REGISTRATION NO. 333-81359
ICA NO. 811-09403
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 26, 1999
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. 2 [X]
Post-Effective Amendment No. [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Pre-Effective Amendment No. 2 [X]
Post-Effective Amendment No. [ ]
(Check Appropriate Box or Boxes)
StockJungle.com Trust
--------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
3805 South Canfield Avenue, Suite B
Culver City, California 90232
--------------------------------------------------
(Address of Principal Executive Offices)(Zip Code)
(310) 841-4010
----------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
Tina D. Hosking, Esq.
Countrywide Fund Services, Inc.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
---------------------------------------
(Name and Address of Agent For Service)
With a copy to:
Thomas R. Westle, Esq.
Spitzer & Feldman P.C.
405 Park Avenue
New York, NY 10022
As soon as practicable after the effective date
-----------------------------------------------
(Approximate Date of Proposed Public Offering)
Shares of Beneficial Interest
-----------------------------
(Title of Securities Being Registered)
It is proposed that this filing will become effective (check appropriate box):
[ ] immediately upon filing pursuant to paragraph (b).
[ ] on (date) pursuant to paragraph (b).
[ ] 60 days after filing pursuant to paragraph (a)(1).
[ ] on (date) pursuant to paragraph (a)(1).
[ ] 75 days after filing pursuant to paragraph (a)(2).
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485.
THE REGISTRANT DECLARES THAT AN INDEFINITE AMOUNT OF SHARES OF BENEFICIAL
INTEREST ARE BEING REGISTERED BY THE REGISTRATION STATEMENT PURSUANT TO SECTION
24(F) UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED, AND RULE 24F-2
THEREUNDER.
<PAGE>
STOCKJUNGLE.COM* TRUST
STOCKJUNGLE.COM MARKET LEADERS GROWTH FUND
STOCKJUNGLE.COM NO FEE S&P 500 INDEX FUND
STOCKJUNGLE.COM PURE PLAY INTERNET FUND
STOCKJUNGLE.COM COMMUNITY INTELLIGENCE FUND
PROSPECTUS
_______________, 1999
STOCKJUNGLE.COM MARKET LEADERS GROWTH FUND seeks to provide investors with
long-term capital appreciation by investing in a diversified portfolio of the
equity securities of U.S. companies that have consistently demonstrated
fundamental investment value and hold strong competitive positions in various
industries. In addition, the Fund may invest up to 20% of its net assets in the
common stock of companies identified by StockJungle.com Investment Advisors,
Inc. (the "Adviser") as relatively new leaders in smaller, but potentially
important industries.
STOCKJUNGLE.COM NO FEE S&P 500 INDEX FUND seeks to provide investors, on a
no-fee basis, with investment results equivalent to the total return of the
Standard & Poor's 500 Composite Stock Price Index** ("S&P 500 Index").
STOCKJUNGLE.COM PURE PLAY INTERNET FUND seeks to provide investors with
long-term capital appreciation by investing in a diversified portfolio of the
equity securities of U.S. Internet companies based on the Adviser's analysis of
their fundamental investment value.
STOCKJUNGLE.COM COMMUNITY INTELLIGENCE FUND seeks to provide investors with
long-term capital appreciation by investing principally in a diversified
portfolio of the equity securities of U.S. companies with market capitalizations
of no less than $100 million which have demonstrated potential for long-term
growth. The Adviser will select portfolio securities from investment
opportunities which are recommended to StockJungle.com, Inc., the parent of the
Adviser, by visitors to the parent's website, http://www.stockjungle.com. These
recommendations will be screened by the Adviser using quantitative analysis, and
the Fund will invest in a portion of the securities passing the screening that
the Adviser believes is representative of those securities as a whole.
Each of the StockJungle.com Funds is designed and created for investment by
on-line investors. In order to keep costs to a minimum, shareholders in the
Funds are required to consent to the acceptance of all information about the
Fund or Funds in which they invest through access to the Trust's website and
electronic delivery. If you want to rescind this consent, the Trust will require
you to redeem your positions in the Funds, unless a new class of shares of the
Funds has been formed for shareholders who want to receive paper-based
information, reflecting the higher costs of such information. Shareholders
required to redeem their shares because they revoked their consent to receive
Fund information electronically may experience adverse tax consequences.
StockJungle.com, Inc. will provide investors and public visitors the ability to
access information and features exclusively via its website, located at
http://www.stockjungle.com. With the goal of providing investors a
<PAGE>
more complete and educational mutual fund investment experience, it is the
Adviser's intention to fully disclose all mutual fund holdings and activities,
to the extent practical, on the StockJungle.com website. The Adviser reserves
the right to alter this full disclosure policy as needed at any time.
*"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.
**"Standard & Poor's(R)," "S&P(R)" "S&P 500(R)", "Standard & Poor's 500(R)", and
"500(R)" are trademarks of The McGraw-Hill Companies, Inc. and have been
licensed for use by Financial Resources Group, Inc., on behalf of the Trust, for
use in connection with the StockJungle.com No Fee S&P 500 Index Fund. This Fund
is not sponsored, endorsed, sold, or promoted by Standard & Poor's and Standard
& Poor's makes no representation regarding the advisability of investing in the
Fund.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
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PAGE
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RISK/RETURN SUMMARY............................................................1
PERFORMANCE....................................................................5
FEES AND EXPENSES OF THE FUNDS.................................................5
STOCKJUNGLE.COM MARKET LEADERS GROWTH FUND.....................................6
STOCKJUNGLE.COM NO FEE S&P 500 INDEX FUND .....................................7
STOCKJUNGLE.COM PURE PLAY INTERNET FUND........................................9
STOCKJUNGLE.COM COMMUNITY INTELLIGENCE FUND ..................................10
MAIN RISKS....................................................................12
MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE................................16
VALUATION OF SHARES...........................................................19
HOW TO PURCHASE SHARES........................................................19
HOW TO REDEEM SHARES..........................................................22
SHAREHOLDER SERVICES..........................................................24
DIVIDENDS AND DISTRIBUTIONS...................................................25
TAX STATUS....................................................................26
PERFORMANCE INFORMATION.......................................................27
GENERAL INFORMATION...........................................................27
CUSTODIAN, TRANSFER, DIVIDEND DISBURSING AND SHAREHOLDER
SERVICING AGENT......................................................27
COUNSEL AND INDEPENDENT AUDITORS..............................................27
FOR MORE INFORMATION..........................................................29
<PAGE>
RISK/RETURN SUMMARY
1. STOCKJUNGLE.COM MARKET LEADERS GROWTH FUND
------------------------------------------
INVESTMENT OBJECTIVE:
---------------------
o The Fund seeks to provide investors with long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGY:
------------------------------
o Investment in a diversified portfolio of the equity securities of U.S.
companies which, in the opinion of the Adviser, have consistently
demonstrated fundamental investment value, hold strong competitive
positions in their respective industries and have favorable long-term
growth prospects. The Fund may also invest up to 20% of its net assets in
the equity securities of companies identified by the Adviser as relatively
new leaders in smaller, but potentially important industries.
o The Adviser will determine the fundamental investment value of each
portfolio security by screening certain financial indicators such as the
price-to-earnings ratio, the return on equity, and cash flow using
proprietary quantitative techniques. In assessing the strength of a
company's competitive position, the Adviser may consider such factors as
technology leadership, market share, rights to patents and other
intellectual property, strength of management, marketing prowess and
product development capabilities.
PRINCIPAL INVESTMENT RISKS:
---------------------------
o Risk of Loss. The loss of money is a risk of investing in this Fund.
o Market Risk. The net asset value of this Fund will fluctuate based on
changes in the value of the securities in which the Fund invests. Market
prices of these securities may be adversely affected by an issuer's having
experienced losses or by the lack of earnings or the issuer's failure to
meet the market's expectations with respect to new products or services, or
even by factors wholly unrelated to the value or condition of the issuer.
o New Leaders. Companies identified by the Adviser as new leaders may include
issuers with small or mid-sized capital structures (generally a market
capitalization of $5 billion or less). Consequently, the Fund may be
subject to the additional risks associated with investment in these
companies. These companies may have a relatively limited operating history
and less capital resources than larger market leaders. In addition, the
market prices of the securities of such companies tend to be
1
<PAGE>
more volatile than those of larger companies. Further, these securities
tend to trade at a lower volume than those of larger more established
companies. Accordingly, the net asset value of the Fund will be more
susceptible to significant losses if the value of these securities suddenly
declines.
2. STOCKJUNGLE.COM NO FEE S&P 500 INDEX FUND
-----------------------------------------
INVESTMENT OBJECTIVE:
---------------------
o The Fund seeks to provide investors with a total return equivalent to that
of the S&P 500 Index.
PRINCIPAL INVESTMENT STRATEGY:
------------------------------
o Replicate the holdings of the S&P 500 Index, an un-managed index of the
common stock of 500 companies ("S&P 500 Index Securities") which represent
a significant portion of the market value of all common stock publicly
traded in the United States.
o Prior to the Fund's commencement of investment operations, there will be a
90-day subscription period in order to accumulate sufficient funds (at
least $3 million) to purchase S&P 500 Index Securities and replicate the
S&P 500 Index. The Fund will commence investment operations before the end
of the subscription period if sufficient funds are accumulated.
PRINCIPAL INVESTMENT RISK:
--------------------------
o Risk of Loss. Loss of money is a risk of investing in this Fund.
o Market Risk. The net asset value of the Fund will fluctuate based on
changes in the value of the individual securities comprising the S&P 500
Index. The U.S. stock markets upon which these securities are listed are
generally susceptible to volatile fluctuations in market price. Increased
volatility of these securities may adversely affect the value of the Fund's
shares and could result in the loss of your investment.
o Inability to Replicate Index. If the Fund fails to accumulate sufficient
funds for the purpose of replicating the S&P 500 Index at the expiration of
the subscription period, the Fund will be unable to achieve its investment
objective, all subscriptions plus any interest earned, will be returned to
the subscribers on a pro rata basis, and the Fund will terminate.
2
<PAGE>
3. STOCKJUNGLE.COM PURE PLAY INTERNET FUND
---------------------------------------
o The Fund seeks to provide investors with long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGY:
------------------------------
o Investment in a diversified portfolio of the equity securities of U.S.
companies determined by the Adviser to be "Pure Play Internet" companies
and whose securities have the potential for long-term growth. Generally,
the Adviser deems a company to be a "Pure Play Internet" company if it
determines they are U.S. companies that (i) derive at least 50% of their
revenue from the Internet and/or the World Wide Web ("WWW"); or (ii) have
business plans which are substantially dependent on the Internet and/or
WWW.
o The Adviser will select portfolio securities based on its review of the
fundamental investment value and long-term growth potential of the
companies determined by the Adviser to be "Pure Play Internet" companies.
This review involves an analysis of various indicators such as the strength
or potential strength of a company's competitive position, strength of
management, marketing prowess and product development capabilities.
PRINCIPAL INVESTMENT RISKS:
---------------------------
o Risk of Loss. The loss of money is a risk of investing in this Fund
o Market Volatility and Sector Risk. The value of this Fund's shares is
susceptible to factors affecting the Internet and WWW such as heightened
regulatory scrutiny and impending changes in government policies which may
have a material effect on the products and services of this sector, as well
as other factors affecting capital markets generally and the Internet
sector of those markets. Furthermore, securities of companies in this
sector tend to be more volatile than securities of companies in other
sectors. Competitive pressures and changing demand may have a significant
effect on the financial condition of Internet companies. These companies
spend heavily on research and development and are especially sensitive to
the risk of product obsolescence. The occurrence of any of these factors,
individually or collectively, may adversely affect the value of the Fund's
shares and could result in the loss of your investment.
o Investment in New and Unseasoned Companies. Companies that are relatively
new and unseasoned and in their early stages of development may not be well
known to the investing public or have significant institutional ownership.
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
3
<PAGE>
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. 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 could result in the loss of your investment.
4. STOCKJUNGLE.COM COMMUNITY INTELLIGENCE FUND
-------------------------------------------
INVESTMENT OBJECTIVE:
---------------------
o The Fund seeks to provide investors with capital appreciation.
PRINCIPAL INVESTMENT STRATEGY:
------------------------------
o Investment in a diversified portfolio of the equity securities of U.S.
companies which the Adviser determines have market capitalizations of no
less than $100 million and favorable growth prospects. The Adviser will
select portfolio securities from investment opportunities which are
recommended to StockJungle.com, Inc., the parent of the Adviser, by
visitors to the parent's website, http://www.stockjungle.com. These
recommendations will be screened by the Adviser using quantitative
analysis, and the Fund will invest in a portion of the securities passing
the screening that the Adviser believes is representative of those
securities as a whole.
PRINCIPAL INVESTMENT RISKS:
---------------------------
o Risk of Loss. Loss of money is a risk of investing in this Fund.
o Volatility of U.S. Markets. The net asset value of this Fund can be
expected to fluctuate based on changes in the value of the securities in
which the Fund invests. The U.S. stock market is generally susceptible to
volatile fluctuations in market price. Investments in equity securities
generally are affected by changes in the stock markets, which fluctuate
substantially over time, sometimes suddenly and sharply. During an overall
stock market decline, stock prices of small- or medium-sized companies (in
which the Fund may invest) often fluctuate more than prices of larger
companies.
o Reliance on Community Intelligence. The effectiveness of this Fund's
investment strategy is directly contingent upon widespread participation by
visitors to the StockJungle.com website. There are no assurances that
visitors to the website will participate or that the Adviser will be able
to successfully screen the information provided and select appropriate
securities for this Fund.
4
<PAGE>
o Investment in New and Unseasoned Companies. Companies that are relatively
new and unseasoned and in their early stages of development may not be well
known to the investing public or have significant institutional ownership.
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. 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 could result in the loss of your
investment.
PERFORMANCE
No Bar Charts or Performance Tables are presented for the StockJungle.com
Funds because the Funds are commencing operations on the date of this Prospectus
and have no operating history.
FEES AND EXPENSES OF THE FUNDS
The following table describes the fees and expenses that you may pay if
you buy and hold shares of each of the Funds:
<TABLE>
<CAPTION>
STOCKJUNGLE.COM
---------------
MARKET NO FEE PURE PLAY COMMUNITY
LEADERS S&P 500 INTERNET INTELLIGENCE
GROWTH FUND INDEX FUND FUND
FUND1
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SHAREHOLDER FEES (PAID
DIRECTLY FROM YOUR INVESTMENTS):
- ------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on Purchases NONE NONE NONE NONE
(as a percentage of the offering price)
- ------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED
FROM FUND ASSETS):
- ------------------------------------------------------------------------------------------------------------
Management Fees2 1.00% NONE 1.00% 1.00%
- ------------------------------------------------------------------------------------------------------------
Distribution (12b-1) Fees NONE NONE NONE NONE
Other Expenses ___% ___% ___% ___%
Total Estimated Annual
Fund Operating Expenses ___% ___% ___% ___%
- ------------------------------------------------------------------------------------------------------------
Expense Reimbursement ___% ___% ___% ___%
- ------------------------------------------------------------------------------------------------------------
Net Expenses2 1.00% NONE 1.00% 1.00%
- ------------------------------------------------------------------------------------------------------------
</TABLE>
- -----------------------------------
1 The Adviser receives no Management Fee and is responsible for the payment
of all fees of the StockJungle.com No Fee S&P 500 Index Fund, except
litigation or other extraordinary expenses and, as a result, this Fund's
Total Fund Operating Expenses will be zero.
2 The Adviser's Management Fees with respect to each of the StockJungle.com
Market Leaders Growth Fund, StockJungle.com Pure Play Internet Fund and
StockJungle.com Community Intelligence Fund are "all inclusive" which means
that the Adviser is responsible for the payment of all of a Fund's other
expenses, except litigation or other extraordinary expenses and, as a
result, each Fund's Total Fund Operating Expenses will not exceed 1% of the
Fund's average daily net assets.
5
<PAGE>
EXAMPLE:
THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN EACH
FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.
THE EXAMPLE ASSUMES THAT YOU INVEST $10,000 IN EACH FUND FOR THE TIME
PERIODS INDICATED AND THEN REDEEM ALL OF YOUR SHARES AT THE END OF THESE
PERIODS. THE EXAMPLE ALSO ASSUMES THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR
AND THAT THE FUND'S OPERATING EXPENSES REMAIN THE SAME. ALTHOUGH YOUR ACTUAL
COSTS MAY BE HIGHER OR LOWER, BASED ON THESE ASSUMPTIONS YOUR COST WOULD BE:
<TABLE>
<CAPTION>
STOCKJUNGLE.COM
MARKET LEADERS STOCKJUNGLE.COM NO STOCKJUNGLE.COM STOCKJUNGLE.COM
GROWTH FUND FEE S&P 500 INDEX FUND PURE PLAY INTERNET FUND COMMUNITY INTELLIGENCE FUND
- ----------- ---------------------- ----------------------- ---------------------------
<S> <C> <C> <C>
ONE YEAR $______ ONE YEAR NONE ONE YEAR $______ ONE YEAR $______
THREE YEARS $______ THREE YEARS NONE THREE YEARS $______ THREE YEARS $______
</TABLE>
STOCKJUNGLE.COM MARKET LEADERS GROWTH FUND
INVESTMENT STRATEGY
Under normal market conditions, the StockJungle.com Market Leaders Growth
Fund invests at least 80% of its assets in a diversified portfolio of equity
securities of U.S. companies which, in the opinion of the Adviser, have
consistently demonstrated fundamental investment value and hold strong
competitive positions in their respective industries. In addition, the Fund may
invest a small but not insignificant portion (up to 20%)
6
<PAGE>
of its net assets in the equity securities of companies identified by the
Adviser as relatively new leaders in smaller, but potentially important
industries.
To achieve its investment objective, the Fund invests primarily in common
stocks, but may also invest in the preferred stock and convertible preferred
stock of such companies. Common stock represents the residual ownership interest
in an issuer and is entitled to the income and increase in the value of the
assets and business of the entity after all of its obligations and preferred
stock are satisfied. Preferred stock has a priority over common stock in
liquidation (and generally dividends as well) but is subordinate to the
liabilities of the issuer in all respects. As a general rule, the market value
of preferred stock with a fixed dividend rate and no conversion element varies
inversely with interest rates and perceived credit risk, while the market price
of convertible preferred stock generally also reflects some element of the
conversion value. A convertible security is a fixed income security (a debt
instrument or a preferred stock) that may be converted at a stated price within
a specified period of time into a certain quantity of the common stock of the
same or a different issuer. Convertible securities are senior to common stock in
an issuer's capital structure, but are usually subordinated to similar
non-convertible securities (e.g. preferred).
Solely as a temporary defensive measure, the Fund may invest up to 20% of
its assets in long or short positions in options on various market indices or
securities held by the Fund and in financial and index futures contracts in
order to reduce the Fund's exposure to adverse conditions. The Fund may also
invest a portion of its assets in U.S. Government securities, Standard & Poor's
Depositary Receipts, money market instruments or similar short-term securities
for liquidity purposes. When the Fund is making defensive investments, the Fund
may not achieve its investment objective.
The Adviser focuses on the market leaders of core industries that have
consistent operating histories, strong management teams and favorable long-term
growth prospects. The Fund will focus primarily on industries represented in the
S&P 500 Index including, but not limited, to Utilities, Transportation,
Technology, Chemicals, Pharmaceuticals, Retail Sales, Oil, Capital Goods,
Financial Services and Communications. The Adviser, in its sole discretion,
determines which and to what extent each industry is to be represented in the
Fund's portfolio and will purchase or sell portfolio securities if it believes
that a particular industry should or should not be included in the Fund's
investments.
The Adviser will determine the fundamental investment value of a security
by screening certain financial indicators such as the price-to-earnings ratio,
the return on equity, and cash flow using proprietary quantitative techniques.
In assessing the strength of a company's competitive position, the Adviser may
consider such factors as technology leadership, market share, rights to patents
and other intellectual property, strength of management, marketing prowess and
product development capabilities.
The Adviser will utilize a buy and hold approach, generally maintaining its
position in a company's stock without regard to day-to-day fluctuations in the
market. However, the Adviser will frequently re-evaluate portfolio holdings, as
it deems necessary, and will typically sell a stock when the reasons for buying
it no longer apply or when the company begins to show deteriorating fundamentals
or poor relative performance.
7
<PAGE>
PORTFOLIO TURNOVER. The frequency of this Fund's portfolio transactions
will vary from year to year. Higher portfolio turnover rates resulting from more
actively traded portfolio securities generally result in higher transaction
costs, including brokerage commissions. However, since the Fund's investment
policies emphasize long-term investment in the securities of established
companies, the Adviser does not anticipate frequent changes in investments and
the Fund's portfolio turnover rate is expected to be relatively low. The Adviser
expects that the annual portfolio turnover rate for the StockJungle.com Market
Leaders Growth Fund will be approximately 50%.
STOCKJUNGLE.COM NO FEE S&P 500 INDEX FUND
INVESTMENT STRATEGY
The StockJungle.com No Fee S&P 500 Index Fund seeks to replicate the
composition and total return of the S&P 500 Index on a no-fee basis to
investors. The Fund invests substantially all of its net assets in the common
stock of the companies that comprise the S&P 500 Index ("S&P 500 Index
Securities"). The Fund does not hold all the stocks included in the Index,
however. Instead, the Adviser selects securities that it believes are
representative of the S&P 500 Index as a whole. During ordinary market
conditions, it expects the correlation between the performance of the Fund and
the S&P 500 Index to be at least 0.95 (a correlation of 1.00 would be a perfect
correlation, in which the net asset value of the Fund increases or decreases in
exact proportion to changes in the S&P 500 Index).
The S&P 500 Index is comprised of the common stocks of 500 companies
representing a significant portion of the market value of all common stocks
publicly traded in the United States and is a widely recognized un-managed index
of common stock prices. As a result, the Fund is diversified in terms of
industry, size, liquidity and other relevant characteristics. The Adviser
employs a passive investment management approach and does not intend to change
the composition of the Fund's equity portfolio based on its own economic,
financial or market analysis.
As a result of the Fund's no-fee feature, the investor has the opportunity
to realize a return on investment substantially equivalent to the return of the
S&P 500 Index (except for portfolio brokerage commissions and transaction costs)
as opposed to investing in other S&P Index funds which charge investors for
investment advisory fees or other management fees and costs of investing (such
as administrative, transfer agency, custodian and distribution fees, for
example) and which provide a return adversely affected by such fees and
expenses.
Prior to the Fund's commencement of investment operations, the Fund will
have a subscription period of 90 days during which all subscriptions for the
purchase of shares will be deposited in an interest-bearing escrow account at
the Fund's custodian, The Fifth Third Bank (the "Custodian"). The purpose of the
subscription period is to accumulate at least $3 million in subscriptions for
the Fund's shares from public investors and/or affiliates of the Adviser to
allow the Fund to purchase S&P 500 Index Securities and replicate the S&P 500
Index. Each subscriber's pro rata share of the interest earned in the escrow
account will be used to purchase additional full or fractional shares of the
Fund. The Fund's initial purchase price during this subscription period is
$10.00 per share. If the Fund fails to accumulate $3 million prior to the
expiration of
8
<PAGE>
the subscription period, all subscriptions plus any interest earned, will be
returned to the subscribers on a pro rata basis and the Fund will terminate.
Pending investment of cash in S&P 500 Index Securities or for liquidity
purposes, the Fund may invest a portion of its assets in U.S. Government
securities, money market instruments or similar short-term securities, options
or futures contracts on the S&P 500 Index, or Standard & Poor's Depository
Receipts.
PORTFOLIO TURNOVER. The frequency of the Fund's portfolio transactions will
vary from year to year and depend, to a large extent, on changes in the S&P 500
Index. Historically, the S&P 500 Index has experienced relatively low portfolio
turnover and it is expected that this will continue. Higher portfolio turnover
rates resulting from more actively traded portfolio securities generally result
in higher transaction costs, including brokerage commissions. The Fund expects
that its annual portfolio turnover rate will be less than 10%.
STOCKJUNGLE.COM PURE PLAY INTERNET FUND
The StockJungle.com Pure Play Internet Fund invests, under normal
conditions, at least 80% of its assets in a diversified portfolio of the equity
securities of U.S. Internet companies identified by the Adviser to be "Pure Play
Internet" companies. Internet companies for purposes of investment by the Fund
include companies principally engaged in businesses that design, develop and/or
manufacture hardware and software products and services for the Internet and the
WWW.
To achieve its investment objective, the Fund invests primarily in common
stocks, but may also invest in the preferred stock and convertible preferred
stock of such companies. Common stock represents the residual ownership interest
in an issuer and is entitled to the income and increase in the value of the
assets and business of the entity after all of its obligations and preferred
stock are satisfied. Preferred stock has a priority over common stock in
liquidation (and generally dividends as well) but is subordinate to the
liabilities of the issuer in all respects. As a general rule, the market value
of preferred stock with a fixed dividend rate and no conversion element varies
inversely with interest rates and perceived credit risk, while the market price
of convertible preferred stock generally also reflects some element of the
conversion value. A convertible security is a fixed income security (a debt
instrument or a preferred stock) that may be converted at a stated price within
a specified period of time into a certain quantity of the common stock of the
same or a different issuer. Convertible securities are senior to common stock in
an issuer's capital structure, but are usually subordinated to similar
non-convertible securities (e.g. preferred).
The Adviser, in its sole discretion, determines which companies properly
constitute "Pure Play Internet" companies. The Adviser's determination is based,
generally, on whether, in its view, such companies (i) derive more than 50% of
their revenues from the Internet and/or WWW or (ii) have business plans which
are substantially dependent on the Internet and/or WWW. "Pure Play Internet"
companies may include media and content providers, companies that use e-commerce
as their principal means of selling goods and services
9
<PAGE>
to the public, companies that develop or manufacture business solutions that
enable businesses to implement Internet strategies, and companies engaged in the
transmission of voice, video and data over the Internet or WWW. These companies
may include entities which are new and unseasoned in which the Fund invests
pursuant to an initial public offering or otherwise where the Adviser believes
that the opportunity for rapid growth is above average. The companies in which
the Fund invests are reevaluated on as frequent a basis as deemed appropriate by
the Adviser.
The Fund will select portfolio securities from the pool of U.S. Internet
companies designated by the Adviser as "Pure Play Internet" companies based on
its review of the fundamental investment value of those companies. This review
involves an analysis of various indicators such as the strength or potential
strength of a company's competitive position, strength of management, marketing
prowess and product development capabilities. Securities are sold as a result of
factors such as lack of performance, change in business direction, or adverse
changes in other factors that were the basis for their purchase.
The Fund may also invest up to 20% of its net assets in U.S. Government
securities, high quality money market instruments and repurchase agreements. In
order to reduce the Fund's exposure to adverse conditions and solely as a
temporary defensive measure, the Fund may invest a more substantial portion of
its net assets in U.S. Government securities, high quality money market
instruments or similar short-term securities or hold either long or short
positions in options on the S&P 500 Index and financial index futures contracts
in order to reduce exposure to market fluctuations. Any use of futures or
options by the Adviser, however, will be in compliance with the Fund's long-term
investment objective. When the Fund is making such defensive investments, the
Fund may not achieve its investment objective.
The Internet is a world-wide network of computers designed to permit users
to share information and transfer data quickly and easily. The WWW, which is a
means of graphically interfacing with the Internet, is a hyper-text based
publishing medium containing text, graphics, interactive feedback mechanisms and
links within the WWW and to other WWW documents. Consequently, the Adviser
believes there are vast opportunities for continued growth in demand for
components, products, media, services and systems to assist, facilitate,
enhance, store, process, record, reproduce, retrieve and distribute information,
products and services for use by businesses, institutions and consumers.
PORTFOLIO TURNOVER. The frequency of the Fund's portfolio transactions will
vary from year to year and depend on changes in the companies designated by the
Adviser as "Pure Play Internet" companies. Higher portfolio turnover rates
resulting from more actively traded portfolio securities generally result in
higher transaction costs, including brokerage commissions. The Fund expects that
its annual portfolio turnover rate will be approximately 50%.
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STOCKJUNGLE.COM COMMUNITY INTELLIGENCE FUND
INVESTMENT STRATEGY
The StockJungle.com Community Intelligence Fund invests, under normal
conditions, at least 80% of its assets in a diversified portfolio of the common
stocks and other equity securities of those U.S. companies that have been
recommended to StockJungle.com, Inc., the parent of the Adviser, by visitors to
the StockJungle.com website. The Adviser believes that there exists a vast
amount of knowledge and experience among the visitors to StockJungle.com's
website and that by seeking input through this website it will have access to a
greater breadth of investment ideas for the Fund's portfolio.
StockJungle.com has established a website on the Internet at
http://www.stockjungle.com. One section of the website has been designated by
StockJungle.com as a community forum in which visitors to the website can
suggest investment opportunities and ideas by posting short written analyses on
companies. StockJungle.com will forward the visitor recommendations posted in
the community forum to the Adviser for consideration as possible investments by
this Fund. The Adviser will analyze each visitor recommendation presented for
evaluation by StockJungle.com using quantitative analysis in order to determine
whether such recommendation suggests securities which are consistent with the
Fund's investment objective of capital appreciation. The Fund will invest in a
portion of the securities passing the screening that the Adviser believes is
representative of those securities as a whole. The Adviser, in its sole
discretion, determines whether and to what extent the equity security of any
recommended company should be purchased or sold by the Fund. While the Adviser
believes that it will receive adequate numbers of proposals from visitors to the
StockJungle.com website, there are no assurances that any will satisfy the
Adviser's investment criteria or that the Adviser will in fact utilize any such
suggestions.
To achieve its investment objective, the Fund invests primarily in common
stocks, but may also invest in the preferred stock and convertible preferred
stock of the companies identified by visitors to the website. Common stock
represents the residual ownership interest in an issuer and is entitled to the
income and increase in the value of the assets and business of the entity after
all of its obligations and preferred stock are satisfied. Preferred stock has a
priority over common stock in liquidation (and generally dividends as well) but
is subordinate to the liabilities of the issuer in all respects. As a general
rule, the market value of preferred stock with a fixed dividend rate and no
conversion element varies inversely with interest rates and perceived credit
risk, while the market price of convertible preferred stock generally also
reflects some element of the conversion value. A convertible security is a fixed
income security (a debt instrument or a preferred stock) that may be converted
at a stated price within a specified period of time into a certain quantity of
the common stock of the same or a different issuer. Convertible securities are
senior to common stock in an issuer's capital structure, but are usually
subordinated to similar non-convertible securities (e.g. preferred).
Investments by the Fund are limited to shares of equity securities of U.S.
companies with market capitalizations of no less than $100 million. These may
include the securities of companies which are new and unseasoned in which the
Fund invests pursuant to an initial public offering or otherwise where the
Adviser believes that the opportunity for rapid growth is above average.
Although it is not currently a principal aspect of the Fund's investment
strategy, the Fund is also 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 addition, for liquidity
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purposes or pending the purchase of investments in accordance with its policies,
the Fund may, from time to time, invest a portion of the Fund's assets in U.S.
Government securities or money market instruments.
PORTFOLIO TURNOVER. The frequency of the Fund's portfolio transactions will
vary from year to year. The Fund's investment policies may lead to frequent
changes in investments and the Fund's portfolio turnover rate may be
significantly higher than that of most other mutual funds. These transactions
may also result in realization of taxable capital gains, much or all of which
are short-term capital gains subject to federal and state taxation as ordinary
income and not eligible for favored long term capital gains tax treatment.
Higher portfolio turnover rates resulting from actively trading portfolio
securities will generally result in higher transaction costs, including
brokerage commissions. The Fund expects that its annual portfolio turnover rate
will be approximately 100%.
GENERAL
Additional information concerning the investment strategies and risks of
each Fund can be found in the Statement of Additional Information ("SAI").
MAIN RISKS
INVESTING IN MUTUAL FUNDS. All mutual funds carry a certain amount of risk.
You may lose money on your investment in any of the StockJungle.com Trust Funds.
The following describes risks that are particular to each Fund as a result of
each Fund's specific investment objective and strategies as well as risks that
are common to all of the StockJungle.com Trust Funds generally. 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. In
addition, you should be aware that none of the Funds has any operating history
and the Adviser has no prior experience in serving as an investment adviser to a
mutual fund.
1. STOCKJUNGLE.COM MARKET LEADERS GROWTH FUND RISKS
------------------------------------------------
NEW LEADERS/RISK OF INVESTMENT IN SMALL AND MID-CAP COMPANIES. Companies
identified by the Adviser as relatively new leaders in smaller and less
developed but potentially important industries may include issuers with small or
mid-sized capital structures (generally a market capitalization of $5 billion or
less). Consequently, the Fund may be subject to the additional risks associated
with investment in these companies. The market prices of the securities of such
companies tend to be more volatile than those of larger companies. Further,
these securities tend to trade at a lower volume than those of larger more
established companies. Accordingly, if the Fund is heavily invested in these
securities and the value of these securities suddenly declines, the Fund will be
susceptible to significant losses.
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RISK OF INVESTING IN S&P 500 INDEX. Investing in the various industries
represented in the S&P 500 Index will expose the Fund to a broad variety of risk
factors. The risks that could adversely affect the value of your investment in
the Fund include: changes in economic conditions and interest rates, the
exposure of companies within these industries to foreign economic and political
developments and currency fluctuations, the ability of companies (especially
those in the Chemical and Pharmaceutical sectors) to pass their products through
regulatory bodies, changes in the spending patterns of consumers, the creation
of new technology which might make obsolete the technology sold, serviced,
utilized, or otherwise relied upon by companies held by the Fund, and the
fluctuation of energy prices.
2. STOCKJUNGLE.COM NO FEE S&P 500 INDEX FUND RISKS
-----------------------------------------------
PASSIVE MANAGEMENT OF FUND. With regard to the purchase of S&P 500 Index
Securities and the StockJungle.com No Fee S&P 500 Index Fund's replication of
the holdings of the S&P 500 Index, the Adviser employs a passive investment
management approach and does not change the composition of the portfolio's
equity position based on its own economic, financial or market analysis. The
inclusion of a security in the Fund's portfolio does not reflect an opinion by
the Adviser regarding the particular security's attractiveness as an investment.
In the event that a particular S&P 500 Index Security underperforms or suffers a
sharp decline in market value, the Fund may not liquidate the investment unless
such liquidation is also reflected in the S&P 500 Index. Under these
circumstances, the net asset value of the Fund may decline, negatively impacting
the value of your investment.
RISK OF INVESTING IN INDUSTRIES REPRESENTED IN THE S&P 500 INDEX. Investing
in the various industries represented in the S&P 500 Index will expose the Fund
to a broad variety of risk factors. The risks that could adversely affect the
value of your investment in the Fund include: changes in economic conditions and
interest rates, the exposure of companies within these industries to foreign
economic and political developments and currency fluctuations, the ability of
companies (especially those in the Chemical and Pharmaceutical sectors) to pass
their products through regulatory bodies, changes in the spending patterns of
consumers, the creation of new technology which might make obsolete the
technology sold, serviced, utilized, or otherwise relied upon by companies held
by the Fund, and the fluctuation of energy prices.
3. STOCKJUNGLE.COM PURE PLAY INTERNET FUND RISKS
---------------------------------------------
SECTOR RISK. The value of the Pure Play Internet Fund's shares will be
susceptible to factors affecting the Internet and WWW. This sector may be
subject to greater governmental regulation than many other sectors and changes
in government policies and the need for regulatory approvals may have a material
effect on the products and services of this sector. In addition, because of its
relatively narrow focus, the Fund's performance is closely tied to, and affected
by, this sector as a whole. Companies in a specialized sector are often faced
with the same obstacles, issues or regulatory burdens and their securities may
react similarly and move in unison to these and other market conditions. As a
result of these factors, securities in which the Fund invests are more volatile
than securities of companies in other sectors. Competitive pressures and
changing demand may have a significant effect on the financial condition of
Internet companies. These
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companies spend heavily on research and development and are especially sensitive
to the risk of product obsolescence.
INVESTMENT IN SMALL AND MID-CAP COMPANIES. Companies identified by the
Adviser as being principally engaged in the Internet and/or WWW may include
issuers with small or mid-sized capital structures (generally a market
capitalization of $5 billion or less). Accordingly, the Fund may be subject to
the additional risks associated with investment in these companies. The market
prices of the securities of such companies tend to be more volatile than those
of larger companies. Further, these securities tend to trade at a lower volume
than those of larger more established companies. If the Fund is heavily invested
in these securities and the value of these securities suddenly declines, the
Fund will be susceptible to significant losses.
INVESTMENT IN NEW AND UNSEASONED COMPANIES. Companies which are relatively
new and unseasoned and in their early stages of development 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 these 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.
4. STOCKJUNGLE.COM COMMUNITY INTELLIGENCE FUND RISKS
-------------------------------------------------
RELIANCE ON RECOMMENDATIONS. The effectiveness of the Fund's investment
strategy is contingent upon the ongoing participation by visitors to the
StockJungle.com website and the submission of bona-fide potential investments
for the Fund. There are no assurances that the website will attract such
participation.
RELIANCE ON INTERNET. Widespread network failure of the Internet and/or WWW
could result in delays or interruptions which could, in turn, delay or prevent
persons from posting investment recommendations to be submitted to the Adviser
for analysis and selection for investment by the Fund.
INVESTMENT IN NEW AND UNSEASONED COMPANIES. Companies which are relatively
new and unseasoned and in their early stages of development 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
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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 SALES. Although it is not currently a principal investment technique,
the Adviser may take short positions in securities. A short sale is the sale by
the Fund of a security which has been borrowed from a third party in the
expectation that the market price will drop. If the price drops, the Fund will
make a profit by purchasing the security in the open market at a lower price. If
the price rises, the Fund may have to cover its short position at a higher
price, resulting in a loss. A short sale may be covered or uncovered. In a
covered short sale, the Fund either borrows and sells the securities it already
owns, or deposits in a segregated account liquid assets equal to the difference
between the market value of the securities and the short sales price. Use of
short sales is a speculative investment technique that has potentially unlimited
risk of loss. Investment via short positions presents the risk that if the stock
markets move against the short position, the Fund will be more susceptible to a
sudden and significant decline in the net asset value of the Fund.
5. ADDITIONAL RISKS
----------------
MARKET RISK OF EQUITY INVESTING. The net asset value of each of the Funds
will fluctuate based on changes in the value of its underlying portfolio. The
stock market is generally susceptible to volatile fluctuations in market price.
Market prices of equity securities in which each Fund invests may be adversely
affected by an issuer's having experienced losses or by the lack of earnings or
by the issuer's failure to meet the market's expectations with respect to new
products or services, or even by factors wholly unrelated to the value or
condition of the issuer. The value of the securities held by each Fund is also
subject to the risk that a specific segment of the stock market does not perform
as well as the overall market. Under any of these circumstances, the value of
the Funds' shares and total return will fluctuate, and your investment may be
worth more or less than your original cost when you redeem your shares.
YEAR 2000 PROBLEM. Virtually all operations of the Funds are computer
reliant. Therefore, each of the Funds could be adversely affected if the
computer systems used by the Adviser, the Funds' other service providers or
persons with whom the Funds transact business do not properly process and
calculate date-related information and data on or after January 1, 2000 ("Year
2000 Problem"). Further, because the Year 2000 Problem can potentially affect
virtually all organizations, the companies or entities in which the Funds invest
could also be adversely affected. Failure to adequately address this issue could
have potentially serious repercussions to each Fund and your investment. The
Adviser is in the process of working with each Fund's service providers to
prepare for the Year 2000 Problem and are taking steps reasonably designed to
address any Year 2000 Problem-related issue. Based on information currently
available, the Adviser does not expect that the Funds will incur significant
operating expenses or be required to incur material costs to be Year 2000
compliant. Although the Adviser does not anticipate that the Year 2000 Problem
will have a material impact on the Adviser's and other service provider's
abilities to provide uninterrupted service to investors, there can
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be no assurance that steps taken in preparation for the Year 2000 Problem will
be sufficient to avoid any adverse impact on the Funds or that interaction with
other third-party computer systems which are not prepared for the Year 2000
Problem will not impair their services at that time, or that the Year 2000
Problem will not have an adverse effect on companies whose securities are held
by the Funds or in global markets or economies generally.
INVESTMENT IN DERIVATIVES. Each of the StockJungle.com Market Leaders
Growth Fund, StockJungle.com No Fee S&P 500 Index 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"-- 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.
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 price movements. For example, if a 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 a 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, a 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.
RISK FACTORS IN FUTURES TRANSACTIONS. Successful use of futures contracts
by a Fund is subject to the Adviser's ability to predict movements in various
factors affecting securities markets, including interest
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rates. Compared to the purchase or sale of futures contracts, the purchase of
call or put options on futures contracts involves less potential risk to a Fund
because the maximum amount at risk is the premium paid for the options (plus
transaction costs). However, there may be circumstances when the purchase of a
call or put option on a futures contract would result in a loss to a Fund when
the purchase or sale of a futures contract would not, such as when there is no
movement in the prices of the hedged investments. The writing of an option on a
futures contract involves risks similar to those risks relating to the sale of
futures contracts.
The use of options and futures strategies also involves the risk of
imperfect correlation among movements in the prices of the securities underlying
the futures and options purchased and sold by a Fund, of the options and 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 interest
rates and market movements correctly.
MANAGEMENT ORGANIZATION AND CAPITAL STRUCTURE
INVESTMENT ADVISER
StockJungle.com Investment Advisors, Inc. has been retained under an
Investment Advisory Agreement with StockJungle.com Trust (the "Trust") on behalf
of each Fund to serve as the investment adviser to each of the Funds, subject to
the authority of the Board of Trustees. The Adviser is a newly organized,
privately-held investment advisory and money management company, registered as
an investment adviser with the Securities and Exchange Commission. The Adviser's
principal office is located at 3805 South Canfield Avenue, Suite B, Culver City,
California 90232. The Adviser can also be contacted by telephone at (310) 841-
4010.
The Adviser provides each Fund with investment advice and supervises the
Fund's management and investment programs and provides investment advisory
facilities and executive and supervisory personnel for managing the investments
and effecting the portfolio transactions of each Fund. The Adviser also
furnishes, at its own expense, all necessary administrative services, office
space, equipment and clerical personnel for servicing the investments of each
Fund. In addition, the Adviser pays the salaries and fees of all officers of the
Trust who are affiliated with the Adviser. The Adviser has reserved the right to
delegate certain investment advisory responsibilities for each of the Funds to
sub-advisers registered as investment advisers with the Securities and Exchange
Commission.
PORTFOLIO MANAGERS
Each of the StockJungle.com No Fee S&P 500 Index Fund, StockJungle.com Pure
Play Internet Fund and the StockJungle.com Community Intelligence Fund is
co-managed by Messrs. Michael Petrino and Gordon Gustafson.
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Michael Petrino is the Chief Investment Officer of StockJungle.com. Mr.
Petrino has more than 20 years of asset management experience, most recently as
the founder of Calport Asset Management, an independent investment adviser
specializing in the management of small and large size domestic equities, global
stocks and global bonds in partnership with GE Investments and Dr. Arthur
Laffer. At Calport, Mr. Petrino was responsible for day-to-day portfolio
management for all of the firm's investment products, as well as their sales and
marketing efforts. In 1985, Mr. Petrino founded Matrix Capital Management, Inc.,
an asset management firm, where he served as President and Chief Investment
Officer. Matrix grew from a start-up to $1 billion in assets under management in
3 years, with offerings ranging from large cap equity portfolios to
derivative-based products. Prior to that, Mr. Petrino served as a Vice President
at Prudential Insurance, where he managed balanced global portfolios as second
in command of a department that managed $9 billion for over 90 plan sponsors.
