Prospectus dated April 30, 1997
JWB AGGRESSIVE GROWTH FUND
Century Square Building
1188 Bishop Street, Suite #1712
Honolulu, HI 96813
(808) 524-0577
JWB Aggressive Growth Fund (the "Trust") is a newly organized, diversified
open-end management investment company that currently consists of one portfolio
(the "Fund"). The Fund's investment objective is to seek capital appreciation.
The Fund seeks to achieve its objective by primarily investing in the common
stock of companies that are traded on the New York Stock Exchange ("NYSE"),
American Stock Exchange ("ASE") and the NASDAQ.
JWB Investment Advisory & Research, founded by John W. Bagwell (the "Advisor")
serves as investment advisor to the Fund. JWB Management Corp. (the
"Administrator") serves as administrator for the Fund.
The minimum initial investment in the Fund is $10,000. The Fund is a pure
no-load fund. There are no 12b-1 marketing fees or sales charges. This means
that 100% of your investment is invested in shares of the Fund.
This Prospectus contains the information you should know about the Fund before
you invest. Please read the Prospectus and retain it for future reference. A
Statement of Additional Information for the Fund (dated April 30, 1997) has been
filed with the Securities and Exchange Commission ("SEC") and is incorporated by
reference into this Prospectus. It is made available for no additional charge by
calling Shareholder Services at 1-800-506-9403.
This Prospectus does not constitute an offer to sell, or a solicitation of an
offer to buy, the shares of the Fund in any jurisdiction in which such may not
lawfully be made.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, PASSED UPON THE
ACCURACY OR THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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Dedicated to my family and friends, and almighty God who made this all possible.
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Table of Contents
Page
Fees and Expenses...................................2
Financial Highlights............................... 3
Investment Objectives and Policies............... 3-4
Performance.........................................5
Management of the Fund............................5-6
Net Asset Value.....................................6
How to Purchase Shares............................6-7
Special Plans.....................................7-8
How to Redeem Shares................................8
Dividends and Distributions.........................9
Tax and General Information......................9-10
Fees and Expenses
Shareholder Transaction Expenses. Charges you pay when you buy, sell or hold
shares of the Fund:
NONE
Annual Fund Operating Expenses. These are expenses paid out of the Fund's
average daily net assets for services such as management of the Fund,
maintaining shareholder records and furnishing shareholder statements. The
following are projections that are calculated as a percentage of average daily
net assets:
Management Fees..............................................1.00%
Other Expenses............................................... .90%
Total Fund Operating Expenses................................1.90%*
The table below is intended to assist you in understanding the various costs and
expenses that an investor in the Fund will bear directly or indirectly. The 5%
annual rate of return used in the example below is only for illustration and is
not intended to be indicative of the future performance of the Fund, which may
be more or less than the assumed rate. Future expenses may be more or less than
those shown. You can refer to the sections "How to Purchase Shares" and
"Management of the Fund" for more information on transaction and operating
expenses of the Fund.
Example
You would pay the following expenses on a $1,000 investment, assuming (1) a 5%
annual return and (2) redemption at the end of each period:
1 Year 3 Years
------ -------
$20 $62
The example should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown above.
* For the Fund's first fiscal year or until the Fund's total assets exceed
$12 million, a portion of the fees payable to the Fund's investment advisor
and administrator will be voluntarily waived so that the total Fund
operating expenses will not exceed 2.35% of the Fund's average daily net
assets.
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Financial Highlights
The "Financial Highlights" in the following table for the fiscal period ended
December 31, 1996 have been audited by Sanville & Co., the Fund's independant
accountants, whose report is included in the Statement of Additional
Information. The table should be read in conjunction with the audited financial
statements and related notes included in the Statement of Additional
Information.
March 28, 1996(1)
to
December 31, 1996
(audited)
---------
Operating Performance:
Net asset value, beginning of period $10.00
Income from Investment Operations:
Net investment loss (0.01)
Net realized and unrealized loss on
investment transactions (0.55)
Net asset value, end of period $9.44
Total return (0.06)%(2)(3)
Supplemental data and ratios:
Net assets, end of period ($) $442,933
Ratio of adjusted operating expenses to net assets 6.34%(4)
Ratio of expenses to average net assets 1.95%(4)
Ratio of net investment income to average net assets (0.23)%(4)
Portfolio turnover rate 181.79%
- ---------------------------------
(1) Commencement of operations.
(2) Not annualized.
(3) The total return would have been lower had certain expenses during the
period not been reduced.
(4) Annualized.
Investment Objective and Policies
The Fund is a diversified mutual fund in which the objective is to seek capital
appreciation. The Fund seeks to achieve this objective through investments
primarily in the common stock of companies (referred to herein as "equity
securities") that are traded on the NYSE, ASE, and the NASDAQ. In selecting
investments for the Fund, the Advisor will allocate investments among securities
of particular issuers based on the Advisor's views as to the best values then
currently available in the marketplace. Such values are based on a company's
ability to show a strong growth momentum, while trading at reasonable valuations
relative to the company's growth rate over a stated period, that are likely to
benefit from new or innovative products, services or processes that should
enhance such companies' prospects for future growth.
Under normal circumstances, the Fund will invest substantially all of its assets
in equity securities of large (over $2 billion in market capitalization), medium
(under $2 billion in market capitalization), and small companies (under $500
million in market capitalization). Smaller companies may involve greater risks
than are associated with larger companies due to limited product and market
diversification with fewer financial
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resources. The Advisor will consider industry diversification as an important
factor, although the emphasis on a certain industry may change due to the
outlook for earnings in certain sectors. Diversification means placing a
limitation on the amount of money invested in any one issuer and limiting the
amount of money invested in any one industry, which reduces the risks of
investing. Although the Fund invests primarily in common stock, it may
ordinarily invest a portion of its assets in cash or cash equivalents such as
obligations issued or guaranteed by the U.S. Government, its agencies and/or
instrumentalities ("U.S. Government securities") or high quality money market
instruments such as notes, certificates of deposit or bankers acceptances. The
Advisor may determine that it is appropriate to assume a temporary defensive
posture in the market, in which case, the Fund may invest up to 100% of its
assets in these instruments.
