INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY ANY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE.
STATEMENT OF ADDITIONAL INFORMATION, DATED OCTOBER ___, 2000
STOCKJUNGLE.COM(1) MARKET LEADERS GROWTH FUND
STOCKJUNGLE.COM PURE PLAY INTERNET FUND
STOCKJUNGLE.COM COMMUNITY INTELLIGENCE FUND
SERIES OF THE TRUST FOR INVESTMENT MANAGERS
STATEMENT OF ADDITIONAL INFORMATION
OCTOBER ___, 2000
This Statement of Additional Information is not a prospectus, and should be read
in conjunction with the Prospectus dated October ___, 2000, as may be amended
from time to time, for the StockJungle.com Market Leaders Growth Fund,
StockJungle.com Pure Play Internet Fund and the StockJungle.com Community
Intelligence Fund, (each individually a "Fund" and collectively the "Funds"),
each a series of the Trust for Investment Managers (the "Trust" or "TIM").
StockJungle.com Investment Advisers, Inc. (the "Adviser") is the investment
adviser to each Fund. The Prospectus may be obtained at http://stockjungle.com
or by calling the Funds at 1-800-945-4957.
Each of the Funds is designed and created primarily for investment by
on-line investors. In order to keep costs to a minimum, shareholders in the
Funds are requested to consent to the acceptance of all information about the
Funds in which they invest through access to the StockJungle.com website and
electronic delivery. However, each Fund will deliver paper-based documents upon
request by shareholders and reserves the right to deliver paper-based documents
at no cost to the investor.
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(1) "StockJungle.com" is a trademark and the exclusive property of
StockJungle.com, Inc., the parent to the Adviser. StockJungle.com, Inc. is
an Internet-based company which offers a wide array of web-based services
and information to visitors to the StockJungle.com website.
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TABLE OF CONTENTS
Page
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THE TRUST................................................................... 3
INVESTMENT POLICIES AND RESTRICTIONS........................................ 3
TRUSTEES AND EXECUTIVE OFFICERS............................................. 17
INVESTMENT ADVISORY AND OTHER SERVICES...................................... 18
PORTFOLIO TRANSACTIONS AND ALLOCATION OF BROKERAGE.......................... 21
OWNERSHIP OF SHARES......................................................... 22
CODE OF ETHICS.............................................................. 23
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION.............................. 23
DETERMINATION OF SHARE PRICE................................................ 25
DISTRIBUTIONS AND TAX INFORMATION........................................... 26
PERFORMANCE COMPARISONS..................................................... 28
ORGANIZATION OF TRUST....................................................... 30
SHAREHOLDER SERVICES PLAN................................................... 30
FINANCIAL STATEMENTS........................................................ 30
OTHER INFORMATION........................................................... 31
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THE TRUST
TIM is an open-end management investment company organized as a Delaware
business trust on April 27, 1999. The Trust consists of various series which
represent separate investment portfolios. This SAI relates only to the Funds.
The Trust is registered with the Securities and Exchange Commission (the
"SEC") as a management investment company. Such a registration does not involve
supervision of the management or policies of the Funds. The Prospectus of the
Funds and this SAI omit certain of the information contained in the Registration
Statement filed with the SEC. Copies of such information may be obtained from
the SEC upon payment of the prescribed fee.
Before October ___, 2000, each of the Funds was a series of StockJungle.com
Trust, a registered investment company for which the Adviser served as
investment adviser, and which had the same investment objectives, policies and
strategies as the Funds. The various series of StockJungle.com Trust were
reorganized into the Trust on that date in a tax free transaction.
INVESTMENT POLICIES AND RESTRICTIONS
INVESTMENT POLICIES AND ASSOCIATED RISKS
The discussion below supplements the information contained in the
Prospectus with respect to the investment policies and primary risks that are
common to all of the Funds as well as risks which are particular to each Fund as
a result of such Fund's specific investment objective and strategies. As all
investment securities are subject to inherent market risks and fluctuations in
value due to earnings, economic and political conditions and other factors, no
Fund can give any assurance that its investment objective will be achieved.
Unless otherwise noted, the policies described in this Statement of Additional
Information are not fundamental and may be changed by the Board of Trustees.
MUTUAL FUNDS AS PART OF AN INVESTMENT PROGRAM. The loss of money is a risk
of investing in the Funds. None of the Funds, individually or collectively, is
intended to constitute a balanced or complete investment program and the net
asset value of each Fund's shares will fluctuate based on the value of the
securities held by each Fund. Each of the Funds is subject to the general risks
and considerations associated with equity investing as well as additional risks
and restrictions discussed herein.
MARKET RISK OF EQUITY INVESTING. An investment in a Fund should be made
with an understanding of the risks inherent in an investment in equity
securities, including the risk that the general condition of the stock market
may deteriorate. Common stocks are susceptible to general stock market
fluctuations and to volatile increases and decreases in value according to
various unpredictable factors including expectations regarding government,
economic, monetary and fiscal policies, inflation and interest rates, economic
expansion or contraction and global or regional political, economic and banking
crises. A decline in the general market value of the equity securities held by
any of these Funds may result in an adverse effect on the value of your
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investment. There can be no assurances that the Funds will be able to absorb
(without significant loss of a portion of your investment), the potentially
negative effects of such market decline.
OTHER SECURITIES A FUND MIGHT PURCHASE. Under normal market conditions,
each Fund will invest at least 80% of its total assets in equity securities,
consisting of common and preferred stocks. If the Adviser believes that market
conditions warrant a temporary defensive posture, or for liquidity purposes,
each of the Funds may invest without limit in high quality, short-term debt
securities and money market instruments. These short-term debt securities and
money market instruments include commercial paper, certificates of deposit,
bankers' acceptances, and U.S. Government securities and repurchase agreements.
SECURITIES LENDING. Repurchase transactions will be fully collateralized at
all times with cash and/or short-term debt obligations. These transactions
involve some risk to a Fund engaged in securities lending if the other party
should default on its obligation and the Fund is delayed or prevented from
recovering the collateral. In the event the original seller defaults on its
obligation to repurchase, the Fund will seek to sell the collateral, which could
involve costs or delays. To the extent proceeds from the sale of collateral are
less than the repurchase price, the Fund would suffer a loss.
INVESTMENT IN NEW AND UNSEASONED COMPANIES. The StockJungle.com Pure Play
Internet Fund and the StockJungle.com Community Intelligence Fund may each
invest, pursuant to an initial public offering or otherwise, in the equity
securities of companies which are relatively new and unseasoned and in their
early stages of development where the Adviser believes that the opportunity for
rapid growth is above average. These companies may not be well-known to the
investing public or have significant institutional ownership. They may lack
depth of management and may be unable to internally generate funds necessary for
growth or potential development or to generate such funds through external
financing on favorable terms. In addition, these companies may be developing or
marketing new products or services for which markets are not yet established and
may never become established. Finally, new and unseasoned companies may have
relatively small revenues and limited product lines, markets, or financial
resources; their securities are often traded over-the-counter or on a regional
exchange and may trade less frequently and in more limited volume than those of
larger more mature companies. When making larger sales, the Fund may have to
sell securities at discounts from quoted prices or may have to make a series of
small sales over an extended period of time. As a result, the market prices of
these securities may be more subject to volatile fluctuations than those of more
mature issuers. Such fluctuations could have an adverse effect on the net asset
value of the Fund and your investment.
SHORT-TERM INVESTMENTS. While seeking desirable equity investments whose
price history and expected performance lend themselves to the Adviser's method
for investment or for liquidity or temporary defensive purposes, each Fund may
invest in money market funds and/or money market instruments consisting of the
following:
Each Fund may acquire certificates of deposit, bankers' acceptances and
time deposits. Certificates of deposit are negotiable certificates issued
against funds deposited in a commercial bank for a definite period of time and
earning a specified return. Bankers' acceptances are negotiable drafts or bills
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of exchange, normally drawn by an importer or exporter to pay for specific
merchandise, which are "accepted" by a bank, meaning in effect that the bank
unconditionally agrees to pay the face value of the instrument on maturity.
Certificates of deposit and bankers' acceptances acquired by any of the Funds
will be dollar-denominated obligations of domestic banks or financial
institutions which at the time of purchase have capital, surplus and undivided
profits in excess of $100 million (including assets of both domestic and foreign
branches), based on latest published reports, or less than $100 million if the
principal amount of such bank obligations are fully insured by the U.S.
Government.
Domestic banks are subject to different governmental regulations with
respect to the amount and types of loans which may be made and interest rates
which may be charged. In addition, the profitability of the banking industry
depends largely upon the availability and cost of funds for the purpose of
financing lending operations under prevailing money market conditions. General
economic conditions as well as exposure to credit losses arising from possible
financial difficulties of borrowers play an important part in the operations of
the banking industry.
As a result of federal and state laws and regulations, domestic banks are,
among other things, required to maintain specified levels of reserves, limited
in the amount which they can loan to a single borrower, and subject to other
regulations designed to promote financial soundness.
INVESTMENT IN DERIVATIVES. Both the StockJungle.com Market Leaders Growth
Fund and the StockJungle.com Pure Play Internet Fund may, as a non-principal
investment strategy, invest a portion of their assets in futures and options
transactions for hedging purposes or as a substitute for direct investment. The
purchaser of a futures contract has the obligation to take delivery of the type
of financial instrument covered by the contract at a specified time and price,
and the seller of the contract has the corresponding obligation to sell the
financial instrument at that time and price. The purchaser of an option contract
acquires the right to purchase or sell a specified security at a specified price
during the term of the option, and the seller of the option has the
corresponding option to sell or buy the security at that price if the purchaser
exercises the option. Futures and options are considered to be "derivatives;"
i.e., financial instruments whose value is derived from the value of an
underlying asset, such as a security or an index. The use of futures and options
involves certain special risks due to the possibility of imperfect correlations
among movements in the prices of options purchased or sold by a Fund and, in the
case of hedging transactions, of the securities that are the subject of the
hedge.
