THE HUGHES GROWTH FUND
A Separate Portfolio of Hughes Funds, Inc.
741 Cox Road
Moorestown, NJ 08057
1-877-593-8637
PROSPECTUS
July 1, 1999
The Securities and Exchange Commission has not approved or disapproved these
securities or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
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TABLE OF CONTENTS
RISK/RETURN SUMMARY..........................................3
FEES AND EXPENSES............................................5
MANAGEMENT OF THE FUND.......................................6
INVESTING IN THE FUND........................................7
HOW TO SELL (REDEEM) SHARES.................................12
DIVIDENDS AND DISTRIBUTIONS.................................14
FEDERAL TAXES...............................................14
GENERAL INFORMATION.........................................15
DISTRIBUTION FEES...........................................15
FINANCIAL HIGHLIGHTS........................................16
FOR MORE INFORMATION........................................17
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RISK/RETURN SUMMARY
Investment Objective
The Fund seeks capital appreciation.
Principal Investment Strategies
The Fund seeks long-term capital growth by normally investing at least 65% of
its total net assets in companies that the Adviser has identified as having
above-average growth potential. The Adviser believes that value-oriented
investing is the soundest long-term strategy for identifying companies with
above-average growth potential.
The Adviser generally follows a value-oriented investment approach to the
selection of individual securities for the Fund. Value investing refers to the
process by which an investment professional chooses certain stocks because that
professional believes that they are undervalued in the marketplace. The Adviser
seeks to identify value using two basic criteria: Price/Earnings Ratio ("P/E")
and Price-to-Book ratio ("P/B").
A low P/E value is important because, in the Adviser's opinion, it tends to be a
historic indicator of valuation. The second criteria considered is the P/B.
The Adviser concentrates on stocks whose market price is low in relation to book
value. A low price-to book ratio may indicate that a company is undervalued in
the marketplace. The Adviser completes its analysis of potential purchases by
focusing on adequate trading liquidity in the security (at least 500,000 shares
per day on average), and measuring the company's financial strength (above-
average return on equity, low levels of corporate debt, generally increasing
dividends and earnings).
The Adviser will utilize its value analysis to identify undervalued companies
and will then;
* Invest primarily in common stocks.
* Invest at least 65% of its net assets in companies that appear to have above-
average prospects for long-term capital growth. The Fund may invest in
companies of any size and industry.
* Invest in foreign and domestic issuers. The Fund may invest in securities of
foreign issuers which are publicly traded on U.S. exchanges, either directly or
in the form of American Depository Receipts (ADRs). The Fund will only invest in
ADRs that are issuer sponsored. Sponsored ADRs typically are issued by a U.S.
bank or trust company and evidence ownership of underlying securities issued by
a foreign corporation.
* Buy and sell securities based on the Adviser's analysis of the company's
overall value. The Adviser will purchase securities of companies that it
considers to be undervalued and will sell companies that fail to maintain their
qualifications under the Adviser's analysis.
* Invest for the long term and not actively trade the market. Active trading
can result in realized capital gains to the Fund, adverse tax consequences to
the Fund's shareholders, and can have a negative impact on the Fund's
performance due to increased transaction and other costs. The Fund does not
anticipate having a turnover ratio in excess of 100%.
The Fund may, from time-to-time, take temporary defensive positions that are
inconsistent with the Fund's principal investment strategies in attempting to
respond to adverse market, economic, political or other conditions. If the Fund
takes such a temporary defensive position, it will not be investing according to
its objective and it may not achieve its investment objective.
Principal Investment Risks
The Fund is subject to the following principal investment risks:
General Risks- You may lose money by investing in the Fund. Your risk of loss
is greater if you hold your investment for shorter time periods. The value of
the Fund's investments will vary from day-to-day, reflecting changes in market
conditions, interest rates and other company, political, and economic news.
When you sell your Fund shares, they may be worth more or less than what you
paid for them.
Year 2000 Risks- As with other mutual funds, financial and business
organizations around the world, the Fund could be adversely affected if the
computer systems used by the Adviser and the Fund's other service providers
don't properly process and calculate date-related information and data from and
after January 1, 2000. This is commonly known as the "Year 2000" or "Y2K"
problem. The Adviser is taking steps to address the Y2K problem with respect to
the computer systems that it uses and to obtain assurances that comparable steps
are being taken by the Funds' other major service providers. The Adviser is
also seeking ways to minimize the potential disruptions that may occur as a
result of lack of preparation by the companies in which the Fund invests.
However, there can be no assurance that the problem will be corrected in all
respects and that the Fund's operations and services provided to shareholders
will not be adversely affected nor can there be any assurance that the year 2000
problem will not have any adverse affect on the entities whose securities are
held by the Fund or on domestic or global equity markets or economies,
generally.
Stock Market Risks- The Fund invests primarily in common stock, so it is
subject to the risks associated with common stocks, including price volatility
and the creditworthiness of the issuing company. The stock market trades in a
cyclical price pattern, with prices generally rising or falling over time.
These cyclical periods may last for a significant period of time.
Small To Medium-Cap Stocks Risks- The Fund may invest in companies with smaller
market capitalizations (less than $6 billion in market capitalization). These
companies are relatively smaller, engaged in business mostly within their own
geographic region, and may be less well-known to the investment community.
Smaller, newer companies have more volatile share prices for several reasons.
Small companies often have less liquidity, less management depth, narrower
market penetrations, less diverse product lines, and fewer resources than larger
companies. As a result, their stock prices react more violently to changes in
the marketplace.
Issuer-Specific Changes- The value of an individual security or particular type
of security can be more volatile than the market as a whole and can perform
differently than the market as a whole. The value of smaller issuers can be
more volatile than that of larger issuers.
Management Risk- The Fund has no operating history, and this may pose additional
risks. There is no assurance that the Fund can achieve its investment objective,
since all investments are inherently subject to market risk.
Value Investing Risk- Value investing seeks to identify companies that trade at
prices below their true value in the marketplace. There is no assurance that
the Adviser will be successful in identifying these companies, or that the
prices of such companies will rise to the level of the Adviser's perceived
"real" value.
Foreign Securities Risks- Investments in foreign securities involve greater
risks compared to domestic investments. Foreign companies are not subject to the
regulatory requirements of U.S. companies and, as such, there may be less
publicly available information about issuers than is available in the reports
and ratings published about companies in the U.S. Additionally, foreign
companies are not subject to uniform accounting, auditing and financial
reporting standards. Dividends and interest on foreign securities may be subject
to foreign withholding taxes. Such taxes may reduce the net return to
shareholders. Further, foreign securities are often denominated in a currency
other than the U.S. dollar. Accordingly, the Fund will be subject to the risks
associated with fluctuations in currency values. Although the Fund intends to
invest in securities of foreign issuers domiciled in nations which the Adviser
considers as having stable and friendly governments, there is the possibility of
expropriation, confiscation, taxation, currency blockage or political or social
instability which could affect investments of foreign issuers domiciled in such
nations.
Performance Information
Because this is a new fund being offered for the first time by this prospectus,
a bar chart and performance table reflecting the Fund's comparative performance
is not yet available.
FEES AND EXPENSES
This table describes the fees and expenses you may pay if you buy and hold
shares of the Growth Fund.
Shareholder Fees: Class A Class C
No-Load
(fees paid directly from your investment)
1. Maximum Sales Charges
Imposed on Purchases 3.75% NONE
NONE
(as a percentage of offering price)
Annual Fund Operating Expenses:
(expenses that are deducted from Fund assets) Class A Class C N0-Load
No-Load
Management Fees1 1.00% 1.00% 1.00%
12b-1 Fees2 0.25% 1.00%3 .25%
Other Expenses 4 0.05% 0.05% .05%
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Total Annual Fund Operating Expenses5 1.30% 2.05% 1.30%
1. Management fees include investment advisory fees of 0.50% per annum of
average daily net assets of each fund and 0.50% per annum of average daily net
assets for administrative services for each fund.
2. You should be aware that if you hold your shares for a substantial period of
time, you may indirectly pay more than the economic equivalent of the maximum
front-end sales charge allowed by the National Association of Securities Dealers
due to the recurring nature of Distribution (12b-1) fees.
3. Includes a fee of 0.75% for distribution-related expenses and 0.25% for
shareholder service expenses.
4. Because the Funds have not yet completed their first year of investment
operations, "Other Expenses" are estimated.
5. The Adviser has voluntarily agreed to waive its advisory fee and/or to
reimburse the Fund, if necessary, if the advisory fee or expenses would cause
the Total Fund Operating expenses to exceed 1.25% for the Class A or No-Load
Class Shares and 2.00% for the Class C shares. The Adviser may revise or cancel
these expense limitations at any time and will notify you by letter not less
than 30 days prior to any such change.
Example: This example is intended to help you compare the costs of investing in
the Fund with the costs of investing in other mutual funds.
The Example below assumes that you invest $10,000 in any Fund for the time
periods indicated, reinvest any dividends and distributions, and then redeem all
your shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses that
were described above remain the same. Although your actual costs may be higher
or lower, based on these assumptions, your costs would be:
Time Period Class A Class C No-Load
One Year $502 $208 $132
Three Years $771 $663 $412
MANAGEMENT OF THE FUND
Investment Adviser
The Company has entered into an Investment Advisory Contract (the "Contract")
with Hughes Investment Advisors LLC, (the "Adviser"), 741 Cox Road, Moorestown
NJ 08057.
Charles J. Hughes is the president of the Adviser and is responsible for all its
investment decisions, including the day-to-day management of the Fund. Mr.
Hughes also serves as the President and as a Director of the Company. The
Adviser manages the investment of the assets of the Fund in accordance with the
Fund's investment objective, policies, and restrictions. The Adviser was formed
on December 9, 1997 and registered as an Investment Advisory Firm with the
Securities and Exchange Commission on March 13, 1998. The Advisor formerly
operated as Hughes Trading L.L.C., and developed financial futures and timing
model software for equity trading.
Mr. Hughes is the portfolio manager for the Fund. Mr. Hughes has been providing
investment advice to the Fund since its inception. From 1994 through 1997, Mr.
Hughes developed and implemented futures trading programs when the Adviser
operated as Hughes Trading, LLC. During this period, he acted as a private
investor for himself and members of his family. In addition, Mr. Hughes has
been a commercial airline pilot for American Airlines since 1988. Although Mr.
Hughes has extensive experience managing portfolios for himself and his family,
Mr. Hughes does not have any previous experience in providing investment
management services to any registered investment company.
The Adviser receives from the Fund, as compensation for its services, a fee,
accrued daily and payable monthly, at an annual rate of 0.50% of the Fund's net
assets.
Operating Services Agreement; the Company has also entered into an Operating
Services Agreement with the Adviser where the Adviser will provide, or arrange
to provide, essentially all other services needed to the Fund. These services
include transfer agent, accounting, distribution and custodial services. The
effect of the Investment Advisory Agreement and the Operating Services Agreement
is to cap the Fund's normal operating expenses. These contracts do not cover
expenses incurred by the Fund for taxes, interest, brokerage fees, legal
expenses for litigation, and other extraordinary expenses.
The Adviser receives from the Fund, as compensation for its services, a fee,
accrued daily and payable monthly, at an annual rate of 0.50% of the Fund's net
assets.
Under these agreements, the Adviser furnishes at its own expense office space to
the Company and all necessary office facilities, equipment, and personnel for
managing the assets of the Fund. The Adviser also pays all expenses of marketing
shares of the Fund, and related bookkeeping.
INVESTING IN THE FUND
Determination of Share Price
Shares of the Fund are offered at the public offering price for each share
class. The public offering price for Class A, Class C and No-Load shares of the
Fund is based upon the Fund's net asset value per share. Net asset value per
share is calculated by adding the value of Fund investments, cash and other
assets, subtracting Fund liabilities, and then dividing the result by the number
of shares outstanding. The assets of the Fund are valued at market value or, if
market quotes cannot be readily obtained, fair value is used as determined by
the Board of Directors. The net asset value of the Fund's shares is computed on
all days on which the New York Stock Exchange is open for business at the close
of regular trading hours on the Exchange, currently 4:00 p.m. East Coast time.
The public offering price for Class A shares is the NAV plus a sales charge of
3.75% of your investment. You should be aware that the Fund may invest in
foreign securities. Foreign securities sometimes trade on exchanges that are
open on days when the new York Stock Exchange is closed. Accordingly, when the
Fund is investing in such securities, the NAV on your shares could change on
days when you cannot purchase or redeem shares.
Opening And Adding To Your Account
You can invest directly in the Fund in a number of ways. Simply choose the one
that is most convenient for you. Any questions you may have can be answered by
calling 1-877-593-8637. You may also purchase Fund shares through broker-dealers
or other financial organizations.
Payments for Fund shares should be in U.S. dollars, and in order to avoid fees
and delays, should be drawn on a U.S. bank. Please remember that Fund
management reserves the right to reject any purchase order for Fund shares if,
in the Fund's opinion, such an order would cause a material detriment to
existing shareholders. Your purchase of Fund shares is subject to the following
minimum investment amounts:
Minimum Investment To Open Account Additional Investments
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Class A Shares
Regular Account $2,500 $50
IRAs $500 $50
Class C Shares
Regular Account $2,500 $50
IRA's $500 $50
No-Load Shares
Regular Accounts $5,000 $1000
IRA's $ 1,000 $ 100
TO OPEN AN ACCOUNT TO ADD TO ACCOUNT
By Mail Complete an Account Make your check payable
to
Registration Form, make The Hughes Growth Fund and
a check payable to The mail it to the address at left.
Hughes Growth Fund
and mail the Form and check
to Hughes Funds, Inc. Please include your account
c/o Mutual Shareholder number on your check.
Services, 1301 East Ninth Or use the convenient form
Street, Suite 3600, Cleveland, attached to your regular
OH 44114. Fund statement.
By Wire Ask your bank to wire funds Ask your bank to wire
immediately
to Account of available funds to the location
described
UMB Bank, N.A. at the left, except that the wire should
ABA#: -------------- note that it is to make a subsequent
Credit: Hughes Funds, Inc. purchase rather than to open
Account #: -------------- a new account.
Further credit: The Hughes
Growth Fund.
The wire should state that the Include your name and Fund
purchase is to be in your account number.
name(s).
The wire should state that you
are opening a new Fund account.
Include your name(s), address and
taxpayer identification number or
Social Security number and the name
of the Fund in which you are
purchasing shares.
Call 1-877-593-8637 to inform us
that a wire is being sent.
By Telephone transactions may Call 1-877-593-8637 to
make
Tele- not be used for initial purchases your purchase.
Phone. If you want to make
subsequent transactions via
telephone, please select this
service on your account
Registration Form.
Hughes Funds, Inc. wants you to be kept current regarding the status of your
account in the Fund. To assist you, the following statements and reports will
be sent to you:
Confirmation Statements After every transaction that affects your
account balance or your account registration.
Financial Reports Semi-annually -- to reduce Fund
expenses, only
one copy of the Fund report will be mailed
to each taxpayer identification number even if
you have more than one account in the Fund.