Restricted and Illiquid Securities. The Fund will not invest more than 10% of
its net assets in securities that the Advisor determines, under the supervision
of the Board of Trustees, to be illiquid. This means that the securities may be
difficult to sell promptly at an acceptable price. The sale of some illiquid and
other types of securities may be subject to legal restrictions. These securities
may present a greater risk of loss than other types of securities and therefore
the Fund is limited as to the percentage of illiquid securities that it will
hold.
When-Issued Securities and Delayed-Delivery Transactions. The Fund may purchase
securities on a when-issued basis, and it may purchase or sell securities for
delayed-delivery. These transactions occur when securities are purchased or sold
by the Fund with payment and delivery taking place in the future to secure what
is considered an advantageous yield and price to the Fund at the time of
entering into the transaction. Although the Fund has not established any limit
on the percentage of its assets that may be committed in connection with such
transactions, the Fund will maintain a segregated account, with its Custodian,
of cash, cash equivalents, U.S. Government securities or other high-grade liquid
debt securities denominated in U.S. dollars or non-U.S. currencies in an
aggregate amount equal to the amount of its commitment in connection with such
purchase transactions.
Options on Securities. The Fund may write (i.e. sell) covered put and call
options and purchase put and call options on securities that are traded on the
United States exchanges or in the over-the-counter markets. Such options can
include long-term options with a duration of up to three years. The value of the
underlying securities on which options may be written at any one time will not
exceed 10% of the net assets of the Fund.
Risk Factors. Although not normally anticipated to be widely employed, the Fund
may use these techniques to increase or decrease its exposure to the effects of
changes in security prices, or that other factors that affect the value of the
Fund's portfolio. Options may fail as hedging techniques in cases where the
price movements of the portfolio securities underlying the options do not follow
the price movements of the portfolio securities subject to the hedge. These
techniques may increase the volatility of the Fund and may involve a small
investment of cash relative to the magnitude of the risk assumed. These
techniques could result in a loss if the counterparty to the transaction does
not perform as promised.
Portfolio Turnover. The portfolio turnover rate for the Fund for the fiscal
period ending December 31, 1996 was 181.79%. Higher portfolio turnover rate
results in higher rate of net realized capital gains to the Fund, thus the
portion of the Fund's distributions constituting taxable gains may increase. In
addition, higher portfolio turnover activity can result in higher brokerage
costs to the Fund.
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Fundamental Investment Policies. The Fund's investment objective, to seek
capital appreciation, is a fundamental policy. This means that this policy may
not be changed without a vote of the holders of a majority of the Fund's shares.
All other policies in this Prospectus, other than those identified in this
paragraph, may be changed without shareholder approval. Additional fundamental
policies are the following: (1) With respect to 75% of its assets, the Fund may
not invest more than 5% of its total assets in any one issuer and may not own
more than 10% of the outstanding voting securities of a single issuer; (2) the
Fund may not invest more than 25% of its total assets in any one industry, and
(3) the Fund may only borrow for temporary or emergency purposes, which
borrowings may not exceed 5% of its total assets.
Risk Factors. The Fund may be appropriate for long-term, aggressive investors
who understand the potential risks and rewards of investing in common stocks.
The value of the Fund's investments will vary from day-to-day, and generally
reflect changes in market conditions, interest rates and other company,
political, and economic news. In short-term, stock prices can fluctuate
dramatically in response to these factors. However, over time, stocks although
more volatile, have shown greater growth potential than other investments. The
Fund is not, in itself, a balanced investment plan, and the lack of operating
history may also present certain risks. The value of the Fund's shares will
fluctuate to a greater degree than the shares of funds utilizing more
conservative investment techniques or those having as investment objectives, the
conservation of capital and/or the realization of current income. When you sell
your Fund shares, they may be worth more or less than what you paid for them.
There is no assurance that this Fund can achieve its objective, since all
investments are inherently subject to market risk.
Performance
The term "total return" will be used as a tool of measurement for the Fund's
performance. Total return is the change in value of an investment in the Fund
over a certain period of time, assuming that all income distributions have been
re-invested. Cumulative total return reflects the actual performance over a
certain period of time and an average total return reflects a hypothetical rate
of return. If this hypothetical rate of return is realized annually, the numbers
reflected are indicative of what the actual cumulative total return would be for
that extended period of time. Total return will be shown for recent one, five,
and ten year periods and may be shown for other periods as well. From
time-to-time, the Fund may advertise its yield. The "yield" refers to the income
generated by the Fund over a specified thirty-day period, which is then
expressed as an annual percentage rate. Investors should note that yield and
total return figures are based on historical earnings and are not intended to
indicate future performance. In reports or other communications to investors or
in advertising material, the Fund may describe general economic and market
conditions affecting the Fund and may compare its performance with other mutual
funds as listed in the rankings prepared by Lipper Analytical Services, Inc. or
similar investment services that monitor evaluations of the Fund published by
nationally recognized rating services and by financial publications that are
nationally recognized. The S&P 500 is the Standard & Poors Composite Index of
500 Stocks, a widely recognized, unmanaged index of common stock prices. The S&P
500 figures assume re-investment of all distributions and does not reflect
brokerage commissions incurred if purchasing the stocks in the open market. For
more information on the Fund's performance see the Fund's annual report which is
available without charge by calling the Fund at 1-800-506-9403.
Management of the Fund
Board of Trustees. Overall responsibility for management and supervision of the
Fund rests with the Fund's Board of Trustees. The Trustees approve all
significant agreements between the Fund and the persons and companies that
furnish services to the Fund, including agreements with the Fund's custodian,
transfer agent, investment advisor and administrator. The day-to-day operations
of the Fund are delegated to the Advisor. The Statement of Additional
Information contains background information regarding each of the Fund's
Trustees and Executive Officers.
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Advisor - JWB Investment Advisory & Research. The Advisor is responsible for
selection and management of the Fund's portfolio. The Advisor is a registered
investment advisor, under the Investment Advisors Act of 1940 and was
established as a sole proprietor in 1993. The Advisor is wholly owned by John W.
Bagwell. The Advisor's office is located at Century Square Building, 1188 Bishop
Street, Suite #1712, Honolulu, HI 96813. For its services, the Fund pays to the
Advisor an annual fee of 1% of its average daily net assets, which is paid
monthly. This 1% charge is higher than other funds of this type, however the
overall operating fees are expected to be lower than other funds. John W.
Bagwell is the portfolio manager for the Fund, and Chris Askeland serves as the
assistant portfolio manager. Mr. Bagwell has been a registered investment
advisor with the Securities and Exchange Commission and the State of Hawaii
since 1993. He previously served as a general securities principal for several
broker/dealers, and has been a broker in the securities arena since 1989. Mr.