PURCHASING PUT AND CALL OPTIONS. The StockJungle.com Market Leaders Growth
Fund may purchase put and call options on securities eligible for purchase by
the Fund and on securities indices, and the StockJungle.com Pure Play Internet
Fund may purchase put and call options on securities indices. Put and call
options are derivative securities traded on U.S. exchanges. If a Fund purchases
a put option, it acquires the right to sell the underlying security or index
value at a specified price at any time during the term of the option. If a Fund
purchases a call option, it acquires the right to purchase the underlying
security or index value at a specified price at any time during the term of the
option. Prior to exercise or expiration, the Fund may sell an option through a
"closing sale transaction," which is accomplished by selling an option of the
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same series as the option previously purchased. The Fund generally will purchase
only those options for which the Adviser believes there is an active secondary
market to facilitate closing transactions.
A Fund may purchase call options to hedge against an increase in the price
of securities that the Fund wants ultimately to buy. Such hedge protection is
provided during the life of the call option since the Fund, as holder of the
call option, is able to buy the underlying security at the exercise price
regardless of any increase in the underlying security's market price. In order
for a call option to be profitable, the market price of the underlying security
must rise sufficiently above the exercise price to cover the premium and
transaction costs.
A Fund may purchase put options to hedge against a decrease in the price of
securities it holds. Such hedge protection is provided during the life of the
put option since the Fund, as the holder of the put option, is able to sell the
underlying security at the exercise price regardless of any decrease in the
underlying security's market price. In order for a put option to be profitable,
the market price of the underlying security must decrease sufficiently below the
exercise price to cover the premium and transaction costs.
WRITING CALL OPTIONS. The StockJungle.com Market Leaders Growth Fund may
write covered call options on securities eligible for purchase by the Fund. A
call option is "covered" if a Fund owns the security underlying the call or has
an absolute right to acquire the security without additional cash consideration
(or, if additional cash consideration is required, cash or cash equivalents in
such amount are held in a segregated account by the Custodian). The writer of a
call option receives a premium and gives the purchaser the right to buy the
security underlying the option at the exercise price. The writer has the
obligation upon exercise of the option to deliver the underlying security
against payment of the exercise price during the option period. If the writer of
an exchange-traded option wishes to terminate its obligation, it may effect a
"closing purchase transaction." This is accomplished by buying an option of the
same series as the option previously written. A writer may not effect a closing
purchase transaction after it has been notified of the exercise of an option.
Effecting a closing transaction in the case of a written call option will
permit a Fund to write another call option on the underlying security with
either a different exercise price, expiration date or both. Also, effecting a
closing transaction allows the cash or proceeds from the concurrent sale of any
securities subject to the option to be used for other investments of the Fund.
If a Fund desires to sell a particular security from its portfolio on which it
has written a call option, it will effect a closing transaction prior to or
concurrent with the sale of the security.
A Fund realizes a gain from a closing transaction if the cost of the
closing transaction is less than the premium received from writing the option or
if the proceeds from the closing transaction are more than the premium paid to
purchase the option. A Fund realizes a loss from a closing transaction if the
cost of the closing transaction is more than the premium received from writing
the option or if the proceeds from the closing transaction are less than the
premium paid to purchase the option. However, because increases in the market
price of a call option will generally reflect increases in the market price of
the underlying security, appreciation of the underlying security owned by a Fund
generally offsets, in whole or in part, any loss to the Fund resulting from the
repurchase of a call option.
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RISK FACTORS IN OPTIONS TRANSACTIONS. The successful use of a Fund's
options strategies depends on the ability of the Adviser to forecast correctly
interest rate and market movements. For example, if the Fund were to write a
call option based on the Adviser's expectation that the price of the underlying
security would fall, but the price were to rise instead, the Fund could be
required to sell the security upon exercise at a price below the current market
price. Similarly, if the Fund were to write a put option based on the Adviser's
expectation that the price of the underlying security would rise, but the price
were to fall instead, the Fund could be required to purchase the security upon
exercise at a price higher than the current market price.
When a Fund purchases an option, it runs the risk that it will lose its
entire investment in the option in a relatively short period of time, unless the
Fund exercises the option or enters into a closing sale transaction before the
option's expiration. If the price of the underlying security does not rise (in
the case of a call) or fall (in the case of a put) to an extent sufficient to
cover the option premium and transaction costs, the Fund will lose part or all
of its investment in the option. This contrasts with an investment by the Fund
in the underlying security, since the Fund will not realize a loss if the
security's price does not change.
The effective use of options also depends on a Fund's ability to terminate
option positions at times when the Adviser deems it desirable to do so. There is
no assurance that a Fund will be able to effect closing transactions at any
particular time or at an acceptable price.
If a secondary market in options were to become unavailable, a Fund could
no longer engage in closing transactions. Lack of investor interest might
adversely affect the liquidity of the market for particular options or series of
options. A market may discontinue trading of a particular option or options
generally. In addition, a market could become temporarily unavailable if unusual
events, such as volume in excess of trading or clearing capability, were to
interrupt its normal operations.
A market may at times find it necessary to impose restrictions on
particular types of options transactions, such as opening transactions. For
example, if an underlying security ceases to meet qualifications imposed by the
market or an options clearing corporation, new series of options on that
security will no longer be opened to replace expiring series, and opening
transactions in existing series may be prohibited. If an options market were to
become unavailable, the Fund as a holder of an option would be able to realize
profits or limit losses only by exercising the option, and the Fund, as option
writer, would remain obligated under the option until expiration or exercise.
Disruptions in the markets for the securities underlying options purchased
or sold by a Fund could result in losses on the options. If trading is
interrupted in an underlying security, the trading of options on that security
is normally halted as well. As a result, the Fund as purchaser or writer of an
option will be unable to close out its positions until options trading resumes,
and it may be faced with considerable losses if trading in the security reopens
at a substantially different price. In addition, an options clearing corporation
or options market may impose exercise restrictions. If a prohibition on exercise
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is imposed at the time when trading in the option has also been halted, the Fund
as purchaser or writer of an option will be locked into its position until one
of the two restrictions has been lifted. If an options clearing corporation were
to determine that the available supply of an underlying security appears
insufficient to permit delivery by the writers of all outstanding calls in the
event of exercise, it may prohibit indefinitely the exercise of put options. The
Fund, as holder of such a put option, could lose its entire investment if the
prohibition remained in effect until the put option's expiration.
DEALER OPTIONS. A Fund may engage in transactions involving dealer options
as well as exchange-traded options. Certain risks are specific to dealer
options. While a Fund might look to an exchange's clearing corporation to
exercise exchange-traded options, if the Fund purchases a dealer option it must
rely on the selling dealer to perform if the Fund exercises the option. Failure
by the dealer to do so would result in the loss of the premium paid by the Fund
as well as loss of the expected benefit of the transaction.
Exchange-traded options generally have a continuous liquid market while
dealer options may not. Consequently, a Fund can realize the value of a dealer
option it has purchased only by exercising or reselling the option to the
issuing dealer. Similarly, when a Fund writes a dealer option, the Fund can
close out the option prior to its expiration only by entering into a closing
purchase transaction with the dealer. While the Funds will seek to enter into
dealer options only with dealers who will agree to and can enter into closing
transactions with the Funds, no assurance exists that a Fund will at any time be
able to liquidate a dealer option at a favorable price at any time prior to
expiration. Unless a Fund, as a covered dealer call option writer, can effect a
closing purchase transaction, it will not be able to liquidate securities (or
other assets) used as cover until the option expires or is exercised. In the
event of insolvency of the other party, the Fund may be unable to liquidate a
dealer option. With respect to options written by a Fund, the inability to enter
into a closing transaction may result in material losses to the Fund. For
example, because a Fund must maintain a secured position with respect to any
call option on a security it writes, the Fund may not sell the assets which it
has segregated to secure the position while it is obligated under the option.
This requirement may impair the Fund's ability to sell portfolio securities at a
time when such sale might be advantageous.
The staff of the SEC takes the position that purchased dealer options are
illiquid securities. A Fund may treat the cover used for written dealer options
as liquid if the dealer agrees that the Fund may repurchase the dealer option it
has written for a maximum price to be calculated by a predetermined formula. In
such cases, the dealer option would be considered illiquid only to the extent
the maximum purchase price under the formula exceeds the intrinsic value of the
option. With that exception, however, the Funds will treat dealer options as
subject to the Funds' limitation on illiquid securities. If the SEC changes its
position on the liquidity of dealer options, the Funds will change their
treatment of such instruments accordingly.
FUTURES CONTRACTS. Subject to applicable law, the StockJungle.com Market
Leaders Growth Fund and the StockJungle.com Pure Play Internet Fund may each
invest in futures contracts for hedging purposes. A financial futures contract
sale creates an obligation by the seller to deliver the type of financial
instrument called for in the contract in a specified delivery month for a stated
price. A financial futures contract purchase creates an obligation by the
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purchaser to take delivery of the type of financial instrument called for in the
contract in a specified delivery month at a stated price. The specific
instruments delivered or taken, respectively, at settlement date are not
determined until on or near that date. The determination is made in accordance
with the rules of the exchange on which the futures contract sale or purchase
was made. Futures contracts are traded in the United States only on commodity
exchanges or boards of trade, known as "contract markets," approved for such
trading by the Commodity Futures Trading Commission (the "CFTC"), and must be
executed through a futures commission merchant or brokerage firm which is a
member of the relevant contract market.
Although futures contracts (other than index futures) by their terms call
for actual delivery or acceptance of commodities or securities, in most cases
the contracts are closed out before the settlement date without the making or
taking of delivery.
Closing out a futures contract sale is effected by purchasing a futures
contract for the same aggregate amount of the specific type of financial
instrument or commodity with the same delivery date. If the price of the initial
sale of the futures contract exceeds the price of the offsetting purchase, the
seller is paid the difference and realizes a gain. Conversely, if the price of
the offsetting purchase exceeds the price of the initial sale, the seller
realizes a loss. If a Fund is unable to enter into a closing transaction, the
amount of the Fund's potential loss is unlimited. The closing out of a futures
contract purchase is effected by the purchaser's entering into a futures
contract sale. If the offsetting sale price exceeds the purchase price, the
purchaser realizes a gain, and if the purchase price exceeds the offsetting sale
price, he realizes a loss.