Mr. Petrino received his undergraduate degree from Amherst College and his
M.B.A. from the University of Chicago. In addition to belonging to the New York
Society of Security Analysts, Mr. Petrino is also a member of the Board of
Directors of Fleming Capital Mutual Fund Group.
Gordon Gustafson joined StockJungle.com in March 1999. Mr. Gustafson has a
B.A. in Economics from the University of California, Los Angeles. Before joining
StockJungle.com, Mr. Gustafson worked in the film industry as a Production
Manager and was pursuing his M.A. in Mass Communications at California State
University, Northridge. Before moving to Los Angeles, Mr. Gustafson lived in
Seattle where he was self-employed as a writer.
MANAGEMENT FEE AND OTHER EXPENSES
Under the Investment Advisory Agreement, the StockJungle.com Market Leaders
Growth Fund, the StockJungle.com Pure Play Internet Fund and the StockJungle.com
Community Intelligence Fund each pay the Adviser monthly in arrears an annual
investment advisory fee equal to 1.0% of the Fund's average daily net assets.
The 1.0% investment advisory fee serves as an all-inclusive fee out of which the
Adviser will be responsible to pay each of these Funds' operating expenses
(other than litigation or other extraordinary expenses). Therefore, none of
these Funds is required to pay any expenses such as fees for transfer agency,
administrative or shareholder servicing, legal insurance, audit, and trustees'
fees or operating costs such as printing, mailing and registration fees. The
Adviser does not receive any management fee for the StockJungle.com No Fee S&P
500 Index Fund and is responsible for the payment of all fees and expenses which
accrue in connection with the management and operation of this Fund (other than
litigation or other extraordinary expenses).
ADMINISTRATOR
The Trust's administrator is Countrywide Fund Services, Inc. ("CFS" or the
"Administrator"), which has its principal office at 312 Walnut Street, 21st
Floor, Cincinnati, Ohio 45202, and is primarily in the business of providing
administrative, fund accounting and transfer agency services to retail and
institutional mutual funds with approximately $16 billion of total assets
throughout the United States.
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CFS provides administrative, executive and regulatory services to each
Fund, supervises the preparation of each Fund's tax returns and coordinates the
preparation of reports to and filings with the SEC and state securities
authorities, subject to the supervision of the Trust's Board of Trustees.
For the services rendered to each Fund by CFS, the Adviser pays CFS, on
behalf of each Fund, a monthly fee at the annual rate of .15% of the average
daily net assets of each Fund, up to $100 million; .10% of such assets from $100
million to $500 million; .075% of such assets from $500 million to $900 million;
and .05% of such assets in excess of $900 million. The minimum fee is $2,000 per
month per Fund. In addition, CFS serves as each Fund's transfer agent and
performs fund accounting services for which it is paid separately by the
Adviser. For additional information, see "Custodian, Transfer, Dividend
Disbursing and Shareholder Servicing Agent."
DISTRIBUTOR
CW Fund Distributors, Inc. (the "Distributor"), an affiliate of the
Administrator, has entered into an underwriting agreement with the Trust to
serve as the principal underwriter of each Fund and the exclusive agent for the
distribution of each Fund's shares. The Distributor will serve as the statutory
underwriter for the direct sale of the shares of each Fund to the public, and
will be responsible for contracting and managing relationships with investment
dealers.
VALUATION OF SHARES
On each day that the Trust is open for business, the share price (net asset
value) of the shares of each Fund is determined as of the close of the regular
session of trading on the New York Stock Exchange ("NYSE"), normally 4:00 p.m.,
eastern standard time. The Trust is open for business on each day the NYSE is
open for business. The net asset value per share of a Fund's is calculated by
dividing the sum of the value of the securities held by the Fund plus cash
and/or other assets minus all liabilities (including estimated accrued expenses)
attributable to the Fund by the total number of shares outstanding of the Fund,
rounded to the nearest cent. The price at which a purchase or redemption of a
Fund's shares is effected is based on the next calculation of net asset value
after the order is received in good order.
U.S. Government obligations are valued at their most recent bid prices as
obtained from one or more major market makers for such securities. Other
portfolio securities are valued as follows: (1) securities which are traded on
stock exchanges or are quoted on NASDAQ are valued at the last reported sale
price as of the close of the regular trading session on the NYSE on the day the
securities are being valued, or, if not traded on a particular day, at the
closing bid price; (2) securities traded in the over-the-counter market, and
which are not quoted by NASDAQ are valued at the last sale price (or, if the
last sale price is not readily available, at the last bid price as quoted by
brokers that make markets in the securities) as of the close of the regular
session of trading on the NYSE on the day the securities are being valued; (3)
securities which are traded both in the over-the-counter and on a stock exchange
are valued according the broadest and most representative market; and (4)
securities (and other assets) for which market quotations are not readily
available are valued at their fair value as determined in good faith in
accordance with consistently applied procedures established by and
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under the general supervision of the Board of Trustees. The net asset value per
share of a Fund will fluctuate with the value of the securities it holds.
Fixed income securities for which market quotations are not considered
readily available, are stated at fair value on the basis of valuations furnished
by a pricing service approved by the Board of Trustees, which pricing service
determines valuations for normal and institutional-size trading units of such
securities using methods based on market transactions for comparable securities
and various relationships between securities which are generally recognized by
institutional traders.
Short-term investments held by any of the Funds that mature in sixty days
or less are valued at amortized cost, which approximates market value. All other
securities and assets are valued at their fair value following procedures
approved by the Board of Trustees.
HOW TO PURCHASE SHARES
GENERAL PURCHASE INFORMATION
Shares of each Fund are sold on a continuous basis. The minimum initial
investment for the StockJungle.com No Fee S&P 500 Index Fund is $5,000. The
minimum initial investment for each other Fund of the Trust is $500. The maximum
investment by any investor in the StockJungle.com No Fee S&P 500 Index Fund is
limited to $100,000. A Fund may waive or reduce its minimum or maximum initial
investment from time to time. If an order is received by a Fund or its
authorized agent after the Fund's net asset value is determined, the purchase
will become effective on the next business day. The purchase price paid for each
Fund's shares is the next determined net asset value of the shares after the
order is placed. See "Valuation of Shares" herein. The Trust reserves the right
to reject any purchase order.
Additional investments may be made at any time by purchasing shares of each
Fund at net asset value by mailing a check to the appropriate Fund at the
address noted under "Purchases by Mail" or by wiring monies to the clearing bank
as outlined below from the bank with which the shareholder has an account and
which is a member of the Federal Reserve system with instructions to transmit
federal funds by wire to the appropriate Fund. Once a shareholder acquires an
interest in the StockJungle.com No Fee S&P 500 Index Fund which is equivalent to
$100,000, however, (through either the purchase of additional shares, dividends
or distributions or appreciation in the underlying portfolio securities held by
the Fund), no further purchases of Fund shares by that shareholder will be
permitted (unless the maximum investment amount is increased or waived).
Further, once the total assets of the StockJungle.com No Fee S&P 500 Index Fund
equal $1 billion, the Fund will be closed and no additional shares in the Fund
will be sold, except by reinvestment of dividend or distributions.
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All purchases of each Fund's shares will be made in full and fractional
shares calculated to three decimal places. No Fund will issue stock certificates
evidencing ownership of its shares.
Although shares of the Funds cannot currently be purchased through the
Trust's website, the Trust is planning to permit such sales as soon as
practicable.
OPENING AN ACCOUNT
Shareholders may open an account by mail by completing and signing an
account application and mailing it to the Fund at the following address:
StockJungle.com Trust
[NAME OF FUND]
P.O. Box 5354
Cincinnati, Ohio 45201-5354
PURCHASES BY WIRE
Subject to acceptance by the Fund, shares of each Fund may be purchased by
wiring immediately available federal funds (subject to the minimum investment,
and in the case of the StockJungle.com No Fee S&P 500 Index Fund, the maximum
investment amount) to Fifth Third Bank from your bank which may charge a fee for
doing so (see instructions below). You should provide your bank with the
following information for purposes of wiring your investment:
Fifth Third Bank
ABA# 042000314
Account# _______________
F/B/O [NAME OF FUND]
Shareholder Account #
A completed, signed application is required to be provided to the Fund by
facsimile or mail at the address listed above in order to complete an initial
purchase of a Fund's shares by wire. Wire orders will be accepted only on a day
on which the Fund whose shares are being purchased, and the Custodian and the
Transfer Agent are open for business. A wire purchase will not be considered
made until the wired money is
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received by the Fund. There is presently no fee for the receipt of wired funds,
but each Fund reserves the right to charge shareholders for this service.
PURCHASES BY MAIL
Subject to acceptance by the Fund, shares of each Fund may be purchased by
mailing your check to the Fund at the address noted below, (subject to the
particular Fund's minimum investment, and in the case of the StockJungle.com No
Fee S&P 500 Index Fund, the maximum investment amount) payable to:
[NAME OF FUND]
P.O. Box 5354
Cincinnati, Ohio 45201-5354
You are required to mail a signed application to the Fund at the address
listed above in order to complete your initial purchase. Payment for the
purchase of shares need not be converted into federal funds (monies credited to
a Fund's custodian bank by a Federal Reserve Bank) before acceptance by the
Fund's Transfer Agent. No third party checks will be accepted. In the event that
there are insufficient funds to cover a check, such prospective investor will be
assessed a $20 charge.
HOW TO REDEEM SHARES
GENERAL REDEMPTION INFORMATION
Your shares will be redeemed at the net asset value next determined after
receipt of your instructions in "good order" as explained below. Each Fund's net
asset value will fluctuate on a daily basis.
To redeem your shares, you may send a written request directly to the Fund.
This request should contain: the dollar amount or number of shares to be
redeemed, your Fund account number and either a social security or tax
identification number (as applicable). You should sign your request in exactly
the same way the account is registered. If there is more than one owner of the
shares, all owners must sign. A signature guarantee is required for redemptions
over $25,000. Please contact the Fund for more details.
Shares of each Fund may be redeemed by mail, or, if authorized, by
telephone. The value of shares redeemed may be more or less than the purchase
price, depending on the market value of the investment securities held by each
Fund.
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Although shares of the Trust cannot currently be redeemed through the
Trust's website, the Trust is planning to permit such redemptions as soon as
practicable.
BY MAIL
Each Fund will redeem its shares at the net asset value next determined
after the request is received in "good order." Requests should be addressed to:
StockJungle.com Trust/StockJungle.com Market Leaders Growth Fund,
StockJungle.com No Fee S&P 500 Index Fund, StockJungle.com Pure Play Internet
Fund or StockJungle.com Community Intelligence Fund, as the case may be, P.O.
Box 5354, Cincinnati, Ohio 45201- 5354.
The Trust reserves the right to reject any redemption request that is not
in "good order". Requests in "good order" must include the following
documentation:
(a) a letter of instruction specifying the number of shares or dollar
amount to be redeemed signed by all registered owners of the shares in
the exact names in which they are registered;
(b) any required signature guarantees (see "SIGNATURE GUARANTEES" below);
and
(c) other supporting legal documents, if required, in the case of estates,
trusts, guardianships, custodianship, corporations, pension and profit
sharing plans and other organizations.
SIGNATURE GUARANTEES
To protect your account, each Fund and the Transfer Agent from fraud,
signature guarantees are required to enable a Fund to verify the identity of the
person who has authorized a redemption of $25,000 or more from an account.
Signature guarantees are also required for redemptions when the proceeds are to
be sent to someone other than the registered shareholder(s) or the registered
address, and in cases of share transfer requests. Signature guarantees may be
obtained from certain eligible financial institutions, including but not limited
to, the following: banks, trust companies, credit unions, securities brokers and
dealers, savings and loan associations and participants in the Securities
Transfer Association Medallion Program ("STAMP"), the Stock Exchange Medallion
Program ("SEEP") or the NYSE Medallion Signature Program ("M.P."). Shareholders
may contact each Fund at (800) 945-4957 for further details.
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BY TELEPHONE
If the Telephone Redemption Option has been authorized, you may redeem your
shares by calling the Transfer Agent and requesting that the redemption proceeds
be mailed to the primary registration address or wired per the authorized
instructions. Provided that the Transfer Agent employs reasonable procedures to
confirm that the instructions are genuine, you bear the risk of loss in the
event of unauthorized instructions reasonably believed by the Fund or its
Transfer Agent to be genuine. The procedures employed by the Funds in connection
with transactions initiated by telephone may include tape recording of telephone
instructions and requiring some form of personal identification prior to acting
upon instructions received by telephone.
During times of drastic economic or market conditions, you may have
difficulty in contacting the Transfer Agent by telephone to request a redemption
or exchange of a Fund's shares. In those cases, you should consider using the
other redemption procedures described herein. Use of these other redemption
procedures may result in your redemption request being processed at a later time
than it would have been if telephone redemption had been used. During the delay,
the Fund's net assets may fluctuate.
PAYMENT OF REDEMPTION PROCEEDS
After your shares have been redeemed, proceeds will normally be mailed
within three business days. In no event will payment be made more than seven
days after receipt of your order in "good order", except that payment may be
postponed or the right of redemption suspended for more than seven days under
unusual circumstances, such as when trading is not taking place on the NYSE.
Payment of redemption proceeds may also be delayed if the shares to be redeemed
were purchased by a check drawn on a bank which is not a member of the Federal
Reserve System until such time as the check has cleared the banking system
(normally up to fifteen days from the purchase date).
You may request that redemption proceeds (minimum of $1,000) be wired to
your account at a bank which is a member of the Federal Reserve System, or a
correspondent bank if your bank is not a member.
If the Board of Trustees determines that it would be detrimental to the
best interests of the remaining shareholders of any Fund to make a payment,
wholly or partly in cash, the Fund may pay the redemption proceeds in whole or
in part by a distribution in-kind of readily marketable securities held by the
Fund in lieu of cash in conformity with applicable rules of the SEC.
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INVOLUNTARY REDEMPTION
Each Fund reserves the right to redeem your account at any time the net
asset value of the account falls below $5,000 in the StockJungle.com No Fee S&P
500 Index Fund or $500 in the other Funds as the result of a redemption or
exchange request. You will be notified in writing prior to any such involuntary
redemption and will be allowed thirty days to make additional investments before
the redemption is processed. In addition, the Funds will redeem your accounts if
you terminate your consent to receive all information about the Funds through
access to the Trust's website and means of electronic delivery, unless a new
class of shares of the Funds has been formed for shareholders who want to
receive paper-based information.
SHAREHOLDER SERVICES
We offer several shareholder service options listed on the account
application which make your account easier to manage. Please make note of these
options and select the ones that are appropriate for you.
AUTOMATIC INVESTMENT PROGRAM
You may arrange to make additional automated purchases of each Fund's
shares. You can automatically transfer any amount per month from your bank,
savings and loan or other financial institution to purchase additional shares.
You should contact your broker-dealer or financial institution or the Transfer
Agent for additional information.
TAX-QUALIFIED RETIREMENT PLANS
Each Fund is available for your tax-deferred retirement plan. Call or write
us and request the appropriate forms for:
o Individual Retirement Accounts ("IRAs"), Simple IRAs and Roth IRAs;
o 401(k) Plans; or
o Profit-sharing plans and pension plans for corporations and other
employees.
You can also transfer your tax-deferred plan to us from another company or
custodian. Call or write the Fund for instructions.
CONFIRMATION OF TRANSACTIONS AND REPORTING OF OTHER INFORMATION VIA ELECTRONIC
DELIVERY
The Funds each provide electronically delivered confirmations of all of
your purchases or redemptions of each Fund's shares. In addition, you will
receive electronically delivered account statements on a quarterly
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basis from the Funds. You will also receive various IRS forms after the first of
each year detailing important tax information and each Fund will supply
electronically delivered annual and semi-annual reports that list securities
held by that Fund and include its then current financial statements.
Each of the StockJungle.com Trust Funds has been designed and created for
investment by on-line investors. Accordingly, by purchasing shares of a Fund,
each shareholder consents to the receipt of all shareholder information about
the Fund through access to the Trust's website and electronically in order to
reduce the higher costs of paper-based information delivery. Such shareholder
information may, from time to time, include prospectuses, statements of
additional information, proxy statements, financial reports, confirmations and
financial statements. Notwithstanding the above, each Fund reserves the right to
deliver paper-based documents in certain circumstances, at no cost to the
investor.
EXCHANGE PRIVILEGE
You may exchange your shares in any StockJungle.com Fund for shares of any
other series of StockJungle.com Trust at no charge. The prospectus and statement
of additional information of the Fund for which you exchange your shares should
be read carefully prior to any exchange for new shares and retained for future
reference. Be advised that exercising the exchange privilege is really two
transactions: a sale of shares in one fund and the purchase of shares in
another. Further, exchanges may have certain tax consequences and you could
realize short- or long-term capital gains or losses. Exchanges are generally
made only between identically registered accounts unless you send written
instructions with a signature guarantee requesting otherwise.
Call 1 (800) 945-4957 to learn more about exercising your exchange
privilege.
DIVIDENDS AND DISTRIBUTIONS
Each Fund will distribute its net investment income, if any, and net
realized capital gains, if any, annually. Distributions from capital gains are
made after applying any available capital loss carry-overs.
As a shareholder in any of the Funds described above, you can choose from
three distribution options:
o Reinvest all distributions in additional shares;
o Receive distributions from net investment income and short-term
capital gains in cash while reinvesting long-term capital gains
distributions, if any, in additional shares; or
o Receive all distributions in cash.
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You can change your distribution option by notifying the Fund in writing.
If you do not select an option when you open your account, all distributions
will be reinvested in additional shares of the Fund at net asset value. You will
receive a statement via electronic delivery confirming reinvestment of
distributions in additional shares promptly following the end of each calendar
year.
If a check representing a distribution is not cashed within one year, the
distribution and all future distributions from the Fund may be reinvested in the
Fund in which you were invested at the then-current net asset value per share.
Similarly, if correspondence sent by a Fund or the Transfer Agent is returned as
"undeliverable," all Fund distributions will automatically be reinvested in the
Fund in which you were invested. No interest will accrue on uncashed checks.
TAX STATUS
Each Fund is treated as a corporation for federal income tax purposes under
the Internal Revenue Code of 1986, as amended. Each Fund intends to qualify and
to elect to be treated as a regulated investment company. If so qualified, no
StockJungle.com Fund will be liable for federal income taxes to the extent they
distribute taxable income to shareholders.
Distributions to shareholders by the StockJungle.com Funds, whether
received in cash or reinvested in additional shares of the Fund, are generally
subject to federal income tax at varying rates depending on whether such
distributions are treated as ordinary income or capital gains distributions.
Interest income from direct investment by non-corporate taxpayers in United
States Government obligations (but not repurchase agreements) generally is not
subject to state taxation. However, some states may tax mutual fund dividends
attributable to such income.
Any redemption of a Fund's shares is a taxable event that may result in a
capital gain or loss.
For a more detailed discussion of the federal income tax consequences of
investing in shares of any of the StockJungle.com Funds. Before investing in any
of these Funds, you should consult your tax adviser regarding the consequences
of your local and state tax laws.
PERFORMANCE INFORMATION
Each Fund's investment performance may, from time to time, be included in
advertisements about such Fund. "Total Return" for the one, five and ten year
periods (or for the life of each Fund, if shorter) through the most recent
quarter represents the average annual compounded rate of return on an investment
of $1,000 in each Fund invested at the public offering price. Total return may
also be presented for other periods.
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All performance data is based on each Fund's past investment results and
does not predict future performance. Investment performance, which will vary, is
based on many factors, including market conditions and the composition of each
Fund's portfolio. Investment performance also often reflects the risks
associated with each Fund's investment objective and policies. These factors
should be considered when comparing the Funds' investment results to those of
other mutual funds and other investment vehicles. Quotation of investment
performance for any period when a fee waiver or expense limitation was in effect
will be greater than if the waiver or limitation had not been in effect. A
Fund's performance may be compared to other mutual funds, relevant indices and
rankings prepared by independent services.
GENERAL INFORMATION
StockJungle.com Market Leaders Growth Fund, StockJungle.com No Fee S&P 500
Index Fund, StockJungle.com Pure Play Internet Fund, and StockJungle.com
Community Intelligence Fund are each a series of StockJungle.com Trust, a
Massachusetts business trust.
CUSTODIAN, TRANSFER, DIVIDEND DISBURSING, AND SHAREHOLDER SERVICING AGENT
The Fifth Third Bank serves as Custodian for each Fund's cash and
securities. The Custodian does not assist in, and is not responsible for,
investment decisions involving assets of any of the Funds. The Adviser pays the
Custodian's annual fees charged for each Fund on behalf of the Trust.
CFS, the Trust's Administrator, also acts as each Fund's Transfer, Dividend
Disbursing, and Shareholder Servicing Agent. For these services, the Adviser
pays the CFS, in addition to the fee for administrative services, a monthly fee
of $15 per month per account with a minimum of $2,000 per month per Fund, plus
out-of-pocket expenses for rendering such transfer, dividend disbursing, and
shareholder servicing agency services. CFS also serves as Accountant Services
Agent for each Fund for which it receives a minimum monthly fee of $2,500.
COUNSEL AND INDEPENDENT AUDITORS
Legal matters in connection with the Trust, including the issuance of
shares of beneficial interest of each Fund, are passed upon by Spitzer & Feldman
P.C., 405 Park Avenue, New York, New York 10022. Arthur Andersen LLP, located at
425 Walnut Street, Suite 1500, Cincinnati, Ohio 45202, has been selected to
serve as the independent auditors for each Fund.
FOR MORE INFORMATION
STOCKJUNGLE.COM TRUST
STOCKJUNGLE.COM MARKET LEADERS GROWTH FUND
STOCKJUNGLE.COM NO FEE S&P 500 INDEX FUND
STOCKJUNGLE.COM PURE PLAY INTERNET FUND
STOCKJUNGLE.COM COMMUNITY INTELLIGENCE FUND
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More Information on each of these Funds is available free upon request,
including the following:
ANNUAL AND SEMIANNUAL REPORTS TO SHAREHOLDERS
Describe each Fund's performance, lists each Fund's holdings and contains a
letter from the Funds' Adviser discussing recent market conditions, economic
trends and investment strategies that significantly affected each particular
Fund's performance.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
Provides more details about each Fund and its policies. A current SAI is on file
with the Securities and Exchange Commission (SEC) and is incorporated by
reference herein (and is legally considered part of this prospectus).
TO OBTAIN INFORMATION:
BY TELEPHONE:
- -------------
(877) 732-7696
ON THE INTERNET:
- ----------------
Text only versions of each Fund's documents can be viewed online or downloaded
from:
SECURITIES AND EXCHANGE COMMISSION: HTTP://WWW.SEC.GOV
- ----------------------------------- ------------------
STOCKJUNGLE.COM, INC.: HTTP://WWW.STOCKJUNGLE.COM
- ---------------------- --------------------------
You can also review and copy the SAI and other information about the Funds by
visiting the SEC's Public Reference Room in Washington D.C. (phone at (1) (800)
SEC-0330) or by sending your request and a duplicating fee to the SEC's Public
Reference Section, Washington, DC 20549-6009.
FILE NO. 811-09403
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STOCKJUNGLE.COM1 TRUST
STOCKJUNGLE.COM MARKET LEADERS GROWTH FUND
STOCKJUNGLE.COM NO FEE S&P 500 INDEX2 FUND
STOCKJUNGLE.COM PURE PLAY INTERNET FUND
STOCKJUNGLE.COM COMMUNITY INTELLIGENCE FUND
STATEMENT OF ADDITIONAL INFORMATION
_____________, 1999
Table of Contents
Page
Investment Objective, Policies and Restrictions................................2
Trustees and Executive Officers...............................................11
Investment Advisory and Other Services........................................13
Portfolio Transactions and Allocation of Brokerage............................16
Taxation......................................................................18
Ownership of Shares...........................................................19
Dividends and Distributions...................................................20
Net Asset Value ..............................................................20
Performance Comparisons.......................................................20
Redemption of Shares..........................................................23
Organization of Trust.........................................................24
Counsel and Independent Auditors..............................................24
License Agreement.............................................................24
Other Information.............................................................24
This Statement of Additional Information is not a prospectus, and should be read
in conjunction with the Prospectus dated _________, 1999, as may be amended from
time to time, of the StockJungle.com Market Leaders Growth Fund, StockJungle.com
No Fee S&P 500 Index Fund, StockJungle.com Pure Play Internet Fund and the
StockJungle.com Community Intelligence Fund, (individually or collectively, a
"Fund" or the "Funds"), each a series of StockJungle.com Trust (the "Trust").
StockJungle.com Investment Advisors, Inc. (the "Adviser") is the investment
adviser to each Fund.
Each of the Funds is designed and created for investment by on-line investors.
Shareholders in the Funds are required to consent to the acceptance of all
information about the Fund or Funds in which they invest only through access to
the Trust's website and electronic delivery. A copy of the Prospectus for these
Funds may be obtained on-line at http://www.stockjungle.com.
- -------------------------
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
2 "Standard & Poor's(R)," "S&P(R)" "S&P 500(R)", "Standard & Poor's
500(R)", and "500(R)" are trademarks of The McGraw-Hill Companies, Inc. and have
been licensed for use by Financial Resources Group, Inc., on behalf of the
Trust, for use in connection with the StockJungle.com No Fee S&P 500 Index Fund.
This Fund is not sponsored, endorsed, sold, or promoted by Standard & Poor's and
Standard & Poor's makes no representation regarding the advisability of
investing in the Fund.
<PAGE>
INVESTMENT OBJECTIVE, POLICIES, AND RESTRICTIONS
INVESTMENT OBJECTIVES
---------------------
STOCKJUNGLE.COM MARKET LEADERS GROWTH FUND seeks to provide investors with
long-term capital appreciation by investing in a diversified portfolio of the
equity securities of U.S. corporations that have consistently demonstrated
fundamental investment value and hold strong competitive positions in various
industries. In addition, the Fund may invest up to 20% percent of its net assets
in the common stock of companies identified by the Adviser as relatively new
leaders in smaller, but potentially important industries.
STOCKJUNGLE.COM NO FEE S&P 500 INDEX FUND seeks to provide investors, on a
no-fee basis, with investment results equivalent to the total return of the
Standard & Poor's 500 Composite Stock Price Index ("S&P 500 Index").
STOCKJUNGLE.COM PURE PLAY INTERNET FUND seeks to provide investors with
long-term capital appreciation by investing in a diversified portfolio of the
equity securities of U.S. Internet companies based on the Adviser's analysis of
their fundamental investment value.
STOCKJUNGLE.COM COMMUNITY INTELLIGENCE FUND seeks to provide investors with
long-term capital appreciation by investing principally in a diversified
portfolio of the equity securities of U.S. companies with market capitalizations
of no less than $100 million which have demonstrated potential for long-term
growth. The Adviser will select portfolio securities from investment
opportunities which are recommended to StockJungle.com, Inc., the parent of the
Adviser, by visitors to the parent's website, http://www.stockjungle.com. These
recommendations will be screened by the Adviser using quantitative analysis, and
the Fund will invest in a portion of the securities passing the screening that
the Adviser believes is representative of those securities as a whole.
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.
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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
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.
YEAR 2000 PROBLEM. Virtually all operations of the Funds are computer
reliant. Therefore, each of the Funds could be adversely affected if the
computer systems used by the Adviser, the Fund's other service providers or
persons with whom the Funds transact business do not properly process and
calculate date-related information and data on or after January 1, 2000 ("Year
2000 Problem"). Further, because the Year 2000 Problem can potentially affect
virtually all organizations, the companies or entities in which the Funds invest
could also be adversely affected. Failure to adequately address this issue could
have potentially serious repercussions to each Fund and your investment. The
Adviser is in the process of working with each Fund's service providers to
prepare for the Year 2000 Problem and are taking steps reasonably designed to
address any Year 2000 Problem-related issue. Based on information currently
available, the Adviser does not expect that the Fund will incur significant
operating expenses or be required to incur material costs to be Year 2000
compliant. Although the Adviser does not anticipate that the Year 2000 Problem
will have a material impact on the Adviser's and other service provider's
abilities to provide uninterrupted service to investors, there can be no
assurance that steps taken in preparation for the Year 2000 Problem will be
sufficient to avoid any adverse impact on the Funds or that interaction with
other third-party computer systems which are not prepared for the Year 2000
Problem will not impair their services at that time, or that the Year 2000
Problem will not have an adverse effect on companies whose securities are held
by the Funds or in global markets or economies generally.
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, except for the StockJungle.com No Fee
S&P 500 Index Fund which will invest substantially all of its assets in common
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.
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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 mutual fund
investments or common stocks 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:
BANK CERTIFICATES OF DEPOSIT AND BANKERS' ACCEPTANCES. 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 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
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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.
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 No Fee S&P 500 Index
Fund 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 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, and
the StockJungle.com No Fee S&P 500 Index Fund may write covered call options on
the S&P 500 Index. 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.
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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.
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.
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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
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
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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, and the StockJungle.com No Fee
S&P 500 Index Fund may do so as a substitute for direct investment. 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 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.
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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
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
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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 units of an index at a specified future date at a price agreed upon when
the contract is made. Entering into a contract to buy units of 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 units of an index is
commonly referred to as selling a contract or holding a short position. A unit
is the current value of the index. 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.
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, contracts are to buy or sell 500 units. Thus, if
the value of the S&P 500 Index were $150, one contract could be worth $75,000
(500 units x $150). 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 enters into a
futures contract to buy 500 units of the S&P 500 Index at a specified future
date at a contract price of $150 and the S&P 500 Index is at $154 on that future
date, the Fund will gain $2,000 (500 units x gain of $4). If the Fund enters
into a futures contract to sell 500 units of the stock index at a specified
future date at a contract price of $150 and the S&P 500 Index is at $152 on that
future date, the Fund will lose $1,000 (500 units x loss of $2).
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.
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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.
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.
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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
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.
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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
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.
RESTRICTED SECURITIES. The SEC Staff currently takes the view that any
delegation by the Board of Trustees of the authority to determine that a
restricted security is readily marketable (as described in the investment
restrictions of the Fund) must be pursuant to written procedures established by
the Board of Trustees. It is the present intention of the Board of Trustees
that, if the Board of Trustees decide to delegate such determinations to the
Adviser or another person, they would do so pursuant to written procedures,
consistent with the Staff's position. Should the Staff modify its position in
the future, the Board of Trustees would consider what action would be
appropriate in light of the Staff's position at that time.
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
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),
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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.
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.
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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. Except for the StockJungle.com Pure Play Internet Fund, 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.
15
<PAGE>
STANDARD & POOR'S LICENSE
The StockJungle.com No Fee S&P 500 Index Fund is not sponsored, endorsed,
sold or promoted by Standard & Poor's, a division of The McGraw-Hill Companies,
Inc. ("S&P"). S&P makes no representation or warranty, express or implied, to
the owners of the Fund's shares or any member of the public regarding the
advisability of investing in securities generally or in the Fund particularly or
the ability of the S&P 500 Index to track general stock market performance.
S&P's only relationship to the Trust is the licensing of certain trademarks and
trade names of S&P and of the S&P 500 Index which is determined, composed and
calculated by S&P without regard to the Trust or the Fund. S&P has no obligation
to take the needs of the Trust or the owners of the Fund's shares into
consideration in determining, composing or calculating the S&P 500 Index. S&P is
not responsible for and has not participated in the determination of the prices
and amount of the Fund's shares or the timing of the issuance or sale of the
Fund's shares or in the determination or calculation of the equation by which
the Fund's shares are to be converted into cash. S&P has no obligation or
liability in connection with the administration, marketing or trading of the
Fund.
S&P does not guarantee the accuracy and/or the completeness of the S&P 500
Index or any data included therein and S&P shall have no liability for any
errors, omissions, or interruptions therein. S&P makes no warranty, express or
implied, as to results to be obtained by the Trust, owners of the Fund, or any
other person or entity from the use of the S&P 500 Index or any data included
therein. S&P makes no express or implied warranties, and expressly disclaims all
warranties of merchantability or fitness for a particular purpose or use with
respect to the S&P 500 Index or any data included therein. Without limiting any
of the foregoing, in no event shall S&P have any liability for any special,
punitive, indirect, or consequential damages (including lost profits), even if
notified of the possibility of such damages.
TRUSTEES AND EXECUTIVE OFFICERS
The following table contains information concerning the trustees and
executive officers of the Trust and their principal occupations during the past
five years.
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATION
NAME AND ADDRESS WITH THE TRUST LAST FIVE YEARS
<S> <C> <C>
Michael J. Witz (Age 27) President, Chief Chairman & CEO of
327 Arnaz Drive Executive Officer and StockJungle.com Investment
Los Angeles, California 90048 Chairman of the Board Advisors, Inc., a registered
of Trustees investment adviser and the
Adviser to the Funds
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<PAGE>
Victor A. Canto (Age__) Trustee Chairman and Founder of La Jolla
7608 La Jolla Boulevard Economics, an economics
La Jolla, California 92037 consulting firm; Managing
Director of Cadinha Institutional
Services, an asset management
firm. Previously served as
Director, Chief Investment Officer
and Portfolio Manager of Calport
Asset Management, an investment
adviser, and as President and
Director of Research of A.B.
Laffer, V.A. Canto & Associates.
Charles A. Parker (Age __) Trustee Director, T.C.W. Convertible
54 Huckleberry Hill Road Fund, a registered investment
New Canaan, Connecticut 06840 company; Director, Underwriters
Real Estate Group a _________;
Chairman and CEO of Continental
Asset Management Company, an
asset management firm; Chief
Investment Officer and Director
of Continental Corp., an asset
management firm; Member,
Business Advisory Council of the
University of Colorado School of
Business; Member, Institute of
Chartered Financial Analysts.
Michael Petrino (Age __) Vice-President Founder of and Portfolio Manager
327 Arnaz Drive at Calport Asset Management,
Los Angeles, California 90048 Inc., an investment adviser
Tina D. Hosking, Esq. (Age 30) Secretary Assistant Vice President and
312 Walnut Street Associate General Counsel of
21 st Floor Countrywide Fund Services, Inc.,
Cincinnati, Ohio 45202 a registered mutual fund transfer
agent and service provider
Theresa M. Samocki, CPA (Age 29) Treasurer Assistant Vice President and Fund
312 Walnut Street Accounting Manager of
21 st Floor Countrywide Fund Services, Inc.,
Cincinnati, Ohio 45202 a registered mutual fund transfer
agent and service provider.
Previously an auditor for Arthur
Andersen LLP
17
<PAGE>
Brian J. Manley, CPA (Age 35) Assistant Secretary Assistant Vice President and
312 Walnut Street Client Service Manager of
21 st Floor Countrywide Fund Services, Inc.,
Cincinnati, Ohio 45202 a registered mutual fund transfer
agent and service provider.
Robert Bennett (Age 57) Assistant Secretary First Vice President and Chief
312 Walnut Street Operations Officer of
21 st Floor Countrywide Fund Services, Inc.,
Cincinnati, Ohio 45202 a registered mutual fund transfer
agent and service provider.
Previously Chief Operations
Officer of The Calvert Group, a
subsidiary of Acacia Mutual Life
Insurance Company.
</TABLE>
The members of the Audit Committee of the Board of Trustees are Messrs.
Canto and Parker. Mr. Parker acts as the chairperson of such committee. The
Audit Committee oversees each Fund's financial reporting process, reviews audit
results and recommends annually to the Trust a firm of independent certified
public accountants.
Those Trustees who are officers or employees of the Adviser, the
Administrator or their affiliates receive no remuneration from the Funds.
Members of the Board who are not affiliated with the Adviser or the
Administrator receive an annual fee of $5,000 per Fund. Each Fund (with the
exception of the StockJungle.com No Fee S&P 500 Index Fund) will pay Trustees'
fees and expenses based on the net assets of the paying series of the Trust. The
Adviser shall be solely responsible for the payment of any Trustees' fees and
expenses attributable to the StockJungle.com No Fee S&P 500 Index Fund. In
addition, each Trustee who is not affiliated with the Adviser, the Administrator
or their affiliate is reimbursed for expenses incurred in connection with
attending meetings.
The following table sets forth the estimated compensation expected to be
received by each Trustee of the Trust during the fiscal year ending September
30, 2000. Trustees who are interested persons of the Trust, as defined by the
1940 Act, are indicated by asterisk.
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<PAGE>
- --------------------------------------------------------------------------------
(1) (2) (3) (4) (5)
- --------------------------------------------------------------------------------
Pension or Total
Retirement Compensation
Aggregate Benefits Estimated From Fund and
Compensation Accrued As Annual Fund Complex
Name of Person, From Each Part of Fund Benefits Upon Paid to
Position Fund3 Expenses Retirement Trustees
- --------------------------------------------------------------------------------
*Michael J. Witz NONE NONE NONE NONE
Chairman of the
Board of Trustees
- --------------------------------------------------------------------------------
Victor A. Canto $5,000 NONE NONE $20,000
Trustee
- --------------------------------------------------------------------------------
Charles A. Parker $5,000 NONE NONE $20,000
Trustee
- --------------------------------------------------------------------------------
- --------
3 The Adviser shall be solely responsible for payment of the Trustees' fees
and expenses incurred in connection with the StockJungle.com No Fee S&P 500
Index Fund.
INVESTMENT ADVISORY AND OTHER SERVICES
The investment adviser for each of the Funds is StockJungle.com Investment
Advisors, Inc., a Delaware corporation organized on ___________, 1999. The
Adviser was organized to act as investment adviser to the Trust, and accordingly
has no substantial operating history as of the date of this Statement of
Additional Information, although some of its employees have experience in the
investment management industry. 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 annually re-approved by the Board of Trustees.
The address of the Adviser is 3805 South Canfield Avenue, Suite B, Culver City,
California 90232. The Adviser can also be contacted by telephone at (310)
841-4010.
CONTROL OF THE ADVISER
The common stock of the Adviser is wholly-owned and controlled by
StockJungle.com, Inc., a Nevada corporation controlled by Messrs. 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.
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<PAGE>
INVESTMENT ADVISORY AGREEMENT
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
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.
MANAGEMENT FEE AND OTHER EXPENSES
Under the Investment Advisory Agreements between the Adviser and the Trust,
on behalf of each Fund, the StockJungle.com Market Leaders Growth Fund, the
StockJungle.com Pure Play Internet Fund and the StockJungle.com Community
Intelligence Fund will each pay the Adviser monthly in arrears an annual
investment advisory fee equal to 1.0% of the Fund's average daily net assets.
The 1.0% investment advisory fee serves as an all-inclusive fee out of which the
Adviser will be responsible to pay each of these Funds' operating expenses
(other than litigation or other extraordinary expenses). Therefore, none of
these Funds will be required to pay any expenses such as fees for transfer
agency, administrative or shareholder servicing, legal, insurance, audit, and
director's fees or operating costs such as printing, mailing and registration
fees. The Adviser will not receive any management fee for the StockJungle.com No
Fee S&P 500 Index Fund and will be responsible for the payment of all fees and
expenses which accrue in connection with the management and operation of this
Fund (other than litigation or other extraordinary expenses).
20
<PAGE>
CODE OF ETHICS
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.
ADMINISTRATOR
The Trust's administrator is Countrywide Fund Services, Inc. ("CFS" or the
"Administrator"), which has its principal office at 312 Walnut Street, 21st
Floor, Cincinnati, Ohio 45202, and is primarily in the business of providing
administrative, fund accounting and transfer agency services to retail and
institutional mutual funds with approximately $16 billion of total assets
throughout the United States.
Pursuant to an Administration Agreement with the Trust on behalf of each
Fund, the Administrator provides all administrative services necessary for the
Funds, subject to the supervision of the Trust's Board of Trustees. The
Administrator may provide persons to serve as officers of each Fund. Such
officers may be trustees, officers or employees of the Administrator or its
affiliates.
The Administration Agreement is terminable by the Board of Trustees or the
Administrator on sixty days' written notice and may be assigned provided the
non-assigning party provides prior written consent. The Agreement will remain in
effect for two years from the date of its initial approval, and subject to
annual approval of the Board of Trustees for one-year periods thereafter. The
Agreement provides that in the absence of willful misfeasance, bad faith or
gross negligence on the part of the Administrator or reckless disregard of its
obligations thereunder, the Administrator shall not be liable for any action or
failure to act in accordance with its duties thereunder and contains mutual
indemnification provisions similar to those in the Investment Advisory
Agreement.
Under the Administration Agreement, the Administrator provides all
administrative services, including, without limitation: (i) providing services
of persons competent to perform such administrative and clerical functions as
are necessary to provide effective administration of each Fund; (ii) overseeing
the performance of administrative and professional services to the Fund by
others, including each Fund's Custodian; (iii) preparing, but not paying for,
the periodic updating of each Fund's Registration Statement, Prospectus and
Statement of Additional Information in conjunction with each Fund's counsel,
including the printing of such documents for the purpose of filings with the SEC
and state securities administrators, preparing each Fund's tax returns, and
preparing reports to each Fund's shareholders and the Securities and Exchange
Commission; (iv) preparing , but not paying for, all filings under the
securities or "Blue Sky" laws of such states or countries as are designated by
the distributor, which may be required to register or qualify, or continue the
registration or qualification, of each Fund and/or its shares under such laws;
(v) preparing notices and agendas for meetings of the Board of Trustees and
minutes of such meetings in all matters required by the 1940 Act to be acted
upon by the Board; and (vi) monitoring daily and periodic compliance
21
<PAGE>
with respect to all requirements and restrictions of the Investment Company Act,
the Internal Revenue Code and the Prospectus.
The Administrator, pursuant to an Accounting Services Agreement with the
Trust, provides each Fund with all accounting services, including, without
limitation: (i) daily computation of net asset value; (ii) maintenance of
security ledgers and books and records as required by the Investment Company
Act; (iii) production of each Fund's listing of portfolio securities and general
ledger reports; (iv) reconciliation of accounting records; (v) calculation of
yield and total return for each Fund; (vi) maintaining certain books and records
described in Rule 31a-1 under the 1940 Act, and reconciling account information
and balances among each Fund's Custodian and Adviser; and (vii) monitoring and
evaluating daily income and expense accruals, and sales and redemptions of
shares of each Fund. The Agreement contains provisions regarding termination,
liability and indemnification similar to those in the Administration Agreement.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT
The 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. CFS, the
Administrator, also acts as each Fund's Transfer, Dividend Disbursing, and
Shareholder Servicing Agent. The Agreement contains provisions regarding
termination, liability and indemnification similar to those in the
Administration Agreement. All fees for these services are paid by the Adviser on
behalf of the Trust.
DISTRIBUTION AGREEMENT
CW Fund Distributors, Inc. ("the Distributor"), an affiliate of the
Administrator, has entered into an underwriting agreement with the Trust to
serve as the principal underwriter of each Fund and the exclusive agent for the
distribution of each Fund's shares. The Distributor will serve as the statutory
underwriter for the direct sale of the shares of each Fund to the public, and
will be responsible for contracting and managing relationships with investment
dealers. The Distributor has agreed to offer such shares for sale at all times
when such shares are available for sale and may lawfully be offered for sale and
sold.