Bagwell has not had previous experience in managing a mutual fund. For the
fiscal year ended December 31, 1996, an investment management fee of $1,775 was
accrued but not paid by the Fund.
Administrator - JWB Management Corp. The Administrator provides the Fund with
certain administrative and shareholder services, subject to the supervision and
direction of the Board of Trustees of the Fund. The Administrator provides a
variety of services, including furnishing certain internal executive and
administrative services, providing office space, responding to shareholder
inquiries, monitoring the financial, accounting and administrative transactions
of the Fund, furnishing corporate secretarial services, which include assisting
in the preparation of material for meetings of the Board of Trustees,
coordinating the preparation of annual and semi-annual reports, preparation of
tax returns and generally assisting in monitoring compliance procedures for the
Fund. In addition, the Administrator pays for certain expenses borne by the Fund
including the charges and expenses of the transfer agent, legal expenses,
bookkeeping and accounting expenses, costs of maintaining the books and records
of the Fund, the expense of printing and mailing Prospectuses and sales
materials used for promotional purposes, and other miscellaneous expenses not
borne by the Fund. For the services provided to the Fund by the Administrator,
the Fund pays to the Administrator an annual fee of .90% of the Fund's average
daily net assets, which is paid monthly. For the fiscal year ended December 31,
1996, an administrative fee of $1,597 was accrued but not paid by the Fund.
From time to time, the Advisor and the Administrator may waive receipt of its
fees and/or voluntarily assume certain fund expenses, which would have the
effect of lowering the Fund's expense ratio, as the case may be, and increasing
yield to investors at the time such amounts are waived or assumed, as the case
may be. The Fund will not be required to pay the Advisor or the Administrator
for any amounts it may waive, nor will the Fund be required to reimburse the
Advisor or Administrator for any amounts assumed, during a previous fiscal year.
Currently the Fund has limited expenses to an amount of 2.35% of the average net
assets of the Fund. The Fund will not accrue as an expense in any given year any
portion of the Manager's fee that has not been paid in such year, or any
expenses that have been reimbursed.
The Administrator has contracted with Brown Legal Resources, Inc., 152R Main
Street, Wenham, Massachusetts 01984, to provide assistance on many of the
administrative functions.
Distributor - Declaration Distributors, Inc., 555 North Lane, Suite #6160,
Conshohocken, Pennsylvania 19428, serves as the Fund's distributor.
Custodian and Transfer Agent. The First National Bank of Boston, 150 Royall St.,
Canton, Massachusetts 02021, serves as custodian for the Fund. Declaration
Service Company, 555 North Lane, Suite #6160, Conshohocken, Pennsylvania 19428,
serves as the Fund's fund accounting agent and transfer agent, dividend
disbursing agent, and shareholder service agent.
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Net Asset Value
The Fund is open for business on each day that the New York Stock Exchange
("NYSE") is open. The Fund's share price or net asset value per share ("NAV") is
normally determined as of 4:00 p.m., New York time. The Fund's share price is
calculated by subtracting its liabilities from its total assets and dividing the
result by the total number of shares outstanding on that same day. Fund
liabilities include accrued expenses and dividends payable, and its total assets
include the market value of the portfolio securities as well as income accrued
but not yet received. Since the Fund does not charge sales or redemption fees,
the NAV is the offering price for shares of the Fund.
How to Purchase Shares
In order to invest in the Fund, an investor must first complete and sign an
account application, which is included in this Prospectus. Investors may call
Shareholder Services at 1-800-506-9403 concerning questions on how to fill out
the account application forms or general questions concerning the Fund.
Completed and signed applications should be mailed to Shareholder Services (see
below).
Orders for the purchase of shares received when the Fund is open for business,
before 4:00 p.m. New York time, will be executed at the NAV determined that day.
The minimum initial investment for non-qualified accounts is $10,000 and the
minimum for additional purchases is $5,000. The minimum initial purchase for IRA
accounts (or other qualified accounts) is $250, and subsequent investments must
be $50 or more. All purchase orders will be executed at the NAV next determined
after the order is received by the Fund's transfer agent.
For information about investing in the Fund through a tax-deferred retirement
plan, such as an Individual Retirement Account ("IRA"), Keogh Plan, a Simplified
Employee Pension IRA ("SEP-IRA") or a profit sharing and money purchase plan, an
investor should telephone Shareholder Services at 1- 800-506-9403 or write to
Shareholder Services at the address set forth below. Investors should consult
their own tax advisors about the establishment of retirement plans.
Purchase by Mail. If the investor desires to purchase shares by mail, a check
made payable to the JWB Aggressive Growth Fund should be sent along with the
completed account application to Shareholder Services.
Send your purchase order to: JWB Aggressive Growth Fund
c/o Declaration Service Company
P.O. Box 844
Conshohocken, PA 19428-0844
Purchases by Telephone. Investors may purchase shares by telephoning Shareholder
Services at 1-800- 506-9403. Telephone orders will not be accepted until a
completed account application in proper form has been received by the transfer
agent at the address set forth above. After the transfer agent receives a
telephone order, an investor should then wire federal funds to:
The First National Bank of Boston
ABA# 011000390
Attn: JWB Aggressive Growth Fund, DDA#6140
For the benefit of: (Shareholder's Name & Account #)
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Pg. 8
General. The Fund reserves the right to reject any purchase order and to suspend
the offering of shares for a period of time. However, shareholders would
generally be given the right to re-invest dividends during a time when sales
were suspended. The Fund also reserves the right to cancel any purchase due to
nonpayment, waive or lower the investment minimums, modify the conditions of
purchase at any time, and reject any check not made directly payable to the JWB
Aggressive Growth Fund. Investors who purchase or redeem shares of the Fund
through broker/dealers may be subject to service fees imposed by those
broker/dealers for the services they provide.