Unlike when a Fund purchases or sells a security, no price is paid or
received by the Fund upon the purchase or sale of a futures contract. Upon
entering into a contract, a Fund is required to deposit with its custodian in a
segregated account in the name of the futures broker an amount of liquid assets.
This amount is known as "initial margin." The nature of initial margin in
futures transactions is different from that of margin in security transactions
in that futures contract margin does not involve the borrowing of Funds to
finance the transactions. Rather, initial margin is similar to a performance
bond or good faith deposit which is returned to the Fund upon termination of the
futures contract, assuming all contractual obligations have been satisfied.
Futures contracts also involve brokerage costs.
Subsequent payments, called "variation margin" or "maintenance margin," to
and from the broker (or the custodian) are made on a daily basis as the price of
the underlying security or commodity fluctuates, making the long and short
positions in the futures contract more or less valuable, a process known as
"marking to the market." For example, when the Fund has purchased a futures
contract on a security and the price of the underlying security has risen, that
position will have increased in value and the Fund will receive from the broker
a variation margin payment based on that increase in value. Conversely, when the
Fund has purchased a security futures contract and the price of the underlying
security has declined, the position would be less valuable and the Fund would be
required to make a variation margin payment to the broker.
A Fund may elect to close some or all of its futures positions at any time
prior to their expiration in order to reduce or eliminate a hedge position then
currently held by the Fund. The Fund may close its positions by taking opposite
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positions which will operate to terminate the Fund's position in the futures
contracts. Final determinations of variation margin are then made, additional
cash is required to be paid by or released to a Fund, and the Fund realizes a
loss or a gain. Such closing transactions involve additional commission costs.
RISKS OF TRANSACTIONS IN FUTURES CONTRACTS. Successful use of futures
contracts by the Fund is subject to the Adviser's ability to predict movements
in various factors affecting securities markets, including interest rates.
The use of futures strategies also involves the risk of imperfect
correlation among movements in the prices of the securities underlying the
futures purchased and sold by the Fund, of the futures contracts themselves,
and, in the case of hedging transactions, of the securities which are the
subject of a hedge. The successful use of these strategies further depends on
the ability of the Adviser to forecast market movements correctly.
There is no assurance that higher than anticipated trading activity or
other unforeseen events might not, at times, render certain market clearing
facilities inadequate, and thereby result in the institution by exchanges of
special procedures which may interfere with the timely execution of customer
orders.
To reduce or eliminate a position held by the Fund, the Fund may seek to
close out such position. The ability to establish and close out positions will
be subject to the development and maintenance of a liquid secondary market. It
is not certain that this market will develop or continue to exist for a
particular futures contract. Reasons for the absence of a liquid secondary
market on an exchange include the following: (i) there may be insufficient
trading interest in certain contracts; (ii) restrictions may be imposed by an
exchange on opening transactions or closing transactions or both; (iii) trading
halts, suspensions or other restrictions may be imposed with respect to
particular classes or series of contracts, or underlying securities; (iv)
unusual or unforeseen circumstances may interrupt normal operations on an
exchange; (v) the facilities of an exchange or a clearing corporation may not at
all times be adequate to handle current trading volume; or (vi) one or more
exchanges could, for economic or other reasons, decide or be compelled at some
future date to discontinue the trading of contracts (or a particular class or
series of contracts), in which event the secondary market on that exchange for
such contracts (or in the class or series of contracts) would cease to exist,
although outstanding contracts on the exchange that had been issued by a
clearing corporation as a result of trades on that exchange would continue to be
exercisable in accordance with their terms. If a Fund is unable to enter into a
closing transaction, the amount of the Fund's potential loss is unlimited.
INDEX FUTURES CONTRACTS. An index futures contract is a contract to buy or
sell an index at a specified future date at a price agreed upon when the
contract is made. Entering into a contract to buy an index is commonly referred
to as buying or purchasing a contract or holding a long position in the index.
Entering into a contract to sell an index is commonly referred to as selling a
contract or holding a short position. The StockJungle.com Market Leaders Growth
Fund and StockJungle.com Pure Play Internet Fund may enter into stock index
futures contracts or other index futures contracts appropriate to their
respective objectives.
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For example, the S&P 500 Index is composed of 500 selected common stocks,
most of which are listed on the New York Stock Exchange. The S&P 500 Index
assigns relative weightings to the common stocks included in the Index, and the
value fluctuates with changes in the market values of those common stocks. In
the case of the S&P 500 Index, the value of one S&P 500 futures contract is $250
times the index. Thus, if the value of the S&P 500 Index were 1000, one contract
could be worth $250,000 (1000 x $250). The stock index futures contract
specifies that no delivery of the actual stocks making up the index will take
place. Instead, settlement in cash must occur upon the termination of the
contract, with the settlement being the difference between the contract price
and the actual level of the stock index at the expiration of the contract. For
example, if the Fund buys one S&P 500 futures contract at a contract price of
1000 and the S&P 500 Index is at 1100 on expiration date, the Fund will gain
$25,000 ($250 x gain of 100). If the Fund sells one S&P 500 futures contract at
a contract price of 1000 and the S&P 500 Index is at 1050 on expiration date,
the Fund will lose $12,500 ($250 x loss of $50).
There are several risks in connection with the use by a Fund of index
futures. One risk arises because of the imperfect correlation between movements
in the prices of the index futures and movements in the prices of securities
which are the subject of the hedge. The Adviser will, however, attempt to reduce
this risk by buying or selling, to the extent possible, futures on indices the
movements of which will, in its judgment, have a significant correlation with
movements in the prices of the securities sought to be hedged.
Successful use of index futures by a Fund is also subject to the Adviser's
ability to predict movements in the direction of the market. For example, it is
possible that, where a Fund has sold futures to hedge its portfolio against a
decline in the market, the index on which the futures are written may advance
and the value of securities held in the Fund's portfolio may decline. If this
occurred, the Fund would lose money on the futures and also experience a decline
in value in its portfolio securities. It is also possible that, if the Fund has
hedged against the possibility of a decline in the market adversely affecting
securities held in its portfolio and securities prices increase instead, the
Fund will lose part or all of the benefit of the increased value of those
securities it has hedged because it will have offsetting losses in its futures
positions. In addition, in such situations, if the Fund has insufficient cash,
it may have to sell securities to meet daily variation margin requirements at a
time when it is disadvantageous to do so.
In addition to the possibility that there may be an imperfect correlation,
or no correlation at all, between movements in the index futures and the portion
of a Fund's portfolio being hedged, the prices of index futures may not
correlate perfectly with movements in the underlying index due to certain market
distortions. First, all participants in the futures market are subject to margin
deposit and maintenance requirements. Rather than meeting additional margin
deposit requirements, investors may close futures contracts through offsetting
transactions which could distort the normal relationship between the index and
futures markets. Second, margin requirements in the futures market are less
onerous than margin requirements in the securities market, and as a result the
futures market may attract more speculators than the securities market does.
Increased participation by speculators in the futures market may also cause
temporary price distortions. Due to the possibility of price distortions in the
futures market and also because of the imperfect correlation between movements
in the index and movements in the prices of index futures, even a correct
forecast of general market trends by the Adviser may still not result in a
profitable position over a short time period.
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<PAGE>
STANDARD & POOR'S DEPOSITARY RECEIPTS ("SPDRS"). SPDR shares trade on the
American Stock Exchange at approximately one-tenth the value of the S&P 500
Index. SPDR shares are relatively liquid and, because they exactly replicate the
S&P 500 Index, any price movement away from the value of the underlying stocks
is generally quickly eliminated by professional traders. Thus, the Adviser
believes that the movement of SPDR share prices should closely track the
movement of the S&P 500 Index. The administrator of the SPDR program, the
American Stock Exchange, receives a fee to cover its costs of about 0.19% per
year. This fee is deducted from the dividends paid to SPDR investors.
GOVERNMENT OBLIGATIONS. Each Fund may invest in U.S. Government
obligations. Such obligations include Treasury bills, certificates of
indebtedness, notes and bonds, and issues of such entities as the Government
National Mortgage Association ("GNMA"), Export-Import Bank of the United States,
Tennessee Valley Authority, Resolution Funding Corporation, Farmers Home
Administration, Federal Home Loan Banks, Federal Intermediate Credit Banks,
Federal Farm Credit Banks, Federal Land Banks, Federal Housing Administration,
Federal National Mortgage Association ("FNMA"), Federal Home Loan Mortgage
Corporation, and the Student Loan Marketing Association.
Certain of these obligations, such as those of the GNMA, are supported by
the full faith and credit of the U.S. Treasury; others, such as those of the
Export-Import Bank of United States, are supported by the right of the issuer to
borrow from the Treasury; others, such as those of the FNMA, are supported by
the discretionary authority of the U.S. Government to purchase the agency's
obligations; still others, such as those of the Student Loan Marketing
Association, are supported only by the credit of the instrumentality. No
assurance can be given that the U.S. Government would provide financial support
to U.S. Government-sponsored instrumentalities if it is not obligated to do so
by law.
SHORT SALES. The StockJungle.com Community Intelligence Fund is authorized
to make short sales of securities it owns or has the right to acquire at no
added cost through conversion or exchange of other securities it owns (referred
to as short sales "against the box") and to make short sales of securities which
it does not currently own or have the right to acquire.
In a short sale that is not "against the box," the Fund sells a security
which it does not own, in anticipation of a decline in the market value of the
security. To complete the sale, the Fund must borrow the security (generally
from the broker through which the short sale is made) in order to make delivery
to the buyer. The Fund is then obligated to replace the security borrowed by
purchasing it at the market price at the time of replacement. The Fund is said
to have a "short position" in the securities sold until it delivers them to the
broker. The period during which the Fund has a short position can range from one
day to more than a year. Until the security is replaced, the proceeds of the
short sale are retained by the broker, and the Fund is required to pay to the
broker a negotiated portion of any dividends or interest which accrue during the
period of the loan. To meet current margin requirements, the Fund is also
required to deposit with the broker additional cash or securities so that the
total deposit with the broker is maintained daily at 150% of the current market
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<PAGE>
value of the securities sold short (100% of the current market value if a
security is held in the account that is convertible or exchangeable into the
security sold short within 90 days without restriction other than the payment of
money).