The Distribution Agreement contains provisions with respect to renewal and
termination similar to those in the Investment Advisory Agreement described
above. Pursuant to the Distribution Agreement, the Trust has agreed to indemnify
the Distributor to the extent permitted by applicable law against certain
liabilities under the Securities Act of 1933.
22
<PAGE>
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 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
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 benefitting 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
23
<PAGE>
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.
TAXATION
Each of the Funds intends to qualify each year as a "regulated investment
company" under Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"). By so qualifying, no Fund will incur federal income or state taxes
on its net investment company taxable income or on its net realized capital
gains (net long-term capital gains in excess of the sum of net short-term
capital losses and capital loss carryovers from the prior 8 years) to the extent
distributed as dividends to shareholders.
To qualify as a regulated investment company, a Fund must, among other
things (a) derive in each taxable year at least 90% of its gross income from
dividends, interest, payments with respect to securities loans, and gains from
the sale or other disposition of stock, securities or foreign currencies, or
other income (including gains from options, futures and forward contracts)
derived with respect to its business of investing in such stock, securities or
currencies; (b) diversify its holdings so that, at the end of each quarter of
the taxable year, (i) at least 50% of the market value of a Fund's assets is
represented by cash, U.S. Government securities, the securities of other
regulated investment companies and other securities, with such other securities
of any one issuer limited for the purposes of this calculation to an amount not
greater than 5% of the value of a Fund's total assets and 10% of the outstanding
voting securities of such issuer, and (ii) not more than 25% of the value of its
total assets is invested in the securities of any one issuer (other than U.S.
Government securities or the securities of other regulated investment
companies); and (c) distribute to its shareholders at least 90% of its
investment company taxable income (which includes dividends, interest and net
short-term capital gains in excess of any net long-term capital losses) and 90%
of its net exempt interest income each taxable year.
Amounts not distributed on a timely basis in accordance with a calendar
year distribution requirement are subject to a nondeductible 4% excise tax at
the Fund level. To avoid the tax, each Fund must distribute during each calendar
year an amount equal to the sum of (a) at least 98% of its ordinary income (not
taking into account any capital gains or losses) for the calendar year, (b) at
least 98% of its capital gains in excess of capital losses (adjusted for certain
ordinary losses) for a one-year period generally ending on October 31st of the
calendar year, and (c) all ordinary income and capital gains for previous years
that were not distributed during such years.
Under the Code, dividends derived from interest, and any short-term capital
gains, are taxable to shareholders as ordinary income for federal and state tax
purposes, regardless of whether such dividends are taken in cash or reinvested
in additional shares. Distributions made from each Fund's net realized long-term
24
<PAGE>
capital gains (if any) and designated as capital gain dividends are taxable to
shareholders as long-term capital gains, regardless of the length of time Fund
shares are held. Corporate investors are not eligible for the dividends-received
deduction with respect to distributions derived from interest on short-or
long-term capital gains from any Fund but may be entitled to such a deduction in
respect to distributions attributable to dividends received by a Fund. A
distribution will be treated as paid on December 31st of a calendar year if it
is declared by the Fund in October, November or December of the year with a
record date in such a month and paid by each Fund during January of the
following year. Such distributions will be taxable to shareholders in the
calendar year the distributions are declared, rather than the calendar year in
which the distributions are received.
Distributions paid by each Fund from net long-term capital gains (excess of
long-term capital gains over long-term capital losses), if any, whether received
in cash or reinvested in additional shares, are taxable as long-term capital
gains, regardless of the length of time you have owned shares in the Fund.
Distributions paid by each Fund from net short-term capital gains (excess of
short-term capital gains over short-term capital losses), if any, whether
received in cash or reinvested in additional shares are taxable as ordinary
income. Capital gains distributions are made when any Fund realizes net capital
gains on sales of portfolio securities during the year.
Many of the options and futures contracts used by the Funds are "section
1256 contracts." Any gains or losses on section 1256 contracts are generally
considered 60% long-term and 40% short-term capital gains or losses ("60/40").
Also, section 1256 contracts held by a Fund at the end of each taxable year
(and, for purposes of the 4% excise tax, on certain other dates as prescribed
under the Code) are "marked to market" with the result that unrealized gains or
losses are treated as though they were realized and the resulting gain or loss
is treated as ordinary or 60/40 gain or loss, depending on the circumstances.
Generally, the hedging transactions and certain other transactions in
options and futures contracts undertaken by a Fund may result in "straddles" for
U.S. federal income tax purposes. The straddle rules may affect the character of
gains (or losses) realized by a Fund. In addition, losses realized by a Fund on
positions that are part of a straddle may be deferred under the straddle rules,
rather than being taken into account in calculating the investment company
taxable income or net capital gain for the taxable year in which such losses are
realized. Because limited regulations implementing the straddle rules have been
promulgated, the tax consequences of transactions in options and future
contracts to a Fund are not entirely clear. The transactions may increase the
amount of short-term capital gain realized by a Fund which is taxed as ordinary
income when distributed to shareholders.
Each Fund may make one or more of the elections available under the Code
which are applicable to straddles. If a Fund makes any of the elections, the
amount, character and timing of the recognition of gains or losses from the
affected straddle positions will be determined under the rules that vary
according to the election(s) made. The rules applicable under certain of the
elections operate to accelerate the recognition of gains or losses from the
affected straddle positions. Because application of the straddle rules may
affect the character of gains or losses, defer losses and/or accelerate the
recognition of gains or losses from the affected straddle positions, the amount
which must be distributed to shareholders, and which will be taxed to
shareholders as ordinary income or long-term capital gain, may be increased or
decreased substantially as compared to a fund that did not engage in such
hedging transactions.
25
<PAGE>
Any redemption or exchange of a Fund's shares is a taxable event and may
result in a gain or loss. Such gain or loss will be capital gain or loss if the
shares are capital assets in the shareholder's hands, and will be long-term or
short-term generally depending upon the shareholder's holding period for the
shares. Any loss realized on a disposition will be disallowed by "wash sale"
rules to the extent the shares disposed of are replaced within a period of 61
days beginning 30 days before and ending 30 days after the disposition. In such
a case, the basis of the shares acquired will be adjusted to reflect the
disallowed loss. Any loss realized by a shareholder on a disposition of shares
held by the shareholder for six months or less will be treated as a long-term
capital loss to the extent of any distributions of capital gain dividends
received by the shareholder with respect to such shares.
Dividend distributions, capital gains distributions, and capital gains or
losses from redemptions and exchanges may also be subject to state and local
taxes.
Ordinarily, distributions and redemption proceeds paid to fund shareholders
are not subject to withholding of federal income tax. However, 31% of each
Fund's distributions and redemption proceeds must be withheld if a Fund
shareholder fails to supply the Fund or its agent with such shareholder's
taxpayer identification number or if the Fund shareholder who is otherwise
exempt from withholding fails to properly document such shareholder's status as
an exempt recipient.
The information above is only a summary of some of the tax considerations
generally affecting the Funds and their shareholders. No attempt has been made
to discuss individual tax consequences. To determine whether any of the Funds is
a suitable investment based on his or her tax situation, a prospective investor
may wish to consult a tax advisor.
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.
On October 19, 1999, the Adviser invested $100,000 in shares of each of the
StockJungle.com Market Leaders Growth Fund, the StockJungle.com Pure Play
Internet Fund and the
26
<PAGE>
StockJungle.com Community Intelligence Fund at $10.00 per share, as seed
capital. The Adviser will control the Fund until public shareholders begin
investing in each of the Funds thereby diluting the ownership of Fund shares by
the Adviser.
DIVIDENDS AND DISTRIBUTIONS
Net investment income, if any, is declared as dividends and paid annually.
Substantially all the realized net capital gains for each Fund, if any, are also
declared and paid on an annual basis. Dividends and distributions are payable to
shareholders of record at the time of declaration.
Distributions from each Fund are automatically reinvested in additional
Fund shares unless the shareholder has elected to have them paid in cash.
NET ASSET VALUE
The method for determining each Fund's net asset value is summarized in the
Prospectus in the text following the heading "Valuation of Shares." The net
asset value of each Fund's shares is determined on each day on which the New
York Stock Exchange is open, provided that the net asset value need not be
determined on days when no Fund shares are tendered for redemption and no order
for Fund shares is received. The New York Stock Exchange is not open for
business on the following holidays (or on the nearest Monday or Friday if the
holiday falls on a weekend): New Year's Day, President's Day, Martin Luther
King, Jr. Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas.
PERFORMANCE COMPARISONS
Total return quoted in advertising and sales literature reflects all
aspects of each 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:
27
<PAGE>
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.
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
28
<PAGE>
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.
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 Barrons, 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.
REDEMPTION OF SHARES
Redemption of shares, or payment for redemptions, may be suspended at times
(a) when the New York Stock Exchange is closed for other than customary weekend
or holiday closings, (b) when trading on said Exchange is restricted, (c) when
an emergency exists, as a result of which disposal by a Fund of securities owned
by it is not reasonably practicable, or it is not reasonably practicable for the
Fund fairly to determine the value of its net assets, or (d) during any other
period when the Securities and Exchange Commission, by order, so permits,
provided that applicable rules and regulations of the Securities and
29
<PAGE>
Exchange Commission shall govern as to whether the conditions prescribed in (b)
or (c) exist.
ORGANIZATION OF TRUST
StockJungle.com Market Leaders Growth Fund, StockJungle.com No Fee S&P 500
Fund, StockJungle.com Pure Play Internet Fund, and StockJungle.com Community
Intelligence Fund are each a series of StockJungle.com Trust, a Massachusetts
business trust organized on June 11, 1999. As of the date of this Statement of
Additional Information, all of the outstanding shares of the Funds are owned by
the Adviser. As indicated above, the Adviser is controlled by Messrs. Witz and
Smerkovitz. As a result, as of such date, the Funds may be deemed to be
controlled by Messrs. Witz and Smerkovitz.
The Board of Trustees may establish additional funds (with different
investment objectives and fundamental policies) and additional classes of shares
at any time in the future. Establishment and offering of additional portfolios
will not alter the rights of the Funds' shareholders. Shares do not have
preemptive rights or subscription rights. All shares when issued, will be fully
paid and non-assessable by the Trust. In liquidation of a Fund, each shareholder
is entitled to receive his pro rata share of the assets of the Fund.
The Trust's Second Amended and Restated Agreement and Declaration of Trust
provides that each series of the Trust will be charged only with the liabilities
of that series and a portion (as determined by the Board of Trustees) of any
general liabilities that are not readily identifiable as belonging to any
particular series, but not with the liabilities of any other series.
Under Massachusetts law, shareholders could, under certain circumstances,
be held personally liable for the obligations of a Fund. However, the Amended
and Restated Agreement and Declaration of Trust disclaims liability of the
shareholders of a Fund for acts or obligations of the Trust, which are binding
only on the assets and property of the Fund, and requires that notice of the
disclaimer be given in each contract or obligation entered into or executed by a
Fund or the Trustees. The Amended and Restated Agreement and Declaration of
Trust provides for indemnification out of Fund property for all loss and expense
of any shareholder held personally liable for the obligations of a Fund. The
risk of a shareholder incurring financial loss on account of shareholder
liability is limited to circumstances in which a Fund itself would be unable to
meet its obligations and thus should be considered to be remote.
COUNSEL AND INDEPENDENT AUDITORS
Legal matters in connection with the Trust, including the issuance of
shares of beneficial interest of each Fund, are passed upon by Spitzer & Feldman
P.C., 405 Park Avenue, New York, New York 10022. Arthur Andersen LLP, 425 Walnut
Street, Suite 1500, Cincinnati, Ohio 45202 has been selected as independent
auditors for each of the Funds.
30
<PAGE>
LICENSE AGREEMENT
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 Trust.
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.
FINANCIAL STATEMENTS
The Trust's balance sheet as of October 19, 1999 is set forth below. It has
been audited by the Trust's independent auditors, Arthur Andersen LLP, whose
report thereon is set forth below. The balance sheet is included herein in
reliance upon their authority as experts in accounting and auditing.
31
<PAGE>
<TABLE>
<CAPTION>
STOCKJUNGLE.COM TRUST
Statements of Assets and Liabilities
October 19, 1999
==========================================================================================================
StockJungle.com StockJungle.com StockJungle.com
Community Pure Play Market
Intelligence Internet Leaders
Fund Fund Fund
- ----------------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C> <C>
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>
The accompanying notes are an integral part of this statement.
<PAGE>
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.
(2) 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.
(3) 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.
<PAGE>
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.
Cincinnati, Ohio
October 20, 1999 /s/ Arthur Andersen LLP
<PAGE>
PART C
------
ITEM 23. EXHIBITS.
**(1) Second Amended and Restated Agreement and Declaration of Trust;
*(2) Bylaws of the Trust;
(3) Not Applicable.
**(4) Form of Investment Advisory Agreements.
**(5) Form of Underwriting Agreement.
(6) Not Applicable.
**(7) Form of Custody Agreement.
**(8.1) Form of Administration Agreement.
**(8.2) Form of Transfer, Dividend Disbursing, Shareholder Service and
Plan Agency Agreement.
**(8.3) Form of Accounting Services Agreement
***(8.4) License Agreement with StockJungle.com, Inc.
**(8.5) Form of License Agreement with Standard & Poor's
**(9.1) Opinion of Spitzer & Feldman P.C. as to the legality of the
securities being registered, including their consent to the
filing thereof and as to the use of their names in the
Prospectus.
**(9.2) Opinion of Goodwin, Procter & Hoar LLP, as Massachusetts counsel,
as to matters governed by Massachusetts law.
**(10) Consent of Arthur Andersen LLP, independent auditors.
(11) Not Applicable.
**(12) Subscription Letter.
(13) Not Applicable.
(14) Not Applicable.
* Filed as part of the Registration Statement on Form N-1A of the Trust filed
with the SEC via EDGAR on June 23, 1999.
** Filed herewith
*** To be filed by amendment.
C-i
<PAGE>
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
Not applicable
ITEM 25. INDEMNIFICATION.
(a) In accordance with Section 1 of Chapter 182 of the Massachusetts
General Laws of the Commonwealth of Massachusetts, Sections 6.4 and
6.6 of the Registrant's Second Amended and Restated Agreement and
Declaration of Trust, respectively, provide as follows:
"Section 6.4 The Trust shall indemnify (from the assets of the
Sub-Trust or Sub-Trusts in question) each of its Trustees and officers
(including persons who serve at the Trust's request as directors,
officers or trustees of another organization in which the Trust has
any interest as a shareholder, creditor or otherwise (hereinafter
referred to as a "Covered Person")) against all liabilities, including
but not limited to amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and expenses, including
reasonable accountants' and counsel fees, incurred by any Covered
Person in connection with the defense or disposition of any action,
suit or other proceeding, whether civil or criminal, before any court
or administrative or legislative body, in which such Covered Person
may be or may have been involved as a party or otherwise or with which
such person may be or may have been threatened, while in office or
thereafter, by reason of being or having been such a Trustee or
officer, director or trustee, except with respect to any matter as to
which it has been determined that such Covered Person had acted with
willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of such Covered Person's office
(such conduct referred to hereafter as "Disabling Conduct"). A
determination that the Covered Person is entitled to indemnification
may be made by (i) a final decision on the merits by a court or other
body before whom the proceeding was brought that the person to be
indemnified was not liable by reason of Disabling Conduct, (ii)
dismissal of a court action or an administrative proceeding against a
Covered Person for insufficiency of evidence of Disabling Conduct, or
(iii) a reasonable determination, based upon a review of the facts,
that the indemnitee was not liable by reason of Disabling Conduct by
(a) a vote of a majority of a quorum of Trustees who are neither
"interested persons" of the Trust as defined in section 2(a)(19) of
the 1940 Act nor parties to the proceeding, or (b) an independent
legal counsel in a written opinion. Expenses, including accountants'
and counsel fees so incurred by any such Covered Person (but excluding
amounts paid in satisfaction of judgments, in compromise or as fines
or penalties), may be paid from time to time by the Sub-Trust in
question in advance of the final disposition of any such action, suit
or proceeding, provided that the Covered Person shall have undertaken
to repay the amounts so paid to the Sub-Trust in question if it is
ultimately determined that indemnification of such expenses is not
authorized under this Article VI and (i) the Covered Person shall have
provided security for such undertaking, (ii) the Trust shall be
insured against losses arising by reason of any lawful advances, or
(iii) a majority of a quorum of the disinterested Trustees who are not
a party to the proceeding, or an independent legal counsel in a
written opinion, shall have determined, based on a review of readily
available facts (as opposed to a full trial-type inquiry), that there
is reason to believe that the Covered Person ultimately will be found
entitled to indemnification."
"Section 6.6 The right of indemnification provided by this Article VI
shall not be exclusive of or affect any other rights to which any such
Covered Person may be entitled. As used in this Article VI, "Covered
Person" shall include such person's heirs, executors and
administrators, an "interested Covered Person" is one against whom the
action, suit or other proceeding in question or another action, suit
or other proceeding on the same or similar grounds is then or has been
pending or threatened, and a "disinterested" person is a person
against whom none of such actions, suits or other proceedings or
another action, suit or other proceeding on the same or similar
grounds is then or has been pending or threatened. Nothing contained
in this Article shall affect any rights to indemnification to which
personnel of the Trust, other than Trustees and officers, and other
persons may be entitled by contract or otherwise under law, nor the
power of the Trust to purchase and maintain liability insurance on
behalf of any such person."
Registrant will comply with Rule 484 under the Securities Act of 1933 and
Release 11300 under the 1940 Act in connection with any indemnification.
C-ii
<PAGE>
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
StockJungle.com Investment Advisors, Inc. serves as investment adviser
to each Fund. Set forth below are the names of the directors and
officers of the Adviser:
Michael J. Witz Chairman, Chief Executive Officer and Director
Brian A. Levy Chief Operating Officer
Julian Smerkovitz Chief Financial Officer and Director
ITEM 27. PRINCIPAL UNDERWRITER.
(a) The principal underwriter of the Trust's shares currently acts as
a principal underwriter for other investment companies.
(b) The following table contains information with respect to each
director, trustee, officer or partner of each principal
underwriter named in the answer to Item 20:
Unless otherwise noted, with an asterisk (*), the address of the
persons named below is 312 Walnut Street, Cincinnati, Ohio 45202.
* The address is 4500 Park Granada Blvd., Calabasas, CA 91302
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address* With Underwriter With Registrant
----------------- ---------------- ---------------
*Angelo R. Mozilo Chairman of the Board/ None
Director
*Andrew S. Bielanski Director None
*Thomas H. Boone Director None
*Marshall M. Gates Director None
Robert H. Leshner President/Vice Chairman None
CEO/Director
Maryellen Peretzky Vice President, Secretary None
Robert L. Bennett Vice President, Chief Assistant
Operations Officer Treasurer
Terrie A. Wiedenheft Vice President, Chief None
Officer, Treasurer
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.
The accounts and records of the Trust required to be maintained by Section
31(a) of the 1940 Act and the rules promulgated thereunder are located, in whole
or in part, at the office of the Adviser at 3805 South Canfield Avenue, Suite B,
Culver City, California 90232, except transfer agency records which are
maintained at the offices of the Administrator, Countrywide Fund Services, Inc.
which has its principal office at 312 Walnut Street, 21st Floor, Cincinnati,
Ohio 45202, and custodial records which are maintained at the offices of the
Custodian. The Adviser can also be contacted by telephone at (310) 841-4010.
ITEM 29. MANAGEMENT SERVICES.
Not Applicable
ITEM 30. UNDERTAKINGS.
Not Applicable
C-iii
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940 the registrant has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Culver City and State of California, on the 22nd day
of October, 1999.
STOCKJUNGLE.COM TRUST
By: /s/ Michael J. Witz
---------------------
Michael J. Witz, Chairman
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the date indicated.
/s/ Michael J. Witz Chairman of the October 22, 1999
- ----------------------------- Board of Trustees and
Michael J. Witz Chief Executive Officer
/s/ Victor A. Canto Trustee October 22, 1999
- -----------------------------
Victor A. Canto
/s/ Charles A. Parker Trustee October 22, 1999
- -----------------------------
Charles A. Parker
/s/ Theresa M. Samocki Treasurer October 22, 1999
- -----------------------------
Theresa M. Samocki
The above persons signing as Trustees are all of the current members of the
Trust's Board of Trustees.
STOCKJUNGLE.COM TRUST
SECOND AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
October 20, 1999
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I - NAME AND DEFINITIONS...............................................1
Section 1.1 Name and Principal Office.....................................1
Section 1.2 Definitions...................................................2
(a) "By-Laws".....................................................2
(b) "class".......................................................2
(c) "Commission"..................................................2
(d) "Declaration of Trust"........................................2
(e) "1940 Act"....................................................2
(f) "Shareholder".................................................2
(g) "Shares"......................................................2
(h) "Sub-Trust"or "Series"........................................2
(i) "Trust".......................................................2
(j) "Trustees"....................................................2
ARTICLE II - PURPOSE OF TRUST..................................................2
ARTICLE III - THE TRUSTEES.....................................................3
Section 3.1 Number, Designation, Election, Term, etc......................3
(a) Trustees......................................................3
(b) Number........................................................3
(c) Election and Term.............................................3
(d) Resignation and Retirement....................................3
(e) Removal.......................................................3
(f) Vacancies.....................................................3
(g) Effect of Death, Resignation, etc.............................4
(h) No Accounting.................................................4
Section 3.2 Powers of Trustees............................................4
(a) Investments...................................................5
(b) Disposition of Assets.........................................5
(c) Ownership Powers..............................................5
(d) Subscription..................................................5
(e) Form of Holding...............................................6
(f) Reorganization, etc...........................................6
(g) Voting Trusts, etc............................................6
(h) Compromise....................................................6
(i) Partnerships, etc.............................................6
(j) Borrowing and Security........................................6
(k) Guarantees, etc...............................................6
(l) Insurance.....................................................6
(m) Pensions, etc.................................................7
(n) Distribution Plans............................................7
(i)
<PAGE>
Section 3.3 Certain Contracts.............................................7
(a) Advisory......................................................7
(b) Administration................................................7
(c) Distribution..................................................8
(d) Custodian and Depository......................................8
(e) Transfer and Dividend Disbursing Agency.......................8
(f) Shareholder Servicing.........................................8
(g) Accounting....................................................8
Section 3.4 Payment of Trust Expenses and Compensation of Trustees........9
Section 3.5 Ownership of Assets of the Trust..............................9
Section 3.6 Action by Trustees............................................9
ARTICLE IV - SHARES...........................................................10
Section 4.1 Description of Shares........................................10
Section 4.2 Establishment and Designation of Sub-Trusts and Classes......11
(a) Assets Belonging to Sub-Trusts...............................11
(b) Liabilities Belonging to Sub-Trusts..........................12
(c) Dividends....................................................12
(d) Liquidation..................................................13
(e) Voting.......................................................13
(f) Redemption by Shareholder....................................14
(g) Redemption by Trust..........................................14
(h) Net Asset Value..............................................14
(i) Transfer.....................................................15
(j) Equality.....................................................15
(k) Fractions....................................................15
(l) Conversion Rights............................................15
(m) Class Differences............................................15
Section 4.3 Ownership of Shares..........................................16
Section 4.4 Investments in the Trust.....................................16
Section 4.5 No Pre-emptive Rights........................................16
Section 4.6 Status of Shares and Limitation of Personal Liability........16
Section 4.7 No Appraisal Rights..........................................16
ARTICLE V - SHAREHOLDERS'VOTING POWERS AND MEETINGS...........................17
Section 5.1 Voting Powers................................................17
Section 5.2 Meetings.....................................................17
Section 5.3 Record Dates.................................................18
Section 5.4 Quorum and Required Vote.....................................18
Section 5.5 Action by Written Consent....................................18
(ii)
<PAGE>
Section 5.6 Inspection of Records........................................18
Section 5.7 Additional Provisions........................................19
Section 5.8 Shareholder Communications...................................19
ARTICLE VI - LIMITATION OF LIABILITY; INDEMNIFICATION.........................19
Section 6.1 Trustees, Shareholders, etc. Not Personally
Liable; Notice...............................................19
Section 6.2 Trustee's Good Faith Action; Expert Advice;
No Bond or Surety............................................20
Section 6.3 Indemnification of Shareholders..............................20
Section 6.4 Indemnification of Trustees, Officers, etc...................21
Section 6.5 Compromise Payment...........................................21
Section 6.6 Indemnification Not Exclusive, etc...........................22
Section 6.7 Liability of Third Persons Dealing with Trustees.............22
ARTICLE VII - MISCELLANEOUS...................................................22
Section 7.1 Duration and Termination of Trust............................22
Section 7.2 Reorganization...............................................23
Section 7.3 Amendments...................................................23
Section 7.4 Filing of Copies; References; Headings.......................23
Section 7.5 Applicable Law...............................................24
Section 7.6 Integration..................................................24
Section 7.7 Resident Agent...............................................24
(iii)
<PAGE>
AGREEMENT AND DECLARATION OF TRUST
WHEREAS, the Agreement and Declaration of Trust of StockJungle.com Trust
(the "Trust") was executed and delivered in Boston, Massachusetts on June 11,
1999 and the initial trustee named therein accepted an initial subscription for,
and caused the initial issuance of, shares of beneficial interest of the Trust
and accepted payment therefor as trust property and has subsequently named the
undersigned as the successor initial Trustees and has thereupon resigned after
delivering the trust property to the undersigned as such successor initial
Trustees;
NOW THEREFORE, the undersigned successor initial Trustees, having accepted
their appointments as such, hereby further amend and restate said Agreement and
Declaration of Trust to read in its entirety as follows:
AGREEMENT AND DECLARATION OF TRUST made this 20th day of October 1999 by
the Trustees hereunder, and by the holders of shares of beneficial interest to
be issued hereunder as hereinafter provided.
W I T N E S S E T H:
WHEREAS this Trust has been formed to carry on the business of an
investment company; and
WHEREAS this Trust is authorized to issue its shares of beneficial interest
in separate series, each separate series to be a Sub-Trust hereunder, and to
issue classes of Shares of any Sub-Trust or divide Shares of any Sub-Trust into
two or more classes, all in accordance with the provisions hereinafter set
forth; and
WHEREAS the Trustees have agreed to manage all property coming into their
hands as trustees of a Massachusetts business trust in accordance with the
provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby declare that they will hold all cash,
securities and other assets which they may from time to time acquire in any
manner as Trustees hereunder IN TRUST to manage and dispose of the same upon the
following terms and conditions for the benefit of the holders from time to time
of shares of beneficial interest in this Trust and the Sub-Trusts created
hereunder as hereinafter set forth.
ARTICLE I - NAME AND DEFINITIONS
--------------------------------
Section 1.1 Name and Principal Office. This Trust shall be known as
"StockJungle.com Trust" and the Trustees shall conduct the business of the Trust
under that name or any other name or names as they may from time to time
determine. The principal office of the Trust shall be located at 3805 South
Canfield Avenue, Suite B, Culver City, California 90232 or at such other
location as the Trustees may from time to time determine.
<PAGE>
Section 1.2 Definitions. Whenever used herein, unless otherwise required by
the context or specifically provided:
(a) "By-Laws" shall mean the By-Laws of the Trust as amended from time
to time;
(b) "class" refers to any class of Shares of any Series or Sub-Trust
established and designated under or in accordance with the provisions of Article
IV;
(c) "Commission" shall have the meaning given it in the 1940 Act;
(d) "Declaration of Trust" shall mean this Master Trust Agreement, as
amended or restated from time to time;
(e) "1940 Act" refers to the Investment Company Act of 1940 and the
rules and regulations thereunder, all as amended from time to time;
(f) "Shareholder" means a record owner of Shares;
(g) "Shares" refers to the transferable units of interest into which
the beneficial interest in the Trust and each Sub-Trust of the Trust and/or any
class of any Sub-Trust (as the context may require) shall be divided from time
to time;
(h) "Sub-Trust" or "Series" refers to a series of Shares established
and designated under or in accordance with the provisions of Article IV;
(i) "Trust" refers to the Massachusetts business trust established by
this Declaration of Trust, as amended from time to time, inclusive of each and
every Sub-Trust established hereunder; and
(j) "Trustees" refers to the Trustees of the Trust and of each
Sub-Trust hereunder named herein or elected in accordance with Article III.
ARTICLE II - PURPOSE OF TRUST
-----------------------------
The purpose of the Trust is to operate as an investment company and to
offer Shareholders of the Trust and each Sub-Trust of the Trust one or more
investment programs primarily in securities and debt instruments.
<PAGE>
ARTICLE III - THE TRUSTEES
--------------------------
Section 3.1 Number, Designation, Election, Term, etc.
(a) Trustees. The initial Trustees hereof and of each Sub-Trust
hereunder shall be Michael J. Witz and Julian Smerkovitz, each of 3805 South
Canfield Avenue, Suite B, Culver City, California 90232.
(b) Number. The Trustees serving as such, whether named above or
hereafter becoming Trustees, may increase or decrease the number of Trustees to
a number other than the number theretofore determined. No decrease in the number
of Trustees shall have the effect of removing any Trustee from office prior to
the expiration of such Trustee's term, but the number of Trustees may be
decreased in conjunction with the removal of a Trustee pursuant to subsection
(e) of this Section 3.1.
(c) Election and Term. Trustees in addition to those named herein may
become such by election by Shareholders or the Trustees in office pursuant to
Section 3.1(f). Each Trustee, whether named above or hereafter becoming a
Trustee, shall serve as a Trustee of the Trust and of each Sub-Trust hereunder
during the lifetime of this Trust and until its termination as hereinafter
provided except as such Trustee sooner dies, resigns, retires or is removed.
Subject to Section 16(a) of the 1940 Act, the Trustees may elect their own
successors and may, pursuant to Section 3.1(f) hereof, appoint Trustees to fill
vacancies.
(d) Resignation and Retirement. Any Trustee may resign or retire as a
Trustee, by written instrument signed by such Trustee and delivered to the other
Trustees or to any officer of the Trust, and such resignation or retirement
shall take effect upon such delivery or upon such later date as is specified in
such instrument and shall be effective as to the Trust and each Sub-Trust
hereunder.
(e) Removal. Any Trustee may be removed with or without cause at any
time: (i) by written instrument, signed by at least two-thirds of the number of
Trustees in office immediately prior to such removal, specifying the date upon
which such removal shall become effective; or (ii) by vote of Shareholders
holding not less than two-thirds of the Shares then outstanding, cast in person
or by proxy at any meeting called for the purpose; or (iii) by a written
declaration signed by Shareholders holding not less than two-thirds of the
Shares then outstanding and filed with the Trust's custodian. Any such removal
shall be effective as to the Trust and each Sub-Trust hereunder.
<PAGE>
(f) Vacancies. Any vacancy or anticipated vacancy resulting from any
reason, including without limitation the death, resignation, retirement, removal
or incapacity of any of the Trustees, or resulting from an increase in the
number of Trustees by the other Trustees may (but so long as there are at least
two remaining Trustees, need not unless required by the 1940 Act) be filled by a
majority of the remaining Trustees, subject to the provisions of Section 16(a)
of the 1940 Act, through the appointment in writing of such other person as such
remaining Trustees in their discretion shall determine and such appointment
shall be effective upon the written acceptance of the person named therein to
serve as a Trustee and agreement by such person to be bound by the provisions of
this Declaration of Trust, except that any such appointment in anticipation of a
vacancy to occur by reason of retirement, resignation or increase in number of
Trustees to be effective at a later date shall become effective only at or after
the effective date of said retirement, resignation or increase in number of
Trustees. As soon as any Trustee so appointed shall have accepted such
appointment and shall have agreed in writing to be bound by this Declaration of
Trust and the appointment is effective, the Trust estate shall vest in the new
Trustee, together with the continuing Trustees, without any further act or
conveyance.
(g) Effect of Death, Resignation, etc. The death, resignation,
retirement, removal or incapacity of the Trustees, or any one of them, shall not
operate to annul or terminate the Trust or any Sub-Trust hereunder or to revoke
or terminate any existing agency or contract created or entered into pursuant to
the terms of this Declaration of Trust.
(h) No Accounting. Except to the extent required by the 1940 Act or
under circumstances which would justify removal for cause, no person ceasing to
be a Trustee as a result of death, resignation, retirement, removal or
incapacity (nor the estate of any such person) shall be required to make an
accounting to the Shareholders or remaining Trustees upon such cessation.
Section 3.2 Powers of Trustees. Subject to the provisions of this
Declaration of Trust, the business of the Trust shall be managed by the
Trustees, and they shall have all powers necessary or convenient to carry out
that responsibility and the purpose of the Trust. The Trustees in all instances
shall act as principals, and are and shall be free from the control of the
Shareholders. The Trustees shall have full power and authority to do any and all
acts and to make and execute any and all contracts and instruments that they may
consider necessary or appropriate in connection with the management of the
Trust. The Trustees shall not be bound or limited by present or future laws or
customs with regard to investment by trustees or fiduciaries, but shall have
full authority and absolute power and control over the assets of the Trust and
the business of the Trust to the same extent as if the Trustees were the sole
owners of the assets of the Trust and the business in their own right, including
such authority, power and control to do all acts and things as they, in their
uncontrolled discretion, shall deem proper to accomplish the purposes of this
Trust. Without limiting the foregoing, the Trustees may adopt By-Laws not
inconsistent with this Declaration of Trust providing for the conduct of the
business and affairs of the Trust and may amend and repeal them to the extent
that such By-Laws do not reserve that right to the Shareholders; they may sue or
be sued in the name of the Trust; they may from time to time in accordance with
the provisions of Section 4.1 hereof establish Sub-Trusts, each such Sub-Trust
to operate as a separate and distinct
<PAGE>
investment medium and with separately defined investment objectives and policies
and distinct investment purposes; they may from time to time in accordance with
the provisions of Section 4.1 hereof establish classes of Shares of any Series
or Sub-Trust or divide the Shares of any Series or Sub-Trust into classes; they
may as they consider appropriate elect and remove officers and appoint and
terminate agents and consultants and hire and terminate employees, any one or
more of the foregoing of whom may be a Trustee, and may provide for the
compensation of all of the foregoing; they may appoint from their own number,
and terminate, any one or more committees consisting of two or more Trustees,
including without implied limitation an executive committee, which may, when the
Trustees are not in session and subject to the 1940 Act, exercise some or all of
the power and authority of the Trustees as the Trustees may determine; in
accordance with Section 3.3 they may employ one or more advisers,
administrators, depositories and custodians and may authorize any depository or
custodian to employ subcustodians or agents and to deposit all or any part of
such assets in a system or systems for the central handling of securities and
debt instruments, retain transfer, dividend, accounting or Shareholder servicing
agents or any of the foregoing, provide for the distribution of Shares by the
Trust through one or more distributors, principal underwriters or otherwise, and
set record dates or times for the determination of Shareholders or various of
them with respect to various matters; they may compensate or provide for the
compensation of the Trustees, officers, advisers, administrators, custodians,
other agents, consultants and employees of the Trust or the Trustees on such
terms as they deem appropriate; and in general they may delegate to any officer
of the Trust, to any committee of the Trustees and to any employee, adviser,
administrator, distributor, depository, custodian, transfer and dividend
disbursing agent, or any other agent or consultant of the Trust such authority,
powers, functions and duties as they consider desirable or appropriate for the
conduct of the business and affairs of the Trust, including without implied
limitation, the power and authority to act in the name of the Trust and any
Sub-Trust and of the Trustees, to sign documents and to act as attorney-in-fact
for the Trustees.
Without limiting the foregoing and to the extent not inconsistent with the
1940 Act or other applicable law, the Trustees shall have power and authority
for and on behalf of the Trust and each separate Sub-Trust established
hereunder:
(a) Investments. To invest and reinvest cash and other property, and
to hold cash or other property uninvested without in any event being bound or
limited by any present or future law or custom in regard to investments by
trustees;
(b) Disposition of Assets. To sell, exchange, lend, pledge, mortgage,
hypothecate, write options on and lease any or all of the assets of the Trust;
(c) Ownership Powers. To vote or give assent, or exercise any rights
of ownership, with respect to stock or other securities, debt instruments or
property; and to execute and deliver proxies or powers of attorney to such
person or persons as the Trustees shall deem proper, granting to such person or
persons such power and discretion with relation to securities, debt instruments
or property as the Trustees shall deem proper;
(d) Subscription. To exercise powers and rights of subscription or
otherwise which in any manner arise out of ownership of securities or debt
instruments;
<PAGE>
(e) Form of Holding. To hold any security, debt instrument or property
in a form not indicating any trust, whether in bearer, unregistered or other
negotiable form, or in the name of the Trustees or of the Trust or of any
Sub-Trust or in the name of a custodian, subcustodian or other depository or a
nominee or nominees or otherwise;
(f) Reorganization, etc. To consent to or participate in any plan for
the reorganization, consolidation or merger of any corporation or issuer, any
security or debt instrument of which is or was held in the Trust; to consent to
any contract, lease, mortgage, purchase or sale of property by such corporation
or issuer, and to pay calls or subscriptions with respect to any security or
debt instrument held in the Trust;
(g) Voting Trusts, etc. To join with other holders of any securities
or debt instruments in acting through a committee, depositary, voting trustee or
otherwise, and in that connection to deposit any security or debt instrument
with, or transfer any security or debt instrument to, any such committee,
depositary or trustee, and to delegate to them such power and authority with
relation to any security or debt instrument (whether or not so deposited or
transferred) as the Trustees shall deem proper, and to agree to pay, and to pay,
such portion of the expenses and compensation of such committee, depositary or
trustee as the Trustees shall deem proper;
(h) Compromise. To compromise, arbitrate or otherwise adjust claims in
favor of or against the Trust or any Sub-Trust or any matter in controversy,
including but not limited to claims for taxes;
(i) Partnerships, etc. To enter into joint ventures, general or
limited partnerships and any other combinations or associations;
(j) Borrowing and Security. To borrow funds and to mortgage and pledge
the assets of the Trust or any part thereof to secure obligations arising in
connection with such borrowing;
(k) Guarantees, etc. To endorse or guarantee the payment of any notes
or other obligations of any person; to make contracts of guaranty or suretyship,
or otherwise assume liability for payment thereof; and to mortgage and pledge
the Trust property or any part thereof to secure any of or all such obligations;
<PAGE>
(l) Insurance. To purchase and pay for entirely out of Trust property
such insurance and/or bonding as they may deem necessary or appropriate for the
conduct of the business, including, without limitation, insurance policies
insuring the assets of the Trust and payment of distributions and principal on
its portfolio investments, and insurance policies insuring the Shareholders,
Trustees, officers, employees, agents, consultants, investment advisers,
managers, administrators, distributors, principal underwriters, or independent
contractors, or any thereof (or any person connected therewith), of the Trust
individually against all claims and liabilities of every nature arising by
reason of holding, being or having held any such office or position, or by
reason of any action alleged to have been taken or omitted by any such person in
any such capacity, including any action taken or omitted that may be determined
to constitute negligence, whether or not the Trust would have the power to
indemnify such person against such liability; and
(m) Pensions, etc. To pay pensions for faithful service, as deemed
appropriate by the Trustees, and to adopt, establish and carry out pension,
profit-sharing, share bonus, share purchase, savings, thrift and other
retirement, incentive and benefit plans, trusts and provisions, including the
purchasing of life insurance and annuity contracts as a means of providing such
retirement and other benefits, for any or all of the Trustees, officers,
employees and agents of the Trust.
(n) Distribution Plans. To adopt on behalf of the Trust or any
Sub-Trust with respect to any class thereof a plan of distribution and related
agreements thereto pursuant to the terms of Rule 12b-1 of the 1940 Act and to
make payments from the assets of the Trust or the relevant Sub-Trust or
Sub-Trusts pursuant to said Rule 12b-1 Plan.
Section 3.3 Certain Contracts. Subject to compliance with the provisions of
the 1940 Act, but notwithstanding any limitations of present and future law or
custom in regard to delegation of powers by trustees generally, the Trustees
may, at any time and from time to time and without limiting the generality of
their powers and authority otherwise set forth herein, enter into one or more
contracts with any one or more corporations, trusts, associations, partnerships,
limited partnerships, other type of organizations, or individuals (a
"Contracting Party"), to provide for the performance and assumption of some or
all of the following services, duties and responsibilities to, for or on behalf
of the Trust and/or any Sub-Trust, and/or the Trustees, and to provide for the
performance and assumption of such other services, duties and responsibilities
in addition to those set forth below as the Trustees may determine appropriate:
(a) Advisory. Subject to the general supervision of the Trustees and
in conformity with the stated policy of the Trustees with respect to the
investments of the Trust or of the assets belonging to any Sub-Trust of the
Trust (as that phrase is defined in subsection (a) of Section 4.2), to manage
such investments and assets, make investment decisions with respect thereto, and
to place purchase and sale orders for portfolio transactions relating to such
investments and assets;
(b) Administration. Subject to the general supervision of the Trustees
and in conformity with any policies of the Trustees with respect to the
operations of the Trust and each Sub-Trust (including each class thereof), to
supervise all or any part of the operations of the Trust and each Sub-Trust, and
to provide all or any part of the administrative and clerical personnel, office
space and office equipment and services appropriate for the efficient
administration and operations of the Trust and each Sub-Trust;
<PAGE>
(c) Distribution. To distribute the Shares of the Trust and each
Sub-Trust (including any classes thereof), to the principal underwriter of such
Shares, and/or to act as agent of the Trust and each Sub-Trust in the sale of
Shares and the acceptance or rejection of orders for the purchase of Shares;
(d) Custodian and Depository. To act as depository for and to maintain
custody of the property of the Trust and each Sub-Trust and accounting records
in connection therewith;
(e) Transfer and Dividend Disbursing Agency. To maintain records of
the ownership of outstanding Shares, the issuance and redemption and the
transfer thereof, and to disburse any dividends declared by the Trustees and in
accordance with the policies of the Trustees and/or the instructions of any
particular Shareholder to reinvest any such dividends;
(f) Shareholder Servicing. To provide service with respect to the
relationship of the Trust and its Shareholders, records with respect to
Shareholders and their Shares, and similar matters; and
(g) Accounting. To handle all or any part of the accounting
responsibilities, whether with respect to the Trust's properties, Shareholders
or otherwise.
The same person may be the Contracting Party for some or all of the
services, duties and responsibilities to, for and of the Trust and/or the
Trustees, and the contracts with respect thereto may contain such terms
interpretive of or in addition to the delineation of the services, duties and
responsibilities provided for, including provisions that are not inconsistent
with the 1940 Act relating to the standard of duty of and the rights to
indemnification of the Contracting Party and others, as the Trustees may
determine. Nothing herein shall preclude, prevent or limit the Trust or a
Contracting Party from entering into sub-contractual arrangements relating to
any of the matters referred to in Sections 3.3(a) through (g) hereof.