Purchase By Mail
Your purchase order, if accompanied by payment, will be processed upon receipt
by Mutual Shareholder Services, the Fund's Transfer Agent. If the Transfer Agent
receives your order and payment by the close of regular trading on the Exchange
(currently 4:00 p.m. East Coast time), your shares will be purchased at your
chosen Fund's net asset value calculated at the close of regular trading on that
day. Otherwise, your shares will be purchased at the net asset value determined
as of the close of regular trading on the next business day.
The Company does not consider the U.S. Postal Service or any other independent
delivery service to be its agent. Therefore, deposit in the mail or with such
services, or receipt at the Transfer Agent's address, of purchase applications
or redemption requests does not constitute receipt by the Custodian or the Fund.
Correspondence mailed by overnight courier should be sent to the Fund at:
Mutual Shareholder Services
1301 East Ninth Street, Suite 3600
Cleveland, OH 44114
All applications to purchase shares of the Funds are subject to acceptance or
rejection by authorized officers of the Company and are not binding until
accepted. Applications will not be accepted unless they are accompanied by
payment in U.S. funds. Payment must be made by check or money order drawn on a
U.S. bank, savings & loan or credit union. The Custodian will charge a $20.00
fee against your account, in addition to any loss sustained by a Fund, for any
payment check returned to the Custodian for insufficient funds. The Company
reserves the right to refuse to accept applications under circumstances or in
amounts considered disadvantageous to shareholders. If you place an order for
Fund shares through a securities broker, and you place your order in proper form
before 4:00 p.m. East Coast time on any business day in accordance with their
procedures, your purchase will be processed at the public offering price
calculated at 4:00 p.m. on that day, if the securities broker then transmits
your order to the Transfer Agent before the end of its business day (which is
usually 5:00 p.m. East Coast time). The securities broker must send to the
Transfer Agent immediately available funds in the amount of the purchase price
within three business days for the order.
By Financial Service Organization
If you are a client of a securities broker or other financial organization, you
should note that such organizations may charge a separate fee for administrative
services in connection with investments in Fund shares and may impose account
minimums and other requirements. These fees and requirements would be in
addition to those imposed by the Funds. If you are investing through a
securities broker or other financial organization, please refer to its program
materials for any additional special provisions or conditions that may be
different from those described in this Prospectus (for example, some or all of
the services and privileges described may not be available to you). Securities
brokers and other financial organizations have the responsibility of
transmitting purchase orders and funds, and of crediting their customers'
accounts following redemptions, in a timely manner in accordance with their
customer agreements and this Prospectus.
Telephone Purchases
In order to be able to purchase shares by telephone, your account authorizing
such purchases must have been established prior to your call. Your initial
purchase of shares may not be made by telephone. Shares purchased by telephone
will be purchased at the per share net asset value determined at the close of
business on the day that the transfer agent receives payment through the
Automatic Clearing House. Call the Transfer Agent for details.
You may make purchases by telephone only if you have an account at a bank that
is a member of the Automated Clearing House. Most transfers are completed
within three business days of your call. To preserve flexibility, the Company
may revise or eliminate the ability to purchase Fund shares by phone, or may
charge a fee for such service, although the Company does not currently expect to
charge such a fee.
Mutual Shareholder Services, the Fund's transfer agent, employs certain
procedures designed to confirm that instructions communicated by telephone are
genuine. Such procedures may include, but are not limited to, requiring some
form of personal identification prior to acting upon telephonic instructions,
providing written confirmations of all such transactions, and/or tape recording
all telephonic instructions. Assuming procedures such as the above have been
followed, neither the Transfer Agent nor the Fund will be liable for any loss,
cost, or expense for acting upon telephone instructions that are believed to be
genuine. The Company shall have authority, as your agent, to redeem shares in
your account to cover any such loss. As a result of this policy, you will bear
the risk of any loss unless the Fund has failed to follow procedures such as the
above. However, if the Fund fails to follow such procedures, it may be liable
for such losses.
Wire Purchases
If you purchase Fund shares by wire, you must complete and file an Account
Registration Form with the Transfer Agent before any of the shares purchased can
be redeemed. You should contact your bank (which will need to be a commercial
bank that is a member of the Federal Reserve System) for information on sending
funds by wire, including any charges that your bank may make for these services.
Miscellaneous Purchase Information
Federal regulations require that you provide a certified taxpayer identification
number whenever you open or reopen an account. Congress has mandated that if
any shareholder fails to provide and certify to the accuracy of the
shareholder's social security number or other taxpayer identification number,
the Company will be required to withhold a percentage, currently 31%, of all
dividends, distributions and payments, including redemption proceeds, to such
shareholder as a backup withholding procedure.
For economy and convenience, share certificates will not be issued.
HOW TO SELL (REDEEM) YOUR SHARES
You may sell (redeem) your shares at any time. You may request the sale of your
shares either by mail, by telephone or by wire.
By Mail
Sale requests should be mailed via U.S. mail or overnight courier service to:
Mutual Shareholder Services
1301 East Ninth Street, Suite 3600
Cleveland, OH 44114
The selling price of the shares being redeemed will be your Fund's per share net
asset value next calculated after receipt of all required documents in Good
Order. Payment of redemption proceeds will be made no later than the third
business day after the valuation date unless otherwise expressly agreed by the
parties at the time of the transaction.
Good Order means that the request must include:
1. Your account number.
2. The number of shares to be sold (redeemed) or the dollar value of the
amount to be redeemed.
3. The signatures of all account owners exactly as they are registered on the
account.
4. Any required signature guarantees.
5. Any supporting legal documentation that is required in the case of estates,
trusts, corporations or partnerships and certain other types of accounts.
Signature Guarantees --
A signature guarantee of each owner is required to redeem shares in the
following situations, for all size transactions:
(i) if you change the ownership on your account;
(ii) when you want the redemption proceeds sent to a different address than is
registered on the account;
(iii) if the proceeds are to be made payable to someone other than the account's
owner(s);
(iv) any redemption transmitted by federal wire transfer to your bank; and
(v) if a change of address request has been received by the Company or
Declaration Service Company within 15 days previous to the request for
redemption.
In addition, signature guarantees are required for all redemptions of $2,500 or
more from any Fund shareholder account. A redemption will not be processed
until the signature guarantee, if required, is received in Good Order.
Signature guarantees are designed to protect both you and the Fund from fraud.
To obtain a signature guarantee, you should visit a bank, trust company, member
of a national securities exchange or other broker-dealer, or other eligible
guarantor institution. (Notaries public cannot provide signature guarantees.)
Guarantees must be signed by an authorized person at one of these institutions,
and be accompanied by the words "Signature Guarantee."
By Telephone
You may redeem your shares in the Fund by calling the Transfer Agent at 1-877-
593-8637 if you elected to use telephone redemption on your account application
when you initially purchased shares. Redemption proceeds must be transmitted
directly to you or to your pre-designated account at a domestic bank. You may
not redeem by telephone if a change of address request has been received by the
Company or the Transfer Agent within 15 days previous to the request for
redemption. During periods of substantial economic or market changes,
telephone redemptions may be difficult to implement. If you are unable to
contact the Transfer Agent by telephone, shares may be redeemed by delivering
the redemption request in person or by mail. You should understand that with
the telephone redemption option, you may be giving up a measure of security that
you might otherwise have had were you to redeem your shares in writing. In
addition, interruptions in telephone service may mean that you will be unable to
effect a redemption by telephone if desired.
Shares purchased by check for which a redemption request has been received will
not be redeemed until the check or payment received for investment has cleared.
By Wire
You may request the redemption proceeds be wired to your designated bank if it
is a member bank or a correspondent of a member bank of the Federal Reserve
System. A $10 fee is charged for outgoing wires.
Redemption At The Option Of The Fund
If the value of the shares in your account falls to less than $1000, the Company
may notify you that, unless your account is increased to $1000 in value, it
will redeem all your shares and close the account by paying you the redemption
proceeds and any dividends and distributions declared and unpaid at the date of
redemption. You will have thirty days after notice to bring the account up to
$1000 before any action is taken. This minimum balance requirement does not
apply to IRAs and other tax-sheltered investment accounts. This right of
redemption shall not apply if the value of your account drops below $1000 as the
result of market action. The Company reserves this right because of the expense
to the Fund of maintaining very small accounts.
DIVIDENDS AND DISTRIBUTIONS
Dividends paid by the Funds are derived from net investment income. Net
investment income will be distributed at least annually. A Fund's net
investment income is made up of dividends received from the stocks it holds, as
well as interest accrued and paid on any other obligations that might be held in
its portfolio.
A Fund realizes capital gains when it sells a security for more than it paid for
it. The Fund may make distributions of net realized capital gains (after any
reductions for capital loss carry forwards), generally, once a year.
Unless you elect to have your distributions paid in cash, your distributions
will be reinvested in additional shares of your Fund.
You may change the manner in which your dividends are paid at any time by
writing to the Transfer Agent.
FEDERAL TAXES
As with any investment, you should consider the tax implications of an
investment in the Fund. The following is only a short summary of the important
tax considerations generally affecting the Fund and its shareholders. You should
consult your tax adviser with specific reference to your own tax situation.
The Fund intends to qualify and maintain its qualification as a "regulated
investment company" under Sub-Chapter M of the Internal Revenue Code (hereafter
the "Code"), meaning that to the extent a fund's earnings are passed on to
shareholders as required by the Code, the Fund itself is not required to pay
federal income taxes on the earnings. Accordingly, the Fund will pay dividends
and make such distributions as are necessary to maintain its qualification as a
regulated investment company under the Code.
Before you purchase shares of the Fund, you should consider the effect of both
dividends and capital gain distributions that are expected to be declared or
that have been declared but not yet paid. When a Fund makes these payments,
its share price will be reduced by the amount of the payment, so that you will
in effect have paid full price for the shares and then received a portion of
your price back as a taxable dividend distribution.
The Fund will notify you annually as to the tax status of dividend and capital
gains distributions paid by the Fund. Such dividends and capital gains may
also be subject to state and local taxes.
You may realize a taxable gain or loss when redeeming shares of the Fund
depending on the difference in the prices at which you purchased and sold the
shares.
Because your state and local taxes may be different than the federal taxes
described above, you should see your tax adviser regarding these taxes.
GENERAL INFORMATION
Total return for each Fund may be calculated on an average annual total return
basis or an aggregate total return basis. Average annual total return reflects
the average annual percentage change in value of an investment over the
measuring period. Aggregate total return reflects the total percentage change in
value of an investment over the measuring period. Both measures assume the
reinvestment of dividends and distributions.
Total return of each Fund may be compared to those of mutual funds with similar
investment objectives and to bond, stock or other relevant indices or to
rankings prepared by independent services or other financial or industry
publications that monitor mutual fund performance.
DISTRIBUTION FEES
The Funds have adopted a distribution plan pursuant to Rule 12b-1 under the 1940
Act (the "Distribution Plan"), pursuant to which each Fund may incur
shareholder servicing expenses of up to .25% per annum of the Fund's average
daily net assets on all of its share classes
The Funds have also adopted a distribution plan (the "Distribution Plan"),
pursuant to which each Fund may incur distribution expenses of up to .75% per
annum of the Fund's average daily net assets on its Class C shares. This fee is
available to broker, dealers and other persons who provide distribution and
other services to each Fund to help sell Class C shares.
The Distribution Plans provide that the Funds may finance activities which
are primarily intended to result in the sale of the Fund's shares, including but
not limited to, advertising, printing of prospectuses and reports for other
than existing shareholders, preparation and distribution of advertising
materials and sales literature, and payments to dealers and shareholder
servicing agents.
You should be aware that if you hold your shares for a substantial period of
time, you may indirectly pay more than the economic equivalent of the maximum
front-end sales charge allowed by the National Association of Securities Dealers
due to the recurring nature of Distribution (12b-1) fees.
The Funds each offer three classes of shares, each with its own Distribution
Plan. Class A shares are sold at their public offering price which is NAV plus
any applicable front-end sales charge. Class B shares are sold at NAV and are
subject to a declining contingent deferred sales charge. Class C shares are
sold at NAV and are subject to an additional continuing 12b-1 fee.
FINANCIAL HIGHLIGHTS
The Fund is being offered for the first time via this prospectus. Accordingly,
it has not yet acquired an operating history. Financial information on the Fund
will be available in the Company's next semi-annual report, dated December 31,
1999.
FOR MORE INFORMATION
Additional information about the Fund will be available in the Fund's Statement
of Additional Information (SAI). The SAI contains more detailed information on
all aspects of the Fund. A current SAI, dated July 1, 1999, has been filed with
the SEC and is incorporated by reference into (is legally a part of) this
prospectus.
To receive information concerning the Fund, or to request a copy of the SAI or
other documents relating to the Fund, please contact the Fund at:
Hughes Funds, Inc.
c/o Mutual Shareholder Services
1301 East Ninth Street, Suite 3600
Cleveland, OH 44114
1-877-593-8637
Or you may visit our web site on the Internet at www.__________.com:
You may also receive information concerning the Fund, or request a copy of the
SAI or other documents relating to the Fund, by contacting the Securities and
Exchange Commission:
In person: at the SEC's Public Reference Room in Washington, D.C.
By Phone: 1-800-SEC-0330
By Mail: Public Reference Section, Securities and Exchange Commission,
Washington, D.C. 20549-6009 (duplicating fee required)
On the Internet: www.sec.gov
Investment Company Act No.
811-08617
STATEMENT OF ADDITIONAL INFORMATION
Dated July 1, 1999
HUGHES FUNDS, INC.
741 Cox Road
Moorestown NJ 08057
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the Prospectus of Hughes Growth Fund, Hughes Technology
Fund, Hughes Health Care Fund, and Hughes Financial Services Fund, dated July 1,
1999. Requests for copies of the Prospectus should be made by writing to Hughes
Funds, Inc., 741 Cox Road, Moorestown NJ 08057 or by calling the Funds collect
at 609-234-3903.
TABLE OF CONTENTS
Hughes Funds, Inc. Fund Service
Providers
Investment Policies and Restrictions Custodian
Investment Adviser
Transfer Agent
Directors and Officers
Administration
Performance Information
Independent Accountants
Purchasing and Redeeming Shares
Tax Information
Financial Statements
Portfolio Transactions Principal Holders
of Securities
* to be filed by amendment
HUGHES FUNDS, INC.
Hughes Funds, Inc (the "Company") was organized on December 15, 1997 as a
Maryland corporation, and is a mutual fund of the type known as an open-end,
diversified management investment company. It did not begin operations
until 1998 nor commence offering its shares until that time. A mutual fund
permits an investor to pool his or her assets with those of others in order to
achieve economies of scale, take advantage of professional money managers and
enjoy other advantages traditionally reserved for large investors.
The Company is authorized to issue 100,000,000 shares of .001 cent par
value common capital stock. The Company's Articles of Incorporation permit
its Board of Directors to classify any unissued shares into one or more classes
of shares. The Board has authorized the issuance of 5,000,000 shares each of
The Hughes Growth Fund, Hughes Technology Fund, Hughes Health Care Fund, and
Hughes Financial Services Fund which are offered by this prospectus.
