund, $778,175 and $556,051.
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
0.25% for the Small-Cap, Mid-Cap, Large-Cap, Balanced, and Intermediate Bond
Funds and up to 0.10% for the Government Money Market Fund are accrued daily.
The distributor is Funds Distributor, Inc.
<Page 26>
Notes To Financial Statements December 31, 1998
6. FINANCIAL HIGHLIGHTS:
Financial highlights for Monetta Fund for a share of capital stock
outstanding throughout the period is presented below:
<TABLE>
<CAPTION>
MONETTA FUND
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net asset value at
beginning of period $17.274 $15.842 $15.591 $14.515 $15.539
Net investment income (loss) (0.104) (0.041) (0.079) 0.029 (0.026)
Net realized and unrealized gain
(loss) on investments (1.554) 4.223 0.330 4.075 (0.938)
Total from investment
operations: (1.658) 4.182 0.251 4.104 (0.964)
Less:
Distributions from net investment
income 0.000 0.000 0.000 (0.028) 0.000
Distributions from short-term capital
gains, net (a) (0.283) (1.910) 0.000 (3.000) (0.060)
Distributions from net realized
gains (0.369) (0.840) 0.000 0.000 0.000
Total distributions (0.652) (2.750) 0.000 (3.028) (0.060)
Net asset value at end of period $14.964 $17.274 $15.842 $15.591 $14.515
Total return (9.03%) 26.18% 1.60% 28.02% (6.21%)
Ratio to average net assets:
Expenses 1.36% 1.48% 1.38% 1.36% 1.35%
Net investment income (0.64%) (0.24%) (0.51%) 0.18% (0.15%)
Portfolio turnover 107.5% 97.8% 204.8% 272.0% 191.3%
Net assets ($ millions) $124.7 $163.4 $211.5 $362.7 $364.9
</TABLE>
(a) Distributions of short-term capital gains are included as ordinary income
for tax purposes.
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 27>
Notes To Financial Statements December 31, 1998
Financial highlights for each Fund of the Trust for a share outstanding
throughout the period are as follows:
<TABLE>
<CAPTION>
Small-Cap
Equity Fund
2/1/97
Through
1998 12/31/97
<S> <C> <C>
Net asset value at beginning of
period $13.900 $10.000
Net investment income (loss) (0.272) (0.148)
Net realized and unrealized
gain (loss) on investments (0.136) 4.878
Total from investment operations (0.408) 4.730
Less:
Distributions from net
investment income 0 0.000
Distributions from short-term
capital gains, net (a) (0.096) (0.830)
Distributions from net
realized gains 0 0.000
Total distributions (0.096) (0.830)
Net asset value at end of period $13.396 $13.900
Total return* (2.81%) 47.17%
Ratios to average net assets:
Expenses* 2.39% 1.75%
Net investment income* (2.04%) (1.13%)
Portfolio turnover 200.4% 138.8%
Net assets ($ thousands) $3,980 $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.
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.
Notes To Financial Statements December 31, 1998
<TABLE>
<CAPTION>
Mid-Cap
Equity Fund
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of
period $14.975 $14.814 $11.962 $12.199 $12.537
Net investment income (loss) 0.022 (0.045) 0.044 0.059 0.071
Net realized and unrealized
gain (loss) on investments (0.266) 4.296 2.852 2.874 0.193
Total from investment operations (0.244) 4.251 2.896 2.933 0.264
Less:
Distributions from net
investment income (0.022) 0.000 (0.044) (0.050) (0.069)
Distributions from short-term
capital gains, net (a) (0.477) (1.452) 0.000 (2.990) (0.533)
Distributions from net
realized gains (0.661) (2.638) 0.000 (0.130) 0.000
Total distributions (1.160) (4.090) (0.044) (3.170) (0.602)
Net asset value at end of period $13.571 $14.975 $14.814 $11.962 $12.199
Total return* (0.85%) 29.14% 24.20% 24.54% 2.17%
Ratios to average net assets:
Expenses* 1.21% 1.26% 1.23% 1.25% 1.30%
Net investment income* 0.15% (0.28%) 0.32% 0.44% 0.57%
Portfolio turnover 237.6% 137.8% 93.3% 254.4% 210.0%
Net assets ($ thousands) $18,920 $21,908 $17,338 $14,216 $11,736
</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.
The per share ratios are calculated using the weighted average number of shares
outstanding during the period, except distributions that are based on shares
outstanding at record date.