The fact that:
(i) any of the Shareholders, Trustees or officers of the Trust is a
shareholder, director, officer, partner, trustee, employee, manager, adviser,
principal underwriter or distributor or agent of or for any Contracting Party,
or of or for any parent or affiliate of any Contracting Party or that the
Contracting Party or any parent or affiliate thereof is a Shareholder or has an
interest in the Trust or any Sub-Trust, or that
(ii) any Contracting Party may have a contract providing for the
rendering of any similar services to one or more other corporations, trusts,
associations, partnerships, limited partnerships or other organizations, or have
other business or interests,
<PAGE>
shall not affect the validity of any contract for the performance and assumption
of services, duties and responsibilities to, for or of the Trust or any
Sub-Trust and/or the Trustees or disqualify any Shareholder, Trustee or officer
of the Trust from voting upon or executing the same or create any liability or
accountability to the Trust, any Sub-Trust or its Shareholders, provided that in
the case of any relationship or interest referred to in the preceding clause (i)
on the part of any Trustee or officer of the Trust either (x) the material facts
as to such relationship or interest have been disclosed to or are known by the
Trustees not having any such relationship or interest and the contract involved
is approved in good faith by a majority of such Trustees not having any such
relationship or interest (even though such unrelated or disinterested Trustees
are less than a quorum of all of the Trustees), (y) the material facts as to
such relationship or interest and as to the contract have been disclosed to or
are known by the Shareholders entitled to vote thereon and the contract involved
is specifically approved in good faith by vote of the Shareholders, or (z) the
specific contract involved is fair to the Trust as of the time it is authorized,
approved or ratified by the Trustees or by the Shareholders.
Section 3.4 Payment of Trust Expenses and Compensation of Trustees. The
Trustees are authorized to pay or to cause to be paid out of the principal or
income of the Trust or any Sub-Trust, or partly out of principal and partly out
of income, and to charge or allocate the same to, between or among such one or
more of the Sub-Trusts and/or one or more classes of Shares thereof that may be
established and designated pursuant to Article IV, as the Trustees deem fair,
all expenses, fees, charges, taxes and liabilities incurred or arising in
connection with the Trust, any Sub-Trust and/or any class of Shares thereof, or
in connection with the management thereof, including, but not limited to, the
Trustees' compensation and such expenses and charges for the services of the
Trust's officers, employees, investment adviser, administrator, distributor,
principal underwriter, auditor, counsel, depository, custodian, transfer agent,
dividend disbursing agent, accounting agent, Shareholder servicing agent, and
such other agents, consultants, and independent contractors and such other
expenses and charges as the Trustees may deem necessary or proper to incur.
Without limiting the generality of any other provision hereof, the Trustees
shall be entitled to reasonable compensation from the Trust for their services
as Trustees and may fix the amount of such compensation.
Section 3.5 Ownership of Assets of the Trust. Title to all of the assets of
the Trust and of each Sub-Trust shall at all times be considered as vested in
the Trustees.
Section 3.6 Action by Trustees. Except as otherwise provided by the 1940
Act or other applicable law, this Declaration of Trust or the By-Laws, any
action to be taken by the Trustees on behalf of or with respect to the Trust or
any Sub-Trust or class thereof may be taken by a majority of the Trustees
present at a meeting of Trustees (a quorum, consisting of at least one-half of
the Trustees then in office, being present), within or without Massachusetts,
including any meeting held by means of a conference telephone or other
communications equipment by means of which all persons participating in the
meeting can hear each other at the same time, and participation by such means
shall constitute presence in person at a meeting, or by written consents of a
majority of the Trustees then in office (or such larger or different number as
may be required by the 1940 Act or other applicable law).
<PAGE>
ARTICLE IV - SHARES
-------------------
Section 4.1 Description of Shares. The beneficial interest in the Trust
shall be divided into Shares, all with $.001 par value, but the Trustees shall
have the authority from time to time to issue Shares in one or more Series (each
of which Series of Shares shall represent the beneficial interest in a separate
and distinct Sub-Trust of the Trust, including without limitation each Sub-Trust
specifically established and designated in Section 4.2), as they deem necessary
or desirable. For all purposes under this Declaration of Trust or otherwise,
including, without implied limitation, (i) with respect to the rights of
creditors and (ii) for purposes of interpreting the relevant rights of each
Sub-Trust and the Shareholders of each Sub-Trust, each Sub-Trust established
hereunder shall be deemed to be a separate trust. The Trustees shall have
exclusive power without the requirement of Shareholder approval to establish and
designate such separate and distinct Sub-Trusts, and to fix and determine the
relative rights and preferences as between the shares of the separate Sub-Trusts
as to right of redemption and the price, terms and manner of redemption, special
and relative rights as to dividends and other distributions and on liquidation,
sinking or purchase fund provisions, conversion rights, and conditions under
which the several Sub-Trusts shall have separate voting rights or no voting
rights.
In addition, the Trustees shall have exclusive power, without the
requirement of Shareholder approval, to issue classes of Shares of any Sub-Trust
or divide the Shares of any Sub-Trust into classes, each class having such
different dividend, liquidation, voting and other rights as the Trustees may
determine, and may establish and designate the specific classes of Shares of
each Sub-Trust. The fact that a Sub-Trust shall have initially been established
and designated without any specific establishment or designation of classes
(i.e., that all Shares of such Sub-Trust are initially of a single class), or
that a Sub-Trust shall have more than one established and designated class,
shall not limit the authority of the Trustees to establish and designate
separate classes, or one or more additional classes, of said Sub-Trust without
approval of the holders of the initial class thereof, or previously established
and designated class or classes thereof.
The number of authorized Shares and the number of Shares of each Sub-Trust
or class thereof that may be issued is unlimited, and the Trustees may issue
Shares of any Sub-Trust or class thereof for such consideration and on such
terms as they may determine (or for no consideration if pursuant to a Share
dividend or split-up), all without action or approval of the Shareholders. All
Shares when so issued on the terms determined by the Trustees shall be fully
paid and non-assessable (but may be subject to mandatory contribution back to
the Trust as provided in subsection (g) of Section 4.2). The Trustees may
classify or reclassify any unissued Shares or any Shares previously issued and
reacquired of any Sub-Trust or class thereof into one or more Sub-Trusts or
classes thereof that may be established and designated from time to time. The
Trustees may hold as treasury Shares, reissue for such consideration and on such
terms as they may determine, or cancel, at their discretion from time to time,
any Shares of any Sub-Trust or class thereof reacquired by the Trust.
<PAGE>
The Trustees may from time to time close the transfer books or establish
record dates and times for the purposes of determining the holders of Shares
entitled to be treated as such, to the extent provided or referred to in Section
5.3.
The establishment and designation of any Sub-Trust or of any class of
Shares of any Sub-Trust in addition to those established and designated in
Section 4.2 shall be effective (i) upon the execution by a majority of the then
Trustees of an instrument setting forth such establishment and designation of
the relative rights and preferences of the Shares of such Sub-Trust or class,
(ii) upon the execution of an instrument in writing by an officer of the Trust
pursuant to the vote of a majority of the Trustees, or (iii) as otherwise
provided in either such instrument. Each instrument establishing and designating
any Sub-Trust shall have the status of an amendment to this Declaration of
Trust. At any time, the Trustees may by an instrument executed by a majority of
their number (or by an instrument executed by an officer of the Trust pursuant
to the vote of a majority of the Trustees) abolish any Sub-Trust or class
previously established and designated.
Any Trustee, officer or other agent of the Trust, and any organization in
which any such person is interested may acquire, own, hold and dispose of Shares
of any Sub-Trust (including any classes thereof) of the Trust to the same extent
as if such person were not a Trustee, officer or other agent of the Trust; and
the Trust may issue and sell or cause to be issued and sold and may purchase
Shares of any Sub-Trust (including any classes thereof) from any such person or
any such organization subject only to the general limitations, restrictions or
other provisions applicable to the sale or purchase of Shares of such Sub-Trust
(including any classes thereof) generally.
Section 4.2 Establishment and Designation of Sub-Trusts and Classes.
Without limiting the authority of the Trustees set forth in Section 4.1 to
establish and designate any further Sub-Trusts, the Trustees hereby establish
and designate four (4) Sub-Trusts: (i) StockJungle.com Market Leaders Growth
Fund, (ii) StockJungle.com No Fee S&P 500 Index Fund, (iii) StockJungle.com Pure
Play Internet Fund and (iv) StockJungle.com Community Intelligence Fund, each of
which shall have a single class of Shares. The Shares of such Sub-Trust and any
Shares of any further Sub-Trust that may from time to time be established and
designated by the Trustees shall (unless the Trustees otherwise determine with
respect to some further Sub-Trust at the time of establishing and designating
the same) have the following relative rights and preferences:
<PAGE>
(a) Assets Belonging to Sub-Trusts. All consideration received by the
Trust for the issue or sale of Shares of a particular Sub-Trust or any classes
thereof, together with all assets in which such consideration is invested or
reinvested, all income, earnings, profits, and proceeds thereof, including any
proceeds derived from the sale, exchange or liquidation of such assets, and any
funds or payments derived from any reinvestment of such proceeds in whatever
form the same may be, shall be held by the Trustees in trust for the benefit of
the holders of Shares of that Sub-Trust or class thereof and shall irrevocably
belong to that Sub-Trust (and be allocable to any classes thereof) for all
purposes, and shall be so recorded upon the books of account of the Trust. Such
consideration, assets, income, earnings, profits, and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation of such
assets, and any funds or payments derived from any reinvestment of such
proceeds, in whatever form the same may be, together with any General Items (as
hereinafter defined) allocated to that Sub-Trust as provided in the following
sentence, are herein referred to as "assets belonging to" that Sub-Trust (and
allocable to any classes thereof). In the event that there are any assets,
income, earnings, profits, and proceeds thereof, funds, or payments which are
not readily identifiable as belonging to any particular Sub-Trust (collectively
"General Items"), the Trustees shall allocate such General Items to and among
any one or more of the Sub-Trusts established and designated from time to time
in such manner and on such basis as they, in their sole discretion, deem fair
and equitable; and any General Items so allocated to a particular Sub-Trust
shall belong to that Sub-Trust (and be allocable to any classes thereof). Each
such allocation by the Trustees shall be conclusive and binding upon the holders
of all Shares of all Sub-Trusts (including any classes thereof) for all
purposes.
(b) Liabilities Belonging to Sub-Trusts. The assets belonging to each
particular Sub-Trust shall be charged with the liabilities in respect of that
Sub-Trust and all expenses, costs, charges and reserves belonging to that
Sub-Trust, and any general liabilities, expenses, costs, charges or reserves of
the Trust which are not readily identifiable as belonging to any particular
Sub-Trust shall be allocated and charged by the Trustees to and among any one or
more of the Sub-Trusts established and designated from time to time in such
manner and on such basis as the Trustees in their sole discretion deem fair and
equitable. In addition, the liabilities in respect of a particular class of
Shares of a particular Sub-Trust and all expenses, costs, charges and reserves
belonging to that class of Shares, and any general liabilities, expenses, costs,
charges or reserves of that particular Sub-Trust which are not readily
identifiable as belonging to any particular class of Shares of that Sub-Trust
shall be allocated and charged by the Trustees to and among any one or more of
the classes of Shares of that Sub-Trust established and designated from time to
time in such manner and on such basis as the Trustees in their sole discretion
deem fair and equitable. The liabilities, expenses, costs, charges and reserves
allocated and so charged to a Sub-Trust or class thereof are herein referred to
as "liabilities belonging to" that Sub-Trust or class thereof. Each allocation
of liabilities, expenses, costs, charges and reserves by the Trustees shall be
conclusive and binding upon the Shareholders, creditors and any other persons
dealing with the Trust or any Sub-Trust (including any classes thereof) for all
purposes. Any creditor of any Sub-Trust may look only to the assets of that
Sub-Trust to satisfy such creditor's debt.
The Trustees shall have full discretion, to the extent not inconsistent
with the 1940 Act, to determine which items shall be treated as income and which
items as capital; and each such determination and allocation shall be conclusive
and binding upon the Shareholders.
<PAGE>
(c) Dividends. Dividends and distributions on Shares of a particular
Sub-Trust or any class thereof may be paid with such frequency as the Trustees
may determine, which may be daily or otherwise pursuant to a standing resolution
or resolutions adopted only once or with such frequency as the Trustees may
determine, to the holders of Shares of that Sub-Trust or class, from such of the
income and capital gains, accrued or realized, from the assets belonging to that
Sub-Trust, or in the case of a class, belonging to that Sub-Trust and allocable
to that class, as the Trustees may determine, after providing for actual and
accrued liabilities belonging to that Sub-Trust or class. All dividends and
distributions on Shares of a particular Sub-Trust or class thereof shall be
distributed pro rata to the holders of Shares of that Sub-Trust or class in
proportion to the number of Shares of that Sub-Trust or class held by such
holders at the date and time of record established for the payment of such
dividends or distributions, except that in connection with any dividend or
distribution program or procedure the Trustees may determine that no dividend or
distribution shall be payable on Shares as to which the Shareholder's purchase
order and/or payment have not been received by the time or times established by
the Trustees under such program or procedure. Such dividends and distributions
may be made in cash or Shares of that Sub-Trust or class or a combination
thereof as determined by the Trustees or pursuant to any program that the
Trustees may have in effect at the time for the election by each Shareholder of
the mode of the making of such dividend or distribution to that Shareholder. Any
such dividend or distribution paid in Shares will be paid at the net asset value
thereof as determined in accordance with subsection (h) of Section 4.2.
The Trustees shall have full discretion to determine which items shall be
treated as income and which items as capital; and each such determination and
allocation shall be conclusive and binding upon the Shareholders.
(d) Liquidation. In the event of the liquidation or dissolution of the
Trust, the holders of Shares of each Sub-Trust or any class thereof that has
been established and designated shall be entitled to receive, when and as
declared by the Trustees, the excess of the assets belonging to that Sub-Trust,
or in the case of a class, belonging to that Sub-Trust and allocable to that
class, over the liabilities belonging to that Sub-Trust or class. The assets so
distributable to the holders of Shares of any particular Sub-Trust or class
thereof shall be distributed among such holders in proportion to the number of
Shares of that Sub-Trust or class thereof held by them and recorded on the books
of the Trust. The liquidation of any particular Sub-Trust or class thereof may
be authorized at any time by vote of a majority of the Trustees then in office
and without the approval of the holders of the Shares of such Sub-Trust or
class.
(e) Voting. On each matter submitted to a vote of the Shareholders,
each holder of a whole Share shall be entitled to one vote for each dollar of
net asset value standing in such Shareholder's name on the books of the Trust
irrespective of the Series thereof or class thereof and all Shares of all Series
and classes thereof shall vote together as a single class; provided, however,
that as to any matter (i) with respect to which a separate vote of one or more
Series or classes thereof is required by the 1940 Act or the provisions of the
writing establishing and designating the Sub-Trust or class, such requirements
as to a separate vote by such Series or class thereof shall apply in lieu of all
Shares of all Series and classes thereof voting together; and (ii) as to any
matter which affects the interests of one or more particular Series or classes
thereof, only the holders of Shares of the one or more affected Series or
classes shall be entitled to vote, and each such Series or class shall vote as a
separate class.
<PAGE>
(f) Redemption by Shareholder. Each holder of Shares of a particular
Sub-Trust or any class thereof shall have the right at such times as may be
permitted by the Trust to require the Trust to redeem all or any part of such
holder's Shares of that Sub-Trust or class thereof at a redemption price equal
to the net asset value per Share of that Sub-Trust or class thereof next
determined in accordance with subsection (h) of this Section 4.2 after the
Shares are properly tendered for redemption, subject to any contingent deferred
sales charge, redemption charge or other charge in effect at the time of
redemption. Payment of the redemption price shall be in cash; provided, however,
that if the Trustees determine, which determination shall be conclusive, that
conditions exist which make payment wholly in cash unwise or undesirable, the
Trust may, subject to the requirements of the 1940 Act, make payment wholly or
partly in securities or other assets belonging to the Sub-Trust of which the
Shares being redeemed are part at the value of such securities or assets used in
such determination of net asset value.
Notwithstanding the foregoing, the Trust may postpone payment of the
redemption price and may suspend the right of the holders of Shares of any
Sub-Trust or class thereof to require the Trust to redeem Shares of that
Sub-Trust during any period or at any time when and to the extent permissible
under the 1940 Act.
(g) Redemption by Trust. Each Share of each Sub-Trust or class thereof
that has been established and designated is subject to redemption by the Trust
at the redemption price which would be applicable if such Share was then being
redeemed by the Shareholder pursuant to subsection (f) of this Section 4.2: (i)
at any time, if the Trustees determine in their sole discretion and by majority
vote that failure to so redeem may have materially adverse consequences to the
Trust or any Sub-Trust or to the holders of the Shares of the Trust or any
Sub-Trust thereof or class thereof, or (ii) upon such other conditions as may
from time to time be determined by the Trustees and set forth in the then
current Prospectus of the Trust. Upon such redemption the holders of the Shares
so redeemed shall have no further right with respect thereto other than to
receive payment of such redemption price.
(h) Net Asset Value. The net asset value per Share of any Sub-Trust
shall be (i) in the case of a Sub-Trust whose Shares are not divided into
classes, the quotient obtained by dividing the value of the net assets of that
Sub-Trust (being the value of the assets belonging to that Sub-Trust less the
liabilities belonging to that Sub-Trust) by the total number of Shares of that
Sub-Trust outstanding, and (ii) in the case of a class of Shares of a Sub-Trust
whose Shares are divided into classes, the quotient obtained by dividing the
value of the net assets of that Sub-Trust allocable to such class (being the
value of the assets belonging to that Sub-Trust allocable to such class less the
liabilities belonging to such class) by the total number of Shares of such class
outstanding; all determined in accordance with the methods and procedures,
including without limitation those with respect to rounding, established by the
Trustees from time to time.
<PAGE>
The Trustees may determine to maintain the net asset value per Share of any
Sub-Trust at a designated constant dollar amount and in connection therewith may
adopt procedures not inconsistent with the 1940 Act for the continuing
declarations of income attributable to that Sub-Trust as dividends payable in
additional Shares of that Sub-Trust at the designated constant dollar amount and
for the handling of any losses attributable to that Sub-Trust. Such procedures
may provide that in the event of any loss each Shareholder shall be deemed to
have contributed to the capital of the Trust attributable to that Sub-Trust such
Shareholder's pro rata portion of the total number of Shares required to be
canceled in order to permit the net asset value per Share of that Sub-Trust to
be maintained, after reflecting such loss, at the designated constant dollar
amount. Each Shareholder of the Trust shall be deemed to have agreed, by making
an investment in any Sub-Trust with respect to which the Trustees shall have
adopted any such procedure, to make the contribution referred to in the
preceding sentence in the event of any such loss.
(i) Transfer. All Shares of each particular Sub-Trust or class thereof
shall be transferable, but transfers of Shares of a particular Sub-Trust or
class thereof will be recorded on the Share transfer records of the Trust
applicable to that Sub-Trust or class only at such times as Shareholders shall
have the right to require the Trust to redeem Shares of that Sub-Trust or class
and at such other times as may be permitted by the Trustees.
(j) Equality. Except as provided herein or in the instrument
designating and establishing any class of Shares or any Sub-Trust, all Shares of
each particular Sub-Trust or class thereof shall represent an equal
proportionate interest in the assets belonging to that Sub-Trust, or in the case
of a class, belonging to that Sub-Trust and allocable to that class, subject to
the liabilities belonging to that Sub-Trust or class, and each Share of any
particular Sub-Trust or class shall be equal to each other Share of that
Sub-Trust or class; but the provisions of this sentence shall not restrict any
distinctions permissible under subsection (c) of this Section 4.2 that may exist
with respect to dividends and distributions on Shares of the same Sub-Trust or
class. The Trustees may from time to time divide or combine the Shares of any
particular Sub-Trust or class into a greater or lesser number of Shares of that
Sub-Trust or class without thereby changing the proportionate beneficial
interest in the assets belonging to that Sub-Trust or class or in any way
affecting the rights of Shares of any other Sub-Trust or class.
(k) Fractions. Any fractional Share of any Sub-Trust or class, if any
such fractional Share is outstanding, shall carry proportionately all the rights
and obligations of a whole Share of that Sub-Trust or class, including rights
and obligations with respect to voting, receipt of dividends and distributions,
redemption of Shares, and liquidation of the Trust.
(l) Conversion Rights. Subject to compliance with the requirements of
the 1940 Act, the Trustees shall have the authority to provide that holders of
Shares of any Sub-Trust or class thereof shall have the right to convert said
Shares into Shares of one or more other Sub-Trust or class thereof in accordance
with such requirements and procedures as may be established by the Trustees.
<PAGE>
(m) Class Differences. The relative rights and preferences of the
classes of any Sub-Trust may differ in such other respects as the Trustees may
determine to be appropriate in their sole discretion, provided that such
differences are set forth in the instrument establishing and designating such
classes and executed by a majority of the Trustees (or by an instrument executed
by an officer of the Trust pursuant to a vote of a majority of the Trustees).
Section 4.3 Ownership of Shares. The ownership of Shares shall be recorded
on the books of the Trust or of a transfer or similar agent for the Trust, which
books shall be maintained separately for the Shares of each Sub-Trust and each
class thereof that has been established and designated. No certificates
certifying the ownership of Shares need be issued except as the Trustees may
otherwise determine from time to time. The Trustees may make such rules as they
consider appropriate for the issuance of Share certificates, the use of
facsimile signatures, the transfer of Shares and similar matters. The record
books of the Trust as kept by the Trust or any transfer or similar agent, as the
case may be, shall be conclusive as to who are the Shareholders and as to the
number of Shares of each Sub-Trust and class thereof held from time to time by
each such Shareholder.
Section 4.4 Investments in the Trust. The Trustees may accept or reject
investments in the Trust and each Sub-Trust from such persons and on such terms
and for such consideration, not inconsistent with the provisions of the 1940
Act, as they from time to time authorize or determine. The Trustees may
authorize any distributor, principal underwriter, custodian, transfer agent or
other person to accept orders for the purchase of Shares that conform to such
authorized terms and to reject any purchase orders for Shares whether or not
conforming to such authorized terms.
Section 4.5 No Pre-emptive Rights. Shareholders shall have no pre-emptive
or other right to subscribe to any additional Shares or other securities issued
by the Trust or any Sub-Trust.
Section 4.6 Status of Shares and Limitation of Personal Liability. Shares
shall be deemed to be personal property giving only the rights provided in this
instrument. Every Shareholder by virtue of having become a Shareholder shall be
held to have expressly assented and agreed to the terms hereof and to have
become a party hereto. The death of a Shareholder during the continuance of the
Trust shall not operate to terminate the Trust or any Sub-Trust thereof nor
entitle the representative of any deceased Shareholder to an accounting or to
take any action in court or elsewhere against the Trust or the Trustees, but
only to the rights of said decedent under this Trust. Ownership of Shares shall
not entitle the Shareholder to any title in or to the whole or any part of the
Trust property or right to call for a partition or division of the same or for
an accounting, nor shall the ownership of Shares constitute the Shareholders
partners. Neither the Trust nor the Trustees, nor any officer, employee or agent
of the Trust shall have any power to bind personally any Shareholder, nor except
as specifically provided herein to call upon any Shareholder for the payment of
any sum of money or assessment whatsoever other than such as the Shareholder may
at any time personally agree to pay.
<PAGE>
Section 4.7 No Appraisal Rights. Shareholders shall have no right to demand
payment for their shares or to any other rights of dissenting shareholders in
the event the Trust participates in any transaction which would give rise to
appraisal or dissenters' rights by a shareholder of a corporation organized
under Chapter 156B of the General Laws of The Commonwealth of Massachusetts, or
otherwise.
ARTICLE V - SHAREHOLDERS' VOTING POWERS AND MEETINGS
----------------------------------------------------
Section 5.1 Voting Powers. The Shareholders shall have power to vote only
(i) for the election or removal of Trustees as provided in Section 3.1, (ii)
with respect to any contract with a Contracting Party as provided in Section 3.3
as to which Shareholder approval is required by the 1940 Act, (iii) with respect
to any termination or reorganization of the Trust to the extent and as provided
in Sections 7.1 and 7.2, (iv) with respect to any amendment of this Declaration
of Trust to the extent and as provided in Section 7.3, (v) to the same extent as
the stockholders of a Massachusetts business corporation as to whether or not a
court action, proceeding or claim should or should not be brought or maintained
derivatively or as a class action on behalf of the Trust or any Sub-Trust
thereof or the Shareholders of the Trust (provided, however, that a Shareholder
of a particular Sub-Trust shall not be entitled to a derivative or class action
on behalf of any other Sub-Trust (or Shareholder of any other Sub-Trust)) and
(vi) with respect to such additional matters relating to the Trust as may be
required by the 1940 Act, this Declaration of Trust, the By-Laws or any
registration of the Trust with the Commission (or any successor agency) or any
state, or as the Trustees may consider necessary or desirable. There shall be no
cumulative voting in the election of Trustees. Shares may be voted in person or
by proxy. Proxies may be given by or on behalf of a shareholder orally or in
writing or pursuant to any computerized, electronic, telephonic or mechanical
data gathering process. A proxy with respect to Shares held in the name of two
or more persons shall be valid if executed or otherwise given by or on behalf of
any one of them unless at or prior to exercise of the proxy the Trust receives a
specific written notice to the contrary from any one of them. A proxy purporting
to be executed or otherwise given by or on behalf of a Shareholder shall be
deemed valid unless challenged at or prior to its exercise and the burden of
proving invalidity shall rest on the challenger. Until Shares are issued, the
Trustees may exercise all rights of Shareholders and may take any action
required by law, this Declaration of Trust or the By-Laws to be taken by
Shareholders.
<PAGE>
Section 5.2 Meetings. No annual or regular meeting of Shareholders is
required. Special meetings of Shareholders may be called by the Trustees from
time to time for the purpose of taking action upon any matter requiring the vote
or authority of the Shareholders as herein provided or upon any other matter
deemed by the Trustees to be necessary or desirable. Notice of any meeting of
Shareholders shall be given or caused to be given by the Trustees, in writing or
by any form of electronic communication to which a Shareholder has consented, by
mailing or transmitting such notice at least seven (7) days before such meeting,
with all costs of mailing or transmitting prepaid, stating the time, place and
purpose of the meeting, to each Shareholder at the Shareholder's address as it
appears on the records of the Trust. The Trustees shall promptly call and give
notice of a meeting of Shareholders for the purpose of voting upon removal of
any Trustee of the Trust when requested to do so in writing by Shareholders
holding not less than 10% of the Shares then outstanding. If the Trustees shall
fail to call or give notice of any meeting of Shareholders for a period of 30
days after written application by Shareholders holding at least 10% of the
Shares then outstanding requesting a meeting be called for any other purpose
requiring action by the Shareholders as provided herein or in the By-Laws, then
Shareholders holding at least 10% of the Shares then outstanding may call and
give notice of such meeting, and thereupon the meeting shall be held in the
manner provided for herein in case of call thereof by the Trustees.
Section 5.3 Record Dates. For the purpose of determining the Shareholders
who are entitled to vote or act at any meeting or any adjournment thereof, or
who are entitled to participate in any dividend or distribution, or for the
purpose of any other action, the Trustees may from time to time close the
transfer books for such period, not exceeding 30 days (except at or in
connection with the termination of the Trust), as the Trustees may determine; or
without closing the transfer books the Trustees may fix a date and time not more
than 90 days prior to the date of any meeting of Shareholders or other action as
the date and time of record for the determination of Shareholders entitled to
vote at such meeting or any adjournment thereof or to be treated as Shareholders
of record for purposes of such other action, and any Shareholder who was a
Shareholder at the date and time so fixed shall be entitled to vote at such
meeting or any adjournment thereof or to be treated as a Shareholder of record
for purposes of such other action, even though such Shareholder has since that
date and time disposed of such Shareholder's Shares, and no Shareholder becoming
such after that date and time shall be so entitled to vote at such meeting or
any adjournment thereof or to be treated as a Shareholder of record for purposes
of such other action.
Section 5.4 Quorum and Required Vote. Except as otherwise provided by the
1940 Act or other applicable law, thirty percent of the Shares entitled to vote
shall be a quorum for the transaction of business at a Shareholders' meeting,
but any lesser number shall be sufficient for adjournments. Any meeting of
shareholders, whether or not a quorum is present, may be adjourned for any
lawful purpose provided that no meeting shall be adjourned for more than six (6)
months beyond the originally scheduled meeting date. Any adjourned session or
sessions may be held, within a reasonable time after the date set for the
original meeting without the necessity of further notice. A majority of the
Shares voted at a meeting of which a quorum is present shall decide any
questions and a plurality shall elect a Trustee, except when a different vote is
required or permitted by any provision of the 1940 Act or other applicable law
or by this Declaration of Trust or the By-Laws.
Section 5.5 Action by Written Consent. Except as provided by the 1940 Act
or any other applicable law or by any express provision of this Declaration of
Trust or the By-Laws, any action taken by Shareholders may be taken without a
meeting if a majority of Shareholders entitled to vote on the matter consent to
the action in writing and such written consents are filed with the records of
the meetings of Shareholders. Such consent shall be treated for all purposes as
a vote taken at a meeting of Shareholders.
<PAGE>
Section 5.6 Inspection of Records. The records of the Trust shall be open
to inspection by Shareholders for any lawful purpose reasonably related to a
Shareholder's interest as a Shareholder. The Trustees may from time to time
establish reasonable standards including standards governing what information
and documents are to be furnished, at what time and location and at whose
expense with respect to Shareholder inspection of Trust records to the same
extent as is permitted stockholders of a Massachusetts business corporation
under the Massachusetts Business Corporation Law.
Section 5.7 Additional Provisions. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters not
inconsistent with the provisions hereof.
Section 5.8 Shareholder Communications. Whenever ten or more Shareholders
of record who have been such for at least six (6) months preceding the date of
application, and who hold in the aggregate either Shares having a net asset
value of at least $25,000 or at least 1% of the outstanding Shares, whichever is
less, shall apply to the Trustees in writing, stating that they wish to
communicate with other Shareholders with a view to obtaining signatures to a
request for a Shareholder meeting and accompanied by a form of communication and
request which they wish to transmit, the Trustees shall within five (5) business
days after receipt of such application either (i) afford to such applicants
access to a list of the names and addresses of all Shareholders as recorded on
the books of the Trust or Sub-Trust, as applicable; or (ii) inform such
applicants as to the approximate number of Shareholders of record, and the
approximate cost of mailing to them the proposed communication and form of
request.
If the Trustees elect to follow the course specified in clause (ii) above,
the Trustees, upon the written request of such applicants, accompanied by a
tender of the material to be mailed and of the reasonable expenses of mailing,
shall, with reasonable promptness, mail such material to all Shareholders of
record at their addresses as recorded on the books, unless within five (5)
business days after such tender the Trustees shall mail to such applicants and
file with the Commission, together with a copy of the material to be mailed, a
written statement signed by at least a majority of the Trustees to the effect
that in their opinion either such material contains untrue statements of fact or
omits to state facts necessary to make the statements contained therein not
misleading, or would be in violation of applicable law, and specifying the basis
of such opinion. The Trustees shall thereafter comply with any order entered by
the Commission and the requirements of the 1940 Act and the Securities Exchange
Act of 1934, as amended.
<PAGE>
ARTICLE VI - LIMITATION OF LIABILITY; INDEMNIFICATION
-----------------------------------------------------
Section 6.1 Trustees, Shareholders, etc. Not Personally Liable; Notice. All
persons extending credit to, contracting with or having any claim against the
Trust shall look only to the assets of the Sub-Trust with which such person
dealt for payment under such credit, contract or claim; and neither the
Shareholders of any Sub-Trust nor the Trustees, nor any of the Trust's officers,
employees or agents, whether past, present or future, nor any other Sub-Trust
shall be personally liable therefor. Every note, bond, contract, instrument,
certificate or undertaking and every other act or thing whatsoever executed or
done by or on behalf of the Trust, any Sub-Trust or the Trustees or any of them
in connection with the Trust shall be conclusively deemed to have been executed
or done only by or for the Trust (or the Sub-Trust) or the Trustees and not
personally. Nothing in this Declaration of Trust shall protect any Trustee or
officer against any liability to the Trust or the Shareholders to which such
Trustee or officer would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee or of such officer.
Every note, bond, contract, instrument, certificate or undertaking made or
issued by the Trustees or by any officers or officer shall give notice that this
Declaration of Trust is on file with the Secretary of the Commonwealth of
Massachusetts and shall recite to the effect that the same was executed or made
by or on behalf of the Trust or by them as Trustees or Trustee or as officers or
officer and not individually and that the obligations of such instrument are not
binding upon any of them or the Shareholders individually but are binding only
upon the assets and property of the Trust, or the particular Sub-Trust in
question, as the case may be, but the omission thereof shall not operate to bind
any Trustees or Trustee or officers or officer or Shareholders or Shareholder
individually.
Section 6.2 Trustee's Good Faith Action; Expert Advice; No Bond or Surety.
The exercise by the Trustees of their powers and discretion hereunder shall be
binding upon everyone interested. A Trustee shall be liable for such Trustee's
own willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of the office of Trustee, and for nothing
else, and shall not be liable for errors of judgment or mistakes of fact or law.
Subject to the foregoing, (a) the Trustees shall not be responsible or liable in
any event for any neglect or wrongdoing of any officer, agent, employee,
consultant, adviser, administrator, distributor or principal underwriter,
custodian or transfer, dividend disbursing, Shareholder servicing or accounting
agent of the Trust, nor shall any Trustee be responsible for the act or omission
of any other Trustee; (b) the Trustees may take advice of counsel or other
experts with respect to the meaning and operation of this Declaration of Trust
and their duties as Trustees, and shall be under no liability for any act or
omission in accordance with such advice or for failing to follow such advice;
and (c) in discharging their duties, the Trustees, when acting in good faith,
shall be entitled to rely upon the books of account of the Trust and upon
written reports made to the Trustees by any officer appointed by them, any
independent public accountant, and (with respect to the subject matter of the
contract involved) any officer, partner or responsible employee of a Contracting
Party appointed by the Trustees pursuant to Section 3.3. The Trustees as such
shall not be required to give any bond or surety or any other security for the
performance of their duties.
<PAGE>
Section 6.3 Indemnification of Shareholders. In case any Shareholder (or
former Shareholder) of any Sub-Trust of the Trust shall be charged or held to be
personally liable for any obligation or liability of the Trust solely by reason
of being or having been a Shareholder and not because of such Shareholder's acts
or omissions or for some other reason, said Sub-Trust (upon proper and timely
request by the Shareholder) shall assume the defense against such charge and
satisfy any judgment thereon, and the Shareholder or former Shareholder (or such
Shareholder's heirs, executors, administrators or other legal representatives or
in the case of a corporation or other entity, its corporate or other general
successor) shall be entitled out of the assets of said Sub-Trust estate to be
held harmless from and indemnified against all loss and expense arising from
such liability.
Section 6.4 Indemnification of Trustees, Officers, etc. The Trust shall
indemnify (from the assets of the Sub-Trust or Sub-Trusts in question) each of
its Trustees and officers (including persons who serve at the Trust's request as
directors, officers or trustees of another organization in which the Trust has
any interest as a shareholder, creditor or otherwise (hereinafter referred to as
a "Covered Person")) against all liabilities, including but not limited to
amounts paid in satisfaction of judgments, in compromise or as fines and
penalties, and expenses, including reasonable accountants' and counsel fees,
incurred by any Covered Person in connection with the defense or disposition of
any action, suit or other proceeding, whether civil or criminal, before any
court or administrative or legislative body, in which such Covered Person may be
or may have been involved as a party or otherwise or with which such person may
be or may have been threatened, while in office or thereafter, by reason of
being or having been such a Trustee or officer, director or trustee, except with
respect to any matter as to which it has been determined that such Covered
Person had acted with willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of such Covered
Person's office (such conduct referred to hereafter as "Disabling Conduct"). A
determination that the Covered Person is entitled to indemnification may be made
by (i) a final decision on the merits by a court or other body before whom the
proceeding was brought that the person to be indemnified was not liable by
reason of Disabling Conduct, (ii) dismissal of a court action or an
administrative proceeding against a Covered Person for insufficiency of evidence
of Disabling Conduct, or (iii) a reasonable determination, based upon a review
of the facts, that the indemnitee was not liable by reason of Disabling Conduct
by (a) a vote of a majority of a quorum of Trustees who are neither "interested
persons" of the Trust as defined in section 2(a)(19) of the 1940 Act nor parties
to the proceeding, or (b) an independent legal counsel in a written opinion.
Expenses, including accountants' and counsel fees so incurred by any such
Covered Person (but excluding amounts paid in satisfaction of judgments, in
compromise or as fines or penalties), may be paid from time to time by the
Sub-Trust in question in advance of the final disposition of any such action,
suit or proceeding, provided that the Covered Person shall have undertaken to
repay the amounts so paid to the Sub-Trust in question if it is ultimately
determined that indemnification of such expenses is not authorized under this
Article VI and (i) the Covered Person shall have provided security for such
undertaking, (ii) the Trust shall be insured against losses arising by reason of
any lawful advances, or (iii) a majority of a quorum of the disinterested
Trustees who are not a party to the proceeding, or an independent legal counsel
in a written opinion, shall have determined, based on a review of readily
available facts (as opposed to a full trial-type inquiry), that there is reason
to believe that the Covered Person ultimately will be found entitled to
indemnification.
<PAGE>
Section 6.5 Compromise Payment. As to any matter disposed of by a
compromise payment by any such Covered Person referred to in Section 6.4,
pursuant to a consent decree or otherwise, no such indemnification either for
said payment or for any other expenses shall be provided unless such
indemnification shall be approved (a) by a majority of the disinterested
Trustees who are not parties to the proceeding or (b) by an independent legal
counsel in a written opinion. Approval by the Trustees pursuant to clause (a) or
by independent legal counsel pursuant to clause (b) shall not prevent the
recovery from any Covered Person of any amount paid to such Covered Person in
accordance with any of such clauses as indemnification if such Covered Person is
subsequently adjudicated by a court of competent jurisdiction to have been
liable to the Trust or its Shareholders by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of such Covered Person's office.
Section 6.6 Indemnification Not Exclusive, etc. The right of
indemnification provided by this Article VI shall not be exclusive of or affect
any other rights to which any such Covered Person may be entitled. As used in
this Article VI, "Covered Person" shall include such person's heirs, executors
and administrators, an "interested Covered Person" is one against whom the
action, suit or other proceeding in question or another action, suit or other
proceeding on the same or similar grounds is then or has been pending or
threatened, and a "disinterested" person is a person against whom none of such
actions, suits or other proceedings or another action, suit or other proceeding
on the same or similar grounds is then or has been pending or threatened.
Nothing contained in this Article shall affect any rights to indemnification to
which personnel of the Trust, other than Trustees and officers, and other
persons may be entitled by contract or otherwise under law, nor the power of the
Trust to purchase and maintain liability insurance on behalf of any such person.
Section 6.7 Liability of Third Persons Dealing with Trustees. No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the Trust or upon
its order.
ARTICLE VII - MISCELLANEOUS
---------------------------
Section 7.1 Duration and Termination of Trust. Unless terminated as
provided herein, the Trust shall continue without limitation of time and,
without limiting the generality of the foregoing, no change, alteration or
modification with respect to any Sub-Trust or class thereof shall operate to
terminate the Trust. The Trust may be terminated at any time by a majority of
the Trustees then in office and without approval of Shareholders.
Upon termination, after paying or otherwise providing for all charges,
taxes, expenses and liabilities, whether due or accrued or anticipated as may be
determined by the Trustees, the Trust shall, in accordance with such procedures
as the Trustees consider appropriate, reduce the remaining assets to
distributable form in cash, securities or other property, or any combination
thereof, and distribute the proceeds to the Shareholders in conformity with the
provisions of subsection (d) of Section 4.2.
<PAGE>
Section 7.2 Reorganization. The Trust, or any one or more Sub-Trusts, may,
either as the successor, survivor, or non-survivor, (1) consolidate or merge
with one or more other trusts, sub-trusts, partnerships, associations or
corporations organized under the laws of The Commonwealth of Massachusetts or
any other state of the United States, to form a consolidated or merged trust,
partnership, limited liability company, association or corporation under the
laws of which any one of the constituent entities is organized with the Trust to
be the survivor or non-survivor of such consolidation or merger, or (2) transfer
a substantial portion of its assets to one or more other trusts, sub-trusts,
partnerships, limited liability companies, associations or corporations
organized under the laws of The Commonwealth of Massachusetts or any other state
of the United States, or have one or more such trusts, sub-trusts, partnerships,
limited liability companies, associations or corporations transfer a substantial
portion of its assets to it, any such consolidation, merger or transfer to be
upon such terms and conditions as are specified in an agreement and plan of
reorganization authorized and approved by the Trustees and entered into by the
Trust, or one or more Sub-Trusts as the case may be, in connection therewith.
Any such consolidation, merger or transfer may be authorized at any time by vote
of a majority of the Trustees then in office.
Section 7.3 Amendments. All rights granted to the Shareholders under this
Declaration of Trust are granted subject to the reservation of the right to
amend this Declaration of Trust as herein provided, except that no amendment
shall repeal the limitations on personal liability of any Shareholder or Trustee
or repeal the prohibition of assessment upon the Shareholders without the
express consent of each Shareholder or Trustee involved. Subject to the
foregoing, the provisions of this Declaration of Trust (whether or not related
to the rights of Shareholders) may be amended at any time, so long as such
amendment does not materially adversely affect the rights of any Shareholder
with respect to which such amendment is or purports to be applicable and so long
as such amendment is not in contravention of applicable law, including the 1940
Act, by an instrument in writing signed by a majority of the then Trustees (or
by an officer of the Trust pursuant to the vote of a majority of such Trustees).
Any amendment to this Declaration of Trust that materially adversely affects the
rights of Shareholders may be adopted at any time by an instrument in writing
signed by a majority of the then Trustees (or by an officer of the Trust
pursuant to a vote of a majority of such Trustees) when authorized to do so by
the vote in accordance with subsection (e) of Section 4.2 of Shareholders as
specified in Section 5.4 hereof. Subject to the foregoing, any such amendment
shall be effective as of any prior or future time as provided in the instrument
containing the terms of such amendment or, if there is no provision therein with
respect to effectiveness, upon the execution of such instrument and of a
certificate (which may be a part of such instrument) executed by a Trustee or
officer of the Trust to the effect that such amendment has been duly adopted.
<PAGE>
Section 7.4 Filing of Copies; References; Headings. The original or a copy
of this instrument and of each amendment hereto shall be kept at the office of
the Trust where it may be inspected by any Shareholder. Anyone dealing with the
Trust may rely on a certificate by an officer of the Trust as to whether or not
any such amendments have been made, as to the identities of the Trustees and
officers, and as to any matters in connection with the Trust hereunder; and,
with the same effect as if it were the original, may rely on a copy certified by
an officer of the Trust to be a copy of this instrument or of any such
amendments. In this instrument and in any such amendment, references to this
instrument, and all expressions like "herein," "hereof" and "hereunder" shall be
deemed to refer to this instrument as a whole as the same may be amended or
affected by any such amendments. Headings are placed herein for convenience of
reference only and shall not be taken as a part hereof or control or affect the
meaning, construction or effect of this instrument. This instrument may be
executed in any number of counterparts each of which shall be deemed an
original.
Section 7.5 Applicable Law. This Declaration of Trust is made in The
Commonwealth of Massachusetts, and it is created under and is to be governed by
and construed and administered according to the laws of said Commonwealth. The
Trust shall be of the type referred to in Section 1 of Chapter 182 of the
Massachusetts General Laws and of the type commonly called a Massachusetts
business trust, and without limiting the provisions hereof, the Trust may
exercise all powers which are ordinarily exercised by such a trust.