Short sales by the Fund that are not made "against the box" create
opportunities to increase the Fund's return but, at the same time, involve
specific risk considerations and may be considered a speculative technique.
Since the Fund in effect profits from a decline in the price of the securities
sold short without the need to invest the full purchase price of the securities
on the date of the short sale, the Fund's net asset value per share will tend to
increase more when the securities it has sold short decrease in value, and to
decrease more when the securities it has sold short increase in value, than
would otherwise be the case if it had not engaged in such short sales. The
amount of any gain will be decreased, and the amount of any loss increased, by
the amount of any premium, dividends or interest the Fund may be required to pay
in connection with the short sale. Furthermore, under adverse market conditions,
the Fund might have difficulty purchasing securities to meet its short sale
delivery obligations, and might have to sell portfolio securities to raise the
capital necessary to meet its short sale obligations at a time when fundamental
investment considerations would not favor such sales.
If the Fund makes a short sale "against the box," the Fund would not
immediately deliver the securities sold and would not immediately receive the
proceeds from the sale. The seller is said to have a short position in the
securities sold until it delivers the securities sold, at which time it receives
the proceeds of the sale. To secure its obligation to deliver securities sold
short, the Fund will deposit in escrow in a separate account with the Custodian
an equal amount of the securities sold short or securities convertible into or
exchangeable for such securities. The Fund can close out its short position by
purchasing and delivering an equal amount of the securities sold short, rather
than by delivering securities already held by the Fund, because the Fund might
want to continue to receive interest and dividend payments on securities in its
portfolio that are convertible into the securities sold short.
The Fund's decision to make a short sale "against the box" may be a
technique to hedge against market risks when the Adviser believes that the price
of a security may decline, causing a decline in the value of a security owned by
the Fund or a security convertible into or exchangeable for such security. In
such case, any future losses in the Fund's long position would be reduced by a
gain in the short position. The extent to which such gains or losses in the long
position are reduced will depend upon the amount of securities sold short
relative to the amount of the securities the Fund owns, either directly or
indirectly, and, in the case where the Fund owns convertible securities, changes
in the investment values or conversion premiums of such securities.
ILLIQUID SECURITIES. No Fund may invest more than 15% of the value of its
net assets in securities that at the time of purchase are illiquid. The Adviser
will monitor the amount of illiquid securities in each Fund's portfolio, under
the supervision of the Trust's Board of Trustees, to ensure compliance with each
Fund's investment restrictions.
Historically, illiquid securities have included securities subject to
contractual or legal restrictions on resale because they have not been
registered under the Securities Act of 1933 (the "Securities Act"), securities
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<PAGE>
which are otherwise not readily marketable and repurchase agreements having a
maturity of longer than seven days. Securities which have not been registered
under the Securities Act are referred to as private placement or restricted
securities and are purchased directly from the issuer or in the secondary
market. Mutual funds do not typically hold a significant amount of these
restricted or other illiquid securities because of the potential for delays on
resale and uncertainty in valuation. Limitations on resale may have an adverse
effect on the marketability of each Fund's portfolio securities and the Funds
might be unable to dispose of restricted or other illiquid securities promptly
or at reasonable prices and might thereby experience difficulty satisfying
redemption requests within seven days. The Funds might also have to register
such restricted securities in order to dispose of them, resulting in additional
expense and delay. Adverse market conditions could impede such a public offering
of securities.
In recent years, however, a large institutional market has developed for
certain securities that are not registered under the Securities Act, including
repurchase agreements, commercial paper, foreign securities, municipal
securities and corporate bonds and notes. Institutional investors depend on an
efficient institutional market in which the unregistered security can be readily
resold or on an issuer's ability to honor a demand for repayment. The fact that
there are contractual or legal restrictions on resale to the general public or
to certain institutions may not be indicative of the liquidity of such
investments. If such securities are subject to purchase by institutional buyers
in accordance with Rule 144A promulgated by the Commission under the Securities
Act, the Trust's Board of Trustees may determine that such securities are not
illiquid securities notwithstanding their legal or contractual restrictions on
resale. In all other cases, however, securities subject to restrictions on
resale will be deemed illiquid.
The Board has delegated to the Adviser, pursuant to Board-approved
guidelines, the function of making day-to-day determinations of whether
securities are liquid. The Adviser, in implementing this delegated function,
takes into account a number of factors in determining liquidity, including but
not limited to: (1) how frequently the security is traded; (2) the number of
dealers that make quotes for the security; (3) the number of dealers that make a
market in the security; (4) the number of other potential purchasers; (5) the
nature of the security; and (6) how trading is effected (e.g., the time needed
to sell the security, how bids are solicited and the mechanics of transfer). The
Adviser monitors the liquidity of restricted securities in each Fund and reports
periodically on these securities to the Board.
AMERICAN DEPOSITORY RECEIPTS. Each Fund may, from time to time, each invest
in the securities of foreign issuers, which securities include American
Depository Receipts ("ADRs"). Generally, ADRs, in registered form, are
denominated in U.S. dollars and are designed for use in the U.S. securities
markets. ADRs are receipts, typically issued by a U.S. bank or trust company,
evidencing ownership of the underlying securities. For purposes of the Funds'
investment policies, ADRs are deemed to have the same classification as the
underlying securities they represent. Thus, an ADR evidencing ownership of
common stock will be treated as common stock.
REPURCHASE AGREEMENTS. Each Fund may invest in repurchase agreements. A
repurchase agreement involves the purchase by a Fund of the securities with the
condition that after a stated period of time the original seller will buy back
the same securities at a predetermined price or yield. The Funds' custodian will
14
<PAGE>
hold the securities underlying any repurchase agreement or such securities will
be part of the Federal Reserve Book Entry System. The market value of the
collateral underlying the repurchase agreement will be determined on each
business day. If at any time the market value of a Fund's collateral falls below
the repurchase price of the repurchase agreement (including any accrued
interest), that Fund will promptly receive additional collateral (so the total
collateral is an amount at least equal to the repurchase price plus accrued
interest).
SECURITIES LOANS. Each Fund may make secured loans of its portfolio
securities, on either a short-term or long-term basis, amounting to not more
than 25% of its total assets, thereby realizing additional income. The risks in
lending portfolio securities, as with other extensions of credit, consist of
possible delay in recovery of the securities or possible loss rights in the
collateral should the borrower fail financially. As a matter of policy,
securities loans are made to broker-dealers pursuant to agreements requiring
that the loans be continuously secured by collateral consisting of cash or
short-term debt obligations at least equal at all times to the value of the
securities on loan, "marked-to-market" daily. The borrower pays to a lender-Fund
an amount equal to any dividends or interest received on securities lent. Each
Fund retains all or a portion of the interest received on the collateral or
receives a fee from the borrower. Although voting rights, or rights to consent,
with respect to the loaned securities may pass to the borrower, each Fund
retains the right to call the loans at any time on reasonable notice, and it
will do so to enable that Fund to exercise voting rights on any matters
materially affecting the investment. The Funds may also call such loans in order
to sell the securities.
INVESTMENT RESTRICTIONS
In addition to the investment objectives and policies set forth in the
Prospectus and in this Statement of Additional Information, the Funds are each
subject to certain fundamental and non-fundamental investment restrictions, as
set forth below. Fundamental investment restrictions may not be changed with
respect to any Fund individually, without the vote of a majority of that Fund's
outstanding shares (as defined in the Investment Company Act of 1940, as amended
(the "1940 Act")). Non-fundamental investment restrictions of a Fund may be
changed by the Board of Trustees.
Each Fund's investment objective as set forth in the "Risk/Return Summary"
portion of the Prospectus, is a fundamental policy. As additional fundamental
investment restrictions, the Funds will not:
1. Purchase the securities of any issuer (other than securities issued
or guaranteed by the U.S. Government, its agencies or instrumentalities), if, as
a result, as to 75% of a Fund's total assets, more than 5% of its net assets
would be invested in the securities of one issuer or the Fund would hold more
than 10% of the outstanding voting securities of any one issuer.
2. Issue any senior securities, as defined in the 1940 Act, except as
set forth in restriction number 3 below.
15
<PAGE>
3. Borrow amounts in excess of 10% of the cost or 10% of the market
value of its total assets, whichever is less, and then only from a bank and as a
temporary measure for extraordinary or emergency purposes. To secure any such
borrowing, a Fund may pledge or hypothecate all or any portion of the value of
its total assets.
4. Act as an underwriter of securities of other issuers, except
insofar as the Trust may be technically deemed an underwriter under the federal
securities laws in connection with the disposition of each Fund's portfolio
securities.
5. Purchase or sell real estate or commodities, including oil, gas or
other mineral exploration or developmental programs or commodity futures
contracts, except as set forth in the Prospectus. This restriction shall not
preclude the Funds from investing in banks or other financial institutions that
have real estate or that buy and sell real estate or from investing in the
equity securities of companies who hold assets or do business in those sectors.
6. Make loans, in the aggregate, exceeding 25% of any Fund's total
assets or lend any Fund's portfolio securities to broker-dealers if the loans
are not fully collateralized or write call options on securities which are not
fully covered.
7. Invest in other registered investment companies, except as
permitted by the 1940 Act.
8. Purchase from or sell to any officer or trustee of the Trust or its
Adviser any securities other than the shares of any Fund.
9. Concentrate its investments in any one industry although it may
invest up to 25% of the value of its total assets in a particular industry. This
limitation shall not apply to securities issued or guaranteed by the U.S.
Government.
The Funds are each subject to the following restrictions that are not
fundamental and may therefore be changed by the Board of Trustees without
shareholder approval. The Funds will not:
1. Acquire securities for the purpose of exercising control over
management.