Special Plans
Systematic Withdrawal Plan. Under a systematic withdrawal plan, a shareholder
can arrange for monthly, quarterly or annual checks in any amount (but not less
than $100) to be drawn against the balance of his or her account. Payment of
this amount can be made on the 5th or the 25th of each month in which a payment
is to be made. A minimum account balance of $5,000 is required to establish a
systematic withdrawal plan. Under a systematic withdrawal plan, all shares are
to be held by the transfer agent, and all dividends and distributions are
re-invested in shares of the Fund by the transfer agent. To provide funds for
payments made under the systematic withdrawal plan, the transfer agent redeems
sufficient full and fractional shares at their net asset value in effect at the
time of each such redemption. Payments under a systematic withdrawal plan
constitute taxable events. Since such payments are funded by the redemption of
shares, they may result in a return of capital and capital gains or losses,
rather than ordinary income. The systematic withdrawal plan may be terminated at
any time upon 10 days prior notice to Shareholder Services (1-800-506-9403). As
an alternative, you may elect to have your payments transferred from your Fund
account to your pre-designated bank account.
Automatic Investment Plan. This plan allows investors to purchase shares on a
regular monthly basis. Under this plan, on a preset day of the month, a draft is
drawn on the investor's bank account in any amount ($100 and over) specified by
the investor. The proceeds of the draft are immediately invested in shares of
the Fund at the NAV determined on the date of investment. The automatic
investment plan may be discontinued upon 30 days written notice or at any time
by the investor by written notice to Declaration Service Company, which is
received not later than 5 business days prior to the designated investment date.
Automatic Dividend and Distribution Investment Plan. Dividends and capital gains
declared by the Fund will be re-invested automatically at net asset value unless
you choose an alternative payment option on the application form. Dividends and
capital gains not re-invested are paid by check. {For additional information on
dividends and capital gains see "Dividends and Distributions" and "Tax and
General Information" on pages 9-10.}
How to Redeem Shares
You can arrange to take money out of your Fund account at any time by selling
some or all of your shares. Your shares will be sold at the next share price
calculated after your order is received. You may redeem your shares by mail or
telephone. Redemptions from retirement accounts (IRA's and other qualified
accounts) must be in writing and include all information to be deemed received
in good order (qualified accounts are not eligible for the telephone redemption
option). Shareholders are automatically provided telephone privileges unless
such privilege is specifically rejected on the application form. Redemption
proceeds are mailed within five business days after an order is received, except
the mailing or wiring of redemption proceeds on shares purchased by personal,
corporate or government checks may be delayed until it has been determined that
collected funds have been received for the purchase of such shares, which may
take up to 15 days from the purchase date.
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Pg. 9
The clearing period does not apply to purchases made by wire or by cashier's,
treasurer's, or certified checks. The Fund and the transfer agent employ
procedures designed to confirm that instructions communicated by telephone are
genuine, including requiring certain identifying information prior to acting
upon instructions, recording all telephone instructions and sending written
confirmations to the address of record. If such procedures are not reasonably
designed to prevent unauthorized or fraudulent instructions, the Fund may be
liable for any losses from unauthorized or fraudulent instructions.
Signature Guarantees. A signature guarantee is designed to protect you and the
Fund by verifying your signature. Examples of when signature guarantees are
required are: (1) establishing certain services after the account is opened; (2)
requests for redemptions by mail or telephone in excess of $10,000; (3)
redeeming or exchanging shares, when proceeds are: (i) being mailed to an
address other than the address of record, (ii) made payable to other than the
registered owner(s); (4) transferring shares to another owner, or (5) changes in
previously designated wiring instructions.
These requirements may be waived or modified in certain circumstances.
Acceptable guarantors are all eligible guarantor institutions as defined by the
Securities Exchange Act of 1934, such as: commercial banks which are FDIC
members, trust companies, credit unions, savings associations, firms which are
members of a domestic stock exchange, and foreign branches of any of the above.
We cannot accept guarantees from institutions or individuals who do not provide
reimbursement in the case of fraud, such as notaries public.
Minimum Account Balance. If an investor's account balance falls below $9,000 for
non-qualified accounts or $100 for qualified accounts (such as IRA's) as a
result of investor withdrawals (not due to market depreciation), the investor
will be given thirty days notice to reestablish the minimum balance. If you do
not increase your balance, the Fund reserves the right to close your account and
send the proceeds to you. The shares will be redeemed at the NAV on the day your
account is closed.
Dividends and Distributions
The Fund distributes substantially all of its net income and net capital gains
to shareholders. Dividends from net investment income and distributions from
capital gains, if any, are normally declared in December and paid after the end
of the year.
Tax and General Information
As with any investment, you should consider how your investment in the Fund will
be taxed. If your account is not a tax-deferred retirement account, you should
be aware of these tax consequences. For federal tax purposes, the Fund's income
and short-term capital gain distributions are taxed as dividends; long-term
capital gain distributions are taxed as long-term capital gains. Your
distributions may also be subject to state income tax. The distributions are
taxable when they are paid, whether you take them in cash or participate in the
dividend re-investment program. In January, the Fund will mail shareholders a
form indicating the federal tax status of your dividend and capital gain
distributions.
Redemptions from the Fund will result in a short or long-term capital gain or
loss, depending on how long you have owned the shares. The Fund will mail a form
indicating the trade date and proceeds from all redemptions.
When investors purchase shares just before the Fund pays a distribution from
NAV, the share price of each Fund may reflect undistributed income, capital
gains or unrealized appreciation of securities. Any distributions from these
amounts that are distributed to the investor, no matter how long the investor
has held their shares, will be fully taxable, even if the net asset value of the
shares are reduced below the price you
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Pg. 10
paid for your shares. The tax discussion set forth above is included for general
information only. Prospective investors should consult their own tax advisors
concerning the federal, state, local or foreign tax consequences of investing in
this Fund.
General Information: The Fund was organized on October 10, 1995 under the laws
of the Commonwealth of Massachusetts as a Massachusetts business trust. An
investor in the Fund is entitled to one vote for each full share held and a
fractional vote for each fractional share held. There will normally be no
meetings of investors for the purpose of electing Trustees unless and until such
time as less than a majority of the Trustees holding office have been elected by
investors. Any Trustee may be removed from office upon the vote of shareholders
holding at least a majority of the Fund's outstanding shares at a meeting called
for that purpose. A meeting will be called for the purpose of voting on the
removal of a Trustee at the written request of 10% of the Fund's outstanding
shares.
The expenses borne by the Fund include all organizational expenses, brokerage
commissions for portfolio transactions, taxes (if any), the advisory fee,
administration fee, extraordinary expenses of printing and mailing proxy
statements, expenses of registering and qualifying shares for sale (Blue Sky
fees), fees of Trustees who are not "interested persons" of the Advisor or
Administrator, custodian fees, auditors expenses, and the Fidelity Bond
premiums.