Section 7.6 Integration. This Declaration of Trust constitutes the entire
agreement among the parties hereto pertaining to the subject matter hereof and
supersedes all prior agreements and understandings pertaining thereto.
Section 7.7 Resident Agent. CT Corporation System, 2 Oliver Street, Boston,
Massachusetts 02109 is hereby designated as the resident agent of the Trust in
Massachusetts. The Trustees may change the designated resident agent in
Massachusetts from time to time.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
STOCKJUNGLE.COM TRUST
INVESTMENT ADVISORY AGREEMENT
-----------------------------
THIS INVESTMENT ADVISORY AGREEMENT ("Agreement") is made as of the __th day
of __________, 1999, by and between STOCKJUNGLE.COM TRUST, a Massachusetts
business trust (the "Trust"), on behalf of its series, StockJungle.com Community
Intelligence Fund (the "Fund") and STOCKJUNGLE.COM INVESTMENT ADVISORS, INC., a
Delaware corporation (the "Adviser").
W I T N E S S E T H:
--------------------
WHEREAS, the Trust is an open-end management investment company, registered
as such under the Investment Company Act of 1940 (the "Investment Company Act");
and
WHEREAS, the Fund is a series of the Trust having separate assets and
liabilities; and
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940 and is engaged in the business of providing
investment advice to individual clients and investment companies; and
WHEREAS, the Trust desires to retain the Adviser to render advice and
services to the Fund pursuant to the terms and provisions of this Agreement, and
the Adviser desires to furnish said advice and services;
NOW, THEREFORE, in consideration of the covenants and the mutual promises
hereinafter set forth, the parties to this Agreement, intending to be legally
bound hereby, mutually agree as follows:
1. APPOINTMENT OF ADVISER. The Trust hereby employs the Adviser and the
Adviser hereby accepts such employment, to render investment advice and related
services with respect to the assets of the Fund for the period and on the terms
set forth in this Agreement, subject to the supervision and direction of the
Board of Trustees.
<PAGE>
1. DUTIES OF ADVISER.
(a) GENERAL DUTIES. The Adviser shall act as investment adviser to the
Fund and shall supervise investments of the Fund on behalf of the Fund in
accordance with the investment objective, policies and restrictions of the Fund
as set forth in the Fund's and Trust's governing documents, including, without
limitation, the Trust's Amended and Restated Agreement and Declaration of Trust
and By-Laws; the Fund's prospectus, statement of additional information and
undertaking from time to time; and such other limitations, policies and
procedures as the Trustees may impose from time to time in writing to the
Adviser. In providing such services, the Adviser shall at all times adhere to
the provisions and restrictions contained in the federal securities laws,
applicable state securities laws, the Internal Revenue Code, the Uniform
Commercial Code and other applicable law.
Without limiting the generality of the foregoing, the Adviser shall: (i)
furnish the Fund with advice and recommendations with respect to the investment
of the Fund's assets and the purchase and sale of portfolio securities for the
Fund, including the taking of such steps as may be necessary to implement such
advice and recommendations (e.g., placing the orders); (ii) manage and oversee
the investments of the Fund, subject to the ultimate supervision and direction
of the Board of Trustees; (iii) vote proxies for the Fund, file ownership
reports under Section 13 of the Securities Exchange Act of 1934 for the Fund,
and take other similar actions on behalf of the Fund; (iv) maintain the books
and records required to be maintained by the Fund except to the extent
arrangements have been made for such books and records to be maintained by the
administrator or another agent of the Fund; (v) furnish reports, statements and
other data on securities, economic conditions and other matters related to the
investment of the Fund's assets which the Fund's administrator or distributor or
the officers of the Trust may reasonably request; and (vi) render to the Board
of Trustees such periodic and special reports with respect to the Fund's
investment activities as the Board may reasonably request, including at least
one in-person appearance annually before the Board of Trustees. Notwithstanding
the provisions of this Section 2(a), the Adviser may delegate some or all of
these duties under Section 2(c) below.
(b) BROKERAGE. The Adviser shall be responsible for decisions to buy
and sell securities for the Fund, for broker-dealer selection, and for
negotiation of brokerage commission rates, provided that the Adviser shall not
direct orders to an affiliated person of the Adviser without general prior
authorization to use such affiliated broker or dealer from the Board of
Trustees. The Adviser's primary consideration in effecting a securities
transaction will be to obtain on behalf of the Fund the best available price and
execution. In selecting a broker-dealer to execute each particular transaction,
the Adviser may take into consideration all factors it deems relevant, including
without limitation: the best net price available; the reliability, integrity and
financial condition of the broker-dealer; the size of and difficulty in
executing the order; and the value of the expected contribution of the
broker-dealer to the investment performance of the Fund on a continuing basis.
The price to the Fund in any transaction may be less favorable than that
available from another broker-dealer if the difference is reasonably justified
by other aspects of the portfolio execution services offered.
Subject to such policies as the Board of Trustees may determine, the
Adviser shall not be deemed to have acted unlawfully or to have breached any
duty created by this Agreement
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<PAGE>
or otherwise solely by reason of its having caused the Fund to pay a broker or
dealer that provides (directly or indirectly) brokerage or research services to
the Adviser an amount of commission for effecting a portfolio transaction in
excess of the amount of commission another broker or dealer would have charged
for effecting that transaction, if the Adviser determines in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer, viewed in
terms of either that particular transaction or the Adviser's overall
responsibilities with respect to the Trust. The Adviser is further authorized to
allocate the orders placed by it on behalf of the Fund to such brokers or
dealers who also provide research or statistical material, or other services, to
the Trust, the Adviser, or any affiliate of either. Such allocation shall be in
such amounts and proportions as the Adviser shall determine, and the Adviser
shall report on such allocations regularly to the Trust, indicating the
broker-dealers to whom such allocations have been made and the basis therefor.
The Adviser is also authorized to consider sales of shares as a factor in the
selection of brokers or dealers to execute portfolio transactions, subject to
the requirements of best price and execution.
On occasions when the Adviser deems the purchase or sale of a security to
be in the best interest of the Fund as well as of other clients, the Adviser, to
the extent permitted by applicable laws and regulations, may aggregate the
securities to be so purchased or sold in order to obtain the most favorable
price or lower brokerage commissions and the most efficient execution. In such
event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Adviser in the manner
it considers to be the most equitable and consistent with its fiduciary
obligations to the Fund and to such other clients.
(c) DELEGATION OF RESPONSIBILITIES. Notwithstanding the provisions of
Sections 2(a) and 2(b), respectively, the Adviser may delegate the performance
of investment advisory services for the Fund to one or more sub-advisers
approved by the Board of Trustees, but such delegation will not relieve the
Adviser of the duty to supervise the performance of advisory services hereunder.
If the advisory functions are delegated to one or more sub-advisers, then the
obligations of each such sub-adviser shall be governed by a sub-advisory
agreement to be entered into between the Adviser and each such sub-adviser.
2. REPRESENTATIONS OF THE ADVISER.
(c) The Adviser shall use its best judgment and efforts in rendering
the advice and services to the Fund as contemplated by this Agreement.
(d) The Adviser shall maintain all licenses and registrations
necessary to perform its duties hereunder in good order.
(e) The Adviser shall conduct its operations at all times in
conformance with the Investment Advisers Act of 1940, the Investment Company
Act, and any other applicable state and/or self-regulatory organization laws and
regulations.
-3-
<PAGE>
(f) The Adviser shall maintain errors and omissions insurance in an
amount at least equal to that disclosed to the Board of Trustees in connection
with their approval of this Agreement.
(g) The Adviser is a corporation duly organized and in good standing
under the laws of the State of Delaware and has full corporate power and
authority to enter into this Agreement and to perform services hereunder, the
execution and delivery of this Agreement by the Adviser has been duly authorized
by all necessary corporate action, and this Agreement is a valid binding
obligation of the Adviser, enforceable against the Adviser in accordance with
its terms.
3. INDEPENDENT CONTRACTOR. The Adviser shall, for all purposes herein, be
deemed to be an independent contractor, and shall, unless otherwise expressly
provided and authorized to do so, have no authority to act for or represent the
Trust or the Fund in any way, or in any way be deemed an agent for the Trust or
for the Fund. It is expressly understood and agreed that the services to be
rendered by the Adviser to the Fund under the provisions of this Agreement are
not to be deemed exclusive, and the Adviser shall be free to render similar or
different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby.
4. ADVISER'S PERSONNEL. The Adviser shall, at its own expense, maintain
such staff and employ or retain such personnel and consult with such other
persons as it shall from time to time determine to be necessary to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Adviser shall be
deemed to include persons employed or retained by the Adviser to furnish
statistical information, research, and other factual information, advice
regarding economic factors and trends, information with respect to technical and
scientific developments, and such other information, advice and assistance as
the Adviser or the Board of Trustees may desire and reasonably request.
5. EXPENSES. With respect to the operation of the Fund, the Adviser shall
be responsible for (i) providing the personnel, office space and equipment
reasonably necessary for the investment management of the Fund, (ii) the
expenses of printing and distributing extra copies of the Fund's prospectus,
statement of additional information, and sales and advertising materials (but
not the legal, auditing or accounting fees attendant thereto) to prospective
investors (but not to existing shareholders), and (iii) the costs of any special
Board of Trustees meetings or shareholder meetings convened for the primary
benefit of the Adviser. The Adviser shall also be responsible for payment of all
of the Fund's operating expenses, including but not limited to: investment
sub-advisory and administrative fees payable to any sub-adviser or administrator
under the appropriate agreements entered into with the Adviser or the Trust, as
the case may be; fees and expenses incurred in connection with the issuance,
registration and transfer of Trust shares; all expenses of transfer, receipt,
safekeeping, servicing and accounting for the cash, securities and other
property of the Trust for the benefit of the Fund including all fees and
expenses of its custodian, shareholder services agent and accounting services
agent; interest
-4-
<PAGE>
charges on any borrowings; costs and expenses of pricing and calculating the
Fund's daily net asset value and of maintaining the Fund's books of account
required under the Investment Company Act; taxes, if any; expenditures in
connection with meetings of the Fund's shareholders and the Trust's Board of
Trustees that are not paid by other third parties; salaries and expenses of
officers and fees and expenses of members of the Board of Trustees or members of
any advisory board or committee who are not members of, affiliated with or
interested persons of the Adviser or the administrator; insurance premiums on
property or personnel of the Fund which inure to its benefit, including
liability and fidelity bond insurance; the cost of preparing and printing
reports, proxy statements, prospectuses and statements of additional information
of the Fund or other communications for distribution to existing shareholders;
legal, auditing and accounting fees; trade association dues; fees and expenses
(including legal fees) of registering and maintaining registration of its shares
for sale under federal and applicable state and foreign securities laws; all
expenses of maintaining and servicing shareholder accounts, including all
charges for transfer, shareholder record-keeping, dividend disbursing,
redemption, and other agents for the benefit of the Fund, if any; and all other
charges and costs of the Fund's operation. Notwithstanding any other provision
of this Agreement to the contrary, however, the Adviser will not be responsible
for any brokerage commissions or extraordinary and non-recurring expenses,
except as specifically agreed to herein or as otherwise prescribed.
6. INVESTMENT ADVISORY FEE.
(h) The Fund shall pay to the Adviser, and the Adviser agrees to
accept, as full compensation for all investment and advisory services furnished
or provided to the Fund pursuant to this Agreement, an annual investment
advisory fee at the rate equal to 1.00% of the Fund's average daily net assets.
(i) The investment advisory fee shall be accrued daily by the Fund and
paid to the Adviser on the first business day of the succeeding month.
(j) The initial fee under this Agreement shall be payable on the first
business day of the first month following the effective date of this Agreement
and shall be prorated as set forth below. If this Agreement is terminated prior
to the end of any month, the fee to the Adviser shall be prorated for the
portion of any month in which this Agreement is in effect which is not a
complete month according to the proportion which the number of calendar days in
the month during which the Agreement is in effect bears to the number of
calendar days in the month, and shall be payable within ten (10) days after the
date of termination.
(k) The fee payable to the Adviser under this Agreement will be
reduced to the extent of any receivable owed by the Adviser to the Fund and as
required under any expense limitation applicable to the Fund.
(l) The Adviser voluntarily may reduce any portion of the compensation
or reimbursement of expenses due to it pursuant to this Agreement and may agree
to make payments to limit the expenses which are the responsibility of the Fund
under this
-5-
<PAGE>
Agreement. Any such reduction or payment shall be applicable only to such
specific reduction or payment and shall not constitute an agreement to reduce
any future compensation or reimbursement due to the Adviser hereunder or to
continue future payments. Any such reduction will be agreed to prior to accrual
of the related expense or fee and will be estimated daily and reconciled and
paid on a monthly basis.
(m) Any fee withheld or voluntarily reduced and any Fund expense
absorbed by the Adviser voluntarily pursuant to Section 7(e) shall be reimbursed
by the Fund to the Adviser, if so requested by the Adviser, no later than the
fifth fiscal year succeeding the fiscal year of the withholding, reduction or
absorption if the aggregate amount actually paid by the Fund toward the
operating expenses for such fiscal year (taking into account the reimbursement)
do not exceed the applicable limitation on Fund expenses. Such reimbursement may
be paid prior to the Fund's payment of current expenses if so requested by the
Adviser even if such practice may require the Adviser to waive, reduce or absorb
current Fund expenses.
(n) The Adviser may agree not to require payment of any portion of the
compensation or reimbursement of expenses otherwise due to it pursuant to this
Agreement. Any such agreement shall be applicable only with respect to the
specific items covered thereby and shall not constitute an agreement not to
require payment of any future compensation or reimbursement due to the Adviser
hereunder.
7. NO SHORTING; NO BORROWING. The Adviser agrees that neither it nor any of
its officers or employees shall take any short position in the shares of the
Fund. This prohibition shall not prevent the purchase of such shares by any of
the officers or employees of the Adviser or any trust, pension, profit-sharing
or other benefit plan for such persons or affiliates thereof, at a price not
less than the net asset value thereof at the time of purchase, as allowed
pursuant to rules promulgated under the Investment Company Act. The Adviser
agrees that neither it nor any of its officers or employees shall borrow from
the Fund or pledge or use the Fund's assets in connection with any borrowing not
directly for the Fund's benefit. For this purpose, failure to pay any amount due
and payable to the Fund for a period of more than thirty (30) days shall
constitute a borrowing.
8. CONFLICTS WITH TRUST'S GOVERNING DOCUMENTS AND APPLICABLE LAWS. Nothing
herein contained shall be deemed to require the Trust or the Fund to take any
action contrary to the Trust's Amended and Restated Agreement and Declaration of
Trust, By-Laws, or any applicable statute or regulation, or to relieve or
deprive the Board of Trustees of the Trust of its responsibility for and control
of the conduct of the affairs of the Trust and the Fund. In this connection, the
Adviser acknowledges that the Trustees retain ultimate plenary authority over
the Fund and may take any and all actions necessary and reasonable to protect
the interests of shareholders.
-6-
<PAGE>
9. REPORTS AND ACCESS. The Adviser agrees to supply such information to the
Fund's administrator and to permit such compliance inspections by the
administrator as shall be reasonably necessary to permit the administrator to
satisfy its obligations and respond to the reasonable requests of the Trustees.
10. ADVISER'S LIABILITIES AND INDEMNIFICATION.
(o) The Adviser shall have responsibility for the accuracy and
completeness of the statements in the Fund's offering materials (including the
prospectus, the statement of additional information, advertising and sales
materials), except for information supplied by any sub-adviser, the
administrator or the Trust or another third party for inclusion therein.
(p) The Adviser shall be liable to the Fund for any loss (including
brokerage charges) incurred by the Fund as a result of any improper investment
made by the Adviser.
(q) In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the obligations or duties hereunder on the
part of the Adviser, the Adviser shall not be subject to liability to the Trust
or the Fund or to any shareholder of the Fund for any act or omission in the
course of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security by the
Fund.
(r) Each party to this Agreement shall indemnify and hold harmless the
other party and the shareholders, trustees, officers and employees of the other
party (any such person, an "Indemnified Party") against any loss, liability,
claim, damage or expense (including the reasonable cost of investigating and
defending any alleged loss, liability, claim, damage or expenses and reasonable
counsel fees incurred in connection therewith) arising out of the Indemnified
Party's performance or nonperformance of any duties under this Agreement;
provided, however, that nothing herein shall be deemed to protect any
Indemnified Party against any liability to which such Indemnified Party would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties under this Agreement.
(s) No provision of this Agreement shall be construed to protect any
Director or officer of the Trust, or officer of the Adviser, from liability in
violation of Sections 17(h) and (i) of the Investment Company Act.
11. NON-EXCLUSIVITY; TRADING FOR ADVISER'S OWN ACCOUNT. The Trust's
employment of the Adviser is not an exclusive arrangement. The Trust may from
time to time employ other individuals or entities to furnish it with the
services provided for herein. Likewise,
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<PAGE>
the Adviser may act as investment adviser for any other person, and shall not in
any way be limited or restricted from having, selling or trading any securities
for its or their own accounts or the accounts of others for whom it or they may
be acting; provided, however, that the Adviser expressly represents that it will
undertake no activities which will adversely affect the performance of its
obligations to the Fund under this Agreement; and provided further that the
Adviser shall adhere to a code of ethics governing employee trading and trading
for proprietary accounts that conforms to the requirements of the Investment
Company Act and the Investment Advisers Act of 1940 and has been approved by the
Trust's Board of Trustees.
12. TERM. This Agreement shall become effective at the time the Fund
commences operations pursuant to an effective amendment to the Trust's
Registration Statement under the Securities Act of 1933 and shall remain in
effect for a period of two (2) years, unless sooner terminated as hereinafter
provided. This Agreement shall continue in effect thereafter for additional
periods not exceeding one (1) year so long as such continuation is approved for
the Fund at least annually by (i) the Board of Trustees of the Trust or by the
vote of a majority of the outstanding voting securities of the Fund and (ii) the
vote of a majority of the Trustees of the Trust who are not parties to this
Agreement nor interested persons thereof, cast in person at a meeting called for
the purpose of voting on such approval. The terms "majority of the outstanding
voting securities" and "interested persons" shall have the meanings as set forth
in the Investment Company Act.
2. OWNERSHIP OF THE NAME OF THE FUND. The parties to this Agreement hereby
acknowledge that the prefix to the name of the Trust and the Fund,
StockJungle.com, is the exclusive property of the parent of the Adviser,
StockJungle.com, Inc. and is not the property of the Trust or the Fund. In the
event that the Adviser ceases to provide investment advisory services to the
Fund pursuant to this Agreement, the Fund shall change its name within thirty
(30) days of the termination of this Agreement.
15. BOOKS AND RECORDS; CONFIDENTIALITY.
(a) In compliance with the requirements of Rule 31a-3 under the
Investment Company Act, the Adviser agrees that all records which it maintains
for the Trust are the property of the Trust and further agrees to surrender
promptly to the Trust any such records upon the Trust's request. The Adviser
further agrees to preserve for the periods prescribed by Rule 31a-2 under the
Investment Company Act the records required to be maintained by Rule 31a-1 under
such Act.
(b) The Adviser shall treat as confidential and proprietary
information of the Trust all records and other information relative to the Trust
and shareholders of the Trust, or persons who respond to inquiries concerning
investment in the Trust, and shall not use such records and information for any
purpose other than performance of its responsibilities and duties
-8-
<PAGE>
hereunder or under any other agreement with the Trust, except as otherwise
provided in writing by the Trust (which approval shall not be unreasonably
withheld if the Adviser may be exposed to civil or criminal proceedings for
failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Trust). However, nothing
herein shall be deemed to prohibit the Adviser or its affiliates from using in
any manner information provided by the Adviser or its affiliates to the Trust,
or from advertising to or soliciting the public generally with respect to other
products and services, regardless of whether such advertisements or solicitation
may coincidentally include prior or present shareholders or persons who have
responded to inquiries regarding the Trust.
16. TERMINATION; NO ASSIGNMENT.
(a) This Agreement may be terminated by the Trust on behalf of the
Fund at any time without payment of any penalty, by the Board of Trustees or by
vote of a majority of the outstanding voting securities of the Fund, upon sixty
(60) days' written notice to the Adviser, and by the Adviser upon sixty (60)
days' written notice to a Fund. In the event of a termination, the Adviser shall
cooperate in the orderly transfer of the Fund's affairs and, at the request of
the Board of Trustees, transfer any and all books and records of the Fund
maintained by the Adviser on behalf of the Fund.
(b) This Agreement shall terminate automatically in the event of any
transfer or assignment thereof, as defined in the Investment Company Act.
17. ENTIRE AGREEMENT; AMENDMENTS. This Agreement constitutes the entire
agreement and understanding between the parties hereto. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement thereof
is sought. To the extent required by the Investment Company Act, no amendment of
this Agreement shall be effective until approved by a majority of the
outstanding voting securities of the Funds (as defined in such Act).
18. DECLARATION OF TRUST. The Amended and Restated Agreement and
Declaration of Trust of the Trust is on file with the Secretary of the
Commonwealth of Massachusetts. In accordance therewith, the Adviser acknowledges
and agrees that this Agreement was signed on behalf of the Trust by the
undersigned as officers of the Trust and not individually, and that the
obligations of the Trust under this Agreement are not binding upon any officers,
trustees or shareholders of the Trust individually but are binding only upon the
assets of the Trust.
19. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute or rule, or shall be otherwise rendered
invalid, the remainder of this Agreement shall not be affected thereby.
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<PAGE>
20. CAPTIONS. The captions in this Agreement are included for convenience
of reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
21. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California without giving effect to
the conflict of laws principles thereof; provided that nothing herein shall be
construed to preempt, or to be inconsistent with, any federal law, regulation or
rule, including the Investment Company Act and the Investment Advisers Act of
1940 and any rules and regulations promulgated thereunder.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers, all on the day and year first
above written.
STOCKJUNGLE.COM TRUST STOCKJUNGLE.COM INVESTMENT
on behalf of its series, the ADVISORS, INC.
StockJungle.com Community
Intelligence Fund
By:______________________________ By:______________________________
Name: Name:
Title: Title:
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<PAGE>
STOCKJUNGLE.COM TRUST
INVESTMENT ADVISORY AGREEMENT
-----------------------------
THIS INVESTMENT ADVISORY AGREEMENT ("Agreement") is made as of the __th day
of __________, 1999, by and between STOCKJUNGLE.COM TRUST, a Massachusetts
business trust (the "Trust"), on behalf of its series, StockJungle.com Market
Leaders Growth Fund (the "Fund") and STOCKJUNGLE.COM INVESTMENT ADVISORS, INC.,
a Delaware corporation (the "Adviser").
W I T N E S S E T H:
--------------------
WHEREAS, the Trust is an open-end management investment company, registered
as such under the Investment Company Act of 1940 (the "Investment Company Act");
and
WHEREAS, the Fund is a series of the Trust having separate assets and
liabilities; and
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940 and is engaged in the business of providing
investment advice to individual clients and investment companies; and
WHEREAS, the Trust desires to retain the Adviser to render advice and
services to the Fund pursuant to the terms and provisions of this Agreement, and
the Adviser desires to furnish said advice and services;
NOW, THEREFORE, in consideration of the covenants and the mutual promises
hereinafter set forth, the parties to this Agreement, intending to be legally
bound hereby, mutually agree as follows:
1. APPOINTMENT OF ADVISER. The Trust hereby employs the Adviser and the
Adviser hereby accepts such employment, to render investment advice and related
services with respect to the assets of the Fund for the period and on the terms
set forth in this Agreement, subject to the supervision and direction of the
Board of Trustees.
<PAGE>
1. DUTIES OF ADVISER.
(a) GENERAL DUTIES. The Adviser shall act as investment adviser to the
Fund and shall supervise investments of the Fund on behalf of the Fund in
accordance with the investment objective, policies and restrictions of the Fund
as set forth in the Fund's and Trust's governing documents, including, without
limitation, the Trust's Amended and Restated Agreement and Declaration of Trust
and By-Laws; the Fund's prospectus, statement of additional information and
undertaking from time to time; and such other limitations, policies and
procedures as the Trustees may impose from time to time in writing to the
Adviser. In providing such services, the Adviser shall at all times adhere to
the provisions and restrictions contained in the federal securities laws,
applicable state securities laws, the Internal Revenue Code, the Uniform
Commercial Code and other applicable law.
Without limiting the generality of the foregoing, the Adviser shall: (i)
furnish the Fund with advice and recommendations with respect to the investment
of the Fund's assets and the purchase and sale of portfolio securities for the
Fund, including the taking of such steps as may be necessary to implement such
advice and recommendations (e.g., placing the orders); (ii) manage and oversee
the investments of the Fund, subject to the ultimate supervision and direction
of the Board of Trustees; (iii) vote proxies for the Fund, file ownership
reports under Section 13 of the Securities Exchange Act of 1934 for the Fund,
and take other similar actions on behalf of the Fund; (iv) maintain the books
and records required to be maintained by the Fund except to the extent
arrangements have been made for such books and records to be maintained by the
administrator or another agent of the Fund; (v) furnish reports, statements and
other data on securities, economic conditions and other matters related to the
investment of the Fund's assets which the Fund's administrator or distributor or
the officers of the Trust may reasonably request; and (vi) render to the Board
of Trustees such periodic and special reports with respect to the Fund's
investment activities as the Board may reasonably request, including at least
one in-person appearance annually before the Board of Trustees. Notwithstanding
the provisions of this Section 2(a), the Adviser may delegate some or all of
these duties under Section 2(c) below.
(b) BROKERAGE. The Adviser shall be responsible for decisions to buy
and sell securities for the Fund, for broker-dealer selection, and for
negotiation of brokerage commission rates, provided that the Adviser shall not
direct orders to an affiliated person of the Adviser without general prior
authorization to use such affiliated broker or dealer from the Board of
Trustees. The Adviser's primary consideration in effecting a securities
transaction will be to obtain on behalf of the Fund the best available price and
execution. In selecting a broker-dealer to execute each particular transaction,
the Adviser may take into consideration all factors it deems relevant, including
without limitation: the best net price available; the reliability, integrity and
financial condition of the broker-dealer; the size of and difficulty in
executing the order; and the value of the expected contribution of the
broker-dealer to the investment performance of the Fund on a continuing basis.
The price to the Fund in any transaction may be less favorable than that
available from another broker-dealer if the difference is reasonably justified
by other aspects of the portfolio execution services offered.
Subject to such policies as the Board of Trustees may determine, the
Adviser shall not be deemed to have acted unlawfully or to have breached any
duty created by this Agreement
-2-
<PAGE>
or otherwise solely by reason of its having caused the Fund to pay a broker or
dealer that provides (directly or indirectly) brokerage or research services to
the Adviser an amount of commission for effecting a portfolio transaction in
excess of the amount of commission another broker or dealer would have charged
for effecting that transaction, if the Adviser determines in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer, viewed in
terms of either that particular transaction or the Adviser's overall
responsibilities with respect to the Trust. The Adviser is further authorized to
allocate the orders placed by it on behalf of the Fund to such brokers or
dealers who also provide research or statistical material, or other services, to
the Trust, the Adviser, or any affiliate of either. Such allocation shall be in
such amounts and proportions as the Adviser shall determine, and the Adviser
shall report on such allocations regularly to the Trust, indicating the
broker-dealers to whom such allocations have been made and the basis therefor.
The Adviser is also authorized to consider sales of shares as a factor in the
selection of brokers or dealers to execute portfolio transactions, subject to
the requirements of best price and execution.
On occasions when the Adviser deems the purchase or sale of a security to
be in the best interest of the Fund as well as of other clients, the Adviser, to
the extent permitted by applicable laws and regulations, may aggregate the
securities to be so purchased or sold in order to obtain the most favorable
price or lower brokerage commissions and the most efficient execution. In such
event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Adviser in the manner
it considers to be the most equitable and consistent with its fiduciary
obligations to the Fund and to such other clients.
(c) DELEGATION OF RESPONSIBILITIES. Notwithstanding the provisions of
Sections 2(a) and 2(b), respectively, the Adviser may delegate the performance
of investment advisory services for the Fund to one or more sub-advisers
approved by the Board of Trustees, but such delegation will not relieve the
Adviser of the duty to supervise the performance of advisory services hereunder.
If the advisory functions are delegated to one or more sub-advisers, then the
obligations of each such sub-adviser shall be governed by a sub-advisory
agreement to be entered into between the Adviser and each such sub-adviser.
2. REPRESENTATIONS OF THE ADVISER.
(c) The Adviser shall use its best judgment and efforts in rendering
the advice and services to the Fund as contemplated by this Agreement.
(d) The Adviser shall maintain all licenses and registrations
necessary to perform its duties hereunder in good order.
(e) The Adviser shall conduct its operations at all times in
conformance with the Investment Advisers Act of 1940, the Investment Company
Act, and any other applicable state and/or self-regulatory organization laws and
regulations.
-3-
<PAGE>
(f) The Adviser shall maintain errors and omissions insurance in an
amount at least equal to that disclosed to the Board of Trustees in connection
with their approval of this Agreement.
(g) The Adviser is a corporation duly organized and in good standing
under the laws of the State of Delaware and has full corporate power and
authority to enter into this Agreement and to perform services hereunder, the
execution and delivery of this Agreement by the Adviser has been duly authorized
by all necessary corporate action, and this Agreement is a valid binding
obligation of the Adviser, enforceable against the Adviser in accordance with
its terms.
3. INDEPENDENT CONTRACTOR. The Adviser shall, for all purposes herein, be
deemed to be an independent contractor, and shall, unless otherwise expressly
provided and authorized to do so, have no authority to act for or represent the
Trust or the Fund in any way, or in any way be deemed an agent for the Trust or
for the Fund. It is expressly understood and agreed that the services to be
rendered by the Adviser to the Fund under the provisions of this Agreement are
not to be deemed exclusive, and the Adviser shall be free to render similar or
different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby.
4. ADVISER'S PERSONNEL. The Adviser shall, at its own expense, maintain
such staff and employ or retain such personnel and consult with such other
persons as it shall from time to time determine to be necessary to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Adviser shall be
deemed to include persons employed or retained by the Adviser to furnish
statistical information, research, and other factual information, advice
regarding economic factors and trends, information with respect to technical and
scientific developments, and such other information, advice and assistance as
the Adviser or the Board of Trustees may desire and reasonably request.
5. EXPENSES. With respect to the operation of the Fund, the Adviser shall
be responsible for (i) providing the personnel, office space and equipment
reasonably necessary for the investment management of the Fund, (ii) the
expenses of printing and distributing extra copies of the Fund's prospectus,
statement of additional information, and sales and advertising materials (but
not the legal, auditing or accounting fees attendant thereto) to prospective
investors (but not to existing shareholders), and (iii) the costs of any special
Board of Trustees meetings or shareholder meetings convened for the primary
benefit of the Adviser. The Adviser shall also be responsible for payment of all
of the Fund's operating expenses, including but not limited to: investment
sub-advisory and administrative fees payable to any sub-adviser or administrator
under the appropriate agreements entered into with the Adviser or the Trust, as
the case may be; fees and expenses incurred in connection with the issuance,
registration and transfer of Trust shares; all expenses of transfer, receipt,
safekeeping, servicing and accounting for the cash, securities and other
property of the Trust for the benefit of the Fund including all fees and
expenses of its custodian, shareholder services agent and accounting services
agent; interest
-4-
<PAGE>
charges on any borrowings; costs and expenses of pricing and calculating the
Fund's daily net asset value and of maintaining the Fund's books of account
required under the Investment Company Act; taxes, if any; expenditures in
connection with meetings of the Fund's shareholders and the Trust's Board of
Trustees that are not paid by other third parties; salaries and expenses of
officers and fees and expenses of members of the Board of Trustees or members of
any advisory board or committee who are not members of, affiliated with or
interested persons of the Adviser or the administrator; insurance premiums on
property or personnel of the Fund which inure to its benefit, including
liability and fidelity bond insurance; the cost of preparing and printing
reports, proxy statements, prospectuses and statements of additional information
of the Fund or other communications for distribution to existing shareholders;
legal, auditing and accounting fees; trade association dues; fees and expenses
(including legal fees) of registering and maintaining registration of its shares
for sale under federal and applicable state and foreign securities laws; all
expenses of maintaining and servicing shareholder accounts, including all
charges for transfer, shareholder record-keeping, dividend disbursing,
redemption, and other agents for the benefit of the Fund, if any; and all other
charges and costs of the Fund's operation. Notwithstanding any other provision
of this Agreement to the contrary, however, the Adviser will not be responsible
for any brokerage commissions or extraordinary and non-recurring expenses,
except as specifically agreed to herein or as otherwise prescribed.
6. INVESTMENT ADVISORY FEE.
(h) The Fund shall pay to the Adviser, and the Adviser agrees to
accept, as full compensation for all investment and advisory services furnished
or provided to the Fund pursuant to this Agreement, an annual investment
advisory fee at the rate equal to 1.00% of the Fund's average daily net assets.
(i) The investment advisory fee shall be accrued daily by the Fund and
paid to the Adviser on the first business day of the succeeding month.
(j) The initial fee under this Agreement shall be payable on the first
business day of the first month following the effective date of this Agreement
and shall be prorated as set forth below. If this Agreement is terminated prior
to the end of any month, the fee to the Adviser shall be prorated for the
portion of any month in which this Agreement is in effect which is not a
complete month according to the proportion which the number of calendar days in
the month during which the Agreement is in effect bears to the number of
calendar days in the month, and shall be payable within ten (10) days after the
date of termination.
(k) The fee payable to the Adviser under this Agreement will be
reduced to the extent of any receivable owed by the Adviser to the Fund and as
required under any expense limitation applicable to the Fund.
(l) The Adviser voluntarily may reduce any portion of the compensation
or reimbursement of expenses due to it pursuant to this Agreement and may agree
to make payments to limit the expenses which are the responsibility of the Fund
under this
-5-
<PAGE>
Agreement. Any such reduction or payment shall be applicable only to such
specific reduction or payment and shall not constitute an agreement to reduce
any future compensation or reimbursement due to the Adviser hereunder or to
continue future payments. Any such reduction will be agreed to prior to accrual
of the related expense or fee and will be estimated daily and reconciled and
paid on a monthly basis.
(m) Any fee withheld or voluntarily reduced and any Fund expense
absorbed by the Adviser voluntarily pursuant to Section 7(e) shall be reimbursed
by the Fund to the Adviser, if so requested by the Adviser, no later than the
fifth fiscal year succeeding the fiscal year of the withholding, reduction or
absorption if the aggregate amount actually paid by the Fund toward the
operating expenses for such fiscal year (taking into account the reimbursement)
do not exceed the applicable limitation on Fund expenses. Such reimbursement may
be paid prior to the Fund's payment of current expenses if so requested by the
Adviser even if such practice may require the Adviser to waive, reduce or absorb
current Fund expenses.
(n) The Adviser may agree not to require payment of any portion of the
compensation or reimbursement of expenses otherwise due to it pursuant to this
Agreement. Any such agreement shall be applicable only with respect to the
specific items covered thereby and shall not constitute an agreement not to
require payment of any future compensation or reimbursement due to the Adviser
hereunder.
7. NO SHORTING; NO BORROWING. The Adviser agrees that neither it nor any of
its officers or employees shall take any short position in the shares of the
Fund. This prohibition shall not prevent the purchase of such shares by any of
the officers or employees of the Adviser or any trust, pension, profit-sharing
or other benefit plan for such persons or affiliates thereof, at a price not
less than the net asset value thereof at the time of purchase, as allowed
pursuant to rules promulgated under the Investment Company Act. The Adviser
agrees that neither it nor any of its officers or employees shall borrow from
the Fund or pledge or use the Fund's assets in connection with any borrowing not
directly for the Fund's benefit. For this purpose, failure to pay any amount due
and payable to the Fund for a period of more than thirty (30) days shall
constitute a borrowing.
8. CONFLICTS WITH TRUST'S GOVERNING DOCUMENTS AND APPLICABLE LAWS. Nothing
herein contained shall be deemed to require the Trust or the Fund to take any
action contrary to the Trust's Amended and Restated Agreement and Declaration of
Trust, By-Laws, or any applicable statute or regulation, or to relieve or
deprive the Board of Trustees of the Trust of its responsibility for and control
of the conduct of the affairs of the Trust and the Fund. In this connection, the
Adviser acknowledges that the Trustees retain ultimate plenary authority over
the Fund and may take any and all actions necessary and reasonable to protect
the interests of shareholders.
-6-
<PAGE>
9. REPORTS AND ACCESS. The Adviser agrees to supply such information to the
Fund's administrator and to permit such compliance inspections by the
administrator as shall be reasonably necessary to permit the administrator to
satisfy its obligations and respond to the reasonable requests of the Trustees.
10. ADVISER'S LIABILITIES AND INDEMNIFICATION.
(o) The Adviser shall have responsibility for the accuracy and
completeness of the statements in the Fund's offering materials (including the
prospectus, the statement of additional information, advertising and sales
materials), except for information supplied by any sub-adviser, the
administrator or the Trust or another third party for inclusion therein.
(p) The Adviser shall be liable to the Fund for any loss (including
brokerage charges) incurred by the Fund as a result of any improper investment
made by the Adviser.
(q) In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the obligations or duties hereunder on the
part of the Adviser, the Adviser shall not be subject to liability to the Trust
or the Fund or to any shareholder of the Fund for any act or omission in the
course of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security by the
Fund.
(r) Each party to this Agreement shall indemnify and hold harmless the
other party and the shareholders, trustees, officers and employees of the other
party (any such person, an "Indemnified Party") against any loss, liability,
claim, damage or expense (including the reasonable cost of investigating and
defending any alleged loss, liability, claim, damage or expenses and reasonable
counsel fees incurred in connection therewith) arising out of the Indemnified
Party's performance or nonperformance of any duties under this Agreement;
provided, however, that nothing herein shall be deemed to protect any
Indemnified Party against any liability to which such Indemnified Party would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties under this Agreement.
(s) No provision of this Agreement shall be construed to protect any
Director or officer of the Trust, or officer of the Adviser, from liability in
violation of Sections 17(h) and (i) of the Investment Company Act.
11. NON-EXCLUSIVITY; TRADING FOR ADVISER'S OWN ACCOUNT. The Trust's
employment of the Adviser is not an exclusive arrangement. The Trust may from
time to time employ other individuals or entities to furnish it with the
services provided for herein. Likewise,
-7-
<PAGE>
the Adviser may act as investment adviser for any other person, and shall not in
any way be limited or restricted from having, selling or trading any securities
for its or their own accounts or the accounts of others for whom it or they may
be acting; provided, however, that the Adviser expressly represents that it will
undertake no activities which will adversely affect the performance of its
obligations to the Fund under this Agreement; and provided further that the
Adviser shall adhere to a code of ethics governing employee trading and trading
for proprietary accounts that conforms to the requirements of the Investment
Company Act and the Investment Advisers Act of 1940 and has been approved by the
Trust's Board of Trustees.
12. TERM. This Agreement shall become effective at the time the Fund
commences operations pursuant to an effective amendment to the Trust's
Registration Statement under the Securities Act of 1933 and shall remain in
effect for a period of two (2) years, unless sooner terminated as hereinafter
provided. This Agreement shall continue in effect thereafter for additional
periods not exceeding one (1) year so long as such continuation is approved for
the Fund at least annually by (i) the Board of Trustees of the Trust or by the
vote of a majority of the outstanding voting securities of the Fund and (ii) the
vote of a majority of the Trustees of the Trust who are not parties to this
Agreement nor interested persons thereof, cast in person at a meeting called for
the purpose of voting on such approval. The terms "majority of the outstanding
voting securities" and "interested persons" shall have the meanings as set forth
in the Investment Company Act.
2. OWNERSHIP OF THE NAME OF THE FUND. The parties to this Agreement hereby
acknowledge that the prefix to the name of the Trust and the Fund,
StockJungle.com, is the exclusive property of the parent of the Adviser,
StockJungle.com, Inc. and is not the property of the Trust or the Fund. In the
event that the Adviser ceases to provide investment advisory services to the
Fund pursuant to this Agreement, the Fund shall change its name within thirty
(30) days of the termination of this Agreement.
15. BOOKS AND RECORDS; CONFIDENTIALITY.
(a) In compliance with the requirements of Rule 31a-3 under the
Investment Company Act, the Adviser agrees that all records which it maintains
for the Trust are the property of the Trust and further agrees to surrender
promptly to the Trust any such records upon the Trust's request. The Adviser
further agrees to preserve for the periods prescribed by Rule 31a-2 under the
Investment Company Act the records required to be maintained by Rule 31a-1 under
such Act.
(b) The Adviser shall treat as confidential and proprietary
information of the Trust all records and other information relative to the Trust
and shareholders of the Trust, or persons who respond to inquiries concerning
investment in the Trust, and shall not use such
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<PAGE>
records and information for any purpose other than performance of its
responsibilities and duties hereunder or under any other agreement with the
Trust, except as otherwise provided in writing by the Trust (which approval
shall not be unreasonably withheld if the Adviser may be exposed to civil or
criminal proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, or when so requested by the Trust).
However, nothing herein shall be deemed to prohibit the Adviser or its
affiliates from using in any manner information provided by the Adviser or its
affiliates to the Trust, or from advertising to or soliciting the public
generally with respect to other products and services, regardless of whether
such advertisements or solicitation may coincidentally include prior or present
shareholders or persons who have responded to inquiries regarding the Trust.
16. TERMINATION; NO ASSIGNMENT.
(a) This Agreement may be terminated by the Trust on behalf of the
Fund at any time without payment of any penalty, by the Board of Trustees or by
vote of a majority of the outstanding voting securities of the Fund, upon sixty
(60) days' written notice to the Adviser, and by the Adviser upon sixty (60)
days' written notice to a Fund. In the event of a termination, the Adviser shall
cooperate in the orderly transfer of the Fund's affairs and, at the request of
the Board of Trustees, transfer any and all books and records of the Fund
maintained by the Adviser on behalf of the Fund.
(b) This Agreement shall terminate automatically in the event of any
transfer or assignment thereof, as defined in the Investment Company Act.
17. ENTIRE AGREEMENT; AMENDMENTS. This Agreement constitutes the entire
agreement and understanding between the parties hereto. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement thereof
is sought. To the extent required by the Investment Company Act, no amendment of
this Agreement shall be effective until approved by a majority of the
outstanding voting securities of the Funds (as defined in such Act).
18. DECLARATION OF TRUST. The Amended and Restated Agreement and
Declaration of Trust of the Trust is on file with the Secretary of the
Commonwealth of Massachusetts. In accordance therewith, the Adviser acknowledges
and agrees that this Agreement was signed on behalf of the Trust by the
undersigned as officers of the Trust and not individually, and that the
obligations of the Trust under this Agreement are not binding upon any officers,
trustees or shareholders of the Trust individually but are binding only upon the
assets of the Trust.
19. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute or rule, or shall be otherwise rendered
invalid, the remainder of this Agreement shall not be affected thereby.
-9-
<PAGE>
20. CAPTIONS. The captions in this Agreement are included for convenience
of reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
21. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California without giving effect to
the conflict of laws principles thereof; provided that nothing herein shall be
construed to preempt, or to be inconsistent with, any federal law, regulation or
rule, including the Investment Company Act and the Investment Advisers Act of
1940 and any rules and regulations promulgated thereunder.
-10-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers, all on the day and year first
above written.