2. Invest more than 15% of their respective net assets in illiquid
securities.
Unless otherwise indicated, percentage limitations included in the
restrictions apply at the time a Fund enters into a transaction. Accordingly,
any later increase or decrease beyond the specified limitation resulting from a
change in that Fund's net assets will not be considered in determining whether
it has complied with its investment restrictions.
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<PAGE>
TRUSTEES AND EXECUTIVE OFFICERS
The Trustees of the Trust, who were elected for an indefinite term by the
initial shareholders of the Trust, are responsible for the overall management of
the Trust, including general supervision and review of the investment activities
of the Funds. The Trustees, in turn, elect the officers of the Trust, who are
responsible for administering the day-to-day operations of the Trust and its
separate series. The current Trustees and officers, their affiliations, dates of
birth and principal occupations for the past five years are set forth below.
Unless noted otherwise, each person has held the position listed for a minimum
of five years.
<TABLE>
<CAPTION>
Position(s)
Held With
Name, Address and Age the Trust Principal Occupation Last Five Years
--------------------- --------- ------------------------------------
<S> <C> <C>
George J. Rebhan (66) Trustee Retired. Formerly, President Hotchkis and
1920 Mission Street Wiley Fund (mutual funds) from 1985 to 1993.
South Pasadena, CA 91030
Ashley T. Rabun (48) Trustee Founder and Chief Executive Officer,
2161 India St. InvestorReach, Inc. (financial services and
San Diego, CA 92101 marketing and distribution consulting).
Formerly, Partner and Director,
Nicholas-Applegate Capital Management
(investment management) from 1992 to 1996.
James Clayburn LaForce (72) Trustee Dean Emeritus, John E. Anderson Graduate
P.O. Box 1595 School of Management, University of
San Diego, CA 92101 California, Los Angeles.
Robert H. Wadsworth* (60) Trustee and President of Investment Company
4455 Camelback Rd. President Administration, LLC ("ICA") (mutual fund
Phoenix, AZ 85018 administrator and the Trust's Administrator)
and First Fund Distributors, Inc. (registered
broker-dealer and the Trust's Distributor).
Robert M. Slotky* (53) Treasurer Senior Vice President, ICA since May 1997.
2020 E. Financial Way Formerly instructor of accounting at
Glendora, CA 91741 California State University-Northridge
(1997); Chief Financial Officer, Wanger Asset
Management L.P. and Treasurer of Acorn
Investment Trust (1992-1996).
</TABLE>
----------
* Indicates an "interested person" of the Trust as defined in the 1940 Act.
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<PAGE>
Set forth below is the rate of compensation received by the following
Trustees from all portfolios of the Trust. This total amount is allocated among
the portfolios. Disinterested Trustees receive an annual retainer of $7,500. The
Trustees also receive a fee of $750 for any special meeting or committee meeting
attended on a date other than that of a regularly scheduled meeting.
Disinterested trustees are also reimbursed for expenses in connection with each
Board meeting attended. No other compensation or retirement benefits were
received by any Trustee or officer from the portfolios of the Trust.
Name of Trustee Total Annual Compensation
--------------- -------------------------
George J. Rebhan $7,500
Ashley T. Rabun $7,500
James Clayburn LaForce $7,500
As of the date of this SAI, the Trustees and officers of the Trust as a
group did not own more than 1% of the outstanding shares of any of the Funds.
INVESTMENT ADVISORY AND OTHER SERVICES
THE INVESTMENT ADVISER
The investment adviser for each of the Funds is StockJungle.com Investment
Advisors, Inc., a Delaware corporation organized on November 3, 1998. The
Adviser was organized to act as investment adviser to the predecessors of the
Funds. The Adviser will act as such pursuant to written agreements with the
Trust, on behalf of each Fund, which, after each agreement's initial two-year
period, must be re-approved annually by the Board of Trustees. The address of
the Adviser is 5750 Wilshire Boulevard, Suite 560, Los Angeles, California
90036. The Adviser can also be contacted by telephone at 1-877-884-3147.
The common stock of the Adviser is wholly-owned and controlled by
StockJungle.com, Inc., a Delaware corporation controlled by Michael Witz and
Julian Smerkovitz. StockJungle.com, Inc. is the sponsor of the StockJungle.com
website located at HTTP://WWW.STOCKJUNGLE.COM upon which that company offers a
wide variety of products and services intended for use by investors with access
to the Internet. Additional information regarding these products and services is
available on the website.
The Adviser acts as the investment adviser to each Fund under an Investment
Advisory Agreement which has been approved by the Board of Trustees (including a
majority of the Trustees who are not parties to the agreement, or interested
persons of any such party).
Each Investment Advisory Agreement will terminate automatically in the
event of its assignment. In addition, each agreement is terminable at any time,
without penalty, by the Board of Trustees of the Trust or by vote of a majority
of the Trust's outstanding voting securities (as defined in the 1940 Act) on not
more than 60 days' written notice to the Adviser, and by the Adviser on 60 days'
written notice to the Trust. Unless sooner terminated, each agreement shall
continue in effect for more than two years after its execution only so long as
such continuance is specifically approved at least annually by either the Board
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<PAGE>
of Trustees or by a vote of a majority of the Trust's outstanding voting
securities (as defined in the 1940 Act), provided that, in either event, such
continuance is also approved by a vote of a majority of the Trustees who are not
parties to such agreement, or interested persons of such parties (as defined in
the 1940 Act), cast in person at a meeting called for the purpose of voting on
such approval.
Under the Investment Advisory Agreement, the Adviser provides each Fund
with advice and assistance in the selection and disposition of the Fund's
investments. The Adviser is obligated to pay the salaries and fees of any
affiliates of the Adviser serving as officers of the Trust and/or the Funds.
Each Investment Advisory Agreement provides that the Adviser will not be
liable to the Trust or its shareholders for its acts or omissions in the course
of its services thereunder, except for willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations ("disabling conduct"). Each
Agreement also provides that each party will indemnify the other against
liabilities arising out of its performance under the Agreement, except for a
party's disabling conduct.
The Adviser has entered into a non-exclusive License Agreement with the
Trust which permits the Trust to use the name "StockJungle.com." The Adviser has
the right to require that the Trust stop using the name at such time as the
Adviser is no longer employed as investment manager to the Funds.
For the period from the commencement of operations of the Funds'
predecessors on November 17, 1999 through March 31, 2000, the Funds'
predecessors paid the Adviser fees as follows: Market Leaders Growth Fund,
$1,214; Pure Play Internet Fund, $2,226; and Community Intelligence Fund,
$2,284. During this period, the Adviser was responsible for the payment of all
other expenses of the Funds (other than brokerage fees and extraordinary
expenses), which were as follows: Market Leaders Growth Fund, $____; Pure Play
Internet Fund, $____; and Community Intelligence Fund, $_____.
THE ADMINISTRATOR
The Funds have an Administration Agreement with Investment Company
Administration, L.L.C. (the "Administrator"), a corporation owned and controlled
in part by Mr. Wadsworth with offices at 2020 E. Financial Way, Suite 100,
Glendora, California 91741. The Administration Agreement provides that the
Administrator will prepare and coordinate reports and other materials supplied
to the Trustees; prepare and/or supervise the preparation and filing of all
securities filings, periodic financial reports, prospectuses, statements of
additional information, marketing materials, tax returns, shareholder reports
and other regulatory reports or filings required of the Funds; prepare all
required notice filings necessary to maintain the Funds' ability to sell shares
in all states where each Fund currently does, or intends to do business;
coordinate the preparation, printing and mailing of all materials (e.g., annual
reports) required to be sent to shareholders; coordinate the preparation and
payment of Fund related expenses; monitor and oversee the activities of the
Funds' servicing agents (i.e., transfer agent, custodian, fund accountants,
19
<PAGE>
etc.); review and adjust as necessary the Funds' daily expense accruals; and
perform such additional services as may be agreed upon by the Funds and the
Administrator.
Administrative services were provided to the Funds' predecessors by
Integrated Fund Services, Inc. ("IFS") from the commencement of operations
through July 17, 2000, and by the Administrator thereafter. The Adviser was
responsible for payment of all administrative expenses of the Funds'
predecessors, which were as follows for the period from commencement of
operations on November 17, 1999 through March 31, 2000: Market Leaders Growth
Fund, $_____; Pure Play Internet Fund, $______; and Community Intelligence Fund,
$_____.
THE DISTRIBUTOR
First Fund Distributors, Inc. (the "Distributor"), a corporation partially
owned by Mr. Wadsworth, acts as the Funds' principal underwriter in a continuous
public offering of the Funds' shares. After its initial two year term, the
Distribution Agreement between each Fund and the Distributor continues in effect
for periods not exceeding one year if approved at least annually by (i) the
Board of Trustees or the vote of a majority of the outstanding shares of that
Fund (as defined in the 1940 Act) and (ii) a majority of the Trustees who are
not interested persons of any such party, in each case cast in person at a
meeting called for the purpose of voting on such approval. The Distribution
Agreement may be terminated without penalty by the parties upon sixty days'
written notice, and is automatically terminated in the event of its assignment
as defined in the 1940 Act.
Distribution services were provided to the Funds' predecessors by IFS Fund
Distributors, Inc. ("IFS") from the commencement of operations through July 17,
2000, and by the Distributor thereafter. The Adviser was responsible for payment
of all distribution expenses of the Funds' predecessors, which were as follows
for the period from commencement of operations on November 17, 1999 through
March 31, 2000: Market Leaders Growth Fund, $500; Pure Play Internet Fund, $500;
and Community Intelligence Fund, $500.
CUSTODIAN, TRANSFER AGENT AND FUND ACCOUNTANT
Fifth Third Bank, 38 Fountain Square Plaza, Cincinnati, Ohio 45263, serves
as custodian for each Fund's cash and securities (the "Custodian"). Pursuant to
a Custodian Agreement with the Trust on behalf of each Fund, the Custodian is
responsible for maintaining the books and records of each Fund's portfolio
securities and cash. The Custodian does not assist in, and is not responsible
for, investment decisions involving assets of the Funds. The Adviser was
responsible for payment of all custodian expenses of the Funds' predecessors,
which were as follows for the period from commencement of operations on November
17, 1999 through March 31, 2000: Market Leaders Growth Fund, $____; Pure Play
Internet Fund, $______; Community Intelligence Fund, $______.