The Technology Fund, Health Care Fund and Financial Services Fund are each "non-
diversified" Funds. Non-diversified funds can be riskier investments than
diversified funds. Each Fund's shares are fully paid and non-assessable. They
are entitled to such dividends and distributions as may be paid with respect to
the shares and shall be entitled to such sums on liquidation of the Fund as
shall be determined. Other than these rights, they have no preference as to
conversion, exchange, dividends, retirement or other features and have no
preemption rights.
Shareholder meetings will not be held unless required by Federal or State law or
in connection with an undertaking given by the Funds.
INVESTMENT POLICIES AND RESTRICTIONS
The Funds investment objectives and the manner in which the Funds pursue their
investment objectives are discussed in the prospectus. The investment
limitations and restrictions of all the Funds, as well as those that apply to
specific Funds, are listed below:
The Funds will not:
1. (The Hughes Growth Fund Only) To the extent of 75% of its net assets (valued
at time of investment), invest more than 5% of its assets in securities of any
one issuer, except in obligations of the United States Government and its
agencies and instrumentalities;
2. (Financial Services Fund) Invest less than 65% of its assets (valued at time
of investment) in securities of banks, thrifts, insurance companies, brokerage
companies and investment banking firms.;
3. (Technology Fund) Invest less than 65% of its assets (valued at time of
investment) in securities of companies that develop products, processes or
services that provide significant technological advancements or improvements or
that rely extensively on technology in connection with their operations or
services;
4. (Health Care Fund Only) Invest less than 65% of its assets (valued at time
of investment) in securities of hospital companies, health insurance companies,
pharmaceutical companies and medical device companies;
5. (All Funds) Acquire securities of any one issuer that at the time of
investment (a) represent more than 10% of the voting securities of the issuer or
(b) have a value greater than 10% of the value of the outstanding securities of
the issuer;
5. (All Funds) Borrow money except from banks for temporary or emergency
purposes in amounts not exceeding 5% of the value of the Fund's assets at the
time of borrowing;
6. (All Funds) Underwrite the distribution of securities of other issuers, or
acquire "restricted" securities that, in the event of a resale, might be
required to be registered under the Securities Act of 1933;
7. (All Funds) Make margin purchases or short sales of securities;
8. (All Funds) Invest in companies for the purpose of management or the
exercise of control;
9. (All Funds) Lend money (but this restriction shall not prevent the Fund from
investing in debt securities or repurchase agreements), or lend its portfolio
securities.
10. (All Funds) Acquire or retain any security issued by a company, an officer
or director of which is an officer or director of the Company or an officer,
director or other affiliated person of the Advisor.
11. (All Funds) Invest in oil, gas or other mineral exploration or development
programs, although the Growth Fund only may invest in marketable securities of
companies engaged in oil, gas or mineral exploration;
12. (All Funds) Purchase or sell real estate or real estate loans or real
estate limited partnerships, although the Growth Fund only may invest in
marketable securities of companies that invest in real estate or interests in
real estate.
13. (All Funds) Purchase warrants on securities.
14. (All Funds) Issue senior securities.
15. (All Funds) Invest in commodities, or futures and options on commodities.
Restrictions 1 through 15 listed above are fundamental policies, and may be
changed only with the approval of a "majority of the outstanding voting
securities" of the Fund as defined in the Investment Company Act of 1940.
The Funds have also adopted the following restrictions that may be changed by
the Board of Directors without shareholder approval:
No Fund may:
a. Invest more than 15% of its net assets in securities that are not readily
marketable;
b. Acquire securities of other investment companies except (a) by purchase in
the open market, where no commission or profit to a sponsor or dealer results
from such purchase other than the customary broker's commission and (b) where
acquisition results from a dividend or merger, consolidation or other
reorganization (in addition to this investment restriction, the Investment
Company Act of 1940 provides that the Fund may neither purchase more than 3%
of the voting securities of any one investment company nor invest more than
10% of the Funds total net assets (valued at time of investment) in all
investment
company securities purchased by the Fund);
c. Pledge, mortgage or hypothecate its assets, except for temporary or emergency
purposes and then to an extent not greater than 5% of its total assets at
cost;
d. Invest more than 10% of the Fund's assets (valued at time of investment)
in initial margin deposits of options or futures contracts;
INVESTMENT ADVISER
Information on the Fund's investment adviser, Hughes Investment Advisors LLC, is
set forth in the prospectus.
The adviser is a New Jersey Limited Liability Company. Charles J. Hughes is the
President with a 51% interest in the company and his brother, Daniel J. Hughes
has a 49% interest and is a member of the company. Although Mr. Hughes has
extensive experience in managing personal investment portfolios for himself and
his family, he does not have any previous experience in providing investment
management services to any registered investment company.
The Advisory Agreement with each Fund provides that the Adviser shall not be
liable for any loss suffered by the Fund or its shareholders as a consequence of
any act or omission in connection with services under the Agreement, except by
reason of the adviser's willful misfeasance, bad faith, gross negligence, or
reckless disregard of its obligations and duties under the Advisory Agreement.
The Advisory Agreements expire on June 30, 2001, but may be continued from year
to year so long as their continuance is approved annually (a) by the vote of a
majority of the Directors of the Fund who are not "interested persons" of the
Fund or the adviser cast in person at a meeting called for the purpose of voting
on such approval, and (b) by the Board of Directors as a whole or by the vote of
a majority (as defined in the 1940 Act) of the outstanding shares of the Fund.
The Agreement will terminate automatically in the event of its assignment (as
defined in the 1940 Act).
DIRECTORS AND OFFICERS
The board of directors has overall responsibility for conduct of the Company's
affairs. The day-to-day operations of the Funds are managed by the Advisor
subject to the bylaws of the Company and review by the Board of Directors. The
directors of the Company, including those directors who are also officers, are
listed below:
- --------------------------------------------------------------------------------
- -------------------------
Principal
Name, Age, Position(s)
Occupation(s) For the
Address, with Fund Last
Five Years
- --------------------------------------------------------------------------------
- -------------------------
Charles J Hughes Age 47 * President, Fund
Adviser
741 Cox Road Treasurer &
President Hughes Trading
Moorestown NJ 08057 Director LLC since
February, 1996.
Pilot for American Airlines since 1980. BA Degree LaSalle University
Frank G Solecki Age 52 Secretary & Director
of Manufacturing
48 Cove Road Director PCD
Division of FMC
Moorestown NJ 08057 Corporation, a
Chemical
manufacturing firm BS Degree Penn State University
Neil K Smith Age 46 Director Sales
Engineer for Del-Val
144 Knotty Oak Dr.
Equipment, Inc., an
Mount Laurel NJ 08054 engineering
firm. BS Degree
Grove City College
* Indicates an "interested person" as defined in the Investment Company Act of
1940.
The Company was organized as a Maryland Corporation on December 15, 1997. The
table below sets forth the compensation anticipated to be paid by the
Corporation to each of the directors of the Corporation during the fiscal year
ending June 30, 1999.
_____________________________________________________________________________
Pension or
Total
Retirement
Compensation
Aggregate Benefits Accrued Estimated Annual
From Fund &
Name of Person, Compensation As Part of Fund Benefits Upon
Fund Complex
Position From Fund Expenses
Retirement Paid to Directors
Charles J Hughes 0 0 0
0
President,
Treasurer,
Director
Frank G Solecki $500 0 0
$500
Secretary,
Director
Niel K Smith $500 0 0
$500
Director
PRINCIPAL HOLDERS OF SECURITIES
Charles J. Hughes and Daniel J. Hughes intend to purchase 50% each of each
Fund's outstanding shares. Accordingly, they will be deemed to then control
each Fund and will have significant influence over the Funds and their
operations.
Mr. Charles J. Hughes is the President of the Adviser, the President, Treasurer
and a Director of the Company, and a controlling shareholder of each Fund. As
such, Mr. Hughes is considered to be an "affiliated person" of the Funds and a
"control person" of the Funds.
The Company will call a meeting of shareholders for the purpose of voting upon
the question of removal of a director or directors when requested in writing to
do so by record holders of at least 10% of the Fund's outstanding common shares.
The Corporation's bylaws contain procedures for the removal of directors by its
stockholders. At any meeting of stockholders, duly called and at which a quorum
is present, the stockholders may by the affirmative vote of the holders of a
majority of the votes entitled to be cast thereon, remove any director or
directors from office and may elect a successor or successors to fill any
resulting vacancies for the unexpired terms of the removed directors.
PERFORMANCE INFORMATION
From time to time the Funds may quote total return figures. "Total Return" for a
period is the percentage change in value during the period of an investment in
Fund shares, including the value of shares acquired through reinvestment of all
dividends and capital gains distributions. "Average Annual Total Return" 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: P(1+T)[n] = ERV
Where: P =a hypothetical initial investment of $1000
T = average annual total return
n = number of years
ERV = ending redeemable value of shares at
the end of the period
Yield. The Funds 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 offering price per share on the
last day of the period, according to the following formula:
Yield = 2[(a-b/cd + 1)6 - 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 they
were entitled to receive dividends
d = the maximum offering price per share on the last day of the period
Each Fund's performance is a function of conditions in the securities markets,
portfolio management, and operating expenses. Although information such as that
shown above is useful in reviewing a Fund's performance and in providing some
basis for comparison with other investment alternatives, it should not be used
for comparison with other investments using different reinvestment assumptions
or time periods.
In sales literature, a Fund's performance may be compared with that of market
indices and other mutual funds. In addition to the above computations, a Fund
might use comparative performance as computed in a ranking determined by Lipper
Analytical Services, Morningstar, Inc., or that of another service.
PURCHASING AND REDEEMING SHARES
Purchases and redemptions are discussed in the prospectus.
Redemptions will be made at net asset value. Each Fund's net asset value is
determined on days on which the New York Stock Exchange is open for trading.
TAX INFORMATION
Taxation Of The Funds. The Funds intend to qualify as a "regulated investment
company" under Subchapter M of the Internal Revenue Code. To qualify as a
regulated investment company, the Funds must, among other things, derive at
least 90% of their 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.
If a 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. The Fund would be subject to corporate income
tax on any undistributed income other than tax-exempt income from municipal
securities. However, if a Fund does not qualify, all of its earnings would be
subject to federal income tax at the prevailing corporate income tax rates.
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 a 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 a 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. 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 a 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 a 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
Funds will notify corporate shareholders annually of the percentage of Fund
dividends that qualifies for the dividend received deductions.
A portion of a 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 Funds 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 a 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 a Fund are taxable to shareholders as
dividends, not as capital gains.
PORTFOLIO TRANSACTIONS
The Funds will generally purchase and sell securities without regard to the
length of time the security has been held. Accordingly, it can be expected that
the rate of portfolio turnover may be substantial. Since investment decisions
are based on the anticipated contribution of a security to the Fund's investment
objective, the rate of portfolio turnover is not a factor when the Adviser
believes a change is in order to achieve those objectives. The Fund expects
that its annual portfolio turnover rate will not exceed 100% under normal
conditions. However, there can be no assurance that the Fund will not exceed
this rate, and the portfolio turnover rate may vary from year to year.
High portfolio turnover in any year will result in the payment by a Fund of
above-average transaction costs and could result in the payment by shareholders
of above-average amounts of taxes on realized investment gains. Distributions to
shareholders of such investment gains, to the extent they consist of short-term
capital gains, will be considered ordinary income for federal income tax
purposes.
Decisions to buy and sell securities for the Funds are made by the Adviser
subject to review by the Corporation's Board of Directors. In placing purchase
and sale orders for portfolio securities for the Funds, it is the policy of the
Adviser to seek the best execution of orders at the most favorable price. In
selecting brokers to effect portfolio transactions, the determination of what is
expected to result in the best execution at the most favorable price involves a
number of largely judgmental considerations. Among these are the Adviser's
evaluation of the broker's efficiency in executing and clearing transactions.
Over-the-counter securities are generally purchased and sold directly with
principal market makers who retain the difference in their cost in the security
and its selling price. In some instances, the Adviser feels that better prices
are available from non-principal market makers who are paid commissions
directly.
FUND SERVICE PROVIDERS
The Funds could not function without the services provided by certain companies.
With the Board's permission, the Adviser and the Funds have entered into
contracts with the following companies. All fees charged by these companies
will be paid by the Adviser.
Custodian
UMB Bank, N.A., Kansas City, Missouri, holds the investments and other assets
that the Fund owns. The Custodian is responsible for receiving and paying for
securities purchased, delivering against payment securities sold, receiving and
collecting income from investments, making all payments covering expenses of
the Fund, and performing other administrative duties, all as directed by
persons authorized by the Fund. The Custodian does not exercise any supervisory
function in such matters as the purchase and sale of portfolio securities,
payment of dividends, or payment of expenses of the Fund. Portfolio
securities of the Fund are maintained in the custody of the Custodian, and
may be entered in the Federal Reserve Book Entry System, or the security
depository system of The Depository Trust Company.
Transfer, Dividend Disbursing And Accounting Services Agent
Mutual Shareholder Services provides transfer agency and dividend disbursing
services for the Fund. This means that its job is to maintain, accurately, the
account records of all shareholders in the Fund as well as to administer the
distribution of income earned as a result of investing in the Fund. Declaration
Service Company also provides accounting services to the Fund including
portfolio accounting services, expense accrual and payment services, valuation
and financial reporting services, tax accounting services and compliance control
services.
Administration
Mutual Shareholder Services also acts as Administrator to the Fund pursuant to a
written agreement with the Company and the Adviser, dated March 31, 1999. The
Administrator supervises all aspects of the operations of the Fund except those
performed by the Fund's investment adviser under the Fund's investment advisory
agreement. The Administrator is responsible for:
(a) calculating the Fund's net asset value
(b) preparing and maintaining the books and accounts specified in Rule 31a-1
and 31a-2 of the Investment Company Act of 1940
(c) preparing financial statements contained in reports to stockholders of the
Fund
(d) preparing the Fund's federal and state tax returns
(e) preparing reports and filings with the Securities and Exchange Commission
(f) preparing filings with state Blue Sky authorities
(g) maintaining the Fund's financial accounts and records
For the services to be rendered as Administrator, The Adviser shall pay mutual
Shareholder Services an annual fee, paid monthly, based on the average net
assets of the Fund, as determined by valuations made as of the close of each
business day of the month.
PRINCIPAL UNDERWRITER.
The Fund has not yet retained a principal underwriter.
INDEPENDENT ACCOUNTANTS
DeAngelis & Higgins LLC, 39 North Main Street, Cranbury NJ 08512 has been
selected as the independent accountants for the Fund. As such, DeAngelis &
Higgins LLC performs audits of the Fund's financial statements.
FINANCIAL STATEMENTS
The Funds have no operating history and therefor have no reportable financial
data.