The Fund will send out a monthly report detailing portfolio composition, price
and a short description of what drives each buy and sell decision to each
shareholder. As an alternative to receiving the report by mail, shareholders may
receive this monthly report and a daily NAV share price by accessing the Fund's
portfolio on the Internet via a Web site (the Fund's Web page(s) address is:
http://www.jwb.com). In addition, the Fund will also send investors a
semi-annual report and audited annual report and year end tax information about
their account. In an effort to conserve on the Fund's printing and mailing
costs, the Fund's plans to consolidate the mailing of its financial reports by
household. This means that a household having multiple accounts with the
identical address of record will receive a single copy of each report. Any
shareholder who does not want consolidation to apply to his or her account
should contact the transfer agent. Each time you buy and sell shares or
re-invest a dividend or capital gain distribution in the Fund, you will receive
a statement confirming such transaction and listing current share balance with
the Fund. The transfer agent may impose certain copying charges for requests for
copies of shareholder account statements and other historical information older
than 1 year. Shareholder inquiries concerning their accounts should be directed
to Shareholder Services by calling 1-800-506-9403.
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, the Statement of
Additional Information or the Fund's official sales literature in connection
with the offering of shares of the Fund, and if given or made, such other
information or representations must not be relied upon as having been authorized
by the Fund. This Prospectus does not constitute an offer of shares in any state
which, or to any person whom such offer may not lawfully be made.
<PAGE>
JWB Aggressive Growth Fund
STATEMENT OF ADDITIONAL INFORMATION
APRIL 30, 1997
This Statement of Additional Information is not a prospectus but should be read
in conjunction with the Fund's Prospectus dated April 30, 1997, which may be
obtained by writing the Fund at Century Square Building, 1188 Bishop Street,
Suite #1712, Honolulu, HI 96813.
TABLE OF CONTENTS PAGE
Investment Policies and Limitations..........................................2-3
Portfolio Transactions.........................................................4
Management of the Fund.......................................................4-6
Investment Management and Administration.....................................6-7
Performance Information......................................................7-8
Taxes and Distributions......................................................8-9
Description of the Trust......................................................10
Investment Advisor
JWB Investment Advisory & Research
Administrator
JWB Management Corp.
Distributor
Declaration Distributors, Inc.
Custodian
First National Bank of Boston
Transfer Agent and Fund Accounting Agent
Declaration Service Company
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INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in the
Prospectus.
FUNDAMENTAL POLICIES. The Fund's fundamental investment policies and limitations
cannot be changed without approval by a "majority of the outstanding voting
securities" of the Fund (as defined in the Investment Company Act of 1940).
However, except for the fundamental investment limitations listed below, the
investment policies and limitations described in this Statement of Additional
Information are not fundamental and may be changed without shareholder approval.
The following are the Fund's fundamental investment limitations set forth in
their entirety. The Fund may not:
(1) With respect to 75% of the Fund's total assets, purchase the securities of
any issuer (other than securities issued or guaranteed by the U.S. Government or
any of its agencies or instrumentalities) if, as a result, (a) more than 5% of
the Fund's total assets would be invested in the securities of that issuer, or
(b) the Fund would hold more than 10% of the outstanding voting securities of
that issuer;
(2) Issue senior securities, except as permitted under the Investment Company
Act of 1940;
(3) Borrow in amounts exceeding 5% of its total assets at the time of borrowing.
The Fund may not pledge or hypothecate any of its assets, except in connection
with permitted borrowing;
(4) Underwrite any issue of securities (except to the extent that the Fund may
be deemed to be an underwriter within the meaning of the Securities Act of 1933
in the disposition of restricted securities);
(5) Invest 25% or more of its total assets in securities of companies
principally engaged in any one industry, (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or instrumentalities);
(6) Purchase or sell real estate unless acquired as a result of ownership of
securities or other instruments (but this shall not prevent the Fund from
investing in securities or other instruments backed by real estate or securities
of companies engaged in the real estate business);
(7) Purchase or sell commodities or commodities futures contracts; and
(8) Lend money, except that it may purchase and hold debt securities publicly
traded or privately placed and may enter into repurchase agreements. The Fund
will not lend securities if such a loan would cause more than 33 1/3 % of the
value of its total net assets to then be subject to such loans.
NON-FUNDAMENTAL POLICIES. The following are non-fundamental investment
limitations and, therefore may be changed by the Board of Trustees without a
shareholder vote. The Fund may not:
(9) Purchase any security on margin, except that it may obtain such short-term
credits as are necessary for clearance of securities transactions;
(10) Invest more than 5% of its total assets in warrants to purchase common
stock;
(11) Invest in companies for the purpose of exercising control or management;
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Pg. 3
(12) Invest more than 10% of its net assets in illiquid securities;
(13) Invest in oil, gas, or other mineral exploration or development programs or
leases;
(14) Purchase the securities of open-end or closed-end investment companies
except in compliance with the Investment Company Act of 1940.
PREFERRED STOCK. The Fund may, from time-to-time, purchase preferred stock.
AMERICAN DEPOSITORY RECEIPTS. The Fund may purchase American Depository Receipts
("ADRs"). ADRs are certificates evidencing ownership of shares of a foreign
issuer. These certificates are issued by depository banks and generally trade on
an established market in the United States or elsewhere. The underlying shares
are held in trust by a custodian bank or similar financial institution in the
issuer's home country. The depository bank may not have physical custody of the
underlying securities at all times and may charge fees for various services,
including forwarding dividends and interest and corporate actions. ADRs are an
alternative to directly purchasing the underlying foreign securities in their
national markets and currencies. However, ADRs continue to be subject to many of
the risks associated with investing directly in foreign securities. These risks
include foreign exchange risk as well as the political and economic risks
associated with investing directly in foreign securities.
FIRM COMMITMENT AGREEMENTS. The Fund may enter into firm commitment agreements
("when-issued" purchases) for the purchase of securities at an agreed upon price
on a specified future date. The Fund will not enter into such agreements for the
purpose of investment leverage. Liability for the purchase price and all the
rights and risks of ownership of the securities accrue to the Fund at the time
it becomes obligated to purchase the securities, although delivery and payment
occur at a later date, generally within 45 days of the date of the commitment to
purchase. Accordingly, if the market price of the security should decline, the
effect of the agreement would obligate the Fund to purchase the security at a
price above the current market price on the date of delivery and payment. During
the time the Fund is obligated to purchase such securities, it will maintain
with the Custodian a segregated account with U.S. Government securities, cash or
cash equivalents of an aggregate current value sufficient to make payment for
the securities.