Unified Fund Services, Inc., 431 North Pennsylvania Street, Indianapolis,
Indiana 42604 ("Unified"), serves as transfer agent and fund accounting agent
for each Fund pursuant to a Mutual Fund Services Agreement with the Trust on
behalf of each Fund. These services were provided to the Funds' predecessors by
CFS from the commencement of operations through September 30, 2000, and by
20
<PAGE>
Unified thereafter. The Adviser was responsible for payment of all transfer
agent and fund accounting expenses of the Funds' predecessors, which were as
follows for the period from commencement of operations on November 17, 1999
through March 31, 2000: Market Leaders Growth Fund, $______; Pure Play Internet
Fund, $_______; and Community Intelligence Fund, $______.
PORTFOLIO TRANSACTIONS AND ALLOCATION OF BROKERAGE
Each Fund's assets are invested by the Adviser in a manner consistent with
its investment objective, policies, and restrictions and with any instructions
the Board of Trustees may issue from time to time. Within this framework, the
Adviser is responsible for making all determinations as to the purchase and sale
of portfolio securities and for taking all steps necessary to implement
securities transactions on behalf of each of the Funds.
Transactions on U.S. stock exchanges, commodities markets and futures
markets and other agency transactions may involve the payment by the Adviser on
behalf of a Fund of negotiated brokerage commissions. Such commissions vary
among different brokers. A particular broker may charge different commissions
according to such factors as the difficulty and size of the transaction.
Transactions in foreign investments often involve the payment of fixed brokerage
commissions, which may be higher than those in the United States. There is
generally no stated commission in the case of securities traded in the
over-the-counter markets, but the price paid by the Adviser usually includes an
undisclosed dealer commission or mark-up. In underwritten offerings, the price
paid by the Adviser on behalf of each Fund includes a disclosed, fixed
commission or discount retained by the underwriter or dealer.
U.S. Government securities and other fixed income securities generally are
traded in the over-the-counter market through broker-dealers. A broker-dealer is
a securities firm or bank that makes a market for securities by offering to buy
at one price and sell at a slightly higher price. The difference between the
prices is known as a spread.
In placing orders for the purchase and sale of portfolio securities for
each Fund, the Adviser seeks to obtain the best price and execution, taking into
account such factors as price, size of order, difficulty and risk of execution
and operational facilities of the firm involved. For securities traded in the
over-the-counter markets, the Adviser deals directly with the dealers who make
markets in the securities unless better prices and execution are available
elsewhere. The Adviser negotiates commission rates with brokers based on the
quality and quantity of services provided in light of generally prevailing
rates, and while the Adviser generally seeks reasonably competitive commission
rates, the Funds do not necessarily pay the lowest commissions available. The
Board of Trustees periodically reviews the commission rates and allocation of
orders.
When consistent with the objectives of best price and execution, business
may be placed with broker-dealers who furnish investment research or services to
the Adviser. Such research or services include advice, both directly and in
writing, as to the value of securities; the advisability of investing in,
purchasing or selling securities; and the availability of securities, or
purchasers or sellers of securities; as well as analyses and reports concerning
issues, industries, securities, economic factors and trends, portfolio strategy
21
<PAGE>
and the performance of accounts. To the extent portfolio transactions are
effected with broker-dealers who furnish research services to the Adviser, the
Adviser receives a benefit, not capable of evaluation in dollar amounts, without
providing any direct monetary benefit to any Fund from these transactions. The
Adviser believes that most research services obtained by it generally benefit
several or all of the investment companies and private accounts which it
manages, as opposed to solely benefiting one specific managed fund or account.
The same security may be suitable for each of the Funds or other private
accounts managed by the Adviser. If and when a Fund and two or more accounts
simultaneously purchase or sell the same security, the transactions will be
allocated as to price and amount in accordance with arrangements equitable to
the Fund and account. The simultaneous purchase or sale of the same securities
by a Fund and other accounts may have a detrimental effect on the Fund, as this
may affect the price paid or received by the Fund or the size of the position
obtainable or able to be sold by the Fund.
Consistent with the Conduct Rules of the National Association of Securities
Dealers, Inc. and subject to seeking the most favorable price and execution
available and such other policies as the Trustees may determine, the Adviser may
consider sales of shares of each Fund as a factor in the selection of
broker-dealers to execute portfolio transactions for the Fund.
OWNERSHIP OF SHARES
Each share of each Fund has one vote for each dollar of net asset value of
the share in the election of Trustees. Cumulative voting is not authorized for
any Fund. This means that the holders of more than 50% of the shares voting for
the election of Trustees can elect 100% of the Trustees if they choose to do so,
and, in that event, the holders of the remaining shares will be unable to elect
any Trustees.
Shareholders of the Funds and any other series of the Trust will vote in
the aggregate and not by series except as otherwise required by law or when the
Board of Trustees determines that the matter to be voted upon affects only the
interest of the shareholders of a particular series. Pursuant to Rule 18f-2
under the 1940 Act, the approval of an investment advisory agreement or any
change in a fundamental policy would be acted upon separately by the series
affected. Matters such as ratification of the independent public accountants and
election of Trustees are not subject to separate voting requirements and may be
acted upon by shareholders of the Trust voting without regard to series.
As of September 30, 2000, the directors and officers of the Trust as a
group owned _____% of the outstanding stock of the Market Leaders Growth Fund,
_____% of the outstanding stock of the Pure Play Internet Fund, and _____% of
the outstanding stock of the Community Intelligence Fund. The following are the
name, address and percentage of ownership of each person who owned of record or
is known by a Fund to have owned 5% or more of any Fund's outstanding stock as
of September 30, 2000.
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<PAGE>
MARKET LEADERS GROWTH FUND
PURE PLAY INTERNET FUND
COMMUNITY INTELLIGENCE FUND
CODE OF ETHICS
The Boards of the Trust, the Adviser and the Distributor have adopted Codes
of Ethics under Rule 17j-l of the 1940 Act. These Codes permit, subject to
certain conditions, personnel of the Adviser and Distributor to invest in
securities that may be purchased or held by the Fund. The Codes of Ethics for
the Adviser, the Trust and the principal underwriter of the Trust are on file
with and available from the SEC.
Personnel of the Adviser may invest in securities for their own accounts
pursuant to a Code of Ethics that sets forth all employees' fiduciary
responsibilities regarding the Funds, establishes procedures for personal
investing and restricts certain transactions. For example, all personal trades
in most securities require pre-clearance, and participation in initial public
offerings is prohibited. In addition, restrictions on the timing of personal
investing in relation to trades by the Funds and on short-term trading have been
adopted.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
The information provided below supplements the information contained in the
Funds' Prospectus regarding the purchase and redemption of Fund shares.
HOW TO BUY SHARES
The public offering price of Fund shares is the net asset value. Shares are
purchased at the public offering price next determined after the Transfer Agent
receives your order in proper form. In most cases, in order to receive that
day's public offering price, the Transfer Agent must receive your order in
proper form before the close of regular trading on the New York Stock Exchange
("NYSE"), normally 4:00 p.m., Eastern time.
The NYSE annually announces the days on which it will not be open for
trading. The most recent announcement indicates that it will not be open on the
following days: New Year's Day, Martin Luther King Jr. Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. However, the NYSE may close on days not included in that
announcement.
The Trust reserves the right in its sole discretion (i) to suspend the
continued offering of any Fund's shares, (ii) to reject purchase orders in whole
or in part when in the judgment of the Adviser or the Distributor such rejection
is in the best interest of a Fund, and (iii) to reduce or waive the minimum for
initial and subsequent investments for certain fiduciary accounts or under
circumstances where certain economies can be achieved in sales of a Fund's
shares.
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HOW TO SELL SHARES
You can sell your Fund shares any day the NYSE is open for regular trading.
A Fund may require documentation for the sale of shares by a corporation,
partnership, agent or fiduciary, or a surviving joint owner. Contact the
Transfer Agent for details.
SIGNATURE GUARANTEES
If you sell shares having a net asset value of $10,000 a signature
guarantee is required. Certain other transactions, including redemptions, also
require a signature guarantee. Signature guarantees may be obtained from a bank,
broker-dealer, credit union (if authorized under state law), securities exchange
or association, clearing agency or savings institution. A notary public cannot
provide a signature guarantee.
DELIVERY OF REDEMPTION PROCEEDS
Payments to shareholders for shares of a Fund redeemed directly from the
Fund will be made as promptly as possible but no later than seven days after
receipt by the Funds' Transfer Agent of the written request in proper form, with
the appropriate documentation as stated in the Prospectus, except that a Fund
may suspend the right of redemption or postpone the date of payment during any
period when (a) trading on the NYSE is restricted as determined by the SEC or
the NYSE is closed for other than weekends and holidays; (b) an emergency exists
as determined by the SEC making disposal of portfolio securities or valuation of
net assets of the Fund not reasonably practicable; or (c) for such other period
as the SEC may permit for the protection of the Fund's shareholders. Under
unusual circumstances, a Fund may suspend redemptions, or postpone payment for
more than seven days, but only as authorized by SEC rules.
The value of shares on redemption or repurchase may be more or less than
your cost, depending upon the market value of a Fund's portfolio securities at
the time of redemption or repurchase.
TELEPHONE REDEMPTIONS. Shareholders must have selected telephone
transactions privileges on the Account Application when opening a Fund account.
Upon receipt of any instructions or inquiries by telephone from a shareholder
or, if held in a joint account, from either party, or from any person claiming
to be the shareholder, a Fund or its agent is authorized, without notifying the
shareholder or joint account parties, to carry out the instructions or to
respond to the inquiries, consistent with the service options chosen by the
shareholder or joint shareholders in his or their latest Account Application or
other written request for services, including purchasing or redeeming shares of
a Fund or Funds and depositing and withdrawing monies from the bank account
specified in the Bank Account Registration section of the shareholder's latest
Account Application or as otherwise properly specified to the Funds in writing.