1
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THE HUGHES GROWTH FUND
THE HUGHES TECHNOLOGY FUND
THE HUGHES HEALTH CARE FUND
THE HUGHES FINANCIAL SERVICES FUND
Separate Portfolios of Hughes Funds, Inc.
741 Cox Road
Moorestown, NJ 08057
1-877-593-8637
PROSPECTUS
July 1, 1999
The Securities and Exchange Commission has not approved or disapproved these
securities or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
- --------------------------------------------------------------------------------
- ----------------------
TABLE OF CONTENTS
THE HUGHES GROWTH FUND...................3
Risk/Return Summary......................3
Fees And Expenses........................6
THE HUGHES TECHNOLOGY FUND.............. 7
Risk/Return Summary......................7
Fees And Expenses .......................10
THE HUGHES HEALTH CARE FUND.......... 11
Risk/Return Summary......................11
Fees And Expenses........................14
THE HUGHES FINANCIAL SERVICES FUND.......15
Risk/Return Summary......................15
Fees And Expenses .......................19
MANAGEMENT OF THE FUND...................20
INVESTING IN THE FUNDS...................21
HOW TO SELL (REDEEM) SHARES..............25
DIVIDENDS AND DISTRIBUTIONS..............27
FEDERAL TAXES............................27
GENERAL INFORMATION......................28
DISTRIBUTION FEES........................28
FINANCIAL HIGHLIGHTS.....................29
FOR MORE INFORMATION.....................30
- --------------------------------------------------------------------------------
Hughes Investment Advisors LLC, (the "Adviser") serves as the investment adviser
to each of the Funds under a written agreement with Hughes Funds, Inc. (the
"Company"), and is responsible for providing an investment program for each Fund
and choosing the investments for each Fund.
THE HUGHES GROWTH FUND
RISK/RETURN SUMMARY
Investment Objective
The Hughes Growth Fund seeks capital appreciation.
Principal Investment Strategies
The Fund seeks long-term capital growth by normally investing at least 65% of
its total net assets in companies that the Adviser has identified as having
above-average growth potential. The Adviser believes that value-oriented
investing is the soundest long-term strategy for identifying companies with
above-average growth potential.
The Adviser generally follows a value-oriented investment approach to the
selection of individual securities for the Fund. Value investing refers to the
process by which an investment professional chooses certain stocks because that
professional believes that they are undervalued in the marketplace. The Adviser
seeks to identify value using two basic criteria: Price/Earnings Ratio ("P/E")
and Price-to-Book ratio ("P/B").
A low P/E value is important because, in the Adviser's opinion, it tends to be a
historic indicator of valuation. The second criteria considered is the P/B.
The Adviser concentrates on stocks whose market price is low in relation to book
value. A low price-to book ratio may indicate that a company is undervalued in
the marketplace. The Adviser completes its analysis of potential purchases by
focusing on adequate trading liquidity in the security (at least 500,000 shares
per day on average), and measuring the company's financial strength (above-
average return on equity, low levels of corporate debt, generally increasing
dividends and earnings).
The Adviser will utilize its value analysis to identify undervalued companies
and will then;
* Invest primarily in common stocks.
* Invest at least 65% of its net assets in companies that appear to have above-
average prospects for long-term capital growth. The Fund may invest in
companies of any size and industry.
* Invest in foreign and domestic issuers. The Fund may invest in securities of
foreign issuers which are publicly traded on U.S. exchanges, either directly or
in the form of American Depository Receipts (ADRs). The Fund will only invest in
ADRs that are issuer sponsored. Sponsored ADRs typically are issued by a U.S.
bank or trust company and evidence ownership of underlying securities issued by
a foreign corporation.
*
Buy and sell securities based on the Adviser's analysis of the company's overall
value. The Adviser will purchase securities of companies that it considers to
be undervalued and will sell companies that fail to maintain their
qualifications under the Adviser's analysis.
* Invest for the long term and not actively trade the market. Active trading
can result in realized capital gains to the Fund, adverse tax consequences to
the Fund's shareholders, and can have a negative impact on the Fund's
performance due to increased transaction and other costs. The Fund does not
anticipate having a turnover ratio in excess of 100%.
The Fund may, from time-to-time, take temporary defensive positions that are
inconsistent with the Fund's principal investment strategies in attempting to
respond to adverse market, economic, political or other conditions. If the Fund
takes such a temporary defensive position, it will not be investing according to
its objective and it may not achieve its investment objective.
Principal Investment Risks
The Fund is subject to the following principal investment risks:
General Risks- You may lose money by investing in the Fund. Your risk of loss
is greater if you hold your investment for shorter time periods. The value of
the Fund's investments will vary from day-to-day, reflecting changes in market
conditions, interest rates and other company, political, and economic news.
When you sell your Fund shares, they may be worth more or less than what you
paid for them.
Year 2000 Risks- As with other mutual funds, financial and business
organizations around the world, the Fund could be adversely affected if the
computer systems used by the Adviser and the Fund's other service providers
don't properly process and calculate date-related information and data from and
after January 1, 2000. This is commonly known as the "Year 2000" or "Y2K"
problem. The Adviser is taking steps to address the Y2K problem with respect to
the computer systems that it uses and to obtain assurances that comparable steps
are being taken by the Funds' other major service providers. The Adviser is
also seeking ways to minimize the potential disruptions that may occur as a
result of lack of preparation by the companies in which the Fund invests.
However, there can be no assurance that the problem will be corrected in all
respects and that the Fund's operations and services provided to shareholders
will not be adversely affected nor can there be any assurance that the year 2000
problem will not have any adverse affect on the entities whose securities are
held by the Fund or on domestic or global equity markets or economies,
generally.
Stock Market Risks- The Fund invests primarily in common stock, so it is
subject to the risks associated with common stocks, including price volatility
and the creditworthiness of the issuing company. The stock market trades in a
cyclical price pattern, with prices generally rising or falling over time.
These cyclical periods may last for a significant period of time.
Small To Medium-Cap Stocks Risks- The Fund may invest in companies with smaller
market capitalizations (less than $6 billion in market capitalization). These
companies are relatively smaller, engaged in business mostly within their own
geographic region, and may be less well-known to the investment community.
Smaller, newer companies have more volatile share prices for several reasons.
Small companies often have less liquidity, less management depth, narrower
market penetrations, less diverse product lines, and fewer resources than larger
companies. As a result, their stock prices react more violently to changes in
the marketplace.
Issuer-Specific Changes- The value of an individual security or particular type
of security can be more volatile than the market as a whole and can perform
differently than the market as a whole. The value of smaller issuers can be
more volatile than that of larger issuers.
Management Risk- The Fund has no operating history, and this may pose additional
risks. There is no assurance that the Fund can achieve its investment objective,
since all investments are inherently subject to market risk.
Value Investing Risk- Value investing seeks to identify companies that trade at
prices below their true value in the marketplace. There is no assurance that
the Adviser will be successful in identifying these companies, or that the
prices of such companies will rise to the level of the Adviser's perceived
"real" value.
Foreign Securities Risks- Investments in foreign securities involve greater
risks compared to domestic investments. Foreign companies are not subject to the
regulatory requirements of U.S. companies and, as such, there may be less
publicly available information about issuers than is available in the reports
and ratings published about companies in the U.S. Additionally, foreign
companies are not subject to uniform accounting, auditing and financial
reporting standards. Dividends and interest on foreign securities may be subject
to foreign withholding taxes. Such taxes may reduce the net return to
shareholders. Further, foreign securities are often denominated in a currency
other than the U.S. dollar. Accordingly, the Fund will be subject to the risks
associated with fluctuations in currency values. Although the Fund intends to
invest in securities of foreign issuers domiciled in nations which the Adviser
considers as having stable and friendly governments, there is the possibility of
expropriation, confiscation, taxation, currency blockage or political or social
instability which could affect investments of foreign issuers domiciled in such
nations.
Performance Information
Because this is a new fund being offered for the first time by this prospectus,
a bar chart and performance table reflecting the Fund's comparative performance
is not yet available.
FEES AND EXPENSES
This table describes the fees and expenses you may pay if you buy and hold
shares of the Growth Fund.
Shareholder Fees: Class A Class C
No-Load
(fees paid directly from your investment)
1. Maximum Sales Charges
Imposed on Purchases 3.75% NONE
NONE
(as a percentage of offering price)
Annual Fund Operating Expenses:
(expenses that are deducted from Fund assets) Class A Class C
No-Load
Management Fees1 1.00% 1.00%
1.00%
12b-1 Fees2 0.25% 1.00%3
0.25%
Other Expenses 4 0.05% 0.05%
0.05%
- ------- ------- -------
Total Annual Fund Operating Expenses5 1.30% 2.05%
1.30%
1. Management fees include investment advisory fees of 0.50% per annum of
average daily net assets of each fund and 0.50% per annum of average daily net
assets for administrative services for each fund.
2. You should be aware that if you hold your shares for a substantial period of
time, you may indirectly pay more than the economic equivalent of the maximum
front-end sales charge allowed by the National Association of Securities Dealers
due to the recurring nature of Distribution (12b-1) fees.
3. Includes a fee of 0.75% for distribution-related expenses and 0.25% for
shareholder service expenses.
4. Because the Funds have not yet completed their first year of investment
operations, "Other Expenses" are estimated.
5. The Adviser has voluntarily agreed to waive its advisory fee and/or to
reimburse the Fund, if necessary, if the advisory fee or expenses would cause
the Total Fund Operating expenses to exceed 1.25% for the Class A or No-Load
Class Shares and 2.00% for the Class C shares. The Adviser may revise or cancel
these expense limitations at any time and will notify you by letter not less
than 30 days prior to any such change.
Example: This example is intended to help you compare the costs of investing in
the Fund with the costs of investing in other mutual funds.
The Example below assumes that you invest $10,000 in any Fund for the time
periods indicated, reinvest any dividends and distributions, and then redeem all
your shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses that
were described above remain the same. Although your actual costs may be higher
or lower, based on these assumptions, your costs would be:
Time Period Class A Class C No-Load
One Year $502 $208 $132
Three Years $771 $663 $412
THE HUGHES TECHNOLOGY FUND
RISK/RETURN SUMMARY
Investment Objective
The Hughes Technology Fund seeks capital appreciation.
Principal Investment Strategies
The Fund seeks long-term growth of capital by normally investing at least 65% of
its total assets in the common stock of companies in the technology sector of
the economy that have above-average potential for long term growth. The Adviser
believes that value-oriented investing is the soundest long-term strategy for
identifying companies with above-average growth potential, and will generally
follow a value-oriented investment approach to the selection of individual
securities for the Fund. Value investing refers to the process by which an
investment professional chooses certain stocks because that professional
believes that they are undervalued in the marketplace.
Technology sector companies are generally companies that derive at least 50% of
their annual revenue from developing products, processes or services that will
provide significant technological advancements or improvements, and companies
that the Adviser believes rely extensively on technology in connection with
their operations or services. These companies will generally be in industries
such as: aerospace/ defense; biotechnology; computers; office/business
equipment; semiconductors; software; telecommunications; and telecommunications
equipment.
The Adviser generally follows a value-oriented investment approach to the
selection of individual securities for the Fund. The Adviser seeks to identify
value using two basic criteria: Price/Earnings Ratio ("P/E") and Price-to-Book
ratio ("P/B").
A low P/E value is important because, in the Adviser's opinion, it tends to be a
historic indicator of valuation. The second criteria considered is the P/B.
The Adviser concentrates on stocks whose market price is low in relation to book
value. A low price-to book ratio may indicate that a company is undervalued in
the marketplace. The Adviser completes its analysis of potential purchases by
focusing on adequate trading liquidity in the security (at least 500,000 shares
per day on average), and measuring the company's financial strength (above-
average return on equity, low levels of corporate debt, generally increasing
dividends and earnings).
The Adviser will utilize its value analysis to identify undervalued companies
and will then;
* Invest primarily in common stocks of technology sector companies.
* Invest at least 65% of its net assets in companies that appear to have above-
average prospects for long-term capital growth. The Fund may invest in
companies of any size.
*
Invest in foreign and domestic issuers. The Fund may invest in securities of
foreign issuers which are publicly traded on U.S. exchanges, either directly or
in the form of American Depository Receipts (ADRs). The Fund will only invest in
ADRs that are issuer sponsored. Sponsored ADRs typically are issued by a U.S.
bank or trust company and evidence ownership of underlying securities issued by
a foreign corporation.
* Buy and sell securities based on the Adviser's analysis of the company's
overall value. The Adviser will purchase securities of companies that it
considers to be undervalued and will sell companies that fail to maintain their
qualifications under the Adviser's analysis.
* Invest for the long term and not actively trade the market. Active trading can
result in realized capital gains to the Fund, adverse tax consequences to the
Fund's shareholders, and can have a negative impact on the Fund's performance
due to increased transaction and other costs. The Fund does not anticipate
having a turnover ration in excess of 100%
The Fund may, from time-to-time, take temporary defensive positions that are
inconsistent with the Fund's principal investment strategies in attempting to
respond to adverse market, economic, political or other conditions. If the Fund
takes such a temporary defensive position, it will not be investing according to
its objective and it may not achieve its investment objective.
Principal Investment Risks
The Fund is subject to the following principal investment risks:
General Risks- You may lose money by investing in the Fund. Your risk of loss
is greater if you hold your investment for shorter time periods. The value of
the Fund's investments will vary from day-to-day, reflecting changes in market
conditions, interest rates and other company, political, and economic news.
When you sell your Fund shares, they may be worth more or less than what you
paid for them.
Year 2000 Risks- As with other mutual funds, financial and business
organizations around the world, the Fund could be adversely affected if the
computer systems used by the Adviser and the Fund's other service providers
don't properly process and calculate date-related information and data from and
after January 1, 2000. This is commonly known as the "Year 2000" or "Y2K"
problem. The Adviser is taking steps to address the Y2K problem with respect to
the computer systems that it uses and to obtain assurances that comparable steps
are being taken by the Funds' other major service providers. The Adviser is
also seeking ways to minimize the potential disruptions that may occur as a
result of lack of preparation by the companies in which the Fund invests.
However, there can be no assurance that the problem will be corrected in all
respects and that the Fund's operations and services provided to shareholders
will not be adversely affected nor can there be any assurance that the year 2000
problem will not have any adverse affect on the entities whose securities are
held by the Fund or on domestic or global equity markets or economies,
generally.
Non-Diversification Risks- Diversification is a way to reduce risk by investing
in a broad range of stocks or other securities. The Fund is non-diversified. A
"nondiversified" fund has the ability to take larger positions in a smaller
number of issuers. Because the appreciation or depreciation of a single stock
may have a greater impact on the net asset value ("NAV") of a nondiversified
fund, its share price can be expected to fluctuate more than a comparable
diversified fund. This fluctuation, if significant, may negatively affect the
performance of the Fund.
Stock Market Risks- The Fund invests primarily in common stock, so it is
subject to the risks associated with common stocks, including price volatility
and the creditworthiness of the issuing company. The stock market trades in a
cyclical price pattern, with prices generally rising or falling over time.