OPTIONS ON SECURITIES. The Fund may write (i.e. sell) covered put and call
options and purchase put and call options on securities that are traded on the
United States exchanges or in the over-the-counter markets. Such options can
include long-term options with a duration of up to three years. The value of the
underlying securities on which options may be written at any one time will not
exceed 10% of the net assets of the Fund.
RISK FACTORS. Although not normally anticipated to be widely employed, the Fund
may use these techniques to increase or decrease its exposure to the effects of
changes in security prices, or that other factors that affect the value of the
Fund's portfolio. Options may fail as hedging techniques in cases where the
price movements of the portfolio securities underlying the options do not follow
the price movements of the portfolio securities subject to the hedge. These
techniques may increase the volatility of the Fund and may involve a small
investment of cash relative to the magnitude of the risk assumed. These
techniques could result in a loss if the counterparty to the transaction does
not perform as promised.
<PAGE>
Pg. 4
PORTFOLIO TRANSACTIONS
The Advisory Agreement between the Fund and the Advisor, provides that when
executing portfolio transactions and selecting brokers and dealers, is to seek
the best overall terms available. In this regard, the Advisor will seek the most
favorable price and execution for the transaction given the size and risk
involved. In placing executions and paying brokerage commissions, the Advisor
considers the financial responsibility and reputation of the broker or dealer,
the range and quality of the brokerage and research services made available to
the Fund and the professional services rendered, including execution, clearance
procedures, wire service quotations, and the ability to provide supplemental
performance, statistical and other research information for consideration,
analysis and evaluation by the Advisor's staff. Under the Advisory Agreement,
the Advisor is permitted, in certain circumstances, to pay a higher commission
than might otherwise be obtained in order to acquire brokerage and research
services. Total brokerage commissions for the fiscal period ending on December
31, 1996 were $2,664.
The Advisor must determine in good faith, however, that such commissions are
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 investment discretion is exercised).
The Board of Trustees will periodically review the commissions paid by the Fund
to monitor if the commissions paid over represented periods of time were
reasonable in relation to the benefits obtained. The advisory fee paid to the
Advisor would not be reduced by reason of its receipt of such brokerage and
research services. To the extent that research services of value are provided by
broker/dealers through or with whom the Fund places portfolio transactions, the
Advisor may use such research in servicing its other fiduciary accounts and not
all services received may be used by the Advisor in connection with its services
to the Fund. However, the Fund may also benefit from research services received
by the Advisor in connection with transactions effected on behalf of other
fiduciary accounts.
On occasions when the Advisor deems the purchase or sale of a security to be in
the best interests of the Fund as well as other fiduciary accounts, the Advisor
may aggregate the securities to be sold or purchased for the Fund with those to
be sold or purchased for other accounts in order to obtain the best net price
and most favorable execution. In such event, the allocation will be made by the
Advisor in the manner considered to be most equitable and consistent with its
fiduciary obligations to all such fiduciary accounts, including the Fund. In
some instances, this procedure could adversely affect the Fund but the Advisor
deems that any disadvantage in the procedure would be outweighed by the
increased opportunity to engage in volume transactions.
MANAGEMENT OF THE FUND
The Trustees and Officers of the Fund, their current business addresses and
principal occupations during the last five years are set forth below. Trustees
that have an asterisk before their name are "interested persons" of the Trust as
defined in the Investment Company Act of 1940, as amended.
* John W. Bagwell (35), Trustee and President of the Fund, founded JWB
Management Corp. in October, 1995 and serves as Chief Executive Officer. Prior
to this service, he served as a general securities principal for Polaris
Financial Services, Inc. (6/93 - 10/95). Mr. Bagwell has also served as a
registered investment advisor with JWB Investment Advisory & Research since
April, 1993. Mr. Bagwell served as a general securities principal & registered
representative for Mariner Financial Services, Inc. (11/91 - 6/93) and as a
registered representative for Gaidos/Tani Associates (11/91 - 12/92) and Money
Concepts International (7/90 - 11/91).
<PAGE>
Pg. 5
Mr. Bagwell's business address is Century Square Building, 1188 Bishop Street,
Suite #1712, Honolulu, HI 96813.
* Gregory P. Lussier (36), Trustee and Chief Financial Officer of the Fund,
serves as Chief Financial Officer of JWB Management Corp. (since 2/96). Mr.
Lussier is also a registered investment advisor (since 1/96), and served as a
registered investment advisor representative with JWB Investment Advisory &
Research (10/94 - 12/95). Mr. Lussier is also the President of The Financial
Freedom Corp. (4/92 to present), and also serves as securities principal for
Polaris Financial Services, Inc. (1/93 to present). Previously, Mr. Lussier
served as a securities principal for Mariner Financial Services, Inc. (5/92 -
12/92), as a branch manager for P.F.S. Home Mortgages, Inc. and as a national
sales director for Primerica Financial Services (5/82 - 9/92), and as a branch
manager for First America National Securities (6/83 - 5/92). Mr. Lussier's
business address is Wailuku Industrial Park, 270 Hookahi St., Suite #306,
Wailuku, HI 96793-1466.
* Roger Y. Dewa (58), Trustee and Secretary of the Fund, serves as Secretary and
General Counsel to JWB Management Corp. (since 10/95). Mr. Dewa has been
practicing law as a sole proprietor since 1969. Mr. Dewa's business address is
International Savings Building, 1111 Bishop Street, Suite #51, Honolulu, HI
96813.
Scott A. Hadley (30), Trustee of the Fund. Mr. Hadley has been an employee of
McDonnell Douglas Corporation (1/90 to present). Prior to this position Mr.
Hadley was in the U.S. Army (6/83 to 12/89). Mr. Hadley's business address is
5301 Bolsa Ave., Huntington Beach, CA 92647.
* Denise Beebe Throntveit (42), Trustee and Chief Operating Officer of the Fund,
serves as Chief Operating Officer of JWB Management Corp. (since 10/96) and
serves as President of Foremost Futures, LTD (since 3/90). Ms. Throntveit also
serves as President of Foremost Capital Resource Management, Inc. (8/95) and
Secretary of the National Introducing Brokers Association (6/95). Ms.