STOCKJUNGLE.COM TRUST STOCKJUNGLE.COM INVESTMENT
on behalf of its series, the ADVISORS, INC.
StockJungle.com Market Leaders
Growth Fund
By:______________________________ By:______________________________
Name: Name:
Title: Title:
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<PAGE>
STOCKJUNGLE.COM TRUST
INVESTMENT ADVISORY AGREEMENT
-----------------------------
THIS INVESTMENT ADVISORY AGREEMENT ("Agreement") is made as of the __th day
of __________, 1999, by and between STOCKJUNGLE.COM TRUST, a Massachusetts
business trust (the "Trust"), on behalf of its series, StockJungle.com Pure Play
Internet Fund (the "Fund") and STOCKJUNGLE.COM INVESTMENT ADVISORS, INC., a
Delaware corporation (the "Adviser").
W I T N E S S E T H:
--------------------
WHEREAS, the Trust is an open-end management investment company, registered
as such under the Investment Company Act of 1940 (the "Investment Company Act");
and
WHEREAS, the Fund is a series of the Trust having separate assets and
liabilities; and
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940 and is engaged in the business of providing
investment advice to individual clients and investment companies; and
WHEREAS, the Trust desires to retain the Adviser to render advice and
services to the Fund pursuant to the terms and provisions of this Agreement, and
the Adviser desires to furnish said advice and services;
NOW, THEREFORE, in consideration of the covenants and the mutual promises
hereinafter set forth, the parties to this Agreement, intending to be legally
bound hereby, mutually agree as follows:
1. APPOINTMENT OF ADVISER. The Trust hereby employs the Adviser and the
Adviser hereby accepts such employment, to render investment advice and related
services with respect to the assets of the Fund for the period and on the terms
set forth in this Agreement, subject to the supervision and direction of the
Board of Trustees.
<PAGE>
1. DUTIES OF ADVISER.
(a) GENERAL DUTIES. The Adviser shall act as investment adviser to the
Fund and shall supervise investments of the Fund on behalf of the Fund in
accordance with the investment objective, policies and restrictions of the Fund
as set forth in the Fund's and Trust's governing documents, including, without
limitation, the Trust's Amended and Restated Agreement and Declaration of Trust
and By-Laws; the Fund's prospectus, statement of additional information and
undertaking from time to time; and such other limitations, policies and
procedures as the Trustees may impose from time to time in writing to the
Adviser. In providing such services, the Adviser shall at all times adhere to
the provisions and restrictions contained in the federal securities laws,
applicable state securities laws, the Internal Revenue Code, the Uniform
Commercial Code and other applicable law.
Without limiting the generality of the foregoing, the Adviser shall: (i)
furnish the Fund with advice and recommendations with respect to the investment
of the Fund's assets and the purchase and sale of portfolio securities for the
Fund, including the taking of such steps as may be necessary to implement such
advice and recommendations (e.g., placing the orders); (ii) manage and oversee
the investments of the Fund, subject to the ultimate supervision and direction
of the Board of Trustees; (iii) vote proxies for the Fund, file ownership
reports under Section 13 of the Securities Exchange Act of 1934 for the Fund,
and take other similar actions on behalf of the Fund; (iv) maintain the books
and records required to be maintained by the Fund except to the extent
arrangements have been made for such books and records to be maintained by the
administrator or another agent of the Fund; (v) furnish reports, statements and
other data on securities, economic conditions and other matters related to the
investment of the Fund's assets which the Fund's administrator or distributor or
the officers of the Trust may reasonably request; and (vi) render to the Board
of Trustees such periodic and special reports with respect to the Fund's
investment activities as the Board may reasonably request, including at least
one in-person appearance annually before the Board of Trustees. Notwithstanding
the provisions of this Section 2(a), the Adviser may delegate some or all of
these duties under Section 2(c) below.
(b) BROKERAGE. The Adviser shall be responsible for decisions to buy
and sell securities for the Fund, for broker-dealer selection, and for
negotiation of brokerage commission rates, provided that the Adviser shall not
direct orders to an affiliated person of the Adviser without general prior
authorization to use such affiliated broker or dealer from the Board of
Trustees. The Adviser's primary consideration in effecting a securities
transaction will be to obtain on behalf of the Fund the best available price and
execution. In selecting a broker-dealer to execute each particular transaction,
the Adviser may take into consideration all factors it deems relevant, including
without limitation: the best net price available; the reliability, integrity and
financial condition of the broker-dealer; the size of and difficulty in
executing the order; and the value of the expected contribution of the
broker-dealer to the investment performance of the Fund on a continuing basis.
The price to the Fund in any transaction may be less favorable than that
available from another broker-dealer if the difference is reasonably justified
by other aspects of the portfolio execution services offered.
Subject to such policies as the Board of Trustees may determine, the
Adviser shall not be deemed to have acted unlawfully or to have breached any
duty created by this Agreement
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or otherwise solely by reason of its having caused the Fund to pay a broker or
dealer that provides (directly or indirectly) brokerage or research services to
the Adviser an amount of commission for effecting a portfolio transaction in
excess of the amount of commission another broker or dealer would have charged
for effecting that transaction, if the Adviser determines in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer, viewed in
terms of either that particular transaction or the Adviser's overall
responsibilities with respect to the Trust. The Adviser is further authorized to
allocate the orders placed by it on behalf of the Fund to such brokers or
dealers who also provide research or statistical material, or other services, to
the Trust, the Adviser, or any affiliate of either. Such allocation shall be in
such amounts and proportions as the Adviser shall determine, and the Adviser
shall report on such allocations regularly to the Trust, indicating the
broker-dealers to whom such allocations have been made and the basis therefor.
The Adviser is also authorized to consider sales of shares as a factor in the
selection of brokers or dealers to execute portfolio transactions, subject to
the requirements of best price and execution.
On occasions when the Adviser deems the purchase or sale of a security to
be in the best interest of the Fund as well as of other clients, the Adviser, to
the extent permitted by applicable laws and regulations, may aggregate the
securities to be so purchased or sold in order to obtain the most favorable
price or lower brokerage commissions and the most efficient execution. In such
event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Adviser in the manner
it considers to be the most equitable and consistent with its fiduciary
obligations to the Fund and to such other clients.
(c) DELEGATION OF RESPONSIBILITIES. Notwithstanding the provisions of
Sections 2(a) and 2(b), respectively, the Adviser may delegate the performance
of investment advisory services for the Fund to one or more sub-advisers
approved by the Board of Trustees, but such delegation will not relieve the
Adviser of the duty to supervise the performance of advisory services hereunder.
If the advisory functions are delegated to one or more sub-advisers, then the
obligations of each such sub-adviser shall be governed by a sub-advisory
agreement to be entered into between the Adviser and each such sub-adviser.
2. REPRESENTATIONS OF THE ADVISER.
(c) The Adviser shall use its best judgment and efforts in rendering
the advice and services to the Fund as contemplated by this Agreement.
(d) The Adviser shall maintain all licenses and registrations
necessary to perform its duties hereunder in good order.
(e) The Adviser shall conduct its operations at all times in
conformance with the Investment Advisers Act of 1940, the Investment Company
Act, and any other applicable state and/or self-regulatory organization laws and
regulations.
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(f) The Adviser shall maintain errors and omissions insurance in an
amount at least equal to that disclosed to the Board of Trustees in connection
with their approval of this Agreement.
(g) The Adviser is a corporation duly organized and in good standing
under the laws of the State of Delaware and has full corporate power and
authority to enter into this Agreement and to perform services hereunder, the
execution and delivery of this Agreement by the Adviser has been duly authorized
by all necessary corporate action, and this Agreement is a valid binding
obligation of the Adviser, enforceable against the Adviser in accordance with
its terms.
3. INDEPENDENT CONTRACTOR. The Adviser shall, for all purposes herein, be
deemed to be an independent contractor, and shall, unless otherwise expressly
provided and authorized to do so, have no authority to act for or represent the
Trust or the Fund in any way, or in any way be deemed an agent for the Trust or
for the Fund. It is expressly understood and agreed that the services to be
rendered by the Adviser to the Fund under the provisions of this Agreement are
not to be deemed exclusive, and the Adviser shall be free to render similar or
different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby.
4. ADVISER'S PERSONNEL. The Adviser shall, at its own expense, maintain
such staff and employ or retain such personnel and consult with such other
persons as it shall from time to time determine to be necessary to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Adviser shall be
deemed to include persons employed or retained by the Adviser to furnish
statistical information, research, and other factual information, advice
regarding economic factors and trends, information with respect to technical and
scientific developments, and such other information, advice and assistance as
the Adviser or the Board of Trustees may desire and reasonably request.
5. EXPENSES. With respect to the operation of the Fund, the Adviser shall
be responsible for (i) providing the personnel, office space and equipment
reasonably necessary for the investment management of the Fund, (ii) the
expenses of printing and distributing extra copies of the Fund's prospectus,
statement of additional information, and sales and advertising materials (but
not the legal, auditing or accounting fees attendant thereto) to prospective
investors (but not to existing shareholders), and (iii) the costs of any special
Board of Trustees meetings or shareholder meetings convened for the primary
benefit of the Adviser. The Adviser shall also be responsible for payment of all
of the Fund's operating expenses, including but not limited to: investment
sub-advisory and administrative fees payable to any sub-adviser or administrator
under the appropriate agreements entered into with the Adviser or the Trust, as
the case may be; fees and expenses incurred in connection with the issuance,
registration and transfer of Trust shares; all expenses of transfer, receipt,
safekeeping, servicing and accounting for the cash, securities and other
property of the Trust for the benefit of the Fund including all fees and
expenses of its custodian, shareholder services agent and accounting services
agent; interest
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charges on any borrowings; costs and expenses of pricing and calculating the
Fund's daily net asset value and of maintaining the Fund's books of account
required under the Investment Company Act; taxes, if any; expenditures in
connection with meetings of the Fund's shareholders and the Trust's Board of
Trustees that are not paid by other third parties; salaries and expenses of
officers and fees and expenses of members of the Board of Trustees or members of
any advisory board or committee who are not members of, affiliated with or
interested persons of the Adviser or the administrator; insurance premiums on
property or personnel of the Fund which inure to its benefit, including
liability and fidelity bond insurance; the cost of preparing and printing
reports, proxy statements, prospectuses and statements of additional information
of the Fund or other communications for distribution to existing shareholders;
legal, auditing and accounting fees; trade association dues; fees and expenses
(including legal fees) of registering and maintaining registration of its shares
for sale under federal and applicable state and foreign securities laws; all
expenses of maintaining and servicing shareholder accounts, including all
charges for transfer, shareholder record-keeping, dividend disbursing,
redemption, and other agents for the benefit of the Fund, if any; and all other
charges and costs of the Fund's operation. Notwithstanding any other provision
of this Agreement to the contrary, however, the Adviser will not be responsible
for any brokerage commissions or extraordinary and non-recurring expenses,
except as specifically agreed to herein or as otherwise prescribed.
6. INVESTMENT ADVISORY FEE.
(h) The Fund shall pay to the Adviser, and the Adviser agrees to
accept, as full compensation for all investment and advisory services furnished
or provided to the Fund pursuant to this Agreement, an annual investment
advisory fee at the rate equal to 1.00% of the Fund's average daily net assets.
(i) The investment advisory fee shall be accrued daily by the Fund and
paid to the Adviser on the first business day of the succeeding month.
(j) The initial fee under this Agreement shall be payable on the first
business day of the first month following the effective date of this Agreement
and shall be prorated as set forth below. If this Agreement is terminated prior
to the end of any month, the fee to the Adviser shall be prorated for the
portion of any month in which this Agreement is in effect which is not a
complete month according to the proportion which the number of calendar days in
the month during which the Agreement is in effect bears to the number of
calendar days in the month, and shall be payable within ten (10) days after the
date of termination.
(k) The fee payable to the Adviser under this Agreement will be
reduced to the extent of any receivable owed by the Adviser to the Fund and as
required under any expense limitation applicable to the Fund.
(l) The Adviser voluntarily may reduce any portion of the compensation
or reimbursement of expenses due to it pursuant to this Agreement and may agree
to make payments to limit the expenses which are the responsibility of the Fund
under this
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Agreement. Any such reduction or payment shall be applicable only to such
specific reduction or payment and shall not constitute an agreement to reduce
any future compensation or reimbursement due to the Adviser hereunder or to
continue future payments. Any such reduction will be agreed to prior to accrual
of the related expense or fee and will be estimated daily and reconciled and
paid on a monthly basis.
(m) Any fee withheld or voluntarily reduced and any Fund expense
absorbed by the Adviser voluntarily pursuant to Section 7(e) shall be reimbursed
by the Fund to the Adviser, if so requested by the Adviser, no later than the
fifth fiscal year succeeding the fiscal year of the withholding, reduction or
absorption if the aggregate amount actually paid by the Fund toward the
operating expenses for such fiscal year (taking into account the reimbursement)
do not exceed the applicable limitation on Fund expenses. Such reimbursement may
be paid prior to the Fund's payment of current expenses if so requested by the
Adviser even if such practice may require the Adviser to waive, reduce or absorb
current Fund expenses.
(n) The Adviser may agree not to require payment of any portion of the
compensation or reimbursement of expenses otherwise due to it pursuant to this
Agreement. Any such agreement shall be applicable only with respect to the
specific items covered thereby and shall not constitute an agreement not to
require payment of any future compensation or reimbursement due to the Adviser
hereunder.
7. NO SHORTING; NO BORROWING. The Adviser agrees that neither it nor any of
its officers or employees shall take any short position in the shares of the
Fund. This prohibition shall not prevent the purchase of such shares by any of
the officers or employees of the Adviser or any trust, pension, profit-sharing
or other benefit plan for such persons or affiliates thereof, at a price not
less than the net asset value thereof at the time of purchase, as allowed
pursuant to rules promulgated under the Investment Company Act. The Adviser
agrees that neither it nor any of its officers or employees shall borrow from
the Fund or pledge or use the Fund's assets in connection with any borrowing not
directly for the Fund's benefit. For this purpose, failure to pay any amount due
and payable to the Fund for a period of more than thirty (30) days shall
constitute a borrowing.
8. CONFLICTS WITH TRUST'S GOVERNING DOCUMENTS AND APPLICABLE LAWS. Nothing
herein contained shall be deemed to require the Trust or the Fund to take any
action contrary to the Trust's Amended and Restated Agreement and Declaration of
Trust, By-Laws, or any applicable statute or regulation, or to relieve or
deprive the Board of Trustees of the Trust of its responsibility for and control
of the conduct of the affairs of the Trust and the Fund. In this connection, the
Adviser acknowledges that the Trustees retain ultimate plenary authority over
the Fund and may take any and all actions necessary and reasonable to protect
the interests of shareholders.
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9. REPORTS AND ACCESS. The Adviser agrees to supply such information to the
Fund's administrator and to permit such compliance inspections by the
administrator as shall be reasonably necessary to permit the administrator to
satisfy its obligations and respond to the reasonable requests of the Trustees.
10. ADVISER'S LIABILITIES AND INDEMNIFICATION.
(o) The Adviser shall have responsibility for the accuracy and
completeness of the statements in the Fund's offering materials (including the
prospectus, the statement of additional information, advertising and sales
materials), except for information supplied by any sub-adviser, the
administrator or the Trust or another third party for inclusion therein.
(p) The Adviser shall be liable to the Fund for any loss (including
brokerage charges) incurred by the Fund as a result of any improper investment
made by the Adviser.
(q) In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the obligations or duties hereunder on the
part of the Adviser, the Adviser shall not be subject to liability to the Trust
or the Fund or to any shareholder of the Fund for any act or omission in the
course of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security by the
Fund.
(r) Each party to this Agreement shall indemnify and hold harmless the
other party and the shareholders, trustees, officers and employees of the other
party (any such person, an "Indemnified Party") against any loss, liability,
claim, damage or expense (including the reasonable cost of investigating and
defending any alleged loss, liability, claim, damage or expenses and reasonable
counsel fees incurred in connection therewith) arising out of the Indemnified
Party's performance or nonperformance of any duties under this Agreement;
provided, however, that nothing herein shall be deemed to protect any
Indemnified Party against any liability to which such Indemnified Party would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties under this Agreement.
(s) No provision of this Agreement shall be construed to protect any
Director or officer of the Trust, or officer of the Adviser, from liability in
violation of Sections 17(h) and (i) of the Investment Company Act.
11. NON-EXCLUSIVITY; TRADING FOR ADVISER'S OWN ACCOUNT. The Trust's
employment of the Adviser is not an exclusive arrangement. The Trust may from
time to time employ other individuals or entities to furnish it with the
services provided for herein. Likewise,
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the Adviser may act as investment adviser for any other person, and shall not in
any way be limited or restricted from having, selling or trading any securities
for its or their own accounts or the accounts of others for whom it or they may
be acting; provided, however, that the Adviser expressly represents that it will
undertake no activities which will adversely affect the performance of its
obligations to the Fund under this Agreement; and provided further that the
Adviser shall adhere to a code of ethics governing employee trading and trading
for proprietary accounts that conforms to the requirements of the Investment
Company Act and the Investment Advisers Act of 1940 and has been approved by the
Trust's Board of Trustees.
12. TERM. This Agreement shall become effective at the time the Fund
commences operations pursuant to an effective amendment to the Trust's
Registration Statement under the Securities Act of 1933 and shall remain in
effect for a period of two (2) years, unless sooner terminated as hereinafter
provided. This Agreement shall continue in effect thereafter for additional
periods not exceeding one (1) year so long as such continuation is approved for
the Fund at least annually by (i) the Board of Trustees of the Trust or by the
vote of a majority of the outstanding voting securities of the Fund and (ii) the
vote of a majority of the Trustees of the Trust who are not parties to this
Agreement nor interested persons thereof, cast in person at a meeting called for
the purpose of voting on such approval. The terms "majority of the outstanding
voting securities" and "interested persons" shall have the meanings as set forth
in the Investment Company Act.
2. OWNERSHIP OF THE NAME OF THE FUND. The parties to this Agreement hereby
acknowledge that the prefix to the name of the Trust and the Fund,
StockJungle.com, is the exclusive property of the parent of the Adviser,
StockJungle.com, Inc. and is not the property of the Trust or the Fund. In the
event that the Adviser ceases to provide investment advisory services to the
Fund pursuant to this Agreement, the Fund shall change its name within thirty
(30) days of the termination of this Agreement.
15. BOOKS AND RECORDS; CONFIDENTIALITY.
(a) In compliance with the requirements of Rule 31a-3 under the
Investment Company Act, the Adviser agrees that all records which it maintains
for the Trust are the property of the Trust and further agrees to surrender
promptly to the Trust any such records upon the Trust's request. The Adviser
further agrees to preserve for the periods prescribed by Rule 31a-2 under the
Investment Company Act the records required to be maintained by Rule 31a-1 under
such Act.
(b) The Adviser shall treat as confidential and proprietary
information of the Trust all records and other information relative to the Trust
and shareholders of the Trust, or persons who respond to inquiries concerning
investment in the Trust, and shall not use such records and information for any
purpose other than performance of its responsibilities and duties
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hereunder or under any other agreement with the Trust, except as otherwise
provided in writing by the Trust (which approval shall not be unreasonably
withheld if the Adviser may be exposed to civil or criminal proceedings for
failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Trust). However, nothing
herein shall be deemed to prohibit the Adviser or its affiliates from using in
any manner information provided by the Adviser or its affiliates to the Trust,
or from advertising to or soliciting the public generally with respect to other
products and services, regardless of whether such advertisements or solicitation
may coincidentally include prior or present shareholders or persons who have
responded to inquiries regarding the Trust.
16. TERMINATION; NO ASSIGNMENT.
(a) This Agreement may be terminated by the Trust on behalf of the
Fund at any time without payment of any penalty, by the Board of Trustees or by
vote of a majority of the outstanding voting securities of the Fund, upon sixty
(60) days' written notice to the Adviser, and by the Adviser upon sixty (60)
days' written notice to a Fund. In the event of a termination, the Adviser shall
cooperate in the orderly transfer of the Fund's affairs and, at the request of
the Board of Trustees, transfer any and all books and records of the Fund
maintained by the Adviser on behalf of the Fund.
(b) This Agreement shall terminate automatically in the event of any
transfer or assignment thereof, as defined in the Investment Company Act.
17. ENTIRE AGREEMENT; AMENDMENTS. This Agreement constitutes the entire
agreement and understanding between the parties hereto. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement thereof
is sought. To the extent required by the Investment Company Act, no amendment of
this Agreement shall be effective until approved by a majority of the
outstanding voting securities of the Funds (as defined in such Act).
18. DECLARATION OF TRUST. The Amended and Restated Agreement and
Declaration of Trust of the Trust is on file with the Secretary of the
Commonwealth of Massachusetts. In accordance therewith, the Adviser acknowledges
and agrees that this Agreement was signed on behalf of the Trust by the
undersigned as officers of the Trust and not individually, and that the
obligations of the Trust under this Agreement are not binding upon any officers,
trustees or shareholders of the Trust individually but are binding only upon the
assets of the Trust.
19. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute or rule, or shall be otherwise rendered
invalid, the remainder of this Agreement shall not be affected thereby.
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20. CAPTIONS. The captions in this Agreement are included for convenience
of reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
21. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California without giving effect to
the conflict of laws principles thereof; provided that nothing herein shall be
construed to preempt, or to be inconsistent with, any federal law, regulation or
rule, including the Investment Company Act and the Investment Advisers Act of
1940 and any rules and regulations promulgated thereunder.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers, all on the day and year first
above written.
STOCKJUNGLE.COM TRUST STOCKJUNGLE.COM INVESTMENT
on behalf of its series, the ADVISORS, INC.
StockJungle.com Pure Play
Internet Fund
By:______________________________ By:______________________________
Name: Name:
Title: Title:
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STOCKJUNGLE.COM TRUST
INVESTMENT ADVISORY AGREEMENT
-----------------------------
THIS INVESTMENT ADVISORY AGREEMENT ("Agreement") is made as of the __th day
of __________, 1999, by and between STOCKJUNGLE.COM TRUST, a Massachusetts
business trust (the "Trust"), on behalf of its series, StockJungle.com No Fee
S&P 500 Index Fund (the "Fund") and STOCKJUNGLE.COM INVESTMENT ADVISORS, INC., a
Delaware corporation (the "Adviser").
W I T N E S S E T H:
--------------------
WHEREAS, the Trust is an open-end management investment company, registered
as such under the Investment Company Act of 1940 (the "Investment Company Act");
and
WHEREAS, the Fund is a series of the Trust having separate assets and
liabilities; and
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940 and is engaged in the business of providing
investment advice to individual clients and investment companies; and
WHEREAS, the Trust desires to retain the Adviser to render advice and
services to the Fund pursuant to the terms and provisions of this Agreement, and
the Adviser desires to furnish said advice and services;
NOW, THEREFORE, in consideration of the covenants and the mutual promises
hereinafter set forth, the parties to this Agreement, intending to be legally
bound hereby, mutually agree as follows:
1. APPOINTMENT OF ADVISER. The Trust hereby employs the Adviser and the
Adviser hereby accepts such employment, to render investment advice and related
services with respect to the assets of the Fund for the period and on the terms
set forth in this Agreement, subject to the supervision and direction of the
Board of Trustees.
<PAGE>
1. DUTIES OF ADVISER.
(a) GENERAL DUTIES. The Adviser shall act as investment adviser to the
Fund and shall supervise investments of the Fund on behalf of the Fund in
accordance with the investment objective, policies and restrictions of the Fund
as set forth in the Fund's and Trust's governing documents, including, without
limitation, the Trust's Amended and Restated Agreement and Declaration of Trust
and By-Laws; the Fund's prospectus, statement of additional information and
undertaking from time to time; and such other limitations, policies and
procedures as the Trustees may impose from time to time in writing to the
Adviser. In providing such services, the Adviser shall at all times adhere to
the provisions and restrictions contained in the federal securities laws,
applicable state securities laws, the Internal Revenue Code, the Uniform
Commercial Code and other applicable law.
Without limiting the generality of the foregoing, the Adviser shall: (i)
furnish the Fund with advice and recommendations with respect to the investment
of the Fund's assets and the purchase and sale of portfolio securities for the
Fund, including the taking of such steps as may be necessary to implement such
advice and recommendations (e.g., placing the orders); (ii) manage and oversee
the investments of the Fund, subject to the ultimate supervision and direction
of the Board of Trustees; (iii) vote proxies for the Fund, file ownership
reports under Section 13 of the Securities Exchange Act of 1934 for the Fund,
and take other similar actions on behalf of the Fund; (iv) maintain the books
and records required to be maintained by the Fund except to the extent
arrangements have been made for such books and records to be maintained by the
administrator or another agent of the Fund; (v) furnish reports, statements and
other data on securities, economic conditions and other matters related to the
investment of the Fund's assets which the Fund's administrator or distributor or
the officers of the Trust may reasonably request; and (vi) render to the Board
of Trustees such periodic and special reports with respect to the Fund's
investment activities as the Board may reasonably request, including at least
one in-person appearance annually before the Board of Trustees. Notwithstanding
the provisions of this Section 2(a), the Adviser may delegate some or all of
these duties under Section 2(c) below.
(b) BROKERAGE. The Adviser shall be responsible for decisions to buy
and sell securities for the Fund, for broker-dealer selection, and for
negotiation of brokerage commission rates, provided that the Adviser shall not
direct orders to an affiliated person of the Adviser without general prior
authorization to use such affiliated broker or dealer from the Board of
Trustees. The Adviser's primary consideration in effecting a securities
transaction will be to obtain on behalf of the Fund the best available price and
execution. In selecting a broker-dealer to execute each particular transaction,
the Adviser may take into consideration all factors it deems relevant, including
without limitation: the best net price available; the reliability, integrity and
financial condition of the broker-dealer; the size of and difficulty in
executing the order; and the value of the expected contribution of the
broker-dealer to the investment performance of the Fund on a continuing basis.
The price to the Fund in any transaction may be less favorable than that
available from another broker-dealer if the difference is reasonably justified
by other aspects of the portfolio execution services offered.
Subject to such policies as the Board of Trustees may determine, the
Adviser shall not be deemed to have acted unlawfully or to have breached any
duty created by this Agreement
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or otherwise solely by reason of its having caused the Fund to pay a broker or
dealer that provides (directly or indirectly) brokerage or research services to
the Adviser an amount of commission for effecting a portfolio transaction in
excess of the amount of commission another broker or dealer would have charged
for effecting that transaction, if the Adviser determines in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer, viewed in
terms of either that particular transaction or the Adviser's overall
responsibilities with respect to the Trust. The Adviser is further authorized to
allocate the orders placed by it on behalf of the Fund to such brokers or
dealers who also provide research or statistical material, or other services, to
the Trust, the Adviser, or any affiliate of either. Such allocation shall be in
such amounts and proportions as the Adviser shall determine, and the Adviser
shall report on such allocations regularly to the Trust, indicating the
broker-dealers to whom such allocations have been made and the basis therefor.
The Adviser is also authorized to consider sales of shares as a factor in the
selection of brokers or dealers to execute portfolio transactions, subject to
the requirements of best price and execution.
On occasions when the Adviser deems the purchase or sale of a security to
be in the best interest of the Fund as well as of other clients, the Adviser, to
the extent permitted by applicable laws and regulations, may aggregate the
securities to be so purchased or sold in order to obtain the most favorable
price or lower brokerage commissions and the most efficient execution. In such
event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Adviser in the manner
it considers to be the most equitable and consistent with its fiduciary
obligations to the Fund and to such other clients.
(c) DELEGATION OF RESPONSIBILITIES. Notwithstanding the provisions of
Sections 2(a) and 2(b), respectively, the Adviser may delegate the performance
of investment advisory services for the Fund to one or more sub-advisers
approved by the Board of Trustees, but such delegation will not relieve the
Adviser of the duty to supervise the performance of advisory services hereunder.
If the advisory functions are delegated to one or more sub-advisers, then the
obligations of each such sub-adviser shall be governed by a sub-advisory
agreement to be entered into between the Adviser and each such sub-adviser.
2. REPRESENTATIONS OF THE ADVISER.
(c) The Adviser shall use its best judgment and efforts in rendering
the advice and services to the Fund as contemplated by this Agreement.
(d) The Adviser shall maintain all licenses and registrations
necessary to perform its duties hereunder in good order.
(e) The Adviser shall conduct its operations at all times in
conformance with the Investment Advisers Act of 1940, the Investment Company Act
of 1940, and any other applicable state and/or self-regulatory organization laws
and regulations.
-3-
<PAGE>
(f) The Adviser shall maintain errors and omissions insurance in an
amount at least equal to that disclosed to the Board of Trustees in connection
with their approval of this Agreement.
(g) The Adviser is a corporation duly organized and in good standing
under the laws of the State of Delaware and has full corporate power and
authority to enter into this Agreement and to perform services hereunder, the
execution and delivery of this Agreement by the Adviser has been duly authorized
by all necessary corporate action, and this Agreement is a valid binding
obligation of the Adviser, enforceable against the Adviser in accordance with
its terms.
3. INDEPENDENT CONTRACTOR. The Adviser shall, for all purposes herein, be
deemed to be an independent contractor, and shall, unless otherwise expressly
provided and authorized to do so, have no authority to act for or represent the
Trust or the Fund in any way, or in any way be deemed an agent for the Trust or
for the Fund. It is expressly understood and agreed that the services to be
rendered by the Adviser to the Fund under the provisions of this Agreement are
not to be deemed exclusive, and the Adviser shall be free to render similar or
different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby.
4. ADVISER'S PERSONNEL. The Adviser shall, at its own expense, maintain
such staff and employ or retain such personnel and consult with such other
persons as it shall from time to time determine to be necessary to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Adviser shall be
deemed to include persons employed or retained by the Adviser to furnish
statistical information, research, and other factual information, advice
regarding economic factors and trends, information with respect to technical and
scientific developments, and such other information, advice and assistance as
the Adviser or the Board of Trustees may desire and reasonably request.
5. EXPENSES.
(h) With respect to the operation of the Fund, the Adviser shall be
responsible for (i) providing the personnel, office space and equipment
reasonably necessary for the investment management of the Fund, (ii) the
expenses of printing and distributing extra copies of the Fund's prospectus,
statement of additional information, and sales and advertising materials (but
not the legal, auditing or accounting fees attendant thereto) to prospective
investors (but not to existing shareholders), and (iii) the costs of any special
Board of Trustees meetings or shareholder meetings convened for the primary
benefit of the Adviser. The Adviser shall also be responsible for payment of all
of the Fund's expenses, including but not limited to: investment sub-advisory
and administrative fees payable to any sub-adviser or administrator under the
appropriate agreements entered into with the Adviser or the Trust, as the case
may be; fees and expenses incurred in connection with the issuance, registration
and transfer of Trust shares; all expenses of transfer, receipt, safekeeping,
servicing and accounting for the cash,
-4-
<PAGE>
securities and other property of the Trust for the benefit of the Fund including
all fees and expenses of its custodian, shareholder services agent and
accounting services agent; interest charges on any borrowings; costs and
expenses of pricing and calculating the Fund's daily net asset value and of
maintaining the Fund's books of account required under the Investment Company
Act; taxes, if any; expenditures in connection with meetings of the Fund's
shareholders and the Trust's Board of Trustees that are not paid by other third
parties; salaries and expenses of officers and fees and expenses of members of
the Board of Trustees or members of any advisory board or committee who are not
members of, affiliated with or interested persons of the Adviser or the
administrator; insurance premiums on property or personnel of the Fund which
inure to its benefit, including liability and fidelity bond insurance; the cost
of preparing and printing reports, proxy statements, prospectuses and statements
of additional information of the Fund or other communications for distribution
to existing shareholders; legal, auditing and accounting fees; trade association
dues; fees and expenses (including legal fees) of registering and maintaining
registration of its shares for sale under federal and applicable state and
foreign securities laws; all expenses of maintaining and servicing shareholder
accounts, including all charges for transfer, shareholder record-keeping,
dividend disbursing, redemption, and other agents for the benefit of the Fund,
if any; and all other charges and costs of the Fund's operation. Notwithstanding
any other provision of this Agreement to the contrary, however, the Adviser will
not be responsible for any brokerage commissions or extraordinary and
non-recurring expenses, except as specifically agreed to herein or as otherwise
prescribed.
6. INVESTMENT ADVISORY FEE. The Adviser has agreed to serve as the Adviser
to the Fund without compensation or reimbursement for expenses incurred by or on
behalf of the Fund.
7. NO SHORTING; NO BORROWING. The Adviser agrees that neither it nor any of
its officers or employees shall take any short position in the shares of the
Fund. This prohibition shall not prevent the purchase of such shares by any of
the officers or employees of the Adviser or any trust, pension, profit-sharing
or other benefit plan for such persons or affiliates thereof, at a price not
less than the net asset value thereof at the time of purchase, as allowed
pursuant to rules promulgated under the Investment Company Act. The Adviser
agrees that neither it nor any of its officers or employees shall borrow from
the Fund or pledge or use the Fund's assets in connection with any borrowing not
directly for the Fund's benefit. For this purpose, failure to pay any amount due
and payable to the Fund for a period of more than thirty (30) days shall
constitute a borrowing.
8. CONFLICTS WITH TRUST'S GOVERNING DOCUMENTS AND APPLICABLE LAWS. Nothing
herein contained shall be deemed to require the Trust or the Fund to take any
action contrary to the Trust's Amended and Restated Agreement and Declaration of
Trust, By-Laws, or any applicable statute or regulation, or to relieve or
deprive the Board of Trustees of the Trust of its responsibility for and control
of the conduct of the affairs of the Trust and the Fund. In this connection, the
Adviser acknowledges that the Trustees retain ultimate plenary authority over
the Fund and may take any and all actions necessary and reasonable to protect
the interests of shareholders.
-5-
<PAGE>
9. REPORTS AND ACCESS. The Adviser agrees to supply such information to the
Fund's administrator and to permit such compliance inspections by the
administrator as shall be reasonably necessary to permit the administrator to
satisfy its obligations and respond to the reasonable requests of the Trustees.
10. ADVISER'S LIABILITIES AND INDEMNIFICATION.
(i) The Adviser shall have responsibility for the accuracy and
completeness of the statements in the Fund's offering materials (including the
prospectus, the statement of additional information, advertising and sales
materials), except for information supplied by any sub-adviser, the
administrator or the Trust or another third party for inclusion therein.
(j) The Adviser shall be liable to the Fund for any loss (including
brokerage charges) incurred by the Fund as a result of any improper investment
made by the Adviser.
(k) In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the obligations or duties hereunder on the
part of the Adviser, the Adviser shall not be subject to liability to the Trust
or the Fund or to any shareholder of the Fund for any act or omission in the
course of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security by the
Fund.
(l) Each party to this Agreement shall indemnify and hold harmless the
other party and the shareholders, trustees, officers and employees of the other
party (any such person, an "Indemnified Party") against any loss, liability,
claim, damage or expense (including the reasonable cost of investigating and
defending any alleged loss, liability, claim, damage or expenses and reasonable
counsel fees incurred in connection therewith) arising out of the Indemnified
Party's performance or nonperformance of any duties under this Agreement
provided, however, that nothing herein shall be deemed to protect any
Indemnified Party against any liability to which such Indemnified Party would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties under this Agreement.
(m) No provision of this Agreement shall be construed to protect any
Director or officer of the Trust, or officer of the Adviser, from liability in
violation of Sections 17(h) and (i) of the Investment Company Act.
11. NON-EXCLUSIVITY; TRADING FOR ADVISER'S OWN ACCOUNT. The Trust's
employment of the Adviser is not an exclusive arrangement. The Trust may from
time to time employ other individuals or entities to furnish it with the
services provided for herein. Likewise, the Adviser may act as investment
adviser for any other person, and shall not in any way be limited or restricted
from having, selling or trading any securities for its or their own accounts or
-6-
<PAGE>
the accounts of others for whom it or they may be acting, provided, however,
that the Adviser expressly represents that it will undertake no activities which
will adversely affect the performance of its obligations to the Fund under this
Agreement; and provided further that the Adviser shall adhere to a code of
ethics governing employee trading and trading for proprietary accounts that
conforms to the requirements of the Investment Company Act and the Investment
Advisers Act of 1940 and has been approved by the Trust's Board of Trustees.
12. TERM. This Agreement shall become effective at the time the Fund
commences operations pursuant to an effective amendment to the Trust's
Registration Statement under the Securities Act of 1933 and shall remain in
effect for a period of two (2) years, unless sooner terminated as hereinafter
provided. This Agreement shall continue in effect thereafter for additional
periods not exceeding one (1) year so long as such continuation is approved for
the Fund at least annually by (i) the Board of Trustees of the Trust or by the
vote of a majority of the outstanding voting securities of the Fund and (ii) the
vote of a majority of the Trustees of the Trust who are not parties to this
Agreement nor interested persons thereof, cast in person at a meeting called for
the purpose of voting on such approval. The terms "majority of the outstanding
voting securities" and "interested persons" shall have the meanings as set forth
in the Investment Company Act.
2. OWNERSHIP OF THE NAME OF THE FUND. The parties to this Agreement hereby
acknowledge that the prefix to the name of the Trust and the Fund,
StockJungle.com, is the exclusive property of the parent of the Adviser,
StockJungle.com, Inc. and is not the property of the Fund. In the event that the
Adviser ceases to provide investment advisory services to the Fund or the Trust
pursuant to this Agreement, the Fund shall change its name within thirty (30)
days of the termination of this Agreement.
15. BOOKS AND RECORDS; CONFIDENTIALITY.
(a) In compliance with the requirements of Rule 31a-3 under the
Investment Company Act, the Adviser agrees that all records which it maintains
for the Trust are the property of the Trust and further agrees to surrender
promptly to the Trust any such records upon the Trust's request. The Adviser
further agrees to preserve for the periods prescribed by Rule 31a-2 under the
Investment Company Act the records required to be maintained by Rule 31a-1 under
such Act.
(b) The Adviser shall treat as confidential and proprietary
information of the Trust all records and other information relative to the Trust
and shareholders of the Trust, or persons who respond to inquiries concerning
investment in the Trust, and shall not use such records and information for any
purpose other than performance of its responsibilities and duties hereunder or
under any other agreement with the Trust, except as otherwise provided in
writing by the Trust (which approval shall not be unreasonably withheld if the
Adviser may be exposed to civil or criminal proceedings for failure to comply,
when requested to divulge such information by duly constituted authorities, or
when so requested by the Trust). However,
-7-
<PAGE>
nothing herein shall be deemed to prohibit the Adviser or its affiliates from
using in any manner information provided by the Adviser or its affiliates to the
Trust, or from advertising to or soliciting the public generally with respect to
other products and services, regardless of whether such advertisements or
solicitation may coincidentally include prior or present shareholders or persons
who have responded to inquiries regarding the Trust.
16. TERMINATION; NO ASSIGNMENT.
(a) This Agreement may be terminated by the Trust on behalf of the
Fund at any time without payment of any penalty, by the Board of Trustees or by
vote of a majority of the outstanding voting securities of the Fund, upon sixty
(60) days' written notice to the Adviser, and by the Adviser upon sixty (60)
days' written notice to a Fund. In the event of a termination, the Adviser shall
cooperate in the orderly transfer of the Fund's affairs and, at the request of
the Board of Trustees, transfer any and all books and records of the Fund
maintained by the Adviser on behalf of the Fund.
(b) This Agreement shall terminate automatically in the event of any
transfer or assignment thereof, as defined in the Investment Company Act.
17. ENTIRE AGREEMENT; AMENDMENTS. This Agreement constitutes the entire
agreement and understanding between the parties hereto. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement thereof
is sought. To the extent required by the Investment Company Act, no amendment of
this Agreement shall be effective until approved by a majority of the
outstanding voting securities of the Funds (as defined in such Act).
18. DECLARATION OF TRUST. The Amended and Restated Agreement and
Declaration of Trust of the Trust is on file with the Secretary of the
Commonwealth of Massachusetts. In accordance therewith, the Adviser acknowledges
and agrees that this Agreement was signed on behalf of the Trust by the
undersigned as officers of the Trust and not individually, and that the
obligations of the Trust under this Agreement are not binding upon any officers,
trustees or shareholders of the Trust individually but are binding only upon the
assets of the Trust.
19. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute or rule, or shall be otherwise rendered
invalid, the remainder of this Agreement shall not be affected thereby.
20. CAPTIONS. The captions in this Agreement are included for convenience
of reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
21. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California without giving effect to
the conflict of laws principles thereof; provided that nothing herein shall be
construed to preempt, or to be
-8-
<PAGE>
inconsistent with, any federal law, regulation or rule, including the Investment
Company Act and the Investment Advisers Act of 1940 and any rules and
regulations promulgated thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers, all on the day and year first
above written.
STOCKJUNGLE.COM TRUST STOCKJUNGLE.COM INVESTMENT
on behalf of its series, the ADVISORS, INC.
StockJungle.com No Fee S&P 500
Index Fund
By:______________________________ By:______________________________
Name: Name:
Title: Title:
-9-
UNDERWRITING AGREEMENT
----------------------
This Agreement is made as of , 199 by and between StockJungle.com Trust, a
Massachusetts business trust (the "Trust"), and CW Fund Distributors, Inc., a
Delaware corporation ("Underwriter").
WHEREAS, the Trust is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, Underwriter is a broker-dealer registered with the Securities and
Exchange Commission and a member of the National Association of Securities
Dealers, Inc. (the "NASD"); and
WHEREAS, the Trust and Underwriter are desirous of entering into an
agreement providing for the distribution by Underwriter of shares of beneficial
interest (the "Shares") of each series of shares of the Trust (the "Series");
and
WHEREAS, StockJungle.com Investment Advisors, Inc., a Delaware corporation
(the "Adviser") which acts as the investment adviser to the Trust and each
Series, has agreed to bear all normal operating expenses of the Trust and each
Series, including without limitation the compensation of Underwriter for its
services hereunder;
NOW, THEREFORE, in consideration of the promises and agreements of the
parties contained herein, the parties agree as follows:
1. Appointment.
------------
The Trust hereby appoints Underwriter as its exclusive agent for the
distribution of the Shares, and Underwriter hereby accepts such appointment
under the terms of this Agreement. While this Agreement is in force, the Trust
shall not sell any Shares except on the terms set forth
<PAGE>
in this Agreement. Notwithstanding any other provision hereof, the Trust may
terminate, suspend or withdraw the offering of Shares whenever, in its sole
discretion, it deems such action to be desirable.
2. Sale and Repurchase of Shares.
------------------------------
(a) Underwriter will have the right, as agent for the Trust, to enter
into dealer agreements with responsible investment dealers, and to sell Shares
to such investment dealers against orders therefor at the public offering price
(as defined in subparagraph 2(d) hereof) stated in the Trust's then-effective
Registration Statement on Form N-1A under the Securities Act of 1933, as
amended, including the then current prospectus and statement of additional
information (the "Registration Statement"). Upon receipt of an order to purchase
Shares from a dealer with whom Underwriter has a dealer agreement, Underwriter
will promptly cause such order to be filled by the Trust.
(b) Underwriter will also have the right, as agent for the Trust, to
sell such Shares to the public against orders therefor at the public offering
price.
(c) Either the Trust or the Distributor may reject an order for the
purchase of Shares, but neither shall do so arbitrarily or without reasonable
cause.