These cyclical periods may last for a significant period of time.
Small To Medium-Cap Stocks Risks- The Fund may invest in companies with smaller
market capitalizations (less than $6 billion in market capitalization). These
companies are relatively smaller, engaged in business mostly within their own
geographic region, and may be less well-known to the investment community.
Smaller, newer companies have more volatile share prices for several reasons.
Small companies often have less liquidity, less management depth, narrower
market penetrations, less diverse product lines, and fewer resources than larger
companies. As a result, their stock prices react more violently to changes in
the marketplace.
Issuer-Specific Changes- The value of an individual security or particular type
of security can be more volatile than the market as a whole and can perform
differently than the market as a whole. The value of smaller issuers can be
more volatile than that of larger issuers.
Management Risk- The Fund has no operating history, and this may pose additional
risks. There is no assurance that the Fund can achieve its investment objective,
since all investments are inherently subject to market risk.
Value-Investing Risk- Value investing seeks to identify companies that trade at
prices below their true value in the marketplace. There is no assurance that
the Adviser will be successful in identifying these companies, or that the
prices of such companies will rise to the level of the Adviser's perceived
"real" value.
Foreign Securities Risks- Investments in foreign securities involve greater
risks compared to domestic investments. Foreign companies are not subject to the
regulatory requirements of U.S. companies and, as such, there may be less
publicly available information about issuers than is available in the reports
and ratings published about companies in the U.S. Additionally, foreign
companies are not subject to uniform accounting, auditing and financial
reporting standards. Dividends and interest on foreign securities may be subject
to foreign withholding taxes. Such taxes may reduce the net return to
shareholders. Further, foreign securities are often denominated in a currency
other than the U.S. dollar. Accordingly, the Fund will be subject to the risks
associated with fluctuations in currency values. Although the Fund intends to
invest in securities of foreign issuers domiciled in nations which the Adviser
considers as having stable and friendly governments, there is the possibility of
expropriation, confiscation, taxation, currency blockage or political or social
instability which could affect investments of foreign issuers domiciled in such
nations.
Technology Sector Risks- Because the Fund focuses its investments in Technology
Sector companies, it will be subject to the risks that are inherent in that
sector. Competition among technology companies may result in increasingly
aggressive pricing of their products and services, which may negatively affect
the profitability of companies in the Fund's portfolio. In addition, because of
the rapid pace of technological development, products or services developed by
companies in the Fund's portfolio may become rapidly obsolete or have relatively
short product cycles. As a result, the Fund's returns may be considerably more
volatile than the returns of a fund that does not invest in similarly related
companies.
Performance Information
Because this is a new fund being offered for the first time by this prospectus,
a bar chart and performance table reflecting the Fund's comparative performance
is not yet available.
FEES AND EXPENSES
This table describes the fees and expenses you may pay if you buy and hold
shares of the Technology Fund.
Shareholder Fees: Class A Class C
No-Load
(fees paid directly from your investment)
1. Maximum Sales Charges
Imposed on Purchases 3.75% NONE
NONE
(as a percentage of offering price)
Annual Fund Operating Expenses:
(expenses that are deducted from Fund assets) Class A Class C
No-Load
Management Fees1 1.00% 1.00%
1.00%
12b-1 Fees2 0.25% 1.00%3
0.25%
Other Expenses 4 0.05% 0.05%
0.05%
Total Annual Fund Operating Expenses5 1.30% 2.05%
1.30%
1. Management fees include investment advisory fees of 0.50% per annum of
average daily net assets of each fund and 0.50% per annum of average daily net
assets for administrative services for each fund.
2. You should be aware that if you hold your shares for a substantial period of
time, you may indirectly pay more than the economic equivalent of the maximum
front-end sales charge allowed by the National Association of Securities Dealers
due to the recurring nature of Distribution (12b-1) fees.
3. Includes a fee of 0.75% for distribution-related expenses and 0.25% for
shareholder service expenses.
4. Because the Funds have not yet completed their first year of investment
operations, "Other Expenses" are estimated.
5. The Adviser has voluntarily agreed to waive its advisory fee and/or to
reimburse the Fund, if necessary, if the advisory fee or expenses would cause
the Total Fund Operating expenses to exceed 1.25% for the Class A or No-Load
Class Shares and 2.00% for the Class C shares. The Adviser may revise or cancel
these expense limitations at any time and will notify you by letter not less
than 30 days prior to any such change.
Example: This example is intended to help you compare the costs of investing in
the Fund with the costs of investing in other mutual funds.
The Example below assumes that you invest $10,000 in any Fund for the time
periods indicated, reinvest any dividends and distributions, and then redeem all
your shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses that
were described above remain the same. Although your actual costs may be higher
or lower, based on these assumptions, your costs would be:
Time Period Class A Class C No-Load
One Year $502 $208 $132
Three Years $771 $663 $412
THE HUGHES HEALTH CARE FUND
RISK/RETURN SUMMARY
Investment Objective
The Hughes Health Care Fund seeks capital appreciation.
Principal Investment Strategies
The Fund seeks long-term growth of capital by normally investing at least 65% of
its total assets in securities of companies that derive at least 50% of their
annual revenues from the provision of goods and services to the health care
sector of the economy that have above-average long-term growth potential. These
companies include hospitals, health insurance companies, pharmaceutical
companies, and medical device companies. The Adviser believes that value-
oriented investing is the soundest long-term strategy for identifying companies
with above-average growth potential, and will generally follow a value-oriented
investment approach to the selection of individual securities for the Fund.
Value investing refers to the process by which an investment professional
chooses certain stocks because that professional believes that they are
undervalued in the marketplace.
The Adviser seeks to identify value using two basic criteria: Price/Earnings
Ratio ("P/E") Price-to-Book ratio ("P/B").
A low P/E value is important because, in the Adviser's opinion, it tends to be a
historic indicator of valuation. The second criteria considered is the P/B.
The Adviser concentrates on stocks whose market price is low in relation to book
value. A low price-to book ratio may indicate that a company is undervalued in
the marketplace. The Adviser completes its analysis of potential purchases by
focusing on adequate trading liquidity in the security (at least 500,000 shares
per day on average), and measuring the company's financial strength (above-
average return on equity, low levels of corporate debt, generally increasing
dividends and earnings).
The Adviser will utilize its value analysis to identify undervalued companies
and will then;
* Invest primarily in common stocks of health care sector companies.
* Invest at least 65% of its net assets in companies that appear to have above-
average prospects for long-term capital growth. The Fund may invest in
companies of any size.
* Invest in foreign and domestic issuers. The Fund may invest in securities of
foreign issuers which are publicly traded on U.S. exchanges, either directly or
in the form of American Depository Receipts (ADRs). The Fund will only invest in
ADRs that are issuer sponsored. Sponsored ADRs typically are issued by a U.S.
bank or trust company and evidence ownership of underlying securities issued by
a foreign corporation.
* Buy and sell securities based on the Adviser's analysis of the company's
overall value. The Adviser will purchase securities of companies that it
considers to be undervalued and will sell companies that fail to maintain their
qualifications under the Adviser's analysis.
* Invest for the long term and not actively trade the market. Active trading can
result in realized capital gains to the Fund, adverse tax consequences to the
Fund's shareholders, and can have a negative impact on the Fund's performance
due to increased transaction and other costs. The Fund does not anticipate
having a turnover ration in excess of 100%
The Fund may, from time-to-time, take temporary defensive positions that are
inconsistent with the Fund's principal investment strategies in attempting to
respond to adverse market, economic, political or other conditions. If the Fund
takes such a temporary defensive position, it will not be investing according to
its objective and it may not achieve its investment objective.
Principal Investment Risks
The Fund is subject to the following principal investment risks:
General Risks- You may lose money by investing in the Fund. Your risk of loss
is greater if you hold your investment for shorter time periods. The value of
the Fund's investments will vary from day-to-day, reflecting changes in market
conditions, interest rates and other company, political, and economic news.
When you sell your Fund shares, they may be worth more or less than what you
paid for them.
Year 2000 Risks- As with other mutual funds, financial and business
organizations around the world, the Fund could be adversely affected if the
computer systems used by the Adviser and the Fund's other service providers
don't properly process and calculate date-related information and data from and
after January 1, 2000. This is commonly known as the "Year 2000" or "Y2K"
problem. The Adviser is taking steps to address the Y2K problem with respect to
the computer systems that it uses and to obtain assurances that comparable steps
are being taken by the Funds' other major service providers. The Adviser is
also seeking ways to minimize the potential disruptions that may occur as a
result of lack of preparation by the companies in which the Fund invests.
However, there can be no assurance that the problem will be corrected in all
respects and that the Fund's operations and services provided to shareholders
will not be adversely affected nor can there be any assurance that the year 2000
problem will not have any adverse affect on the entities whose securities are
held by the Fund or on domestic or global equity markets or economies,
generally.
Non-Diversification Risks- Diversification is a way to reduce risk by investing
in a broad range of stocks or other securities. The Fund is non-diversified. A
"nondiversified" fund has the ability to take larger positions in a smaller
number of issuers. Because the appreciation or depreciation of a single stock
may have a greater impact on the net asset value ("NAV") of a nondiversified
fund, its share price can be expected to fluctuate more than a comparable
diversified fund. This fluctuation, if significant, may negatively affect the
performance of the Fund.
Stock Market Risks- The Fund invests primarily in common stock, so it is
subject to the risks associated with common stocks, including price volatility
and the creditworthiness of the issuing company. The stock market trades in a
cyclical price pattern, with prices generally rising or falling over time.
These cyclical periods may last for a significant period of time.
Small To Medium-Cap Stocks Risks- The Fund may invest in companies with smaller
market capitalizations (less than $6 billion in market capitalization). These
companies are relatively smaller, engaged in business mostly within their own
geographic region, and may be less well-known to the investment community.
Smaller, newer companies have more volatile share prices for several reasons.
Small companies often have less liquidity, less management depth, narrower
market penetrations, less diverse product lines, and fewer resources than larger
companies. As a result, their stock prices react more violently to changes in
the marketplace.
Issuer-Specific Changes- The value of an individual security or particular type
of security can be more volatile than the market as a whole and can perform
differently than the market as a whole. The value of smaller issuers can be
more volatile than that of larger issuers.
Management Risk- The Fund has no operating history, and this may pose additional
risks. There is no assurance that the Fund can achieve its investment objective,
since all investments are inherently subject to market risk.
Value Investing Risks- Value investing seeks to identify companies that trade
at prices below their true value in the marketplace. There is no assurance that
the Adviser will be successful in identifying these companies, or that the
prices of such companies will rise to the level of the Adviser's perceived
"real" value.
Foreign Securities Risks- Investments in foreign securities involve greater
risks compared to domestic investments. Foreign companies are not subject to the
regulatory requirements of U.S. companies and, as such, there may be less
publicly available information about issuers than is available in the reports
and ratings published about companies in the U.S. Additionally, foreign
companies are not subject to uniform accounting, auditing and financial
reporting standards. Dividends and interest on foreign securities may be subject
to foreign withholding taxes. Such taxes may reduce the net return to
shareholders. Further, foreign securities are often denominated in a currency
other than the U.S. dollar. Accordingly, the Fund will be subject to the risks
associated with fluctuations in currency values. Although the Fund intends to
invest in securities of foreign issuers domiciled in nations which the Adviser
considers as having stable and friendly governments, there is the possibility of
expropriation, confiscation, taxation, currency blockage or political or social
instability which could affect investments of foreign issuers domiciled in such
nations.
Health Care Sector Risks- The Hughes Health Care Fund focuses its investments
in companies that are involved in the health care sector. As a result, the Fund
will be particularly vulnerable to adverse changes to this sector. The health
care sector is heavily regulated. Changes in regulations and laws that
negatively impact these companies will have a greater impact on the Fund than if
the Fund were invested in a broader variety of securities. In addition, because
of the rapid pace of technological developments, products or services developed
by companies in the Fund's portfolio may become rapidly obsolete or have
relatively short product cycles. As a result, the Fund's returns may be
considerably more volatile than the returns of a fund that does not invest in
similarly related companies. Also, because of the population demographics of
the nation and the aging of America's population, the industry may undergo
significant changes to adjust to the changing health care needs of the country,
and the Fund will be impacted by those changes.
Performance Information
Because this is a new fund being offered for the first time by this prospectus,
a bar chart and performance table reflecting the Fund's comparative performance
is not yet available.
FEES AND EXPENSES
This table describes the fees and expenses you may pay if you buy and hold
shares of the Health Care Fund.
Shareholder Fees: Class A Class C
No-Load
(fees paid directly from your investment)
1. Maximum Sales Charges
Imposed on Purchases 3.75% NONE
NONE
(as a percentage of offering price)
Annual Fund Operating Expenses:
(expenses that are deducted from Fund assets) Class A Class C
No-Load
Management Fees1 1.00% 1.00%
1.00%
12b-1 Fees2 0.25% 1.00%3
0.25%
Other Expenses 4 0.05% 0.05%
0.05%
- ------- ------- -------
Total Annual Fund Operating Expenses5 1.30% 2.05%
1.30%
1. Management fees include investment advisory fees of 0.50% per annum of
average daily net assets of each fund and 0.50% per annum of average daily net
assets for administrative services for each fund.
2. You should be aware that if you hold your shares for a substantial period of
time, you may indirectly pay more than the economic equivalent of the maximum
front-end sales charge allowed by the National Association of Securities Dealers
due to the recurring nature of Distribution (12b-1) fees.
3. Includes a fee of 0.75% for distribution-related expenses and 0.25% for
shareholder service expenses.
4. Because the Funds have not yet completed their first year of investment
operations, "Other Expenses" are estimated.
5. The Adviser has voluntarily agreed to waive its advisory fee and/or to
reimburse the Fund, if necessary, if the advisory fee or expenses would cause
the Total Fund Operating expenses to exceed 1.25% for the Class A or No-Load
Class Shares and 2.00% for the Class C shares. The Adviser may revise or cancel
these expense limitations at any time and will notify you by letter not less
than 30 days prior to any such change.
Example: This example is intended to help you compare the costs of investing in
the Fund with the costs of investing in other mutual funds.
The Example below assumes that you invest $10,000 in any Fund for the time
periods indicated, reinvest any dividends and distributions, and then redeem all
your shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses that
were described above remain the same. Although your actual costs may be higher
or lower, based on these assumptions, your costs would be:
Time Period Class A Class C No-Load
One Year $502 $208 $132
Three Years $771 $663 $412
THE HUGHES FINANCIAL SERVICES FUND
RISK/RETURN SUMMARY
Investment Objective
The Hughes Financial Services Fund seeks capital appreciation.
Principal Investment Strategies
The Fund seeks long-term growth of capital by normally investing at least 65% of
its total assets in securities of companies that derive at least 50% of their
annual revenues from the provision of goods and services to the financial
services sector of the economy that have above-average potential for long-term
growth. These companies include banks, thrifts, insurance companies, brokerage
companies and investment banking firms. The Adviser believes that value-oriented
investing is the soundest long-term strategy for identifying companies with
above-average growth potential, and will generally follow a value-oriented
investment approach to the selection of individual securities for the Fund.