Throntveit's business address is 223 Jackson #600, Chicago, IL 60606.
Wallace Y. Watanabe (49), Trustee of the Fund. Mr. Watanabe serves as President
of the Honolulu City & County Employees Federal Credit Union (6/72 to present).
Mr. Watanabe's business address is 832 S. Hotel St., Honolulu, HI 96813-2590.
Terry S. Krznarich, M.D. (34), Trustee of the Fund, serves as Chief Resident,
Dept. of Pathology for Saint Johns Hospital (6/92 to present). Prior to this
service, Doctor Krznarich was pursuing his education. Mr. Krznarich's business
address is 22101 Moross St., Detroit, MI 48236.
The Fund does not pay any direct remuneration to any Trustee who is an
"interested person" of the Fund, or any officer employed by the Advisor or its
affiliates. It is anticipated that the Trustees of the Fund who are not
"interested persons" of the Fund will receive compensation in the amount of $200
per meeting attended.
The following table sets forth information estimating the compensation of each
current Trustee of the Fund for his services.
<PAGE>
Pg. 6
<TABLE>
<CAPTION>
PENSION OR ESTIMATED
RETIREMENT ANNUAL
BENEFITS BENEFITS
AGGREGATE ACCRUED AS UPON TOTAL
COMPENSATION PART OF FUND RETIREMENT COMPENSATION
TRUSTEES FROM THE FUND* EXPENSES FROM THE FUND FROM THE FUND**
<S> <C> <C> <C> <C>
John W. Bagwell* None None None None
Denise B. Throntveit* None None None None
Gregory P. Lussier* None None None None
Roger Y. Dewa* None None None None
Scott A. Hadley $200 None None $200**
Wallace Y. Watanabe $200 None None $200**
Terry S. Krznarich $200 None None $200**
</TABLE>
* Interested Trustees of the Fund are compensated by JWB Management Corp.
** Fees are based on a $200.00 fee per in-person meeting.
INVESTMENT MANAGEMENT AND ADMINISTRATION
JWB Investment Advisory & Research serves as the Fund's Investment Advisor and
JWB Management Corp. serves as the Fund's Administrator. In addition to the
services described in the Fund's Prospectus, the Advisor and/or the
Administrator will compensate all personnel, Officers and Trustees of the Fund
if such persons are employees of the Advisor or its affiliates. For the services
and facilities provided to the Fund by the Advisor, the Fund pays to the Advisor
an annual fee of 1% of its average daily net asset, which is paid monthly. For
the services provided to the Fund by the Administrator, the Fund pays to the
Administrator an annual fee of .90% of the Fund's average daily net assets,
which is paid monthly.
The total operating expenses of the Fund, exclusive of taxes, interest,
brokerage commissions and extraordinary expenses, but inclusive of the Advisor's
and the Administrator's fees, are subject to the most restrictive of the
expenses limitations imposed by state securities commissions of the states in
which the Fund's shares are registered or qualified for sale. The current most
restrictive limitation that may apply to the Fund is 2.35% of the first $30
million of average net assets, 2% of the next $70 million and 1.5% of any excess
over $100 million. The Advisor has agreed to absorb certain Fund operating
expenses to the extent that the ratio of expenses to average daily net assets
exceeds 2.35%.
The Board of Trustees of the Fund (including a majority of the Trustees who are
not "interested persons" of the Fund) approved the Advisory Agreement on January
5, 1996. The Advisory Agreement provides that it will continue initially for two
years, and from year-to-year thereafter as long as it is approved at least
annually both (i) by a vote of a majority of the outstanding voting securities
of the Fund (as defined in the Investment Company Act of 1940) or by the Board
of Trustees of the Fund, and (ii) by a vote of a majority of the Trustees who
are not parties to the Advisory Agreement or "interested persons" of any party
thereto, cast in person at a
<PAGE>
Pg. 7
meeting called for the purpose of voting on such approval. The Advisory
Agreement may be terminated upon 60 days written notice by either party and will
terminate automatically if it is assigned. The Advisory Agreement provides in
substance that the Advisor shall not be liable for any action or failure to act
in accordance with its duties thereunder in the absence of willful misfeasance,
bad faith or gross negligence on the part of the Advisor or of reckless
disregard of its obligations thereunder.
The Advisor has adopted a Code of Ethics which regulates the personal securities
transactions of the Advisor's investment personnel and other employees and
affiliates with access to information regarding securities transactions of the
Fund. The Code of Ethics requires investment personnel to disclose personal
securities holdings upon commencement of employment and all subsequent trading
activity. Investment personnel are prohibited from trading in any securities (i)
for which the Fund has a pending buy or sell order, (ii) in which the Fund is
considering buying or selling, or (iii) which the Fund has purchased or sold
within seven calendar days.
Ownership structure of JWB Investment Advisory & Research is a sole
proprietorship, wholly owned by John W. Bagwell, and JWB Management Corp.
percentage of stock ownership is 51% controlled by John W. Bagwell.
PERFORMANCE INFORMATION
TOTAL RETURN. The Fund may advertise performance in terms of average annual
total return for 1, 5 and 10-year periods, or for such lesser periods as the
Fund has been in existence. Average annual total return is computed by finding
the average annual compounded rates of return over the periods that would equate
the initial amount invested to the ending redeemable value, according to the
following formula:
P(1 + T)n = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment and assumes all dividends and distributions
by the Fund are re-invested at the price stated in
the Prospectus on the re-investment dates during
the period
The Fund's average annual total return for the period from March 28, 1996
through December 31, 1996 was (0.06%). In addition to average total returns, the
Fund may quote an average or cumulative total return reflecting the change in
value of an investment over a specified period. Total returns, yields and other
performance information may be quoted numerically or in a table, graph, or
similar illustration.
YIELD. The Fund may advertise performance in terms of a 30-day yield quotation.
The 30-day yield quotation is computed by dividing the net investment income per
share earned during the period by the maximum
<PAGE>
Pg. 8
offering price per share on the last day of the period, according to the
following formula:
6
Yield = 2[(a-b/cd + 1) - 1]
Where: a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursement)
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends
d = the maximum offering price per share on the last day of
the period
The Fund's 30 day yield for the month ending December 31, 1996 was (1.88%).