The Transfer Agent will employ these and other reasonable procedures to
confirm that instructions communicated by telephone are genuine; if it fails to
employ reasonable procedures, the Funds and the Transfer Agent may be liable for
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<PAGE>
any losses due to unauthorized or fraudulent instructions. If these procedures
are followed, an investor agrees, however, that to the extent permitted by
applicable law, neither the Funds nor their agents will be liable for any loss,
liability, cost or expense arising out of any redemption request, including any
fraudulent or unauthorized request. For information, consult the Transfer Agent.
During periods of unusual market changes and shareholder activity, you may
experience delays in contacting the Transfer Agent by telephone. In this event,
you may wish to submit a written redemption request, as described in the
Prospectus. The Telephone Redemption Privilege may be modified or terminated
without notice.
REDEMPTIONS-IN-KIND. The Trust has filed an election under SEC pursuant to
Rule 18f-1 under the 1940 Act committing to pay in cash all redemptions by a
shareholder of record up to amounts specified by the Rule (in excess of the
lesser of (i) $250,000 or (ii) 1% of the Fund's assets). Each Fund reserves the
right to pay the redemption price of its shares in excess of the amounts
specified by the Rule, either totally or partially, by a distribution in kind of
portfolio securities (instead of cash). The securities so distributed would be
valued at the same amount as assigned to them in calculating the net asset value
for the shares being sold. If a shareholder receives a distribution in kind, the
shareholder could incur brokerage or other charges in converting the securities
to cash.
AUTOMATIC INVESTMENT PLAN. As discussed in the Prospectus, the Funds
provide an Automatic Investment Plan for the convenience of investors who wish
to purchase shares of a Fund or Funds on a regular basis. All record keeping and
custodial costs of the Automatic Investment Plan are paid by the Funds. The
market value of each Fund's shares is subject to fluctuation, so before
undertaking any plan for systematic investment, the investor should keep in mind
that this plan does not assure a profit nor protect against depreciation in
declining markets.
DETERMINATION OF SHARE PRICE
The net asset value and offering price of shares of each Fund will be
determined once daily as of the close of public trading on the NYSE (normally
4:00 p.m., Eastern time) on each day that the NYSE is open for trading. None of
the Funds expects to determine the net asset value of its shares on any day when
the NYSE is not open for trading even if there is sufficient trading in its
portfolio securities on such days to materially affect the net asset value per
share. However, the net asset value of each Fund's shares may be determined on
days the NYSE is closed or at times other than 4:00 p.m. if the Board of
Trustees decides it is necessary.
In valuing a Fund's assets for calculating net asset value, readily
marketable portfolio securities listed on a national securities exchange or on
NASDAQ are valued at the last sale price on the business day as of which such
value is being determined. If there has been no sale on such exchange or on
NASDAQ on such day, the security is valued at the closing bid price on such day.
Readily marketable securities traded only in the over-the-counter market and not
on NASDAQ are valued at the current or last bid price. If no bid is quoted on
such day, the security is valued by such method as the Board of Trustees of the
Trust determines in good faith to reflect the security's fair value. All other
assets of the Funds are valued in such manner as the Board of Trustees in good
faith deems appropriate to reflect their fair value.
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<PAGE>
The net asset value per share of each Fund is calculated as follows: all
liabilities incurred or accrued are deducted from the valuation of total assets,
which includes accrued but undistributed income; the resulting net assets are
divided by the number of shares of the Fund outstanding at the time of the
valuation and the result (adjusted to the nearest cent) is the net asset value
per share.
DISTRIBUTIONS AND TAX INFORMATION
DISTRIBUTIONS
Dividends from net investment income and distributions from net profits
from the sale of securities are generally made annually. Also, each Fund expects
to distribute any undistributed net investment income on or about December 31 of
each year. Any net capital gains realized through the period ended October 31 of
each year will also be distributed by December 31 of each year.
Each distribution by a Fund is accompanied by a brief explanation of the
form and character of the distribution. In January of each year the Funds will
issue to each shareholder a statement of the federal income tax status of all
distributions.
TAX INFORMATION
Each series of the Trust is treated as a separate entity for federal income
tax purposes. Each Fund intends to continue to qualify and elect to be treated
as a "regulated investment company" under Subchapter M of the Internal Revenue
Code of 1986 (the "Code"), provided that it complies with all applicable
requirements regarding the source of its income, diversification of its assets
and timing of distributions. It is each Fund's policy to distribute to its
shareholders all of its investment company taxable income and any net realized
capital gains for each fiscal year in a manner that complies with the
distribution requirements of the Code, so that no Fund will be subject to any
federal income tax or excise taxes based on net income. To avoid the excise tax,
each Fund must also distribute (or be deemed to have distributed) by December 31
of each calendar year (i) at least 98% of its ordinary income for such year,
(ii) at least 98% of the excess of its realized capital gains over its realized
capital losses for the one-year period ending on October 31 during such year and
(iii) any amounts from the prior calendar year that were not distributed and on
which the Fund paid no federal excise tax.
Each Fund's ordinary income generally consists of interest and dividend
income, less expenses. Net realized capital gains for a fiscal period are
computed by taking into account any capital loss carryforward of each Fund.
Distributions of net investment income and net short-term capital gains are
taxable to shareholders as ordinary income. In the case of corporate
shareholders, a portion of the distributions may qualify for the intercorporate
dividends-received deduction to the extent the Portfolio designates the amount
distributed as a qualifying dividend. This designated amount cannot, however,
26
<PAGE>
exceed the aggregate amount of qualifying dividends received by a Fund for its
taxable year. The deduction, if any, may be reduced or eliminated if Portfolio
shares held by a corporate investor are treated as debt-financed or are held for
fewer than 46 days.
Any long-term capital gain distributions are taxable to shareholders as
long-term capital gains regardless of the length of time they have held their
shares. Capital gains distributions are not eligible for the dividends-received
deduction referred to in the previous paragraph. Distributions of any ordinary
income and net realized capital gains will be taxable as described above,
whether received in shares or in cash. Shareholders who choose to receive
distributions in the form of additional shares will have a cost basis for
federal income tax purposes in each share so received equal to the net asset
value of a share on the reinvestment date. Distributions are generally taxable
when received. However, distributions declared in October, November or December
to shareholders of record on a date in such a month and paid the following
January are taxable as if received on December 31. Distributions are includable
in alternative minimum taxable income in computing a shareholder's liability for
the alternative minimum tax.
Under the Code, each Fund will be required to report to the Internal
Revenue Service all distributions of ordinary income and capital gains as well
as gross proceeds from the redemption of Portfolio shares, except in the case of
exempt shareholders, which includes most corporations. Pursuant to the backup
withholding provisions of the Code, distributions of any taxable income and
capital gains and proceeds from the redemption of Fund shares may be subject to
withholding of federal income tax at the current maximum federal tax rate of 31%
in the case of non-exempt shareholders who fail to furnish the Funds with their
taxpayer identification numbers and with required certifications regarding their
status under the federal income tax law. If the backup withholding provisions
are applicable, any such distributions and proceeds, whether taken in cash or
reinvested in additional shares, will be reduced by the amounts required to be
withheld. Corporate and other exempt shareholders should provide the Funds with
their taxpayer identification numbers or certify their exempt status in order to
avoid possible erroneous application of backup withholding. The Funds reserve
the right to refuse to open an account for any person failing to certify the
person's taxpayer identification number.
The Funds will not be subject to corporate income tax in the State of
Delaware as long as they qualify as regulated investment companies for federal
income tax purposes. Distributions and the transactions referred to in the
preceding paragraphs may be subject to state and local income taxes, and the tax
treatment thereof may differ from the federal income tax treatment.
The foregoing discussion of U.S. federal income tax law relates solely to
the application of that law to U.S. citizens or residents and U.S. domestic
corporations, partnerships, trusts and estates. Each shareholder who is not a
U.S. person should consider the U.S. and foreign tax consequences of ownership
of shares of the Fund, including the possibility that such a shareholder may be
subject to a U.S. withholding tax at a rate of 30% (or at a lower rate under an
applicable income tax treaty) on amounts constituting ordinary income.
In addition, the foregoing discussion of tax law is based on existing
provisions of the Code, existing and proposed regulations thereunder, and
current administrative rulings and court decisions, all of which are subject to
change. Any such charges could affect the validity of this discussion. The
27
<PAGE>
discussion also represents only a general summary of tax law and practice
currently applicable to the Funds and certain shareholders therein, and, as
such, is subject to change. In particular, the consequences of an investment in
shares of the Fund under the laws of any state, local or foreign taxing
jurisdictions are not discussed herein. Each prospective investor should consult
his or her own tax adviser to determine the application of the tax law and
practice in his or her own particular circumstances.
PERFORMANCE COMPARISONS
Total return quoted in advertising and sales literature reflects all
aspects of a Fund's return, including the effect of reinvesting dividends and
capital gain distributions and any change in a Fund's net asset value during the
period.
Each Fund's total return must be displayed in any advertisement containing
the Fund's yield. Total return is the average annual total return for the 1-, 5-
and 10-year period ended on the date of the most recent balance sheet included
in the Statement of Additional Information, computed by finding the average
annual compounded rates of return over 1-, 5- and 10-year periods that would
equate the initial amount invested to the ending redeemable value according to
the following formula:
n
P(1 + T) = ERV
Where:
P = a hypothetical initial investment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made
at the beginning of the 1-, 5- or 10-year periods at the end
of the 1-, 5- or 10-year periods (or fractional portion).
Because the Funds have not had a registration in effect for 1, 5 or 10
years, the period during which the registration has been effective shall be
substituted.
Average annual total return is calculated by determining the growth or
decline in value of a hypothetical historical investment in each Fund over a
stated period and then calculating the annual compounded percentage rate that
would have produced the same result if the rate of growth or decline in value
had been constant throughout the period. For example, a cumulative total return
of 100% over 10 years would produce an average annual total return of 7.18%,
which is the steady annual rate that would result in 100% growth on a compounded
basis in 10 years. While average annual total returns are a convenient means of
comparing investment alternatives, investors should realize that the Fund's
performance is not constant over time, but changes from year to year, and that
average annual total returns represent averaged figures as opposed to actual
year-to-year performance.