Value investing refers to the process by which an investment professional
chooses certain stocks because that professional believes that they are
undervalued in the marketplace.
The Adviser seeks to identify value using two basic criteria: Price/Earnings
Ratio ("P/E") and Price-to-Book ratio ("P/B").
A low P/E value is important because, in the Adviser's opinion, it tends to be a
historic indicator of valuation. The second criteria considered is the P/B.
The Adviser concentrates on stocks whose market price is low in relation to book
value. A low price-to book ratio may indicate that a company is undervalued in
the marketplace. The Adviser completes its analysis of potential purchases by
focusing on adequate trading liquidity in the security (at least 500,000 shares
per day on average), and measuring the company's financial strength (above-
average return on equity, low levels of corporate debt, generally increasing
dividends and earnings).
The Adviser will utilize its value analysis to identify undervalued companies
and will then;
* Invest primarily in common stocks of financial services sector companies.
* Invest at least 65% of its net assets in companies that appear to have above-
average prospects for long-term capital growth. The Fund may invest in
companies of any size.
* Invest in foreign and domestic issuers. The Fund may invest in securities of
foreign issuers which are publicly traded on U.S. exchanges, either directly or
in the form of American Depository Receipts (ADRs). The Fund will only invest in
ADRs that are issuer sponsored. Sponsored ADRs typically are issued by a U.S.
bank or trust company and evidence ownership of underlying securities issued by
a foreign corporation.
* Buy and sell securities based on the Adviser's analysis of the company's
overall value. The Adviser will purchase securities of companies that it
considers to be undervalued and will sell companies that fail to maintain their
qualifications under the Adviser's analysis.
* Invest for the long term and not actively trade the market. Active trading can
result in realized capital gains to the Fund, adverse tax consequences to the
Fund's shareholders, and can have a negative impact on the Fund's performance
due to increased transaction and other costs. The Fund does not anticipate
having a turnover ration in excess of 100%
The Fund may, from time-to-time, take temporary defensive positions that are
inconsistent with the Fund's principal investment strategies in attempting to
respond to adverse market, economic, political or other conditions. If the Fund
takes such a temporary defensive position, it will not be investing according to
its objective and it may not achieve its investment objective.
Principal Investment Risks
The Fund is subject to the following principal investment risks:
General Risks- You may lose money by investing in the Fund. Your risk of loss
is greater if you hold your investment for shorter time periods. The value of
the Fund's investments will vary from day-to-day, reflecting changes in market
conditions, interest rates and other company, political, and economic news.
When you sell your Fund shares, they may be worth more or less than what you
paid for them.
Year 2000 Risks- As with other mutual funds, financial and business
organizations around the world, the Fund could be adversely affected if the
computer systems used by the Adviser and the Fund's other service providers
don't properly process and calculate date-related information and data from and
after January 1, 2000. This is commonly known as the "Year 2000" or "Y2K"
problem. The Adviser is taking steps to address the Y2K problem with respect to
the computer systems that it uses and to obtain assurances that comparable steps
are being taken by the Funds' other major service providers. The Adviser is
also seeking ways to minimize the potential disruptions that may occur as a
result of lack of preparation by the companies in which the Fund invests.
However, there can be no assurance that the problem will be corrected in all
respects and that the Fund's operations and services provided to shareholders
will not be adversely affected nor can there be any assurance that the year 2000
problem will not have any adverse affect on the entities whose securities are
held by the Fund or on domestic or global equity markets or economies,
generally.
Non-Diversification Risks- Diversification is a way to reduce risk by investing
in a broad range of stocks or other securities. The Fund is non-diversified. A
"nondiversified" fund has the ability to take larger positions in a smaller
number of issuers. Because the appreciation or depreciation of a single stock
may have a greater impact on the net asset value ("NAV") of a nondiversified
fund, its share price can be expected to fluctuate more than a comparable
diversified fund. This fluctuation, if significant, may negatively affect the
performance of the Fund.
Stock Market Risks- The Fund invests primarily in common stock, so it is
subject to the risks associated with common stocks, including price volatility
and the creditworthiness of the issuing company. The stock market trades in a
cyclical price pattern, with prices generally rising or falling over time.
These cyclical periods may last for a significant period of time.
Small To Medium-Cap Stocks Risks- The Fund may invest in companies with smaller
market capitalizations (less than $6 billion in market capitalization). These
companies are relatively smaller, engaged in business mostly within their own
geographic region, and may be less well-known to the investment community.
Smaller, newer companies have more volatile share prices for several reasons.
Small companies often have less liquidity, less management depth, narrower
market penetrations, less diverse product lines, and fewer resources than larger
companies. As a result, their stock prices react more violently to changes in
the marketplace.
Issuer-Specific Changes- The value of an individual security or particular type
of security can be more volatile than the market as a whole and can perform
differently than the market as a whole. The value of smaller issuers can be
more volatile than that of larger issuers.
Management Risk- The Fund has no operating history, and this may pose additional
risks. There is no assurance that the Fund can achieve its investment objective,
since all investments are inherently subject to market risk.
Value Investing Risks- Value investing seeks to identify companies that trade
at prices below their true value in the marketplace. There is no assurance that
the Adviser will be successful in identifying these companies, or that the
prices of such companies will rise to the level of the Adviser's perceived
"real" value.
Foreign Securities Risks- Investments in foreign securities involve greater
risks compared to domestic investments. Foreign companies are not subject to the
regulatory requirements of U.S. companies and, as such, there may be less
publicly available information about issuers than is available in the reports
and ratings published about companies in the U.S. Additionally, foreign
companies are not subject to uniform accounting, auditing and financial
reporting standards. Dividends and interest on foreign securities may be subject
to foreign withholding taxes. Such taxes may reduce the net return to
shareholders. Further, foreign securities are often denominated in a currency
other than the U.S. dollar. Accordingly, the Fund will be subject to the risks
associated with fluctuations in currency values. Although the Fund intends to
invest in securities of foreign issuers domiciled in nations which the Adviser
considers as having stable and friendly governments, there is the possibility of
expropriation, confiscation, taxation, currency blockage or political or social
instability which could affect investments of foreign issuers domiciled in such
nations.
Financial Services Sector Risks- The Fund focuses its investments in companies
that are involved in the financial sector of the economy. As a result of the
Fund's concentration in this industry, the Fund will be particularly vulnerable
to adverse changes to the industry. The financial services industry is heavily
regulated. Changes in regulations and laws that negatively impact these
companies will have a greater impact on the Fund than if the Fund were invested
in a broader variety of securities. Changes in the strength of the nation's
economy and changes in the investing, spending and savings habits of people have
a significant effect on these companies. Also, changes in interest rates can
have a negative impact on these companies. Further, changes in the structure of
brokerage commission rates could negatively impact the earnings of these
companies. In recent times, there has been considerable consolidation of
competing companies within this sector, which may negatively affect the Fund.
Finally, the risk of diminished capital availability could have a negative
impact on the Fund.
Performance Information
Because this is a new fund being offered for the first time by this prospectus,
a bar chart and performance table reflecting the Fund's comparative performance
is not yet available.
FEES AND EXPENSES
This table describes the fees and expenses you may pay if you buy and hold
shares of the Financial Services Fund.
Shareholder Fees: Class A Class C
No-Load
(fees paid directly from your investment)
1. Maximum Sales Charges
Imposed on Purchases 3.75% NONE
NONE
(as a percentage of offering price)
Annual Fund Operating Expenses:
(expenses that are deducted from Fund assets) Class A Class C
No-Load
Management Fees1 1.00% 1.00%
1.00%
12b-1 Fees2 0.25% 1.00%3
0.25%
Other Expenses 4 0.05% 0.05%
0.05%
- ------- ------- -------
Total Annual Fund Operating Expenses5 1.30% 2.05%
1.30%
1. Management fees include investment advisory fees of 0.50% per annum of
average daily net assets of each fund and 0.50% per annum of average daily net
assets for administrative services for each fund.
2. You should be aware that if you hold your shares for a substantial period of
time, you may indirectly pay more than the economic equivalent of the maximum
front-end sales charge allowed by the National Association of Securities Dealers
due to the recurring nature of Distribution (12b-1) fees.
3. Includes a fee of 0.75% for distribution-related expenses and 0.25% for
shareholder service expenses.
4. Because the Funds have not yet completed their first year of investment
operations, "Other Expenses" are estimated.
5. The Adviser has voluntarily agreed to waive its advisory fee and/or to
reimburse the Fund, if necessary, if the advisory fee or expenses would cause
the Total Fund Operating expenses to exceed 1.25% for the Class A or No-Load
Class Shares and 2.00% for the Class C shares. The Adviser may revise or cancel
these expense limitations at any time and will notify you by letter not less
than 30 days prior to any such change.
Example: This example is intended to help you compare the costs of investing in
the Fund with the costs of investing in other mutual funds.
The Example below assumes that you invest $10,000 in any Fund for the time
periods indicated, reinvest any dividends and distributions, and then redeem all
your shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses that
were described above remain the same. Although your actual costs may be higher
or lower, based on these assumptions, your costs would be:
Time Period Class A Class C No-Load
One Year $502 $208 $132
Three Years $771 $663 $412
MANAGEMENT OF THE FUND
Investment Adviser
The Company has entered into an Investment Advisory Contract (the "Contract")
with Hughes Investment Advisors LLC, (the "Adviser"), 741 Cox Road, Moorestown
NJ 08057.
Charles J. Hughes is the president of the Adviser and is responsible for all its
investment decisions, including the day-to-day management of the Funds. Mr.
Hughes also serves as the President and as a Director of the Company. The
Adviser manages the investment of the assets of the Funds in accordance with
each Fund's investment objective, policies, and restrictions. The Adviser was
formed on December 9, 1997 and registered as an Investment Advisory Firm with
the Securities and Exchange Commission on March 13, 1998. The Advisor formerly
operated as Hughes Trading L.L.C., and developed financial futures and timing
model software for equity trading.
Mr. Hughes is the portfolio manager for the Funds. Mr. Hughes has been
providing investment advice to the Funds since their inception. From 1994
through 1997, Mr. Hughes developed and implemented futures trading programs when
the Advisor operated as Hughes Trading, LLC. During this period, he acted as a
private investor for himself and members of his family. In addition, Mr. Hughes
has been a commercial airline pilot for American Airlines since 1988. Although
Mr. Hughes has extensive experience managing portfolios for himself and his
family, Mr. Hughes does not have any previous experience in providing investment
management services to any registered investment company.
The Adviser receives from each Fund, as compensation for its services, a fee,
accrued daily and payable monthly, at an annual rate of 0.50% of each Fund's net
assets.
Operating Services Agreement; the Company has also entered into an Operating
Services Agreement with the Adviser where the Adviser will provide, or arrange
to provide, essentially all other services needed to each Fund. These services
include transfer agent, accounting, distribution and custodial services. The
effect of the Investment Advisory Agreement and the Operating Services Agreement
is to cap each Fund's normal operating expenses. These contracts do not cover
expenses incurred by a Fund for taxes, interest, brokerage fees, legal expenses
for litigation, and other extraordinary expenses.
The Adviser receives from each Fund, as compensation for its services, a fee,
accrued daily and payable monthly, at an annual rate of 0.50% of each Fund's net
assets.
Under these agreements, the Adviser furnishes at its own expense office space to
the Company and all necessary office facilities, equipment, and personnel for
managing the assets of the Fund. The Adviser also pays all expenses of marketing
shares of the Fund, and related bookkeeping.
INVESTING IN THE FUNDS
Determination of Share Price
Shares of the Funds are offered at the public offering price for each share
class. The public offering price for Class A, Class C and No-Load shares of the
Funds is based upon each Fund's net asset value per share. Net asset value per
share is calculated by adding the value of Fund investments, cash and other
assets, subtracting Fund liabilities, and then dividing the result by the number
of shares outstanding. The assets of each Fund are valued at market value or,
if market quotes cannot be readily obtained, fair value is used as determined
by the Board of Directors. The net asset value of each Fund's shares is
computed on all days on which the New York Stock Exchange is open for business
at the close of regular trading hours on the Exchange, currently 4:00 p.m. East
Coast time. The public offering price for Class A shares is the NAV plus a
sales charge of 3.75% of your investment. You should be aware that each Fund
may invest in foreign securities. Foreign securities sometimes trade on
exchanges that are open on days when the new York Stock Exchange is closed.
Accordingly, when a Fund is investing in such securities, the NAV on your shares
could change on days when you cannot purchase or redeem shares.
Opening And Adding To Your Account
You can invest directly in the Funds in a number of ways. Simply choose the one
that is most convenient for you. Any questions you may have can be answered by
calling 1-877-593-8637. You may also purchase Fund shares through broker-dealers
or other financial organizations.
Payments for Fund shares should be in U.S. dollars, and in order to avoid fees
and delays, should be drawn on a U.S. bank. Please remember that Fund
management reserves the right to reject any purchase order for Fund shares if,
in the Fund's opinion, such an order would cause a material detriment to
existing shareholders. Your purchase of Fund shares is subject to the following
minimum investment amounts:
Minimum Investment To Open Account Additional Investments
- --------------- ---------------------
Class A Shares
Regular Account $2,500 $50
IRAs $500 $50
Class C Shares
Regular Account $2,500 $50
IRA's $500 $50
No-Load Shares
Regular Accounts $5,000 $1000
IRA's $ 1,000 $ 100
TO OPEN AN ACCOUNT TO ADD TO ACCOUNT
By Mail Complete an Account Make your check payable
to
Registration Form, make The Hughes [NAME] Fund and
a check payable to The mail it to the address at left.
Hughes [NAME] Fund
and mail the Form and check
to Hughes Funds, Inc. Please include your account
c/o Mutual Shareholder number on your check.
Services, 1301 East Ninth Or use the convenient form
Street, Suite 3600, Cleveland, attached to your regular
OH 44114. Fund statement.
By Wire Ask your bank to wire funds Ask your bank to wire
immediately
to Account of available funds to the location
described
UMB Bank, N.A. at the left, except that the wire should
ABA#: -------------- note that it is to make a subsequent
Credit: Hughes Funds, Inc. purchase rather than to open
Account #: -------------- a new account.
Further credit: The Hughes
[NAME] Fund.
The wire should state that the Include your name and Fund
purchase is to be in your account number.
name(s).
The wire should state that you
are opening a new Fund account.
Include your name(s), address and
taxpayer identification number or
Social Security number and the name
of the Fund in which you are
purchasing shares.
Call 1-877-593-8637 to inform us
that a wire is being sent.
By Telephone transactions may Call 1-877-593-8637 to
make
Tele- not be used for initial purchases your purchase.
Phone. If you want to make
subsequent transactions via
telephone, please select this
service on your account
Registration Form.
Hughes Funds, Inc. wants you to be kept current regarding the status of your
account in the Fund. To assist you, the following statements and reports will
be sent to you:
Confirmation Statements After every transaction that affects your
account balance or your account registration.