(d) The public offering price for the Shares of each Series shall be
the respective net asset value of the Shares of that Series then in effect, plus
any applicable sales charge determined in the manner set forth in the
Registration Statement or as permitted by the Act and the rules and regulations
of the Securities and Exchange Commission promulgated thereunder. In no event
shall any applicable sales charge exceed the maximum sales charge permitted by
the Rules of the NASD.
<PAGE>
(e) The net asset value of the Shares of each Series shall be
determined in the manner provided in the Registration Statement, and when
determined shall be applicable to transactions as provided for in the
Registration Statement. The net asset value of the Shares of each Series shall
be calculated by the Trust or by another entity on behalf of the Trust.
Underwriter shall have no duty to inquire into or liability for the accuracy of
the net asset value per Share as calculated.
(f) On every sale, the Trust shall receive the applicable net asset
value of the Shares promptly, but in no event later than the third business day
following the date on which Underwriter shall have received an order for the
purchase of the Shares.
(g) Upon receipt of purchase instructions, Underwriter will transmit
such instructions to the Trust or its transfer agent for registration of the
Shares purchased.
(h) Nothing in this Agreement shall prevent Underwriter or any
affiliated person (as defined in the Act) of Underwriter from acting as
underwriter or distributor for any other person, firm or corporation (including
other investment companies) or in any way limit or restrict Underwriter or any
such affiliated person from buying, selling or trading any securities for its or
their own account or for the accounts of others for whom it or they may be
acting; provided, however, that Underwriter expressly represents that it will
undertake no activities which, in its judgment, will adversely affect the
performance of its obligations to the Trust under this Agreement.
<PAGE>
(i) Underwriter, as agent of and for the account of the Trust, may
repurchase the Shares at such prices and upon such terms and conditions as shall
be specified in the Registration Statement.
3. Sale of Shares by the Trust.
----------------------------
The Trust reserves the right to issue any Shares at any time directly
to the holders of Shares ("Shareholders"), to sell Shares to its Shareholders or
to other persons approved by Underwriter at not less than net asset value and to
issue Shares in exchange for substantially all the assets of any corporation or
trust or for the shares of any corporation or trust.
4. Basis of Sale of Shares.
------------------------
Underwriter does not agree to sell any specific number of Shares.
Underwriter, as agent for the Trust, undertakes to sell Shares on a best efforts
basis only against orders therefore.
5. Rules of NASD, etc.
-------------------
(a) Underwriter will conform to the Rules of the NASD and the
securities laws of any jurisdiction in which it sells, directly or indirectly,
any Shares.
(b) Underwriter will require each dealer with whom Underwriter has a
dealer agreement to conform to the applicable provisions hereof and the
Registration Statement with respect to the public offering price of the Shares,
and neither Underwriter nor any such dealers shall withhold the placing of
purchase orders so as to make a profit thereby.
(c) Underwriter agrees to furnish to the Trust sufficient copies of
any agreements, plans or other materials it intends to use in connection with
any sales of Shares in adequate time for the Trust to approve or request
modifications to them and to file and clear them with the proper authorities
before they are put in use, and not to use them until so approved, filed and
cleared.
<PAGE>
(d) Underwriter, at its own expense, will qualify as dealer or broker,
or otherwise, under all applicable State or federal laws required in order that
Shares may be sold in such States as may be mutually agreed upon by the parties.
(e) Underwriter shall not make, or permit any representative, broker
or dealer to make, in connection with any sale or solicitation of a sale of the
Shares, any representations concerning the Shares except those contained in the
then current prospectus and statement of additional information covering the
Shares and in printed information approved by the Trust as information
supplemental to such prospectus and statement of additional information. Copies
of the then effective prospectus and statement of additional information and any
such printed supplemental information will be supplied by the Trust to
Underwriter in reasonable quantities upon request.
6. Records to be Supplied by Trust.
--------------------------------
The Trust shall furnish to Underwriter copies of all information,
financial statements and other papers which Underwriter may reasonably request
for use in connection with the distribution of the Shares, and this shall
include, but shall not be limited to, one certified copy, upon request by
Underwriter, of all financial statements prepared for the Trust by independent
public accountants.
<PAGE>
7. Fees and Expenses.
------------------
For performing its services under this Agreement, Underwriter will
receive from the Adviser a fee of $500 per month per Series. Fees shall be paid
monthly in arrears. The Adviser shall promptly reimburse Underwriter for any
expenses which are to be paid by the Trust in accordance with the following
paragraph.
In the performance of its obligations under this Agreement,
Underwriter will pay only the costs incurred in qualifying as a broker or dealer
under state and federal laws and in establishing and maintaining its
relationships with the dealers selling the Shares. All other costs in connection
with the offering of the Shares will be paid by the Adviser in accordance with
agreements between the Trust and Underwriter as permitted by applicable law,
including the Act and rules and regulations promulgated thereunder; provided,
however, that any litigation or other extraordinary expenses shall be paid by
the Trust rather than the Adviser. These costs include, but are not limited to,
licensing fees, filing fees, travel and such other expenses as may be incurred
by Underwriter on behalf of the Trust.
8. Indemnification of Trust.
-------------------------
Underwriter agrees to indemnify and hold harmless the Trust, the
Adviser and each person who has been, is, or may hereafter be a trustee,
director, officer, employee, partner, shareholder or control person of the Trust
or the Adviser, against any loss, damage or expense (including the reasonable
costs of investigation) reasonably incurred by any of them in connection with
any claim or in connection with any action, suit or proceeding to which any of
them may be a party, which arises out of or is alleged to arise out of or is
based upon any untrue
<PAGE>
statement or alleged untrue statement of a material fact, or the omission or
alleged omission to state a material fact necessary to make the statements not
misleading, on the part of Underwriter or any agent or employee of Underwriter
or any other person for whose acts Underwriter is responsible, unless such
statement or omission was made in reliance upon written information furnished by
the Trust or the Adviser. Underwriter likewise agrees to indemnify and hold
harmless the Trust, the Adviser and each such person in connection with any
claim or in connection with any action, suit or proceeding which arises out of
or is alleged to arise out of Underwriter's failure to exercise reasonable care
and diligence with respect to its services, if any, rendered in connection with
investment, reinvestment, automatic withdrawal and other plans for Shares. The
term "expenses" for purposes of this and the next paragraph includes amounts
paid in satisfaction of judgments or in settlements which are made with
Underwriter's consent (which consent shall not be withheld unreasonably). The
foregoing rights of indemnification shall be in addition to any other rights to
which the Trust, the Adviser or each such person may be entitled as a matter of
law.
Underwriter shall be notified promptly of any such claim, action, suit
or proceeding. Underwriter shall be entitled to assume the defense of any such
action, suit or proceeding and retain counsel of good standing approved by the
person or persons indemnified hereunder (which approval shall not be withheld
unreasonably). If Underwriter elects to assume the defense of such matter
through such counsel, the defendant or defendants in such suit shall bear the
fees and expenses of any additional counsel retained by them. If Underwriter
does not elect to assume the defense of such matter, or counsel chosen by
Underwriter is not approved,
<PAGE>
then the defense shall be undertaken by counsel chosen by the defendants, and
the fees and expenses of such counsel shall be reimbursed in accordance with the
provisions of this Section 8.
9. Indemnification of Underwriter.
-------------------------------
The Trust agrees to indemnify and hold harmless Underwriter and each
person who has been, is, or may hereafter be a director, officer, employee,
shareholder or control person of Underwriter against any loss, damage or expense
(including the reasonable costs of investigation) reasonably incurred by any of
them in connection with any claim or in connection with any action, suit or
proceeding to which any of them may be a party, which arises out of or is
alleged to arise out of or is based upon any untrue statement or alleged untrue
statement of a material fact, or the omission or alleged omission to state a
material fact necessary to make the statements not misleading, on the part of
the Trust or any agent or employee of the Trust or any other person for whose
act the Trust is responsible, unless such statement or omission was made in
reliance upon written information furnished by the Underwriter to the Trust or
the Adviser; provided, however, that this indemnity agreement shall not inure to
the benefit or any such person unless a court of competent jurisdiction shall
determine, in a final decision on the merits, that the person to be indemnified
was not liable by reasons of willful misfeasance, bad faith or gross negligence
in the performance of his or its duties or by reason of his or its reckless
disregard of obligations under this Agreement ("disabling conduct") or, in the
absence of such a decision, a reasonable determination, based upon a review of
the facts, that the indemnified person was not liable by reason of disabling
conduct is made by (i) a vote of a majority of a quorum of the Trustees of the
Trust who are neither "interested persons" of the Trust as defined
<PAGE>
in the Act or parties to the proceeding, or (ii) an independent legal counsel to
the Trust in a written opinion. Any person employed by Underwriter who may also
be or become an officer or employee of the Trust shall be deemed, when acting
within the scope of his employment by the Trust, to be acting in such employment
solely for the Trust and not as an employee or agent of Underwriter.
The Trust shall be notified promptly of any such claim, action, suit
or proceeding. The Trust shall be entitled to assume the defense of any such
action, suit or proceeding and retain counsel of good standing approved by the
person or persons indemnified hereunder (which approval shall not be withheld
unreasonably). If the Trust elects to assume the defense of such matter through
such counsel, the defendant or defendants in such suit shall bear the fees and
expenses of any additional counsel retained by them. If the Trust does not elect
to assume the defense of such matter, or counsel chosen by the Trust is not
approved, then the defense shall be undertaken by counsel chosen by the
defendants, and the fees and expenses of such counsel shall be reimbursed in
accordance with the provisions of this Section 9.
10. Termination and Amendment of this Agreement.
--------------------------------------------
This Agreement shall automatically terminate, without the payment of
any penalty, in the event of its assignment. This Agreement may be amended only
if such amendment is approved (i) by Underwriter, (ii) either by action of the
Board of Trustees of the Trust or at a meeting of the Shareholders of the Trust
by the affirmative vote of a majority of the outstanding Shares (as defined in
the Act), and (iii) by a majority of the Trustees of the Trust who are not
interested persons of the Trust or of Underwriter (as defined in the Act) by
vote cast in person at a meeting called for the purpose of voting on such
approval.
<PAGE>
Either the Trust or Underwriter may at any time terminate this
Agreement without penalty on sixty (60) days' written notice delivered or mailed
by registered mail, postage prepaid, to the other party.
11. Effective Period of this Agreement.
-----------------------------------
This Agreement shall take effect upon its execution and shall remain
in full force and effect for a period of two (2) years from the date of its
execution (unless terminated earlier as set forth in Section 10), and from year
to year thereafter, subject to annual approval (i) by Underwriter, (ii) by the
Board of Trustees of the Trust or a vote of a majority of the outstanding Shares
(as defined in the Act), and (iii) by a majority of the Trustees of the Trust
who are not interested persons of the Trust or of Underwriter (as defined in the
Act) by vote cast in person at a meeting called for the purpose of voting on
such approval.
12. Limitation of Liability.
------------------------
The term "StockJungle.com Trust" means and refers to the Trustees from
time to time serving under the Trust's Agreement and Declaration of Trust as the
same may subsequently thereto have been, or subsequently hereto be, amended. It
is expressly agreed that the obligations of the Trust hereunder shall not be
binding upon any of the Trustees, Shareholders, nominees, officers, agents or
employees of the Trust, personally, but bind only the trust property of the
Trust, as provided in the Agreement and Declaration of Trust of the Trust. The
execution and delivery of this Agreement have been authorized by the Trustees of
the Trust and signed by an officer of the Trust, acting as such, and neither
such authorization by such Trustees nor such
<PAGE>
execution and delivery by such officer shall be deemed to have been made by any
of them individually or to impose any liability on any of them personally, but
shall bind only the trust property of the Trust as provided in its Agreement and
Declaration of Trust.
13. New Series.
-----------
The terms and provisions of this Agreement shall become automatically
applicable to any additional series of the Trust established during the initial
or any renewal term of this Agreement.
Notwithstanding any other provision of this Agreement, the parties
agree that the assets and liabilities of each Series are separate and distinct
from the assets and liabilities of each other Series and that no Series shall be
liable or shall be charged for any debt, obligation or liability of any other
Series, whether arising under this Agreement or otherwise.
14. Successor Investment Company.
-----------------------------
Unless this Agreement has been terminated in accordance with Paragraph
10, the terms and provisions of this Agreement shall become automatically
applicable to any investment company which is a successor to the Trust as a
result of reorganization, recapitalization or change of domicile.
15. Severability.
-------------
In the event any provision of this Agreement is determined to be void
or unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
<PAGE>
16. Questions of Interpretation.
----------------------------
(a) This Agreement shall be governed by the laws of the State of Ohio
and the applicable provisions of the Act which shall control in the event of any
conflict with Ohio law.
(b) Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or provision
of the Act shall be resolved by reference to such term or provision of the Act
and to interpretation thereof, if any, by the United States courts or in the
absence of any controlling decision of any such court, by rules, regulations or
orders of the Securities and Exchange Commission issued pursuant to said Act. In
addition, where the effect of a requirement of the Act, reflected in any
provision of this Agreement is revised by rule, regulation or order of the
Securities and Exchange Commission, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
17. Notices.
--------
Any notices under this Agreement shall be in writing, addressed and
delivered, communicated by facsimile transmission or mailed postage paid to the
other party at such address as such other party may designate for the receipt of
such notice. Until further notice to the other party, it is agreed that the
address of the Trust for this purpose shall be 3805 S. Canfield Ave., Suite B,
Culver City, CA 90232 and that the address of Underwriter for this purpose shall
be 312 Walnut Street, Cincinnati, Ohio 45202 (facsimile (513) 629-2008).
<PAGE>
IN WITNESS WHEREOF, the Trust and Underwriter have each caused this
Agreement to be signed in duplicate on their behalf, all as of the day and year
first above written.
ATTEST: STOCKJUNGLE.COM TRUST
_____________________________ By:______________________________
Its:_____________________________
ATTEST: CW FUND DISTRIBUTORS, INC.
_____________________________ By:______________________________
Its: President
For good and valuable consideration, the receipt of which is hereby
acknowledged, the undersigned hereby agrees to be bound by the provisions of
Section 7 of the foregoing Agreement.
ATTEST: STOCKJUNGLE.COM INVESTMENT
ADVISORS, INC.
_____________________________ By:______________________________
Its:_____________________________
CUSTODY AGREEMENT
-----------------
THIS AGREEMENT, is made as of October 4, 1999, by and between
STOCKJUNGLE.COM TRUST, a business trust organized under the laws of the State of
Massachusetts (the "Company"), and THE FIFTH THIRD BANK, a banking trust
organized under the laws of the State of Ohio (the "Custodian").
WITNESSETH:
WHEREAS, the Trust desires that the Securities and cash of each of the
investment portfolios identified in Exhibit A hereto (such investment portfolios
and individually referred to herein as a "Fund" and collectively as the
"Funds"), be held and administered by the Custodian pursuant to this Agreement;
and
WHEREAS, the Trust is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Custodian represents that it is a bank having the
qualifications prescribed in Section 26(a)(i) of the 1940 Act;
NOW, THEREFORE, in consideration of the mutual agreements herein made, the
Trust and the Custodian hereby agree as follows:
ARTICLE I
---------
DEFINITIONS
-----------
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
1.1 "AUTHORIZED PERSON" means any Officer or other person duly authorized
by resolution of the Board of Trustees to give Oral Instructions and Written
Instructions on behalf of the Trust and named in Exhibit B hereto or in such
resolutions of the Board of Trustees, certified by an Officer, as may be
received by the Custodian from time to time.
1.2 "BOARD OF TRUSTEES" shall mean the Trustees from time to time serving
under the Trust's Agreement and Declaration of Trust, dated _____________,as
from time to time amended.
1.3 "BOOK-ENTRY SYSTEM" shall mean a federal book-entry system as provided
in Subpart O of Treasury Circular No. 300, 31 CFR 306, in Subpart B of 31 CFR
Part 350, or in such book-entry regulations of federal agencies as are
substantially in the form of such Subpart O.
1.4 "BUSINESS DAY" shall mean any day recognized as a settlement day by The
New York Stock Exchange, Inc. and any other day for which the Fund computes the
net asset value of the Fund.
1.5 "NASD" shall mean The National Association of Securities Dealers, Inc.
1.6 "OFFICER" shall mean the President, any Vice President, the Secretary,
any Assistant Secretary, the Treasurer, or any Assistant Treasurer of the Trust.
1.7 "ORAL INSTRUCTIONS" shall mean instructions orally transmitted to and
accepted by the Custodian because such instructions are: (i) reasonably believed
by the Custodian to have been given by an Authorized Person, (ii) recorded and
kept among the records of the Custodian made in the ordinary course of business
and (iii) orally confirmed by the Custodian. The Trust shall cause all Oral
Instructions to be confirmed by Written Instructions. If such Written
Instructions confirming Oral Instructions are not received by the Custodian
prior to a transaction, it shall in no way affect the validity of the
transaction or the authorization thereof by the Trust. If Oral Instructions vary
from the Written Instructions which purport to confirm them, the Custodian shall
notify the of such variance but such Oral Instructions will govern unless the
Custodian has not yet acted.
1.8 "CUSTODY ACCOUNT" shall mean any account in the name of the Trust,
which is provided for in Section 3.2 below.
1.9 "PROPER INSTRUCTIONS" shall mean Oral Instructions or Written
Instructions. Proper Instructions may be continuing Written Instructions when
deemed appropriate by both parties.
1.10 "SECURITIES DEPOSITORY" shall mean The Participants Trust Company or
The Depository Trust Company and (provided that Custodian shall have received a
copy of a resolution of the Board of Trustees, certified by an Officer,
specifically
1
<PAGE>
approving the use of such clearing agency as a depository for the Trust) any
other clearing agency registered with the Securities and Exchange Commission
under Section 17A of the Securities and Exchange Act of 1934 (the "1934 Act"),
which acts as a system for the central handling of Securities where all
Securities of any particular class or series of an issuer deposited within the
system are treated as fungible and may be transferred or pledged by bookkeeping
entry without physical delivery of the Securities.
1.11 "SECURITIES" shall include, without limitation, common and preferred
stocks, bonds, call options, put options, debentures, notes, bank certificates
of deposit, bankers' acceptances, mortgage-backed securities, other money market
instruments or other obligations, and any certificates, receipts, warrants or
other instruments or documents representing rights to receive, purchase or
subscribe for the same, or evidencing or representing any other rights or
interests therein, or any similar property or assets that the Custodian has the
facilities to clear and to service.
1.12 "SHARES" shall mean the units of beneficial interest issued by the
Trust.
1.13 "WRITTEN INSTRUCTIONS" shall mean (i) written communications actually
received by the Custodian and signed by one or more persons as the Board of
Trustees shall have from time to time authorized, or (ii) communications by
telex or any other such system from a person or persons reasonably believed by
the Custodian to be Authorized, or (iii) communications transmitted
electronically through the Institutional Delivery System (IDS), or any other
similar electronic instruction system acceptable to Custodian and approved by
resolutions of the Board of Trustees, a copy of which, certified by an Officer,
shall have been delivered to the Custodian.
ARTICLE II
----------
APPOINTMENT OF CUSTODIAN
------------------------
2.1 APPOINTMENT. The Trust hereby constitutes and appoints the Custodian as
custodian of all Securities and cash owned by or in the possession of the Trust
at any time during the period of this Agreement, provided that such Securities
or cash at all times shall be and remain the property of the Trust.
2.2 ACCEPTANCE. The Custodian hereby accepts appointment as such custodian
and agrees to perform the duties thereof as hereinafter set forth and in
accordance with the 1940 Act as amended. Except as specifically set forth
herein, the Custodian shall have no liability and assumes no responsibly for any
non-compliance by the Trust or a Fund of any laws, rules or regulations.
ARTICLE III
-----------
CUSTODY OF CASH AND SECURITIES
------------------------------
3.1 SEGREGATION. All Securities and non-cash property held by the Custodian
for the account of the Fund, except Securities maintained in a Securities
Depository or Book-Entry System, shall be physically segregated from other
Securities and non-cash property in the possession of the Custodian and shall be
identified as subject to this Agreement.
3.2 CUSTODY ACCOUNT. The Custodian shall open and maintain in its trust
department a custody account in the name of each Fund, subject only to draft or
order of the Custodian, in which the Custodian shall enter and carry all
Securities, cash and other assets of the Fund which are delivered to it.
3.3 APPOINTMENT OF AGENTS. In its discretion, the Custodian may appoint,
and at any time remove, any domestic bank or trust company, which has been
approved by the Board of Trustees and is qualified to act as a custodian under
the 1940 Act, as sub-custodian to hold Securities and cash of the Funds and to
carry out such other provisions of this Agreement as it may determine, and may
also open and maintain one or more banking accounts with such a bank or trust
company (any such accounts to be in the name of the Custodian and subject only
to its draft or order), provided, however, that the appointment of any such
agent shall not relieve the Custodian of any of its obligations or liabilities
under this Agreement.
3.4 DELIVERY OF ASSETS TO CUSTODIAN. The Fund shall deliver, or cause to be
delivered, to the Custodian all of the Fund's Securities, cash and other assets,
including (a) all payments of income, payments of principal and capital
distributions received by the Fund with respect to such Securities, cash or
other assets owned by the Fund at any time during the period of this Agreement,
and (b) all cash received by the Fund for the issuance, at any time during such
period, of Shares. The Custodian shall not be responsible for such Securities,
cash or other assets until actually received by it.
3.5 SECURITIES DEPOSITORIES AND BOOK-ENTRY SYSTEMS. The Custodian may
deposit and/or maintain Securities of the Funds in a Securities Depository or in
a Book-Entry System, subject to the following provisions:
(a) Prior to a deposit of Securities of the Funds in any Securities
Depository or Book-Entry System, the Fund shall deliver to the
Custodian a resolution of the Board of Trustees, certified by an
Officer, authorizing and instructing the Custodian on an on-going
basis to deposit in such Securities Depository or Book-Entry System
all Securities eligible
2
<PAGE>
for deposit therein and to make use of such Securities Depository or
Book-Entry System to the extent possible and practical in connection
with its performance hereunder, including, without limitation, in
connection with settlements of purchases and sales of Securities,
loans of Securities, and deliveries and returns of collateral
consisting of Securities.
(b) Securities of the Fund kept in a Book-Entry System or Securities
Depository shall be kept in an account ("Depository Account") of the
Custodian in such Book-Entry System or Securities Depository which
includes only assets held by the Custodian as a fiduciary, custodian
or otherwise for customers.
(c) The records of the Custodian and the Custodian's account on the books
of the Book-Entry System and Securities Depository as the case may be,
with respect to Securities of a Fund maintained in a Book-Entry System
or Securities Depository shall, by book-entry, or otherwise identify
such Securities as belonging to the Fund.
(d) If Securities purchases by the Fund are to be held in a Book-Entry
System or Securities Depository, the Custodian shall pay for such
Securities upon (i) receipt of advice from the Book-Entry System or
Securities Depository that such Securities have been transferred to
the Depository Account, and (ii) the making of an entry on the records
of the Custodian to reflect such payment and transfer for the account
of the Fund. If Securities sold by the Fund are held in a Book-Entry
System or Securities Depository, the Custodian shall transfer such
Securities upon (i) receipt of advice from the Book-Entry System or
Securities depository that payment for such Securities has been
transferred to the Depository Account, and (ii) the making of an entry
on the records of the Custodian to reflect such transfer and payment
for the account of the Fund.
(e) Upon request, the Custodian shall provide the Fund with copies of any
report (obtained by the Custodian from a Book-Entry System or
Securities Depository in which Securities of the Fund is kept) on the
internal accounting controls and procedures for safeguarding
Securities deposited in such Book-Entry System or Securities
Depository.
(f) Anything to the contrary in this Agreement notwithstanding, the
Custodian shall be liable to the Trust for any loss or damage to the
Trust resulting (i) from the use of a Book-Entry System or Securities
Depository by reason of any negligence or willful misconduct on the
part of Custodian or any sub-custodian appointed pursuant to Section
3.3 above or any of its or their employees, or (ii) from failure of
Custodian or any such sub-custodian to enforce effectively such rights
as it may have against a Book-Entry System or Securities Depository.
At its election, the Trust shall be subrogated to the rights of the
Custodian with respect to any claim against a Book-Entry System or
Securities Depository or any other person for any loss or damage to
the Funds arising from the use of such Book-Entry System or Securities
Depository, if and to the extent that the Trust has been made whole
for any such loss or damage.
3.6 DISBURSEMENT OF MONEYS FROM CUSTODY ACCOUNTS. Upon receipt of Proper
Instructions, the Custodian shall disburse moneys from a Fund Custody Account
but only in the following cases:
(a) For the purchase of Securities for the Fund but only upon compliance
with Section 4.1 of this Agreement and only (i) in the case of
Securities (other than options on Securities, futures contracts and
options on futures contracts), against the delivery to the Custodian
(or any sub-custodian appointed pursuant to Section 3.3 above) of such
Securities registered as provided in Section 3.9 below in proper form
for transfer, or if the purchase of such Securities is effected
through a Book-Entry System or Securities Depository, in accordance
with the conditions set forth in Section 3.5 above; (ii) in the case
of options on Securities, against delivery to the Custodian (or such
sub-custodian) of such receipts as are required by the customs
prevailing among dealers in such options; (iii) in the case of futures
contracts and options on futures contracts, against delivery to the
Custodian (or such sub-custodian) of evidence of title thereto in
favor of the Trust or any nominee referred to in Section 3.9 below;
and (iv) in the case of repurchase or reverse repurchase agreements
entered into between the Trust and a bank which is a member of the
Federal Reserve System or between the Trust and a primary dealer in
U.S. Government securities, against delivery of the purchased
Securities either in certificate form or through an entry crediting
the Custodian's account at a Book-Entry System or Securities
Depository for the account of the Fund with such Securities;
(b) In connection with the conversion, exchange or surrender, as set forth
in Section 3.7(f) below, of Securities owned by the Fund;
(c) For the payment of any dividends or capital gain distributions
declared by the Fund;
(d) In payment of the redemption price of Shares as provided in Section
5.1 below;
3
<PAGE>
(e) For the payment of any expense or liability incurred by the Trust,
including but not limited to the following payments for the account of
a Fund: interest; taxes; administration, investment management,
investment advisory, accounting, auditing, transfer agent, custodian,
trustee and legal fees; and other operating expenses of a Fund; in all
cases, whether or not such expenses are to be in whole or in part
capitalized or treated as deferred expenses;
(f) For transfer in accordance with the provisions of any agreement among
the Trust, the Custodian and a broker-dealer registered under the 1934
Act and a member of the NASD, relating to compliance with rules of The
Options Clearing Corporation and of any registered national securities
exchange (or of any similar organization or organizations) regarding
escrow or other arrangements in connection with transactions by the
Trust;
(g) For transfer in accordance with the provisions of any agreement among
the Trust, the Custodian, and a futures commission merchant registered
under the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission and/or any contract
market (or any similar organization or organizations) regarding
account deposits in connection with transactions by the Trust;
(h) For the funding of any uncertificated time deposit or other
interest-bearing account with any banking institution (including the
Custodian), which deposit or account has a term of one year or less;
and
(i) For any other proper purposes, but only upon receipt, in addition to
Proper Instructions, of a copy of a resolution of the Board of
Trustees, certified by an Officer, specifying the amount and purpose
of such payment, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom such payment is to
be made.
3.7 DELIVERY OF SECURITIES FROM FUND CUSTODY ACCOUNTS. Upon receipt of
Proper Instructions, the Custodian shall release and deliver Securities from a
Custody Account but only in the following cases:
(a) Upon the sale of Securities for the account of a Fund but only against
receipt of payment therefor in cash, by certified or cashiers check or
bank credit;
(b) In the case of a sale effected through a Book-Entry System or
Securities Depository, in accordance with the provisions of Section
3.5 above;
(c) To an Offeror's depository agent in connection with tender or other
similar offers for Securities of a Fund; provided that, in any such
case, the cash or other consideration is to be delivered to the
Custodian;
(d) To the issuer thereof or its agent (i) for transfer into the name of
the Trust, the Custodian or any sub-custodian appointed pursuant to
Section 3.3 above, or of any nominee or nominees of any of the
foregoing, or (ii) for exchange for a different number of certificates
or other evidence representing the same aggregate face amount or
number of units; provided that, in any such case, the new Securities
are to be delivered to the Custodian;
(e) To the broker selling Securities, for examination in accordance with
the "street delivery" custom;
(f) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the
issuer of such Securities, or pursuant to provisions for conversion
contained in such Securities, or pursuant to any deposit agreement,
including surrender or receipt of underlying Securities in connection
with the issuance or cancellation of depository receipts; provided
that, in any such case, the new Securities and cash, if any, are to be
delivered to the Custodian;
(g) Upon receipt of payment therefor pursuant to any repurchase or reverse
repurchase agreement entered into by a Fund;
(h) In the case of warrants, rights or similar Securities, upon the
exercise thereof, provided that, in any such case, the new Securities
and cash, if any, are to be delivered to the Custodian;
(i) For delivery in connection with any loans of Securities of a Fund, but
only against receipt of such collateral as the Trust shall have
specified to the Custodian in Proper Instructions;
(j) For delivery as security in connection with any borrowings by the
Trust on behalf of a Fund requiring a pledge of assets by such Fund,
but only against receipt by the Custodian of the amounts borrowed;
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<PAGE>
(k) Pursuant to any authorized plan of liquidation, reorganization,
merger, consolidation or recapitalization of the Trust or a Fund;
(l) For delivery in accordance with the provisions of any agreement among
the Trust, the Custodian and a broker-dealer registered under the 1934
Act and a member of the NASD, relating to compliance with the rules of
The Options Clearing Corporation and of any registered national
securities exchange (or of any similar organization or organizations)
regarding escrow or other arrangements in connection with transactions
by the Trust on behalf of a Fund;
(m) For delivery in accordance with the provisions of any agreement among
the Trust on behalf of a Fund, the Custodian, and a futures commission
merchant registered under the Commodity Exchange Act, relating to
compliance with the rules of the Commodity Futures Trading Commission
and/or any contract market (or any similar organization or
organizations) regarding account deposits in connection with
transactions by the Trust on behalf of a Fund; or
(n) For any other proper corporate purposes, but only upon receipt, in
addition to Proper Instructions, of a copy of a resolution of the
Board of Trustees, certified by an Officer, specifying the Securities
to be delivered, setting forth the purpose for which such delivery is
to be made, declaring such purpose to be a proper corporate purpose,
and naming the person or persons to whom delivery of such Securities
shall be made.
3.8 ACTIONS NOT REQUIRING PROPER INSTRUCTIONS. Unless otherwise instructed
by the Trust, the Custodian shall with respect to all Securities held for a
Fund;
(a) Subject to Section 7.4 below, collect on a timely basis all income and
other payments to which the Trust is entitled either by law or
pursuant to custom in the securities business;
(b) Present for payment and, subject to Section 7.4 below, collect on a
timely basis the amount payable upon all Securities which may mature
or be called, redeemed, or retired, or otherwise become payable;
(c) Endorse for collection, in the name of the Trust, checks, drafts and
other negotiable instruments;
(d) Surrender interim receipts or Securities in temporary form for
Securities in definitive form;
(e) Execute, as custodian, any necessary declarations or certificates of
ownership under the federal income tax laws or the laws or regulations
of any other taxing authority now or hereafter in effect, and prepare
and submit reports to the Internal Revenue Service ("IRS") and to the
Trust at such time, in such manner and containing such information as
is prescribed by the IRS;
(f) Hold for a Fund, either directly or, with respect to Securities held
therein, through a Book-Entry System or Securities Depository, all
rights and similar securities issued with respect to Securities of the
Fund; and
(g) In general, and except as otherwise directed in Proper Instructions,
attend to all non-discretionary details in connection with sale,
exchange, substitution, purchase, transfer and other dealings with
Securities and assets of the Fund.
3.9 REGISTRATION AND TRANSFER OF SECURITIES. All Securities held for a Fund
that are issued or issuable only in bearer form shall be held by the Custodian
in that form, provided that any such Securities shall be held in a Book-Entry
System for the account of the Trust on behalf of a Fund, if eligible therefor.
All other Securities held for a Fund may be registered in the name of the Trust
on behalf of such Fund, the Custodian, or any sub-custodian appointed pursuant
to Section 3.3 above, or in the name of any nominee of any of them, or in the
name of a Book-Entry System, Securities Depository or any nominee of either
thereof; provided, however, that such Securities are held specifically for the
account of the Trust on behalf of a Fund. The Trust shall furnish to the
Custodian appropriate instruments to enable the Custodian to hold or deliver in
proper form for transfer, or to register in the name of any of the nominees
hereinabove referred to or in the name of a Book-Entry System or Securities
Depository, any Securities registered in the name of a Fund.
3.10 RECORDS. (a) The Custodian shall maintain, by Fund, complete and
accurate records with respect to Securities, cash or other property held for the
Trust, including (i) journals or other records of original entry containing an
itemized daily record in detail of all receipts and deliveries of Securities and
all receipts and disbursements of cash; (ii) ledgers (or other records)
reflecting (A) Securities in transfer, (B) Securities in physical possession,
(C) monies and Securities borrowed and monies and Securities loaned (together
with a record of the collateral therefor and substitutions of such collateral),
(D) dividends and interest received, and (E) dividends receivable and interest
accrued; and (iii) canceled checks and bank records related thereto. The
Custodian shall keep such
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<PAGE>
other books and records of the Trust as the Trust shall reasonably request, or
as may be required by the 1940 Act, including, but not limited to Section 3.1
and Rule 31a-1 and Rule 31a-2 promulgated thereunder.
(b) All such books and records maintained by the Custodian shall (i) be
maintained in a form acceptable to the Trust and in compliance with rules and
regulations of the Securities and Exchange Commission, (ii) be the property of
the Trust and at all times during the regular business hours of the Custodian be
made available upon request for inspection by duly authorized officers,
employees or agents of the Trust and employees or agents of the Securities and
Exchange Commission, and (iii) if required to be maintained by Rule 31a-1 under
the 1940 Act, be preserved for the periods prescribed in Rule 31a-2 under the
1940 Act.
3.11 FUND REPORTS BY CUSTODIAN. The Custodian shall furnish the Trust with
a daily activity statement by Fund and a summary of all transfers to or from the
Custody Account on the day following such transfers. At least monthly and from
time to time, the Custodian shall furnish the Trust with a detailed statement,
by Fund, of the Securities and moneys held for the Trust under this Agreement.
3.12 OTHER REPORTS BY CUSTODIAN. The Custodian shall provide the Trust with
such reports, as the Trust may reasonably request from time to time, on the
internal accounting controls and procedures for safeguarding Securities, which
are employed by the Custodian or any sub-custodian appointed pursuant to Section
3.3 above.
3.13 PROXIES AND OTHER MATERIALS. The Custodian shall cause all proxies if
any, relating to Securities which are not registered in the name of a Fund, to
be promptly executed by the registered holder of such Securities, without
indication of the manner in which such proxies are to be voted, and shall
include all other proxy materials, if any, promptly deliver to the Trust such
proxies, all proxy soliciting materials, which should include all other proxy
materials, if any, and all notices to such Securities.
3.14 INFORMATION ON CORPORATE ACTIONS. Custodian will promptly notify the
Trust of corporate actions, limited to those Securities registered in nominee
name and to those Securities held at a Depository or sub-Custodian acting as
agent for Custodian. Custodian will be responsible only if the notice of such
corporate actions is published by Xcitek, DTC, or received by first class mail
from the transfer agent. For market announcements not yet received and
distributed by Custodian's services, Trust will inform its custody
representative with appropriate instructions. Custodian will, upon receipt of
Trust's response within the required deadline, affect such action for receipt or
payment for the Trust. For those responses received after the deadline,
Custodian will affect such action for receipt or payment, subject to the
limitations of the agent(s) affecting such actions. Custodian will promptly
notify Trust for put options only if the notice is received by first class mail
from the agent. The Trust will provide or cause to be provided to Custodian with
all relevant information contained in the prospectus for any security which has
unique put/option provisions and provide Custodian with specific tender
instructions at least ten business days prior to the beginning date of the
tender period.
ARTICLE IV
----------
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
--------------------------------------------
4.1 PURCHASE OF SECURITIES. Promptly upon each purchase of Securities for
the Trust, Written Instructions shall be delivered to the Custodian, specifying
(a) the name of the issuer or writer of such Securities, and the title or other
description thereof, (b) the number of shares, principal amount (and accrued
interest, if any) or other units purchased, (c) the date of purchase and
settlement, (d) the purchase price per unit, (e) the total amount payable upon
such purchase, and (f) the name of the person to whom such amount is payable.
The Custodian shall upon receipt of such Securities purchased by a Fund pay out
of the moneys held for the account of such Fund the total amount specified in
such Written Instructions to the person named therein. The Custodian shall not
be under any obligation to pay out moneys to cover the cost of a purchase of
Securities for a Fund, if in the relevant Custody Account there is insufficient
cash available to the Fund for which such purchase was made.
4.2 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES PURCHASED. In
any and every case where payment for the purchase of Securities for a Fund is
made by the Custodian in advance of receipt for the account of the Fund of the
Securities purchased but in the absence of specific Written or Oral Instructions
to so pay in advance, the Custodian shall be liable to the Fund for such
Securities to the same extent as if the Securities had been received by the
Custodian.
4.3 SALE OF SECURITIES. Promptly upon each sale of Securities by a Fund,
Written Instructions shall be delivered to the Custodian, specifying (a) the
name of the issuer or writer of such Securities, and the title or other
description thereof, (b) the number of shares, principal amount (and accrued
interest, if any), or other units sold, (c) the date of sale and settlement (d)
the sale price per unit, (e) the total amount payable upon such sale, and (f)
the person to whom such Securities are to be delivered. Upon receipt of the
total amount payable to the Trust as specified in such Written Instructions, the
Custodian shall deliver such Securities to the person specified in such Written
Instructions. Subject to the foregoing, the Custodian may accept payment in such
form as shall be satisfactory to it, and may deliver Securities and arrange for
payment in accordance with the customs prevailing among dealers in Securities.
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4.4 DELIVERY OF SECURITIES SOLD. Notwithstanding Section 4.3 above or any
other provision of this Agreement, the Custodian, when instructed to deliver
Securities against payment, shall be entitled, if in accordance with generally
accepted market practice, to deliver such Securities prior to actual receipt of
final payment therefor. In any such case, the Trust shall bear the risk that
final payment for such Securities may not be made or that such Securities may be
returned or otherwise held or disposed of by or through the person to whom they
were delivered, and the Custodian shall have no liability for any of the
foregoing.
4.5 PAYMENT FOR SECURITIES SOLD, ETC. In its sole discretion and from time
to time, the Custodian may credit the relevant Custody Account, prior to actual
receipt of final payment thereof, with (i) proceeds from the sale of Securities
which it has been instructed to deliver against payment, (ii) proceeds from the
redemption of Securities or other assets of the Trust, and (iii) income from
cash, Securities or other assets of the Trust. Any such credit shall be
conditional upon actual receipt by Custodian of final payment and may be
reversed if final payment is not actually received in full. The Custodian may,
in its sole discretion and from time to time, permit the Trust to use funds so
credited to its Custody Account in anticipation of actual receipt of final
payment. Any such funds shall be repayable immediately upon demand made by the
Custodian at any time prior to the actual receipt of all final payments in
anticipation of which funds were credited to the Custody Account.
4.6 ADVANCES BY CUSTODIAN FOR SETTLEMENT. The Custodian may, in its sole
discretion and from time to time, advance funds to the Trust to facilitate the
settlement of a Trust transactions on behalf of a Fund in its Custody Account.
Any such advance shall be repayable immediately upon demand made by Custodian.
ARTICLE V
---------
REDEMPTION OF TRUST SHARES
--------------------------
TRANSFER OF FUNDS. From such funds as may be available for the purpose in
the relevant Custody Account, and upon receipt of Proper Instructions specifying
that the funds are required to redeem Shares of a Fund, the Custodian shall wire
each amount specified in such Proper Instructions to or through such bank as the
Trust may designate with respect to such amount in such Proper Instructions.
Upon effecting payment or distribution in accordance with proper Instruction,
the Custodian shall not be under any obligation or have any responsibility
thereafter with respect to any such paying bank.
ARTICLE VI
----------
SEGREGATED ACCOUNTS
-------------------
Upon receipt of Proper Instructions, the Custodian shall establish and
maintain a segregated account or accounts for and on behalf of each Fund, into
which account or accounts may be transferred cash and/or Securities, including
Securities maintained in a Depository Account,
(a) in accordance with the provisions of any agreement among the Trust,
the Custodian and a broker-dealer registered under the 1934 Act and a
member of the NASD (or any futures commission merchant registered
under the Commodity Exchange Act), relating to compliance with the
rules of The Options Clearing Corporation and of any registered
national securities exchange (or the Commodity Futures Trading
commission or any registered contract market), or of any similar
organization or organizations, regarding escrow or other arrangements
in connection with transactions by the Trust,
(b) for purposes of segregating cash or Securities in connection with
securities options purchased or written by a Fund or in connection
with financial futures contracts (or options thereon) purchased or
sold by a Fund,
(c) which constitute collateral for loans of Securities made by a Fund,
(d) for purposes of compliance by the Trust with requirements under the
1940 Act for the maintenance of segregated accounts by registered
investment companies in connection with reverse repurchase agreements
and when-issued, delayed delivery and firm commitment transactions,
and
(e) for other proper corporate purposes, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution of
the Board of Trustees, certified by an Officer, setting forth the
purpose or purposes of such segregated account and declaring such
purposes to be proper corporate purposes.
ARTICLE VII
-----------
CONCERNING THE CUSTODIAN
------------------------
7.1 STANDARD OF CARE. The Custodian shall be held to the exercise of
reasonable care in carrying out its obligations under
7
<PAGE>
this Agreement, and shall be without liability to the Trust for any loss,
damage, cost, expense (including attorneys' fees and disbursements), liability
or claim unless such loss, damages, cost, expense, liability or claim arises
from negligence, bad faith or willful misconduct on its part or on the part of
any sub-custodian appointed pursuant to Section 3.3 above. The Custodian's
cumulative liability within a calendar year shall be limited with respect to the
Trust or any party claiming by, through or on behalf of the Trust for the
initial and all subsequent renewal terms of this Agreement, to the actual
damages sustained by the Trust, (actual damages for uninvested funds shall be
the overnight Feds fund rate). However, Custodian will not be liable for special
incidental or punitive damages. The Custodian shall be entitled to rely on and
may act upon advice of counsel on all matters, and shall be without liability
for any action reasonably taken or omitted pursuant to such advice. The
Custodian shall promptly notify the Trust of any action taken or omitted by the
Custodian pursuant to advice of counsel. The Custodian shall not be under any
obligation at any time to ascertain whether the Trust is in compliance with the
1940 Act, the regulations thereunder, the provisions of the Trust's charter
documents or by-laws, or its investment objectives and policies as then in
effect.
7.2 ACTUAL COLLECTION REQUIRED. The Custodian shall not be liable for, or
considered to be the custodian of, any cash belonging to the Trust or any money
represented by a check, draft or other instrument for the payment of money,
until the Custodian or its agents actually receive such cash or collect on such
instrument.
7.3 NO RESPONSIBILITY FOR TITLE, ETC. So long as and to the extent that it
is in the exercise of reasonable care, the Custodian shall not be responsible
for the title, validity or genuineness of any property or evidence of title
thereto received or delivered by it pursuant to this Agreement.