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<PAGE>
In addition to average annual total returns, each Fund may quote unaveraged
or cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total returns may
be quoted as a percentage or as a dollar amount and may be calculated for a
single investment, a series of investments, or a series of redemptions over any
time period. Performance information may be quoted numerically or in a table,
graph, or similar illustration.
Each Fund's performance may be compared with the performance of other funds
with comparable investment objectives, tracked by fund rating services or with
other indexes of market performance. Sources of economic data that may be
considered in making such comparisons may include, but are not limited to,
rankings of any mutual fund or mutual fund category tracked by Lipper Analytical
Services, Inc. or Morningstar, Inc.; data provided by the Investment Company
Institute; major indexes of stock market performance; and indexes and historical
data supplied by major securities brokerage or investment advisory firms. The
Funds may also each utilize reprints from newspapers and magazines furnished by
third parties to illustrate historical performance.
The agencies listed below measure performance based on their own criteria
rather than on the standardized performance measures described in the preceding
section.
Lipper Analytical Services, Inc. distributes mutual fund rankings monthly.
The rankings are based on total return performance calculated by Lipper,
generally reflecting changes in net asset value adjusted for reinvestment of
capital gains and income dividends. They do not reflect deduction of any sales
charges. Lipper rankings cover a variety of performance periods, including
year-to-date, 1-year, 5-year, and 10-year performance. Lipper classifies mutual
funds by investment objective and asset category.
Morningstar, Inc. distributes mutual fund ratings twice a month. The
ratings are divided into five groups: highest, above average, neutral, below
average and lowest. They represent the fund's historical risk/reward ratio
relative to other funds in its broad investment class as determined by
Morningstar, Inc. Morningstar ratings cover a variety of performance periods,
including 1-year, 3-year, 5-year, 10-year and overall performance. The
performance factor for the overall rating is a weighted-average assessment of
the fund's 1-year, 3-year, 5-year, and 10-year total return performance (if
available) reflecting deduction of expenses and sales charges. Performance is
adjusted using quantitative techniques to reflect the risk profile of the fund.
The ratings are derived from a purely quantitative system that does not utilize
the subjective criteria customarily employed by rating agencies such as Standard
& Poor's and Moody's Investor Service, Inc.
CDA/Weisenberger's Management Results publishes mutual fund rankings and is
distributed monthly. The rankings are based entirely on total return calculated
by Weisenberger for periods such as year-to-date, 1-year, 3-year, 5-year and
10-year. Mutual funds are ranked in general categories (e.g., international
bond, international equity, municipal bond, and maximum capital gain).
Weisenberger rankings do not reflect deduction of sales charges or fees.
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<PAGE>
Independent publications may also evaluate each Fund's performance. The
Funds may from time to time each refer to results published in various
periodicals, including BARRON'S, FINANCIAL WORLD, FORBES, FORTUNE, INVESTOR'S
BUSINESS DAILY, KIPLINGER'S PERSONAL FINANCE MAGAZINE, MONEy, U.S. NEWS AND
WORLD REPORT and THE WALL STREET JOURNAL.
ORGANIZATION OF TRUST
StockJungle.com Market Leaders Growth Fund, StockJungle.com Pure Play
Internet Fund, and StockJungle.com Community Intelligence Fund are each a series
of TIM, a Delaware business trust organized on April 27, 1999.
The Agreement and Declaration of Trust of TIM permits the Board of Trustees
to issue an limited number of full and fractional shares of beneficial interest,
without par value, which may be issued in any number of series. The Board of
Trustees may from time to time issue other series, the assets and liabilities of
which will be separate and distinct from any other series.
Shares issued by a Fund have no preemptive, conversion, or subscription
rights. Shareholders have equal and exclusive rights as to dividends and
distributions as declared by the Fund and to the net assets of the Fund upon
liquidation or dissolution. Each Fund, as a separate series of the Trust, votes
separately on matters affecting only that Fund (E.G., approval of the Advisory
Agreement); all series of the Trust vote as a single class on matters affecting
all series jointly or the Trust as a whole (E.G., election or removal of
Trustees). Voting rights are not cumulative, so that the holders of more than
50% of the shares voting in any election of Trustees can, if they so choose,
elect all of the Trustees. While the Trust is not required and does not intend
to hold annual meetings of shareholders, such meetings may be called by the
Trustees in their discretion, or upon demand by the holders of 10% or more of
the outstanding shares of the Trust, for the purpose of electing or removing
Trustees.
SHAREHOLDER SERVICES PLAN
The Trust, on behalf of each Fund, has adopted a Shareholder Services Plan
that permits the Fund to pay shareholder servicing fees. The Plan provides that
the Funds will pay a fee to the Adviser for shareholder servicing at an annual
rate of 0.25% of the Funds' average daily net assets. The Plan provides for the
compensation to the Adviser as Shareholder Servicing Coordinator regardless of
the Funds' shareholder servicing expenses. The Plan may be terminated at any
time by vote of a majority of the Trustees of the Trust who are not interested
persons. Continuation of the Plan is considered by such Trustees no less
frequently than annually.
FINANCIAL STATEMENTS
The balance sheet of the Funds' predecessors as of October 19, 1999 are
attached to this SAI. It has been audited by the Funds' independent auditors,
Arthur Andersen LLP, whose report thereon is also attached. The balance sheet is
included herein in reliance upon their authority as experts in accounting and
auditing.
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The unaudited financial statements included in the semi-annual report to
shareholders of the Funds' predecessors for the period from commencement of
operations on November 17, 1999 through March 31, 2000 are incorporated herein
by reference. Copies of the report may be obtained for free by calling the Funds
toll-free at 1-800-945-4957 or by writing the Funds at 431 North Pennsylvania
Street, Indianapolis, IN 46204-1806. It is also available without charge on the
Internet website at http://www.stockjungle.com.
OTHER INFORMATION
The Adviser has been recently registered with the Securities Exchange
Commission ("SEC") under the Investment Advisers Act of 1940, as amended. The
Trust has filed a registration statement under the Securities Act of 1933 and
the 1940 Act with respect to the shares offered. Such registrations do not imply
approval or supervision of any Fund or the Adviser by the SEC.
For further information, please refer to the registration statement and
exhibits on file with the SEC in Washington, D.C. These documents are available
upon payment of a reproduction fee. Statements in the Prospectus and in this
Statement of Additional Information concerning the contents of contracts or
other documents, copies of which are filed as exhibits to the registration
statement, are qualified by reference to such contracts or documents.
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STOCKJUNGLE.COM TRUST
Statement of Assets and Liabilities
October 19, 1999
<TABLE>
<CAPTION>
StockJungle.com StockJungle.com StockJungle.com
Community Pure Play Market
Intelligence Fund Internet Fund Leaders Fund
------- ------- -------
<S> <C> <C> <C>
ASSETS
Cash $50,000 $25,000 $25,000
------- ------- -------
NET ASSETS $50,000 $25,000 $25,000
======= ======= =======
Shares of beneficial interest
outstanding (unlimited number of shares
authorized, no par value) $ 5,000 $ 2,500 $ 2,500
======= ======= =======
Net Asset Value, offering price
and redemption price per share $ 10.00 $ 10.00 $ 10.00
======= ======= =======
</TABLE>
STOCKJUNGLE.COM TRUST
NOTES TO STATEMENTS OF ASSETS AND LIABILITIES
AS OF OCTOBER 19, 1999
(1) The StockJungle.com Community Intelligence Fund, the StockJungle.com
Pure Play Internet Fund, the StockJungle.com Market Leaders Fund and the
StockJungle.com No Fee S&P 500 Fund (the Funds) are each a non-diversified
series of the StockJungle.com Trust (the Trust), an open-end management
investment company organized as a Massachusetts business trust under a
Declaration of Trust dated June 11, 1999. On October 19, 1999, 5,000 shares of
the StockJungle.com Community Intelligence Fund, and 2,500 shares each of the
StockJungle.com Pure Play Internet Fund and the StockJungle.com Market Leaders
Fund were issued for cash at $10.00 per share. The Funds have had no operations
except for the initial issuance of shares.
Expenses incurred in connection with the organization of the Funds and the
initial offering of shares will be permanently absorbed by StockJungle.com, Inc.
(the Adviser). As of October 19, 1999, all outstanding shares of the Funds were
held by the Adviser, who purchased these initial shares in order to provide the
Trust with its required capital.
Reference is made to the Prospectus and the Statement of Additional
Information for a description of the Investment Advisory Agreement, the
Underwriting Agreement, the Administration Agreement, the Accounting Services
Agreement, the Transfer, Dividend Disbursing, Shareholder Service and Plan
Agency Agreement, tax aspects of the Fund and the calculation of the net asset
value of shares of the Funds.
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ARTHUR ANDERSEN LLP
Report of Independent Public Accountants
To the Board of Trustees and Shareholders of the StockJungle.com Community
Intelligence Fund, StockJungle.com Pure Play Internet Fund and StockJungle.com
Market Leaders Fund of StockJungle.com Trust:
We have audited the accompanying statements of assets and liabilities of
the StockJungle.com Community Intelligence Fund, the StockJungle.com Pure Play
Internet Fund and the StockJungle.com Market Leaders Fund of StockJungle.com
Trust as of October 19, 1999. These financial statements are the responsibility
of the Trust's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statements of assets and liabilities are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the statements of assets and
liabilities. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the statements of assets and liabilities referred to above
present fairly, in all material respects, the financial position of the
StockJungle.com Community Intelligence Fund, the StockJungle.com Pure Play
Internet Fund and the StockJungle.com Market Leaders Fund of StockJungle.com
Trust as of October 19, 1999 in conformity with generally accepted accounting
principles.
/s/ Arthur Andersen LLP
Cincinnati, Ohio
October 20, 1999
33