DISTRIBUTION RATE. In its sales literature, the Fund may also quote its
distribution rate along with the above described standard total return and yield
information. The distribution rate is calculated by annualizing the latest
distribution and dividing the result by the offering price per share as of the
end of the period to which the distribution relates. A distribution can include
gross investment income from debt obligations purchased at a premium and, in
effect, include a portion of the premium paid. A distribution can also include
gross short-term capital gains without recognition of any unrealized capital
losses. Further, a distribution is not considered investment income under
generally accepted accounting principles.
Because a distribution can include such premiums and capital gains, the amount
of the distribution may be susceptible to control by the Advisor through
transactions designed to increase the amount of such items. Also, because the
distribution rate is calculated in part by dividing the latest distribution by
net asset value, the distribution rate will increase as the net asset value
declines. A distribution rate can be greater than the yield calculated as
described above.
COMPARATIVE PERFORMANCE. The Fund's performance may be compared to that of other
similar mutual funds. These comparisons may be expressed as mutual fund rankings
prepared by Lipper Analytical Services, Inc., which monitors mutual fund
performance. The Fund's performance may also be compared to other mutual funds
tracked by financial or business publications and periodicals.
TAXES AND DISTRIBUTIONS
TAXATION OF THE FUND. The Fund intends to qualify as a "regulated investment
company" under Subchapter M of the Internal Revenue Code. To qualify as a
regulated investment company, the Fund must, among other things, (a) derive at
least 90% of its gross income from dividends, interest, payments with respect to
securities loans, gains from the sale or other disposition of stock, securities,
or other income derived with respect to its business of investing in such stock
or securities; (b) derive in each taxable year less than 30% of its gross income
from the sale or other disposition of stock, securities held less than three
months (the "30% test"), and (c) satisfy certain diversification requirements at
the close of each quarter of the Fund's taxable year.
If the Fund qualifies as a regulated investment company and distributes at least
90% of its net investment income, the Fund will not be subject to Federal income
tax on the income so distributed. However, the Fund
<PAGE>
Pg. 9
would be subject to corporate income tax on any undistributed income other than
tax-exempt income from municipal securities.
TAXATION OF THE SHAREHOLDER. Taxable distributions generally are included in a
shareholder's gross income for the taxable year in which they are received.
However, dividends declared in October, November and December and made payable
to shareholders of record in such month will be deemed to have been received on
December 31st if paid by the Fund during the following January.
Distributions by the Fund will result in a reduction in the fair market value of
the Fund's shares, should a distribution reduce the fair market value below a
shareholder's cost basis, such distribution would be taxable to the shareholder
as ordinary income or as a long-term capital gain, even though, from an
investment standpoint, it may constitute a partial return of capital. In
particular, investors should be careful to consider the tax implications of
buying shares of the Fund just prior to a distribution. The price of such shares
include the amount of any forthcoming distribution so that those investors may
receive a return of investment upon distribution which will, nevertheless, be
taxable to them.
A redemption of shares is a taxable event and, accordingly, a capital gain or
loss may be recognized. If a shareholder receives a distribution taxable as a
long-term gain and redeems shares which he has not held for more than six
months, any loss on the redemption (not otherwise disallowed as attributable to
an exempt-interest dividend) will be treated as a long-term capital loss to the
extent of the long-term capital previously recognized. Each investor should
consult a tax advisor regarding the effect of federal, state, local, and foreign
taxes on an investment in the Fund.
DIVIDENDS. A portion of the Fund's income may qualify for the dividends-received
deduction available to corporate shareholders to the extent that the Fund's
income is derived from qualifying dividends. Because the Fund may earn other
types of income, such as interest, income from securities loans, non-qualifying
dividends, and short-term capital gains, the percentage of dividends from the
Fund that qualifies for the deduction generally will be less than 100%. The Fund
will notify corporate shareholders annually of the percentage of Fund dividends
that qualifies for the dividend received deductions.
A portion of the Fund's dividends derived from certain U.S. Government
obligations may be exempt from state and local taxation. Short-term capital
gains are distributed as dividend income. The Fund will send each shareholder a
notice in January describing the tax status of dividends and capital gain
distributions for the prior year.
CAPITAL GAIN DISTRIBUTION. Long-term capital gains earned by the Fund from the
sale of securities and distributed to shareholders are federally taxable as
long-term capital gains, regardless of the length of time shareholders have held
their shares. If a shareholder receives a long-term capital gain distribution on
shares of the Fund, and such shares are held six months or less and are sold at
a loss, the portion of the loss equal to the amount of the long-term capital
gain distribution will be considered a long-term loss for tax purposes.
Short-term capital gains distributed by the Fund are taxable to shareholders as
dividends, not as capital gains.
<PAGE>
Pg. 10
DESCRIPTION OF THE TRUST
ORGANIZATION. JWB Aggressive Growth Fund is an open-end management investment
company organized as a Massachusetts business trust on October 10, 1995. Under
Massachusetts law, shareholders of Massachusetts business trusts may, under
certain circumstances, be held personally liable for the obligations of the
trust. The Declaration of Trust provides that the Trust shall not have any claim
against shareholders, except for the payment of the purchase price of shares,
and requires that each agreement entered into or executed by the Trust or the
Trustees include a provision limiting the obligations created thereby to the
Trust and its assets. The Declaration of Trust provides that the Fund shall,
upon request, assume the defense of any claim made against any shareholder for
any act or obligations of the Fund and satisfy any judgement thereon. Thus, the
risk of a shareholder incurring financial loss on account of shareholder
liability is limited to circumstances in which the Fund itself would be unable
to meet its obligations.
VOTING RIGHTS. The Fund's capital consists of shares of beneficial interest. An
investor in the Fund is entitled to one vote for each full share held and a
fractional vote for each fractional share held. The shares have no preemptive or
conversion rights; the voting and dividend rights and the right of redemption
are described in the Prospectus. Shares are fully paid and nonassessable, except
as set forth above describing shareholder and Trustee liability. Shareholders
representing 10% or more of the Trust or the Fund may, as set forth in the
Declaration of Trust, call meetings of the Trust for any purpose related to the
Trust, including for the purpose of voting on the removal of one or more
Trustees.
AUDITOR. Sanville & Co., 1514 Old York Road, Abington, Pennsylvania 19001,
serves as the Trust's independent accountant. The independent accountant
examines financial statements for the Fund and provides other audit, tax and
related services.
<PAGE>