<Page 28>
Notes To Financial Statements December 31, 1998
<TABLE>
<CAPTION>
Large-Cap
Equity Fund
9/1/95
Through
1998 1997 1996 12/31/95
<S> <C> <C> <C> <C>
Net asset value at beginning of
period $13.359 $12.266 $10.571 $10.000
Net investment income (loss) (0.068) (0.007) 0.023 0.005
Net realized and unrealized
gain (loss) on investments 1.074 3.250 2.928 0.570
Total from investment operations 1.006 3.243 2.951 0.575
Less:
Distributions from net
investment income 0.000 0.000 (0.023) (0.004)
Distributions from short-term
capital gains, net (a) (0.714) (1.113) (1.188) 0.000
Distributions from net
realized gains (0.214) (1.037) (0.045) 0.000
Total distributions (0.928) (2.150) (1.256) (0.004)
Net asset value at end of period $13.437 $13.359 $12.266 $10.571
Total return* 8.99% 26.64% 28.20% 5.74%
Ratios to average net assets:
Expenses* 1.86% 1.51% 1.51% 0.69%
Net investment income* (0.52%) (0.05%) 0.31% 0.05%
Portfolio turnover 207.5% 123.2% 152.7% 38.2%
Net assets ($ thousands) $4,185 $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.
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.
Notes To Financial Statements December 31, 1998
<TABLE>
<CAPTION>
Balanced
Fund
9/1/95
Through
1998 1997 1996 12/31/95
<S> <C> <C> <C> <C>
Net asset value at beginning of
period $14.078 $12.643 $10.605 $10.000
Net investment income (loss) 0.290 0.264 0.132 0.009
Net realized and unrealized
gain (loss) on investments 0.838 2.398 2.598 0.602
Total from investment operations 1.128 2.662 2.730 0.611
Less:
Distributions from net
investment income (0.286) (0.224) (0.132) (0.004)
Distributions from short-term
capital gains, net (a) (0.389) (0.927) (0.560) (0.002)
Distributions from net
realized gains (0.055) (0.076) 0.000 0.000
Total distributions (0.730) (1.227) (0.692) (0.006)
Net asset value at end of period $14.476 $14.078 $12.643 $10.605
Total return* 8.59% 21.21% 25.94% 6.16%
Ratios to average net assets:
Expenses* 0.84% 1.02% 1.40% 0.91%
Net investment income* 2.06% 1.88% 1.54% 0.08%
Portfolio turnover 127.7% 115.9% 117.8% 54.8%
Net assets ($ thousands) $14,489 $12,054 $2,336 $410
</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.
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 29>
Notes To Financial Statements December 31, 1998
Monetta Trust Continued:
<TABLE>
<CAPTION>
Intermediate Bond Fund
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of
period $10.445 $10.208 $10.244 $9.624 $10.345
Net investment income 0.592 0.599 0.612 0.655 0.589
Net realized and unrealized gain
(loss) on investments 0.269 0.278 0.019 0.740 (.690)
Total from investment operations 0.861 0.877 0.631 1.395 (0.101)
Less:
Distributions from net
investment income (0.577) (0.592) (0.612) (0.655) (0.580)
Distributions from short-term
capital gains, net (a) (0.038) (0.047) (0.055) (0.120) (0.040)
Distributions from net realized
gains (0.039) (0.001) 0.000 0.000 0.000
Total distributions (0.654) (0.640) (0.667) (0.775) (0.620)
Net asset value at end of period $10.652 $10.445 $10.208 $10.244 $9.624
Total return 8.38% 8.91% 6.46% 14.84% (1.04%)
Ratios to average net assets:
Expenses - Net 0.55% 0.65% 0.55% 0.27% 0.28%
Expenses - Gross (b) 0.75% 0.87% 0.85% 0.75% 0.88%
Net investment income-Net 5.59% 5.82% 5.75% 5.94% 5.94%
Net investment income-Gross (b) 5.39% 5.60% 5.45% 5.46% 5.34%
Portfolio turnover 52.0% 96.7% 28.9% 75.1% 94.5%
Net assets ($ thousands) $6,676 $3,933 $2,769 $3,589 $3,010
</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.
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 30>
Notes To Financial Statements December 31, 1998
<TABLE>
<CAPTION>
Government Money Market Fund
1998 1997 1996 1995 1994
<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 0.051 0.050 0.049 0.059 0.040
Net realized and unrealized gain
(loss) on investments 0.000 0.000 0.000 0.000 0.000
Total from investment operations
Less:
Distributions from net
investment income (0.051) (0.050) (0.049) (0.059) (0.040)
Distributions from short-term
capital gains, net (a) 0.000 0.000 0.000 0.000 0.000
Distributions from net realized
gains 0.000 0.000 0.000 0.000 0.000
Total distributions (0.051) (0.050) (0.049) (0.059) (0.040)
Net asset value at end of
period $1.000 $1.000 $1.000 $1.000 $1.000
Total return 5.24% 5.15% 5.06% 5.87% 4.04%
Ratios to average net assets:
Expenses - Net 0.32% 0.39% 0.31% 0.07% 0.0%
Expenses - Gross (b) 0.68% 0.76% 0.67% 0.59% 0.66%
Net investment income-Net 5.11% 5.02% 4.95% 5.69% 4.04%
Net investment income-Gross(b) 4.76% 4.65% 4.59% 5.17% 3.39%
Portfolio turnover N/A N/A N/A N/A N/A
Net assets ($ thousands) $4,095 $4,464 $6,232 $4,393 $3,315
</TABLE>
(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.
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 31>