Financial Reports Semi-annually -- to reduce Fund
expenses, only
one copy of the Fund report will be mailed
to each taxpayer identification number even if
you have more than one account in the Fund.
Purchase By Mail
Your purchase order, if accompanied by payment, will be processed upon receipt
by Mutual Shareholder Services, the Fund's Transfer Agent. If the Transfer Agent
receives your order and payment by the close of regular trading on the Exchange
(currently 4:00 p.m. East Coast time), your shares will be purchased at your
chosen Fund's net asset value calculated at the close of regular trading on that
day. Otherwise, your shares will be purchased at the net asset value determined
as of the close of regular trading on the next business day.
The Company does not consider the U.S. Postal Service or any other independent
delivery service to be its agent. Therefore, deposit in the mail or with such
services, or receipt at the Transfer Agent's address, of purchase applications
or redemption requests does not constitute receipt by the Custodian or the Fund.
Correspondence mailed by overnight courier should be sent to the Fund at:
Mutual Shareholder Services
1301 East Ninth Street, Suite 3600
Cleveland, OH 44114
All applications to purchase shares of the Funds are subject to acceptance or
rejection by authorized officers of the Company and are not binding until
accepted. Applications will not be accepted unless they are accompanied by
payment in U.S. funds. Payment must be made by check or money order drawn on a
U.S. bank, savings & loan or credit union. The Custodian will charge a $20.00
fee against your account, in addition to any loss sustained by a Fund, for any
payment check returned to the Custodian for insufficient funds. The Company
reserves the right to refuse to accept applications under circumstances or in
amounts considered disadvantageous to shareholders. If you place an order for
Fund shares through a securities broker, and you place your order in proper form
before 4:00 p.m. East Coast time on any business day in accordance with their
procedures, your purchase will be processed at the public offering price
calculated at 4:00 p.m. on that day, if the securities broker then transmits
your order to the Transfer Agent before the end of its business day (which is
usually 5:00 p.m. East Coast time). The securities broker must send to the
Transfer Agent immediately available funds in the amount of the purchase price
within three business days for the order.
By Financial Service Organization
If you are a client of a securities broker or other financial organization, you
should note that such organizations may charge a separate fee for administrative
services in connection with investments in Fund shares and may impose account
minimums and other requirements. These fees and requirements would be in
addition to those imposed by the Funds. If you are investing through a
securities broker or other financial organization, please refer to its program
materials for any additional special provisions or conditions that may be
different from those described in this Prospectus (for example, some or all of
the services and privileges described may not be available to you). Securities
brokers and other financial organizations have the responsibility of
transmitting purchase orders and funds, and of crediting their customers'
accounts following redemptions, in a timely manner in accordance with their
customer agreements and this Prospectus.
Telephone Purchases
In order to be able to purchase shares by telephone, your account authorizing
such purchases must have been established prior to your call. Your initial
purchase of shares may not be made by telephone. Shares purchased by telephone
will be purchased at the per share net asset value determined at the close of
business on the day that the transfer agent receives payment through the
Automatic Clearing House. Call the Transfer Agent for details.
You may make purchases by telephone only if you have an account at a bank that
is a member of the Automated Clearing House. Most transfers are completed
within three business days of your call. To preserve flexibility, the Company
may revise or eliminate the ability to purchase Fund shares by phone, or may
charge a fee for such service, although the Company does not currently expect to
charge such a fee.
Mutual Shareholder Services, the Fund's transfer agent, employs certain
procedures designed to confirm that instructions communicated by telephone are
genuine. Such procedures may include, but are not limited to, requiring some
form of personal identification prior to acting upon telephonic instructions,
providing written confirmations of all such transactions, and/or tape recording
all telephonic instructions. Assuming procedures such as the above have been
followed, neither the Transfer Agent nor the Fund will be liable for any loss,
cost, or expense for acting upon telephone instructions that are believed to be
genuine. The Company shall have authority, as your agent, to redeem shares in
your account to cover any such loss. As a result of this policy, you will bear
the risk of any loss unless the Fund has failed to follow procedures such as the
above. However, if the Fund fails to follow such procedures, it may be liable
for such losses.
Wire Purchases
If you purchase Fund shares by wire, you must complete and file an Account
Registration Form with the Transfer Agent before any of the shares purchased can
be redeemed. You should contact your bank (which will need to be a commercial
bank that is a member of the Federal Reserve System) for information on sending
funds by wire, including any charges that your bank may make for these services.
Miscellaneous Purchase Information
Federal regulations require that you provide a certified taxpayer identification
number whenever you open or reopen an account. Congress has mandated that if
any shareholder fails to provide and certify to the accuracy of the
shareholder's social security number or other taxpayer identification number,
the Company will be required to withhold a percentage, currently 31%, of all
dividends, distributions and payments, including redemption proceeds, to such
shareholder as a backup withholding procedure.
For economy and convenience, share certificates will not be issued.
HOW TO SELL (REDEEM) YOUR SHARES
You may sell (redeem) your shares at any time. You may request the sale of your
shares either by mail, by telephone or by wire.
By Mail
Sale requests should be mailed via U.S. mail or overnight courier service to:
Mutual Shareholder Services
1301 East Ninth Street, Suite 3600
Cleveland, OH 44114
The selling price of the shares being redeemed will be your Fund's per share net
asset value next calculated after receipt of all required documents in Good
Order. Payment of redemption proceeds will be made no later than the third
business day after the valuation date unless otherwise expressly agreed by the
parties at the time of the transaction.
Good Order means that the request must include:
1. Your account number.
2. The number of shares to be sold (redeemed) or the dollar value of the
amount to be redeemed.
3. The signatures of all account owners exactly as they are registered on the
account.
4. Any required signature guarantees.
5. Any supporting legal documentation that is required in the case of estates,
trusts, corporations or partnerships and certain other types of accounts.
Signature Guarantees --
A signature guarantee of each owner is required to redeem shares in the
following situations, for all size transactions:
(i) if you change the ownership on your account;
(ii) when you want the redemption proceeds sent to a different address than is
registered on the account;
(iii) if the proceeds are to be made payable to someone other than the account's
owner(s);
(iv) any redemption transmitted by federal wire transfer to your bank; and
(v) if a change of address request has been received by the Company or
Declaration Service Company within 15 days previous to the request for
redemption.
In addition, signature guarantees are required for all redemptions of $2,500 or
more from any Fund shareholder account. A redemption will not be processed
until the signature guarantee, if required, is received in Good Order.
Signature guarantees are designed to protect both you and the Fund from fraud.
To obtain a signature guarantee, you should visit a bank, trust company, member
of a national securities exchange or other broker-dealer, or other eligible
guarantor institution. (Notaries public cannot provide signature guarantees.)
Guarantees must be signed by an authorized person at one of these institutions,
and be accompanied by the words "Signature Guarantee."
By Telephone
You may redeem your shares in any Fund by calling the Transfer Agent at 1-877-
593-8637 if you elected to use telephone redemption on your account application
when you initially purchased shares. Redemption proceeds must be transmitted
directly to you or to your pre-designated account at a domestic bank. You may
not redeem by telephone if a change of address request has been received by the
Company or the Transfer Agent within 15 days previous to the request for
redemption. During periods of substantial economic or market changes,
telephone redemptions may be difficult to implement. If you are unable to
contact the Transfer Agent by telephone, shares may be redeemed by delivering
the redemption request in person or by mail. You should understand that with
the telephone redemption option, you may be giving up a measure of security that
you might otherwise have had were you to redeem your shares in writing. In
addition, interruptions in telephone service may mean that you will be unable to
effect a redemption by telephone if desired.
Shares purchased by check for which a redemption request has been received will
not be redeemed until the check or payment received for investment has cleared.
By Wire
You may request the redemption proceeds be wired to your designated bank if it
is a member bank or a correspondent of a member bank of the Federal Reserve
System. A $10 fee is charged for outgoing wires.
Redemption At The Option Of The Fund
If the value of the shares in your account falls to less than $1000, the Company
may notify you that, unless your account is increased to $1000 in value, it
will redeem all your shares and close the account by paying you the redemption
proceeds and any dividends and distributions declared and unpaid at the date of
redemption. You will have thirty days after notice to bring the account up to
$1000 before any action is taken. This minimum balance requirement does not
apply to IRAs and other tax-sheltered investment accounts. This right of
redemption shall not apply if the value of your account drops below $1000 as the
result of market action. The Company reserves this right because of the expense
to the Fund of maintaining very small accounts.
DIVIDENDS AND DISTRIBUTIONS
Dividends paid by the Funds are derived from net investment income. Net
investment income will be distributed at least annually. A Fund's net
investment income is made up of dividends received from the stocks it holds, as
well as interest accrued and paid on any other obligations that might be held in
its portfolio.
A Fund realizes capital gains when it sells a security for more than it paid for
it. The Funds may make distributions of net realized capital gains (after any
reductions for capital loss carry forwards), generally, once a year.
Unless you elect to have your distributions paid in cash, your distributions
will be reinvested in additional shares of your Fund.
You may change the manner in which your dividends are paid at any time by
writing to the Transfer Agent.
FEDERAL TAXES
As with any investment, you should consider the tax implications of an
investment in the Funds. The following is only a short summary of the
important tax considerations generally affecting the Funds and their
shareholders. You should consult your tax adviser with specific reference to
your own tax situation.
Each Fund intends to qualify and maintain its qualification as a "regulated
investment company" under Sub-Chapter M of the Internal Revenue Code
(hereafter the "Code"), meaning that to the extent a fund's earnings are
passed on to shareholders as required by the Code, the Fund itself is not
required to pay federal income taxes on the earnings. Accordingly, the Funds
will pay dividends and make such distributions as are necessary to maintain
their qualification as a regulated investment company under the Code.
Before you purchase shares of a Fund, you should consider the effect of both
dividends and capital gain distributions that are expected to be declared or
that have been declared but not yet paid. When a Fund makes these payments,
its share price will be reduced by the amount of the payment, so that you will
in effect have paid full price for the shares and then received a portion of
your price back as a taxable dividend distribution.
The Funds will notify you annually as to the tax status of dividend and
capital gains distributions paid by the Fund. Such dividends and capital
gains may also be subject to state and local taxes.
You may realize a taxable gain or loss when redeeming shares of a Fund depending
on the difference in the prices at which you purchased and sold the shares.
Because your state and local taxes may be different than the federal taxes
described above, you should see your tax adviser regarding these taxes.
GENERAL INFORMATION
Total return for each Fund may be calculated on an average annual total
return basis or an aggregate total return basis. Average annual total return
reflects the average annual percentage change in value of an investment
over the measuring period. Aggregate total return reflects the total percentage
change in value of an investment over the measuring period. Both measures
assume the reinvestment of dividends and distributions.
Total return of each Fund may be compared to those of mutual funds with
similar investment objectives and to bond, stock or other relevant indices or to
rankings prepared by independent services or other financial or industry
publications that monitor mutual fund performance.
DISTRIBUTION FEES
The Funds have adopted a distribution plan pursuant to Rule 12b-1 under the 1940
Act (the "Distribution Plan"), pursuant to which each Fund may incur
shareholder servicing expenses of up to .25% per annum of the Fund's average
daily net assets on all of its share classes
The Funds have also adopted a distribution plan (the "Distribution Plan"),
pursuant to which each Fund may incur distribution expenses of up to .75% per
annum of the Fund's average daily net assets on its Class C shares. This fee is
available to broker, dealers and other persons who provide distribution and
other services to each Fund to help sell Class C shares.
The Distribution Plans provide that the Funds may finance activities which
are primarily intended to result in the sale of the Fund's shares, including but
not limited to, advertising, printing of prospectuses and reports for other
than existing shareholders, preparation and distribution of advertising
materials and sales literature, and payments to dealers and shareholder
servicing agents.
You should be aware that if you hold your shares for a substantial period of
time, you may indirectly pay more than the economic equivalent of the maximum
front-end sales charge allowed by the National Association of Securities Dealers
due to the recurring nature of Distribution (12b-1) fees.
The Funds each offer three classes of shares, each with its own Distribution
Plan. Class A shares are sold at their public offering price which is NAV plus
any applicable front-end sales charge. Class B shares are sold at NAV and are
subject to a declining contingent deferred sales charge. Class C shares are
sold at NAV and are subject to an additional continuing 12b-1 fee.
FINANCIAL HIGHLIGHTS
The Funds are being offered for the first time via this prospectus.
Accordingly, they have not yet acquired an operating history. Financial
information on each of the Funds will be available in the Company's next semi-
annual report, dated December 31, 1999.
FOR MORE INFORMATION
Additional information about the Funds will be available in the Funds' Statement
of Additional Information (SAI). The SAI contains more detailed information on
all aspects of the Fund. A current SAI, dated July 1, 1999, has been filed with
the SEC and is incorporated by reference into (is legally a part of) this
prospectus.
To receive information concerning the Funds, or to request a copy of the SAI or
other documents relating to the Funds, please contact the Fund at:
Hughes Funds, Inc.
c/o Mutual Shareholder Services
1301 East Ninth Street, Suite 3600
Cleveland, OH 44114
1-877-593-8637
You may also receive information concerning the Funds, or request a copy of the
SAI or other documents relating to the Funds, by contacting the Securities and
Exchange Commission:
In person: at the SEC's Public Reference Room in Washington, D.C.
By Phone: 1-800-SEC-0330
By Mail: Public Reference Section, Securities and Exchange Commission,
Washington, D.C. 20549-6009 (duplicating fee required)
On the Internet: www.sec.gov
Investment Company Act No.
811-08617
STATEMENT OF ADDITIONAL INFORMATION
Dated July 1, 1999
HUGHES FUNDS, INC.
741 Cox Road
Moorestown NJ 08057
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the Prospectus of Hughes Growth Fund, Hughes Technology
Fund, Hughes Health Care Fund, and Hughes Financial Services Fund, dated July 1,
1999. Requests for copies of the Prospectus should be made by writing to Hughes
Funds, Inc., 741 Cox Road, Moorestown NJ 08057 or by calling the Funds collect
at 609-234-3903.
TABLE OF CONTENTS
Hughes Funds, Inc. Fund Service
Providers
Investment Policies and Restrictions Custodian
Investment Adviser
Transfer Agent
Directors and Officers
Administration
Performance Information
Independent Accountants
Purchasing and Redeeming Shares
Tax Information
Financial Statements
Portfolio Transactions Principal Holders
of Securities
* to be filed by amendment
HUGHES FUNDS, INC.
Hughes Funds, Inc (the "Company") was organized on December 15, 1997 as a
Maryland corporation, and is a mutual fund of the type known as an open-end,
diversified management investment company. It did not begin operations
until 1998 nor commence offering its shares until that time. A mutual fund
permits an investor to pool his or her assets with those of others in order to
achieve economies of scale, take advantage of professional money managers and
enjoy other advantages traditionally reserved for large investors.
The Company is authorized to issue 100,000,000 shares of .001 cent par
value common capital stock. The Company's Articles of Incorporation permit
its Board of Directors to classify any unissued shares into one or more classes
of shares. The Board has authorized the issuance of 5,000,000 shares each of
The Hughes Growth Fund, Hughes Technology Fund, Hughes Health Care Fund, and
Hughes Financial Services Fund which are offered by this prospectus.
The Technology Fund, Health Care Fund and Financial Services Fund are each "non-
diversified" Funds. Non-diversified funds can be riskier investments than
diversified funds. Each Fund's shares are fully paid and non-assessable. They
are entitled to such dividends and distributions as may be paid with respect to
the shares and shall be entitled to such sums on liquidation of the Fund as
shall be determined. Other than these rights, they have no preference as to
conversion, exchange, dividends, retirement or other features and have no
preemption rights.
Shareholder meetings will not be held unless required by Federal or State law or
in connection with an undertaking given by the Funds.
INVESTMENT POLICIES AND RESTRICTIONS
The Funds investment objectives and the manner in which the Funds pursue their
investment objectives are discussed in the prospectus. The investment
limitations and restrictions of all the Funds, as well as those that apply to
specific Funds, are listed below:
The Funds will not:
1. (The Hughes Growth Fund Only) To the extent of 75% of its net assets (valued
at time of investment), invest more than 5% of its assets in securities of any
one issuer, except in obligations of the United States Government and its
agencies and instrumentalities;
2. (Financial Services Fund) Invest less than 65% of its assets (valued at time
of investment) in securities of banks, thrifts, insurance companies, brokerage
companies and investment banking firms.;
3. (Technology Fund) Invest less than 65% of its assets (valued at time of
investment) in securities of companies that develop products, processes or
services that provide significant technological advancements or improvements or
that rely extensively on technology in connection with their operations or
services;
4. (Health Care Fund Only) Invest less than 65% of its assets (valued at time
of investment) in securities of hospital companies, health insurance companies,
pharmaceutical companies and medical device companies;
5. (All Funds) Acquire securities of any one issuer that at the time of
investment (a) represent more than 10% of the voting securities of the issuer or
(b) have a value greater than 10% of the value of the outstanding securities of
the issuer;
5. (All Funds) Borrow money except from banks for temporary or emergency
purposes in amounts not exceeding 5% of the value of the Fund's assets at the
time of borrowing;
6. (All Funds) Underwrite the distribution of securities of other issuers, or
acquire "restricted" securities that, in the event of a resale, might be
required to be registered under the Securities Act of 1933;
7. (All Funds) Make margin purchases or short sales of securities;
8. (All Funds) Invest in companies for the purpose of management or the
exercise of control;
9. (All Funds) Lend money (but this restriction shall not prevent the Fund from
investing in debt securities or repurchase agreements), or lend its portfolio
securities.
10. (All Funds) Acquire or retain any security issued by a company, an officer
or director of which is an officer or director of the Company or an officer,
director or other affiliated person of the Advisor.
11. (All Funds) Invest in oil, gas or other mineral exploration or development
programs, although the Growth Fund only may invest in marketable securities of
companies engaged in oil, gas or mineral exploration;
12. (All Funds) Purchase or sell real estate or real estate loans or real
estate limited partnerships, although the Growth Fund only may invest in
marketable securities of companies that invest in real estate or interests in
real estate.
13. (All Funds) Purchase warrants on securities.
14. (All Funds) Issue senior securities.
15. (All Funds) Invest in commodities, or futures and options on commodities.
Restrictions 1 through 15 listed above are fundamental policies, and may be
changed only with the approval of a "majority of the outstanding voting
securities" of the Fund as defined in the Investment Company Act of 1940.
The Funds have also adopted the following restrictions that may be changed by
the Board of Directors without shareholder approval:
No Fund may:
a. Invest more than 15% of its net assets in securities that are not readily
marketable;
b. Acquire securities of other investment companies except (a) by purchase in
the open market, where no commission or profit to a sponsor or dealer results
from such purchase other than the customary broker's commission and (b) where
acquisition results from a dividend or merger, consolidation or other
reorganization (in addition to this investment restriction, the Investment
Company Act of 1940 provides that the Fund may neither purchase more than 3%
of the voting securities of any one investment company nor invest more than
10% of the Funds total net assets (valued at time of investment) in all
investment
company securities purchased by the Fund);
c. Pledge, mortgage or hypothecate its assets, except for temporary or emergency
purposes and then to an extent not greater than 5% of its total assets at
cost;
d. Invest more than 10% of the Fund's assets (valued at time of investment)
in initial margin deposits of options or futures contracts;
INVESTMENT ADVISER
Information on the Fund's investment adviser, Hughes Investment Advisors LLC, is
set forth in the prospectus.
The adviser is a New Jersey Limited Liability Company. Charles J. Hughes is the
President with a 51% interest in the company and his brother, Daniel J. Hughes
has a 49% interest and is a member of the company. Although Mr. Hughes has
extensive experience in managing personal investment portfolios for himself and
his family, he does not have any previous experience in providing investment
management services to any registered investment company.
The Advisory Agreement with each Fund provides that the Adviser shall not be
liable for any loss suffered by the Fund or its shareholders as a consequence of
any act or omission in connection with services under the Agreement, except by
reason of the adviser's willful misfeasance, bad faith, gross negligence, or
reckless disregard of its obligations and duties under the Advisory Agreement.
The Advisory Agreements expire on June 30, 2001, but may be continued from year
to year so long as their continuance is approved annually (a) by the vote of a
majority of the Directors of the Fund who are not "interested persons" of the
Fund or the adviser cast in person at a meeting called for the purpose of voting
on such approval, and (b) by the Board of Directors as a whole or by the vote of
a majority (as defined in the 1940 Act) of the outstanding shares of the Fund.
The Agreement will terminate automatically in the event of its assignment (as
defined in the 1940 Act).
DIRECTORS AND OFFICERS
The board of directors has overall responsibility for conduct of the Company's
affairs. The day-to-day operations of the Funds are managed by the Advisor
subject to the bylaws of the Company and review by the Board of Directors. The
directors of the Company, including those directors who are also officers, are
listed below:
- --------------------------------------------------------------------------------
Principal
Name, Age, Position(s)
Occupation(s) For the
Address, with Fund Last
Five Years
- --------------------------------------------------------------------------------
- -------------------------
Charles J Hughes Age 47 * President, Fund
Adviser
741 Cox Road Treasurer &
President Hughes Trading
Moorestown NJ 08057 Director LLC since
February, 1996.
Pilot for American Airlines since 1980. BA Degree LaSalle University
Frank G Solecki Age 52 Secretary & Director
of Manufacturing
48 Cove Road Director PCD
Division of FMC
Moorestown NJ 08057 Corporation, a
Chemical
manufacturing firm BS Degree Penn State University
Neil K Smith Age 46 Director Sales
Engineer for Del-Val
144 Knotty Oak Dr.
Equipment, Inc., an
Mount Laurel NJ 08054 engineering
firm. BS Degree
Grove City College
* Indicates an "interested person" as defined in the Investment Company Act of
1940.
The Company was organized as a Maryland Corporation on December 15, 1997. The
table below sets forth the compensation anticipated to be paid by the
Corporation to each of the directors of the Corporation during the fiscal year
ending June 30, 1999.
_____________________________________________________________________________
Pension or
Total
Retirement
Compensation
Aggregate Benefits Accrued Estimated Annual
From Fund &
Name of Person, Compensation As Part of Fund Benefits Upon
Fund Complex
Position From Fund Expenses
Retirement Paid to Directors
Charles J Hughes 0 0 0
0
President,
Treasurer,
Director
Frank G Solecki $500 0 0
$500
Secretary,
Director
Niel K Smith $500 0 0
$500
Director
PRINCIPAL HOLDERS OF SECURITIES
Charles J. Hughes and Daniel J. Hughes intend to purchase 50% each of each
Fund's outstanding shares. Accordingly, they will be deemed to then control
each Fund and will have significant influence over the Funds and their
operations.
Mr. Charles J. Hughes is the President of the Adviser, the President, Treasurer
and a Director of the Company, and a controlling shareholder of each Fund. As
such, Mr. Hughes is considered to be an "affiliated person" of the Funds and a
"control person" of the Funds.
The Company will call a meeting of shareholders for the purpose of voting upon
the question of removal of a director or directors when requested in writing to
do so by record holders of at least 10% of the Fund's outstanding common shares.
The Corporation's bylaws contain procedures for the removal of directors by its
stockholders. At any meeting of stockholders, duly called and at which a quorum
is present, the stockholders may by the affirmative vote of the holders of a
majority of the votes entitled to be cast thereon, remove any director or
directors from office and may elect a successor or successors to fill any
resulting vacancies for the unexpired terms of the removed directors.
PERFORMANCE INFORMATION
From time to time the Funds may quote total return figures. "Total Return" for a
period is the percentage change in value during the period of an investment in
Fund shares, including the value of shares acquired through reinvestment of all
dividends and capital gains distributions. "Average Annual Total Return" 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: P(1+T)[n] = ERV
Where: P =a hypothetical initial investment of $1000
T = average annual total return
n = number of years
ERV = ending redeemable value of shares at
the end of the period
Yield. The Funds 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 offering price per share on the
last day of the period, according to the following formula:
Yield = 2[(a-b/cd + 1)6 - 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 they
were entitled to receive dividends
d = the maximum offering price per share on the last day of the period
Each Fund's performance is a function of conditions in the securities markets,
portfolio management, and operating expenses. Although information such as that
shown above is useful in reviewing a Fund's performance and in providing some
basis for comparison with other investment alternatives, it should not be used
for comparison with other investments using different reinvestment assumptions
or time periods.
In sales literature, a Fund's performance may be compared with that of market
indices and other mutual funds. In addition to the above computations, a Fund
might use comparative performance as computed in a ranking determined by Lipper
Analytical Services, Morningstar, Inc., or that of another service.
PURCHASING AND REDEEMING SHARES
Purchases and redemptions are discussed in the prospectus.
Redemptions will be made at net asset value. Each Fund's net asset value is
determined on days on which the New York Stock Exchange is open for trading.
TAX INFORMATION
Taxation Of The Funds. The Funds intend to qualify as a "regulated investment
company" under Subchapter M of the Internal Revenue Code. To qualify as a
regulated investment company, the Funds must, among other things, derive at
least 90% of their 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.
If a 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. The Fund would be subject to corporate income
tax on any undistributed income other than tax-exempt income from municipal
securities. However, if a Fund does not qualify, all of its earnings would be
subject to federal income tax at the prevailing corporate income tax rates.
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 a 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 a 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. 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 a 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 a 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
Funds will notify corporate shareholders annually of the percentage of Fund
dividends that qualifies for the dividend received deductions.
A portion of a 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 Funds 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 a 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 a Fund are taxable to shareholders as
dividends, not as capital gains.
PORTFOLIO TRANSACTIONS
The Funds will generally purchase and sell securities without regard to the
length of time the security has been held. Accordingly, it can be expected that
the rate of portfolio turnover may be substantial. Since investment decisions
are based on the anticipated contribution of a security to the Fund's investment
objective, the rate of portfolio turnover is not a factor when the Adviser
believes a change is in order to achieve those objectives. The Fund expects
that its annual portfolio turnover rate will not exceed 100% under normal
conditions. However, there can be no assurance that the Fund will not exceed
this rate, and the portfolio turnover rate may vary from year to year.
High portfolio turnover in any year will result in the payment by a Fund of
above-average transaction costs and could result in the payment by shareholders
of above-average amounts of taxes on realized investment gains. Distributions to
shareholders of such investment gains, to the extent they consist of short-term
capital gains, will be considered ordinary income for federal income tax
purposes.
Decisions to buy and sell securities for the Funds are made by the Adviser
subject to review by the Corporation's Board of Directors. In placing purchase
and sale orders for portfolio securities for the Funds, it is the policy of the
Adviser to seek the best execution of orders at the most favorable price. In
selecting brokers to effect portfolio transactions, the determination of what is
expected to result in the best execution at the most favorable price involves a
number of largely judgmental considerations. Among these are the Adviser's
evaluation of the broker's efficiency in executing and clearing transactions.
Over-the-counter securities are generally purchased and sold directly with
principal market makers who retain the difference in their cost in the security
and its selling price. In some instances, the Adviser feels that better prices
are available from non-principal market makers who are paid commissions
directly.
FUND SERVICE PROVIDERS
The Funds could not function without the services provided by certain companies.
With the Board's permission, the Adviser and the Funds have entered into
contracts with the following companies. All fees charged by these companies
will be paid by the Adviser.
Custodian
UMB Bank, N.A., Kansas City, Missouri, holds the investments and other assets
that the Fund owns. The Custodian is responsible for receiving and paying for
securities purchased, delivering against payment securities sold, receiving and
collecting income from investments, making all payments covering expenses of
the Fund, and performing other administrative duties, all as directed by
persons authorized by the Fund. The Custodian does not exercise any supervisory
function in such matters as the purchase and sale of portfolio securities,
payment of dividends, or payment of expenses of the Fund. Portfolio
securities of the Fund are maintained in the custody of the Custodian, and
may be entered in the Federal Reserve Book Entry System, or the security
depository system of The Depository Trust Company.
Transfer, Dividend Disbursing And Accounting Services Agent
Mutual Shareholder Services provides transfer agency and dividend disbursing
services for the Fund. This means that its job is to maintain, accurately, the
account records of all shareholders in the Fund as well as to administer the
distribution of income earned as a result of investing in the Fund. Declaration
Service Company also provides accounting services to the Fund including
portfolio accounting services, expense accrual and payment services, valuation
and financial reporting services, tax accounting services and compliance control
services.
Administration
Mutual Shareholder Services also acts as Administrator to the Fund pursuant to a
written agreement with the Company and the Adviser, dated March 31, 1999. The
Administrator supervises all aspects of the operations of the Fund except those
performed by the Fund's investment adviser under the Fund's investment advisory
agreement. The Administrator is responsible for:
(a) calculating the Fund's net asset value
(b) preparing and maintaining the books and accounts specified in Rule 31a-1
and 31a-2 of the Investment Company Act of 1940
(c) preparing financial statements contained in reports to stockholders of the
Fund
(d) preparing the Fund's federal and state tax returns
(e) preparing reports and filings with the Securities and Exchange Commission
(f) preparing filings with state Blue Sky authorities
(g) maintaining the Fund's financial accounts and records
For the services to be rendered as Administrator, The Adviser shall pay mutual
Shareholder Services an annual fee, paid monthly, based on the average net
assets of the Fund, as determined by valuations made as of the close of each
business day of the month.
PRINCIPAL UNDERWRITER.
The Fund has not yet retained a principal underwriter.
INDEPENDENT ACCOUNTANTS
DeAngelis & Higgins LLC, 39 North Main Street, Cranbury NJ 08512 has been
selected as the independent accountants for the Fund. As such, DeAngelis &
Higgins LLC performs audits of the Fund's financial statements.
FINANCIAL STATEMENTS
The Funds have no operating history and therefor have no reportable financial
data.