7.4 LIMITATION ON DUTY TO COLLECT. Custodian shall not be required to
enforce collection, by legal means or otherwise, of any money or property due
and payable with respect to Securities held for the Trust if such Securities are
in default or payment is not made after due demand or presentation.
7.5 RELIANCE UPON DOCUMENTS AND INSTRUCTIONS. The Custodian shall be
entitled to rely upon any certificate, notice or other instrument in writing
received by it and reasonably believed by it to be genuine. The Custodian shall
be entitled to rely upon any Oral Instructions and/or any Written Instructions
actually received by it pursuant to this Agreement.
7.6 EXPRESS DUTIES ONLY. The Custodian shall have no duties or obligations
whatsoever except such duties and obligations as are specifically set forth in
this Agreement, and no covenant or obligation shall be implied in this Agreement
against the Custodian.
7.7 COOPERATION. The Custodian shall cooperate with and supply necessary
information, by the Trust, to the entity or entities appointed by the Trust to
keep the books of account of the Trust and/or compute the value of the assets of
the Trust. The Custodian shall take all such reasonable actions as the Trust may
from time to time request to enable the Trust to obtain, from year to year,
favorable opinions from the Trust's independent accountants with respect to the
Custodian's activities hereunder in connection with (a) the preparation of the
Trust's report on Form N-1A and Form N-SAR and any other reports required by the
Securities and Exchange Commission, and (b) the fulfillment by the Trust of any
other requirements of the Securities and Exchange Commission.
ARTICLE VIII
------------
INDEMNIFICATION
---------------
8.1 INDEMNIFICATION. The Trust shall indemnify and hold harmless the
Custodian and any sub-custodian appointed pursuant to Section 3.3 above, and any
nominee of the Custodian or of such sub-custodian from and against any loss,
damage, cost, expense (including attorneys' fees and disbursements), liability
(including, without limitation, liability arising under the Securities Act of
1933, the 1934 Act, the 1940 Act, and any state or foreign securities and/or
banking laws) or claim arising directly or indirectly (a) from the fact that
Securities are registered in the name of any such nominee, or (b) from any
action or inaction by the Custodian or such sub-custodian (i) at the request or
direction of or in reliance on the advice of the Trust, or (ii) upon Proper
Instructions, or (c) generally, from the performance of its obligations under
this Agreement or any sub-custody agreement with a sub-custodian appointed
pursuant to Section 3.3 above or, in the case of any such sub-custodian, from
the performance of its obligations under such custody agreement, provided that
neither the Custodian nor any such sub-custodian shall be indemnified and held
harmless from and against any such loss, damage, cost, expense, liability or
claim arising from the Custodian's or such sub-custodian's negligence, bad faith
or willful misconduct.
8.2 INDEMNITY TO BE PROVIDED. If the Trust requests the Custodian to take
any action with respect to Securities, which may, in the opinion of the
custodian, result in the Custodian or its nominee becoming liable for the
payment of money or incurring liability of some other form, the Custodian shall
not be required to take such action until the Trust shall have provided
indemnity therefor to the Custodian in an amount and form satisfactory to the
Custodian.
8
<PAGE>
ARTICLE IX
----------
FORCE MAJEURE
-------------
Neither the Custodian nor the Trust shall be liable for any failure or
delay in performance of its obligations under this Agreement arising out of or
caused, directly or indirectly, by circumstances beyond its reasonable control,
including, without limitation, acts of God; earthquakes; fires; floods; wars;
civil or military disturbances; sabotage; strikes; epidemics; riots; power
failures; computer failure and any such circumstances beyond its reasonable
control as may cause interruption, loss or malfunction of utility,
transportation, computer (hardware or software) or telephone communication
service; accidents; labor disputes, acts of civil or military authority;
governmental actions; or inability to obtain labor, material, equipment or
transportation; provided, however, that the Custodian in the event of a failure
or delay shall use its best efforts to ameliorate the effects of any such
failure or delay. Notwithstanding the foregoing, the Custodian shall maintain
sufficient disaster recovery procedures to minimize interruptions.
ARTICLE X
---------
EFFECTIVE PERIOD; TERMINATION
-----------------------------
10.1 EFFECTIVE PERIOD. This Agreement shall become effective as of the date
first set forth above and shall continue in full force and effect until
terminated as hereinafter provided.
10.2 TERMINATION. Either party hereto may terminate this Agreement by
giving to the other party a notice in writing specifying the date of such
termination, which shall be not less than ninety (90) days after the date of the
giving of such notice. If a successor custodian shall have been appointed by the
Board of Trustees, the Custodian shall, upon receipt of a notice of acceptance
by the successor custodian, on such specified date of termination (a) deliver
directly to the successor custodian all Securities (other than Securities held
in a Book-Entry System or Securities Depository) and cash then owned by the
Trust and held by the Custodian as custodian, and (b) transfer any Securities
held in a Book-Entry System or Securities Depository to an account of or for the
benefit of the Trust at the successor custodian, provided that the Trust shall
have paid to the Custodian all fees, expenses and other amounts to the payment
or reimbursement of which it shall then be entitled. Upon such delivery and
transfer, the Custodian shall be relieved of all obligations under this
Agreement. The Trust may at any time immediately terminate this Agreement in the
event of the appointment of a conservator or receiver for the Custodian by
regulatory authorities in the State of Ohio or upon the happening of a like
event at the direction of an appropriate regulatory agency or court of competent
jurisdiction.
10.3 FAILURE TO APPOINT SUCCESSOR CUSTODIAN. If a successor custodian is
not designated by the Trust on or before the date of termination specified
pursuant to Section 10.1 above, then the Custodian shall have the right to
deliver to a bank or trust company of its own selection, which is (a) a "Bank"
as defined in the 1940 Act, (b) has aggregate capital, surplus and undivided
profits as shown on its then most recent published report of not less than $25
million, and (c) is doing business in New York, New York, all Securities, cash
and other property held by Custodian under this Agreement and to transfer to an
account of or for the Trust at such bank or trust company all Securities of the
Trust held in a Book-Entry System or Securities Depository. Upon such delivery
and transfer, such bank or trust company shall be the successor custodian under
this Agreement and the Custodian shall be relieved of all obligations under this
Agreement. If, after reasonable inquiry, Custodian cannot find a successor
custodian as contemplated in this Section 10.3, then Custodian shall have the
right to deliver to the Trust all Securities and cash then owned by the Trust
and to transfer any Securities held in a Book-Entry System or Securities
Depository to an account of or for the Trust. Thereafter, the Trust shall be
deemed to be its own custodian with respect to the Trust and the Custodian shall
be relieved of all obligations under this Agreement.
ARTICLE XI
----------
COMPENSATION OF CUSTODIAN
-------------------------
The Custodian shall be entitled to compensation as agreed upon from time to
time by the Trust and the Custodian. The fees and other charges in effect on the
date hereof and applicable to the Funds are set forth in Exhibit B attached
hereto.
ARTICLE XII
-----------
LIMITATION OF LIABILITY
-----------------------
The Trust is a business trust organized under the laws of the State of Ohio
and under a Declaration of Trust, to which reference is hereby made a copy of
which is on file at the office of Secretary of State of Ohio as required by law,
and to any and all amendments thereto so filed or hereafter filed. The
obligations of the Trust entered into in the name of the Trust or on behalf
thereof by any of the Trustees, officers, employees or agents are made not
individually, but in such capacities, and are not binding upon any of the
Trustees, officers, employees, agents or shareholders of the Trust or the Funds
personally, but bind only the assets of the Trust, and all persons dealing with
any of the Funds of the Trust must look solely to the assets of the Trust
belonging to such Fund for the enforcement of any claims against the Trust.
9
<PAGE>
ARTICLE XIII
------------
NOTICES
-------
Unless otherwise specified herein, all demands, notices, instructions, and
other communications to be given hereunder shall be in writing and shall be sent
or delivered to The receipt at the address set forth after its name herein
below:
To the Trust:
-------------
StockJungle.com Trust
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Attn: Mr. Brian Manley
Telephone: (513) 629-2034
Facsimile:
To the Custodian:
-----------------
The Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Attn: Area Manager - Trust Operations
Telephone: (513) 579-5300
Facsimile: (513) 744-6622
or at such other address as either party shall have provided to the other by
notice given in accordance with this Article XIII. Writing shall include
transmission by or through teletype, facsimile, central processing unit
connection, on-line terminal and magnetic tape.
ARTICLE XIV
-----------
MISCELLANEOUS
-------------
14.1 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio.
14.2 REFERENCES TO CUSTODIAN. The Trust shall not circulate any printed
matter which contains any reference to Custodian without the prior written
approval of Custodian, excepting printed matter contained in the prospectus or
statement of additional information or its registration statement for the Trust
and such other printed matter as merely identifies Custodian as custodian for
the Trust. The Trust shall submit printed matter requiring approval to Custodian
in draft form, allowing sufficient time for review by Custodian and its counsel
prior to any deadline for printing.
14.3 NO WAIVER. No failure by either party hereto to exercise and no delay
by such party in exercising, any right hereunder shall operate as a waiver
thereof. The exercise by either party hereto of any right hereunder shall not
preclude the exercise of any other right, and the remedies provided herein are
cumulative and not exclusive of any remedies provided at law or in equity.
14.4 AMENDMENTS. This Agreement cannot be changed orally and no amendment
to this Agreement shall be effective unless evidenced by an instrument in
writing executed by the parties hereto.
14.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the parties hereto on separate counterparts, each of which
shall be deemed an original but all of which together shall constitute but one
and the same instrument.
14.6 SEVERABILITY. If any provision of this Agreement shall be invalid,
illegal or unenforceable in any respect under any applicable law, the validity,
legality and enforceability of the remaining provisions shall not be affected or
impaired thereby.
14.7 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns; provided, however, that this Agreement shall not be assignable by
either party hereto without the written consent of the other party hereto.
14.8 HEADINGS. The headings of sections in this Agreement are for
convenience of reference only and shall not affect the meaning or construction
of any provision of this Agreement.
10
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed and delivered in its name and on its behalf by its representatives
thereunto duly authorized, all as of the day and year first above written.
ATTEST: STOCKJUNGLE.COM TRUST
_________________________________ By:________________________________
Its:_______________________________
ATTEST: THE FIFTH THIRD BANK
_________________________________ By:________________________________
Its:_______________________________
11
<PAGE>
Dated: _________________ , 19___
EXHIBIT A
TO THE CUSTODY AGREEMENT BETWEEN
THE STOCKJUNGLE.COM TRUST
AND THE FIFTH THIRD BANK
_____________, 1999
Name of Fund Date
- ------------ ----
StockJungle.com Market Leaders Growth Fund
StockJungle.com Free S&P 500 Index Fund
StockJungle.com Pure Play Internet Fund
StockJungle.com Community Intelligence Fund
STOCKJUNGLE.COM TRUST
By:________________________________
Its:_______________________________
THE FIFTH THIRD BANK
By:________________________________
Its:_______________________________
12
<PAGE>
Dated: _________________ , 19___
EXHIBIT B
TO THE CUSTODY AGREEMENT BETWEEN
STOCKJUNGLE.COM TRUST
AND THE FIFTH THIRD BANK
______________, 1999
AUTHORIZED PERSONS
Set forth below are the names and specimen signatures of the persons
authorized by the Trust to Administer each Custody Account.
Name Signature
_____________________________________ ______________________________________
_____________________________________ ______________________________________
_____________________________________ ______________________________________
_____________________________________ ______________________________________
_____________________________________ ______________________________________
_____________________________________ ______________________________________
13
<PAGE>
SIGNATURE RESOLUTION
--------------------
RESOLVED, That all of the following officers of STOCKJUNGLE.COM TRUST and any of
them, namely the Chairman, President, Vice President, Secretary and Treasurer,
are hereby authorized as signers for the conduct of business for an on behalf of
the Funds with THE FIFTH THIRD BANK:
___________________________ CHAIRMAN ______________________________
___________________________ PRESIDENT ______________________________
___________________________ VICE PRESIDENT ______________________________
___________________________ VICE PRESIDENT ______________________________
___________________________ VICE PRESIDENT ______________________________
___________________________ VICE PRESIDENT ______________________________
___________________________ TREASURER ______________________________
___________________________ SECRETARY ______________________________
In addition, the following Assistant Treasurer is authorized to sign on behalf
of the Trust for the purpose of effecting securities transactions:
___________________________ ASSISTANT TREASURER ______________________________
The undersigned officers of STOCKJUNGLE.COM TRUST hereby certify that the
foregoing is within the parameters of a Resolution adopted by Trustees of the
Trust in a meeting held ______________, 1999, directing and authorizing
preparation of documents and to do everything necessary to effect the Custody
Agreement between STOCKJUNGLE.COM TRUST and THE FIFTH THIRD BANK.
By:_____________________________________
Its:____________________________________
By:_____________________________________
Its:____________________________________
ADMINISTRATION AGREEMENT
------------------------
AGREEMENT dated as of , 199 between StockJungle.Com Trust, a Massachusetts
business trust (the "Trust"), and Countrywide Fund Services, Inc.
("Countrywide"), an Ohio corporation.
WHEREAS, the Trust is an investment company registered under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust wishes to employ the services of Countrywide to serve as
its administrative agent; and
WHEREAS, Countrywide wishes to provide such services under the conditions
set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement, the Trust and Countrywide agree as follows:
1. APPOINTMENT.
------------
The Trust hereby appoints and employs Countrywide as agent to perform
those services described in this Agreement for the Trust. Countrywide shall act
under such appointment and perform the obligations thereof upon the terms and
conditions hereinafter set forth.
2. DOCUMENTATION.
--------------
The Trust will furnish from time to time the following documents:
A. Each resolution of the Board of Trustees of the Trust authorizing the
original issue of its shares;
B. Each Registration Statement filed with the Securities and Exchange
Commission (the "SEC") and amendments thereof;
C. A certified copy of each amendment to the Agreement and Declaration of
Trust and the Bylaws of the Trust;
D. Certified copies of each resolution of the Board of Trustees
authorizing officers to give instructions to Countrywide;
E. Specimens of all new forms of share certificates accompanied by Board
of Trustees' resolutions approving such forms;
<PAGE>
F. Such other certificates, documents or opinions which Countrywide may,
in its reasonable discretion, deem necessary or appropriate in the
proper performance of its duties;
G. Copies of all Underwriting and Dealer Agreements in effect;
H. Copies of all Investment Advisory Agreements in effect; and
I. Copies of all documents relating to special investment or withdrawal
plans which are offered or may be offered in the future by the Trust
and for which Countrywide is to act as plan agent.
3. TRUST ADMINISTRATION.
---------------------
Subject to the direction and control of the Trustees of the Trust,
Countrywide shall provide all administrative services required for the conduct
of the Trust's business affairs not otherwise provided by other agents of the
Trust. To the extent not otherwise the primary responsibility of, or provided
by, other agents of the Trust, Countrywide shall, without limitation, supply (i)
office facilities, (ii) internal auditing and regulatory services, and (iii)
executive and administrative services. Countrywide shall coordinate the
preparation of (i) tax returns, (ii) reports to shareholders of the Trust, (iii)
reports to and filings with the SEC and state securities authorities, including
preliminary and definitive proxy materials, post-effective amendments to the
Trust's registration statement, and the Trust's Form N-SAR, and (iv) necessary
materials for Board of Trustees' meetings unless prepared by other parties under
agreement with the Trust. Countrywide shall provide personnel to serve as
officers of the Trust if so elected by the Board of Trustees; provided, however,
that the Adviser shall reimburse Countrywide for the reasonable out-of-pocket
expenses incurred by such personnel in attending Board of Trustees' meetings and
shareholders' meetings of the Trust.
4. RECORDKEEPING AND OTHER INFORMATION.
------------------------------------
Countrywide shall create and maintain all records required by
applicable laws, rules and regulations, including but not limited to records
required by Section 31(a) of the 1940 Act and the rules thereunder, as the same
may be amended from time to time, pertaining to the various functions performed
by it hereunder and not otherwise created and maintained by another party
pursuant to contract with the Trust. All such records shall be the property of
the Trust at all times and shall be available for inspection and use by the
Trust. Where applicable, such records shall be maintained by Countrywide for the
periods and in the places required by Rule 31a-2 under the 1940 Act. The
retention of such records shall be at the expense of StockJungle.com Investment
Advisors, Inc. Countrywide shall make available during regular business hours
all records and other data created and maintained pursuant to this Agreement for
reasonable audit and inspection by the Trust, any person retained by the Trust,
or any regulatory agency having authority over the Trust.
2
<PAGE>
5. FURTHER ACTIONS.
----------------
Each party agrees to perform such further acts and execute such
further documents as are reasonably necessary to effectuate the purposes hereof.
6. COMPENSATION.
-------------
For the performance of Countrywide's obligations under this Agreement,
StockJungle.com Investment Advisors, Inc., the investment adviser to the Trust,
shall pay Countrywide, on the first business day following the end of each
month, a monthly fee at the annual rate of .15% of the average daily net assets
of each series of the Trust up to $100 million; .10% of each Series' assets from
$100 million to $500 million; .075% of each Series' assets from $500 million to
$900 million; and .05% of each Series' assets in excess of $900 million;
provided, however, that the minimum fee shall be $2,000 per month for each
series.
7. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS.
---------------------------------------------------
The parties hereto acknowledge and agree that nothing contained herein
shall be construed to require Countrywide to perform any services for the Trust
which services could cause Countrywide to be deemed an "investment adviser" of
the Trust within the meaning of Section 2(a)(20) of the 1940 Act or to supersede
or contravene the Trust's prospectus or statement of additional information or
any provisions of the 1940 Act and the rules thereunder. Except as otherwise
provided in this Agreement or in any other agreement between the Trust and
Countrywide, and except for the accuracy of information furnished to it by
Countrywide, the Trust assumes full responsibility for complying with all
applicable requirements of the 1940 Act, the Securities Act of 1933, as amended,
and any other laws, rules and regulations of governmental authorities having
jurisdiction.
8. REFERENCES TO COUNTRYWIDE.
--------------------------
The Trust shall not circulate any printed matter which contains any
reference to Countrywide without the prior written approval of Countrywide,
excepting solely such printed matter as merely identifies Countrywide as
Administrative Services Agent, Transfer, Shareholder Servicing and Dividend
Disbursing Agent and Accounting Services Agent. The Trust will submit printed
matter requiring approval to Countrywide in draft form, allowing reasonable time
for review by Countrywide and its counsel prior to any deadline for printing.
9. INDEMNIFICATION.
----------------
A. In performing its services hereunder, Countrywide may rely on
information reasonably believed by it to be accurate and reliable. Except as may
otherwise be required by the 1940 Act and the rules thereunder, neither
Countrywide nor its shareholders, officers, directors, employees, agents,
control persons or affiliates of any thereof shall be subject
3
<PAGE>
to any liability for, or any damages, expenses or losses incurred by the Trust
in connection with, any error of judgment, mistake of law, any act or omission
connected with or arising out of any services rendered under or payments made
pursuant to this Agreement or any other matter to which this Agreement relates,
except by reason of willful misfeasance, bad faith or negligence on the part of
any such persons in the performance of the duties of Countrywide under this
Agreement or by reason of reckless disregard by any of such persons of the
obligations and duties of Countrywide under this Agreement.
B. Any person, even though also a director, officer, employee,
shareholder or agent of Countrywide, or any of its affiliates, who may be or
become an officer, trustee or employee of the Trust, shall be deemed, when
rendering services to the Trust or acting on any business of the Trust, to be
rendering such services to or acting solely as an officer, trustee or employee
of the Trust and not as a director, officer, employee, shareholder or agent of
or one under the control or direction of Countrywide or any of its affiliates,
even though paid by one of these entities.
C. Notwithstanding any other provision of this Agreement, the Trust
shall indemnify and hold harmless Countrywide, its directors, officers,
employees, shareholders, agents, control persons and affiliates from and against
any and all claims, demands, expenses and liabilities (whether with or without
basis in fact or law) of any and every nature which Countrywide may sustain or
incur or which may be asserted against Countrywide by any person by reason of,
or as a result of: (i) any action taken or omitted to be taken by Countrywide in
good faith in reliance upon any certificate, instrument, order or share
certificate reasonably believed by it to be genuine and to be signed,
countersigned or executed by any duly authorized person, upon the oral
instructions or written instructions of an authorized person of the Trust or
upon the opinion of legal counsel for the Trust or its own counsel; or (ii) any
action taken or omitted to be taken by Countrywide in connection with its
appointment in good faith in reliance upon any law, act, regulation or
interpretation of the same even though the same may thereafter have been
altered, changed, amended or repealed. However, indemnification under this
subparagraph shall not apply to actions or omissions of Countrywide or its
directors, officers, employees, shareholders or agents in cases of its or their
own negligence, willful misconduct, bad faith, or reckless disregard of its or
their own duties hereunder.
D. Notwithstanding any other provision of this Agreement, Countrywide
shall indemnify and hold harmless the Trust, its trustees, officers, employees,
shareholders, agents, control persons and affiliates from and against any and
all claims, demands expenses and liabilities (whether with or without basis in
fact or in law) of any and every nature which any of them may sustain or incur
or which may be asserted against any of them by any person by reason of, or as a
result of, the willful misfeasance, bad faith or negligence on part of
Countrywide, its employees or agents in the performance of the duties of
Countrywide under this Agreement or by reason of reckless disregard by any of
such persons of the obligations and duties of Countrywide under this Agreement.
E. Upon the assertion of a claim for which a party may be required to
provide indemnification hereunder, the person seeking indemnification shall
promptly notify such party
4
<PAGE>
of such assertion and shall keep the such party advised with respect to all
developments concerning such claim. The party who may be required to indemnify
shall have the option to participate with the person seeking indemnification in
the defense of such claim or to defend against such claim with counsel
reasonably acceptable to the indemnified person in such party's own name or in
the name of such person. The person seeking indemnification shall in no case
confess any claim or make any compromise in any case in which a party may be
required to indemnify it except with the such party's prior written consent. An
idemnifying party shall in no event be liable to bear the expenses of more than
one counsel for all indemnified persons in connection with any matter for which
it is providing indemnification hereunder.
10. TERMINATION
-----------
A. The provisions of this Agreement shall be effective on the date
first above written, shall continue in effect for two years from that date and
shall continue in force from year to year thereafter, but only so long as such
continuance is approved (1) by Countrywide, and (2) by the Trust's Board of
Trustees.
B. Either party may terminate this Agreement for any reason, without
penalty, on any date by giving the other party at least sixty (60) days' prior
written notice of such termination specifying the date fixed therefor. Upon
termination of this Agreement, StockJungle.com Investment Advisors, Inc. shall
pay to Countrywide such compensation as may be due as of the date of such
termination, and shall likewise reimburse Countrywide for any out-of-pocket
expenses and disbursements reasonably incurred by Countrywide to such date and
payable to Countrywide hereunder.
C. In the event that in connection with the termination of this
Agreement a successor to any of Countrywide's duties or responsibilities under
this Agreement is designated by the Trust by written notice to Countrywide,
Countrywide shall, promptly upon such termination and at the expense of
StockJungle.com Investment Advisors, Inc., transfer to such successor all
records maintained by Countrywide under this Agreement and shall cooperate in
the transfer of such duties and responsibilities, including provision for
assistance from Countrywide's cognizant personnel in the establishment of books,
records and other data by such successor.
11. SERVICES FOR OTHERS.
--------------------
Nothing in this Agreement shall prevent Countrywide or any affiliated
person (as defined in the 1940 Act) of Countrywide from providing services for
any other person, firm or corporation (including other investment companies);
provided, however, that Countrywide expressly represents that it will undertake
no activities which, in its judgment, will adversely affect the performance of
its obligations to the Trust under this Agreement.
12. LIMITATION OF LIABILITY.
------------------------
It is expressly agreed that the obligations of the Trust hereunder
shall not be binding personally upon any of the Trustees, shareholders,
nominees, officers, agents or
5
<PAGE>
employees of the Trust, but shall bind only the trust property of the Trust. It
is further expressly agreed that the debts, liabilities, obligations and
expenses of any series of the Trust hereunder shall be enforceable against the
asset and property of such series only, and not against the assets and property
of any other series of the Trust. Neither the authorization of this Agreement by
the Trustees of the Trust, nor its execution and delivery by an officer of the
Trust, shall be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but shall bind only the trust
property of the Trust.
13. SEVERABILITY.
-------------
In the event any provision of this Agreement is determined to be void
or unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
14. QUESTIONS OF INTERPRETATION.
----------------------------
This Agreement shall be governed by the laws of the State of Ohio. Any
question of interpretation of any term or provision of this Agreement having a
counterpart in or otherwise derived from a term or provision of the 1940 Act
shall be resolved by reference to such term or provision of the 1940 Act and to
interpretations thereof, if any, by the United States Courts or in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the SEC issued pursuant to the 1940 Act. In addition, where the effect of a
requirement of the 1940 Act, reflected in any provision of this Agreement, is
revised by rule, regulation or order of the SEC, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
15. NOTICES.
--------
All notices, requests, consents and other communications required or
permitted under this Agreement shall be in writing (including telex and
telegraphic communication) and shall be (as elected by the person giving such
notice) hand delivered by messenger or courier service, telecommunicated, or
mailed (airmail if international) by registered or certified mail (postage
prepaid), return receipt requested, addressed to:
To the Trust: StockJungle.com Trust
3805 S. Canfield Avenue, Suite B
Culver City, CA 90232
Attention: Michael J. Witz
To Countrywide: Countrywide Fund Services, Inc.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Attention: Brian J. Manley
or to such other address as any party may designate by notice complying with the
terms of this Section 15. Each such notice shall be deemed delivered (a) on the
date delivered if by personal
6
<PAGE>
delivery; (b) on the date telecommunicated if by telegraph; (c) on the date of
transmission with confirmed answer back if by telex, telefax or other
telegraphic method; and (d) on the date upon which the return receipt is signed
or delivery is refused or the notice is designated by the postal authorities as
not deliverable, as the case may be, if mailed.
16. AMENDMENT.
----------
This Agreement may not be amended or modified except by a written
agreement executed by both parties; provided, however, that no provision of
Sections 4, 6 and 10 hereof which would increase the expenses to be paid by
StockJungle.com Investment Advisors, Inc. shall be amended without its prior
written consent.
17. BINDING EFFECT.
---------------
Each of the undersigned expressly warrants and represents to the other
that it has full power and authority to enter into and perform this Agreement,
that its execution and delivery of this Agreement has been duly authorized by
all necessary corporate or trust action, that the person signing this Agreement
on its behalf if duly authorized and has full power to do so, and that this
Agreement is its valid and binding obligation, duly enforceable against in
accordance with the terms hereof.
18. COUNTERPARTS.
-------------
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
19. FORCE MAJEURE.
--------------
Countrywide represents and warrants that it has taken reasonable steps
to make its transaction processing and recordkeeping and other systems and
equipment compatible with the change in the year 1999 to 2000 without any
related errors in reports or material disruption to services provided hereunder
and Countrywide expects full compatibility before December 31, 1999.
If Countrywide shall be delayed in its performance of services or
prevented entirely or in part from performing services due to causes or events
beyond its control, including and without limitation, acts of God, interruption
of power or other utility, transportation or communication services, acts of
civil or military authority, sabotages, national emergencies, explosion, flood,
accident, earthquake or other catastrophe, fire, strike or other labor problems,
legal action, present or future law, governmental order, rule or regulation, or
shortages of suitable parts, materials, labor or transportation, such delay or
non-performance shall be excused and a reasonable time for performance in
connection with this Agreement shall be extended to include the period of such
delay or non-performance.
7
<PAGE>
20. MISCELLANEOUS.
--------------
Countrywide agrees on behalf of itself and its agents and employees to
treat confidentially all records and other information relating to the Trust and
its various series and all prior, present or potential shareholders thereof,
except after prior notification to, and approval of release of information in
writing by, the Trust, which approval shall not be unreasonably withheld where
Countrywide may be exposed to civil or criminal contempt proceedings for failure
to comply, when requested to divulge such information by duly constituted
authorities, or when so requested by the Trust.
The captions in this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
STOCKJUNGLE.COM TRUST
By:________________________________
Its: President
COUNTRYWIDE FUND SERVICES, INC.
By:________________________________
Its: President
The undersigned hereby agrees to the provisions of Sections 4, 6 and 10 of
the foregoing Administration Agreement.
STOCKJUNGLE.COM INVESTMENT
ADVISORS, INC.
By:________________________________
Its: President
8
TRANSFER, DIVIDEND DISBURSING, SHAREHOLDER SERVICE
--------------------------------------------------
AND PLAN AGENCY AGREEMENT
-------------------------
AGREEMENT dated as of , 199 between StockJungle.com Trust, a Massachusetts
business trust (the "Trust"), and Countrywide Fund Services, Inc.
("Countrywide"), an Ohio corporation.
WHEREAS, the Trust is an investment company registered under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust wishes to employ the services of Countrywide to serve as
its transfer, dividend disbursing, shareholder service and plan agent; and
WHEREAS, Countrywide wishes to provide such services under the conditions
set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement, the Trust and Countrywide agree as follows:
1. APPOINTMENT.
------------
The Trust hereby appoints and employs Countrywide as agent to perform
those services described in this Agreement for the Trust. Countrywide shall act
under such appointment and perform the obligations thereof upon the terms and
conditions hereinafter set forth.
2. DOCUMENTATION.
--------------
The Trust will furnish from time to time the following documents:
A. Each resolution of the Board of Trustees of the Trust authorizing the
original issue of its shares;
B. Each Registration Statement filed with the Securities and Exchange
Commission (the "SEC") and amendments thereof;
C. A certified copy of each amendment to the Agreement and Declaration of
Trust and the Bylaws of the Trust;
D. Certified copies of each resolution of the Board of Trustees
authorizing officers to give instructions to Countrywide;
E. Specimens of all new forms of share certificates accompanied by Board
of Trustees' resolutions approving such forms;
<PAGE>
F. Such other certificates, documents or opinions which Countrywide may,
in its reasonable discretion, deem necessary or appropriate in the
proper performance of its duties;
G. Copies of all Underwriting and Dealer Agreements in effect;
H. Copies of all Investment Advisory Agreements in effect; and
I. Copies of all documents relating to special investment or withdrawal
plans which are offered or may be offered in the future by the Trust
and for which Countrywide is to act as plan agent.
3. COUNTRYWIDE TO RECORD SHARES.
-----------------------------
Countrywide shall record the issuance of shares of the Trust and
maintain pursuant to applicable rules of the SEC a record of the total number of
shares of the Trust which are authorized, issued and outstanding, based upon
data provided to it by the Trust. Countrywide shall also provide the Trust on a
regular basis or upon reasonable request the total number of shares which are
issued and outstanding, but shall have no obligation when recording the issuance
of the Trust's shares, except as otherwise set forth herein or in any other
agreement between Countrywide and the Trust, to monitor the issuance of such
shares or to take cognizance of any laws relating to the issue or sale of such
shares, which functions shall be the sole responsibility of the Trust.
4. COUNTRYWIDE TO VALIDATE TRANSFERS.
----------------------------------
Upon receipt of a proper request for transfer and upon surrender to
Countrywide of certificates, if any, in proper form for transfer, Countrywide
shall approve such transfer and shall take all necessary steps to effectuate the
transfer as indicated in the transfer request. Upon approval of the transfer,
Countrywide shall notify the Trust in writing of each such transaction and shall
make appropriate entries on the shareholder records maintained by Countrywide.
5. SHARE CERTIFICATES.
-------------------
If the Trust authorizes the issuance of share certificates and an
investor requests a share certificate, Countrywide will countersign and mail, by
insured first class mail, a share certificate to the investor at his address as
set forth on the transfer books of the Trust, subject to any other instructions
for delivery of certificates representing newly purchased shares and subject to
the limitation that no certificates representing newly purchased shares shall be
mailed to the investor until the cash purchase price of such shares has been
collected and credited to the account of the Trust maintained by the Custodian.
The Trust shall supply Countrywide with a sufficient supply of blank share
certificates and from time to time shall renew such supply upon
<PAGE>
request of Countrywide. Such blank share certificates shall be properly signed,
manually or, if authorized by the Trust, by facsimile; and notwithstanding the
death, resignation or removal of any officers of the Trust authorized to sign
share certificates, Countrywide may continue to countersign certificates which
bear the manual or facsimile signature of such officer until otherwise directed
by the Trust. In case of the alleged loss or destruction of any share
certificate, no new certificates shall be issued in lieu thereof, unless there
shall first be furnished an appropriate bond satisfactory to Countrywide and the
Trust, and issued by a surety company satisfactory to Countrywide and the Trust.
6. RECEIPT OF FUNDS.
-----------------
Upon receipt of any check or other instrument drawn or endorsed to it
as agent for, or identified as being for the account of, the Trust or the
principal underwriter of the Trust (the "Underwriter"), Countrywide shall stamp
the check or instrument with the date of receipt, determine the amount thereof
due the Trust and shall forthwith process the same for collection and deposit
with the Trust's Custodian. Upon receipt of notification of receipt of funds
eligible for share purchases in accordance with the Trust's then current
prospectus and statement of additional information, Countrywide shall notify the
Trust, at the close of each business day, in writing of the amount of said funds
credited to the Trust and deposited in its account with the Custodian, and shall
similarly notify the Underwriter of the amount of said funds credited to the
Underwriter and deposited in its account with its designated bank.
7. PURCHASE ORDERS.
----------------
Upon receipt of an order for the purchase of shares of the Trust,
accompanied by sufficient information to enable Countrywide to establish a
shareholder account, Countrywide shall, as of the next determination of net
asset value after receipt of such order in accordance with the Trust's then
current prospectus and statement of additional information, compute the number
of shares due to the shareholder, credit the share account of the shareholder,
subject to collection of the funds, with the number of shares so purchased,
notify the Trust in writing or by computer report at the close of each business
day of such transactions and shall provide to the shareholder and/or dealer of
record a notice of such credit when requested to do so by the Trust.
8. RETURNED CHECKS.
----------------
In the event that Countrywide is notified by the Trust's Custodian
that any check or other order for the payment of money is returned unpaid for
any reason, Countrywide will:
A. Give prompt notification to the Trust and the Underwriter of the
non-payment of said check;
B. In the absence of other instructions from the Trust or the
Underwriter, take such steps as may be necessary to redeem any shares purchased
on the basis of such returned check and cause the proceeds of such redemption
plus any dividends declared with respect to
<PAGE>
such shares to be credited to the account of the Trust and to request the
Trust's Custodian to forward such returned check to the person who originally
submitted the check; and
C. Notify the Trust and Underwriter of such actions and correct the
Trust's records maintained by Countrywide pursuant to this Agreement.
9. SALES CHARGE.
-------------
In computing the number of shares to credit to the account of a
shareholder, Countrywide will calculate the total of the applicable sales
charges with respect to each purchase as set forth in the Trust's current
prospectus and statement of additional information and in accordance with any
notification filed with respect to combined and accumulated purchases.
Countrywide will also determine the portion of each sales charge payable by the
Underwriter to the dealer of record participating in the sale in accordance with
such schedules as are from time to time delivered by the Underwriter to
Countrywide; provided, however, that Countrywide shall have no liability
hereunder arising from the incorrect selection by Countrywide of the gross rate
of sales charges except that this exculpation shall not apply in the event the
rate is specified by the Underwriter or the Trust and Countrywide fails to
select the rate specified.
10. DIVIDENDS AND DISTRIBUTIONS.
----------------------------
The Trust shall furnish Countrywide with appropriate evidence of
trustee action authorizing the declaration of dividends and other distributions.
Countrywide shall establish procedures in accordance with the Trust's then
current prospectus and statement of additional information and with other
authorized actions of the Trust's Board of Trustees under which it will have
available from the Custodian or the Trust any required information for each
dividend and other distribution. After deducting any amount required to be
withheld by any applicable laws, Countrywide shall, as agent for each
shareholder who so requests, invest the dividends and other distributions in
full and fractional shares in accordance with the Trust's then current
prospectus and statement of additional information. If a shareholder has elected
to receive dividends or other distributions in cash, then Countrywide shall
disburse dividends to such shareholder of record in accordance with the Trust's
then current prospectus and statement of additional information. Countrywide
shall, on or before the mailing date of such checks, notify the Trust and the
Custodian of the estimated amount of cash required to pay such dividend or
distribution, and the Trust shall instruct the Custodian to make available
sufficient funds therefor in the appropriate account of the Trust. Countrywide
shall mail to the shareholders periodic statements, as requested by the Trust,
showing the number of full and fractional shares and the net asset value per
share of shares so credited. When requested by the Trust, Countrywide shall
prepare and file with the Internal Revenue Service, and when required, shall
address and mail to shareholders, such returns and information relating to
dividends and distributions paid by the Trust as are required to be so prepared,
filed and mailed by applicable laws, rules and regulations.
<PAGE>
11. UNCLAIMED DIVIDENDS AND UNCLAIMED REDEMPTION PROCEEDS.
------------------------------------------------------
Countrywide shall, at least annually, furnish electronically or in
writing to the Trust the names and addresses, as shown in the shareholder
accounts maintained by Countrywide, of all shareholders for which there are, as
of the end of the calendar year, dividends, distributions or redemption proceeds
for which checks or share certificates mailed in payment of distributions have
been returned. Countrywide shall use its best efforts to contact the
shareholders affected and to follow any other instructions received from the
Trust concerning the disposition of any such unclaimed dividends, distributions
or redemption proceeds. Countrywide will escheat unclaimed funds as required by
law.
12. REDEMPTIONS AND EXCHANGES.
--------------------------
A. Countrywide shall process, in accordance with the Trust's then
current prospectus and statement of additional information, each order for the
redemption of shares accepted by Countrywide. Upon its approval of such
redemption transactions, Countrywide, if requested by the Trust, shall mail to
the shareholder and/or dealer of record a confirmation showing trade date,
number of full and fractional shares redeemed, the price per share and the total
redemption proceeds. For each such redemption, Countrywide shall either: (a)
prepare checks in the appropriate amounts for approval and verification by the
Trust and signature by an authorized officer of Countrywide and mail the checks
to the appropriate person, or (b) in the event redemption proceeds are to be
wired through the Federal Reserve Wire System or by bank wire, cause such
proceeds to be wired in federal funds to the bank account designated by the
shareholder, or (c) effectuate such other redemption procedures which are
authorized by the Trust's Board of Trustees or its then current prospectus and
statement of additional information. The requirements as to instruments of
transfer and other documentation, the applicable redemption price and the time
of payment shall be as provided in the then current prospectus and statement of
additional information, subject to such supplemental instructions as may be
furnished by the Trust and accepted by Countrywide. If Countrywide or the Trust
determines that a request for redemption does not comply with the requirements
for redemptions, Countrywide or the Trust shall promptly notify the shareholder
indicating the reason therefor.
B. If shares of a series of the Trust are eligible for exchange with
shares of any other series of the Trust or any other investment company,
Countrywide, in accordance with the then current prospectus and statement of
additional information and exchange rules of the Trust and such other investment
company, or such other investment company's transfer agent, shall review and
approve all exchange requests and shall, on behalf of the Trust's shareholders,
process such approved exchange requests.
C. Countrywide shall notify the Trust, the Custodian and the
Underwriter on each business day of the amount of cash required to meet payments
made pursuant to the provisions of this Paragraph 12, and, on the basis of such
notice, the Trust shall instruct the Custodian to make available from time to
time sufficient funds therefor in the appropriate account of the Trust.
Procedures for effecting redemption orders accepted from shareholders or dealers
of record by telephone or other methods shall be established by mutual agreement
between Countrywide and the Trust consistent with the Trust's then current
prospectus and statement of additional information.
<PAGE>
D. The authority of Countrywide to perform its responsibilities under
Paragraph 7, Paragraph 10, and this Paragraph 12 shall be suspended with respect
to any series of the Trust upon receipt of notification by it of the suspension
of the determination of such series' net asset value.
13. AUTOMATIC WITHDRAWAL PLANS.
---------------------------
Countrywide will process automatic withdrawal orders pursuant to the
provisions of the withdrawal plans duly executed by shareholders and the current
prospectus and statement of additional information of the Trust. Payments upon
any such withdrawal order shall be made by Countrywide from the appropriate
account maintained by the Trust with the Custodian on approximately the last
business day of each month in which a payment has been requested, and
Countrywide will withdraw from a shareholder's account and present for
repurchase or redemption as many shares as shall be sufficient to make such
withdrawal payment pursuant to the provisions of the shareholder's withdrawal
plan and the current prospectus and statement of additional information of the
Trust. From time to time on new automatic withdrawal plans a check for payment
date already past may be issued upon request by the shareholder.
14. LETTERS OF INTENT.
------------------
Countrywide will process such letters of intent for investing in
shares of the Trust as are provided for in the Trust's current prospectus and
statement of additional information. Countrywide will make appropriate deposits
to the account of the Underwriter for the adjustment of sales charges as therein
provided and will currently report the same to the Underwriter.
15. WIRE-ORDER PURCHASES.
---------------------
Countrywide will send written confirmations to the dealers of record
containing all details of the wire-order purchases placed by each such dealer by
the close of business on the business day following receipt of such orders by
Countrywide or the Underwriter, with copies to the Underwriter. Upon receipt of
any check drawn or endorsed to the Trust (or Countrywide, as agent) or otherwise
identified as being payment of an outstanding wire-order, Countrywide will stamp
said check with the date of its receipt and deposit the amount represented by
such check to Countrywide's deposit accounts maintained with the Custodian.
Countrywide will compute the respective portions of such deposit which represent
the sales charge and the net asset value of the shares so purchased, will cause
the Custodian to transfer federal funds in an amount equal to the net asset
value of the shares so purchased to the Trust's account with the Custodian, and
will notify the Trust and the Underwriter before noon of each business day of
the total amount deposited in the Trust's deposit accounts, and in the event
that payment for a purchase order is not received by Countrywide or the
Custodian on the tenth business day following receipt of the order, will prepare
an NASD "notice of failure of dealer to make payment" and forward such
notification to the Underwriter.
<PAGE>
16. OTHER PLANS.
------------
Countrywide will process such accumulation plans, group programs and
other plans or programs for investing in shares of the Trust as are now provided
for in the Trust's current prospectus and statement of additional information
and will act as plan agent for shareholders pursuant to the terms of such plans
and programs duly executed by such shareholders.
17. RECORDKEEPING AND OTHER INFORMATION.
------------------------------------
Countrywide shall create and maintain all records required by
applicable laws, rules and regulations, including but not limited to records
required by Section 31(a) of the 1940 Act and the rules thereunder, as the same
may be amended from time to time, pertaining to the various functions performed
by it and not otherwise created and maintained by another party pursuant to
contract with the Trust. All such records shall be the property of the Trust at
all times and shall be available for inspection and use by the Trust. Where
applicable, such records shall be maintained by Countrywide for the periods and
in the places required by Rule 31a-2 under the 1940 Act. The retention of such
records shall be at the expense of the Trust. Countrywide shall make available
during regular business hours all records and other data created and maintained
pursuant to this Agreement for reasonable audit and inspection by the Trust, any
person retained by the Trust, or any regulatory agency having authority over the
Trust.
18. SHAREHOLDER RECORDS.
--------------------
Countrywide shall maintain records for each shareholder account
showing the following:
A. Names, addresses and tax identifying numbers;
B. Name of the dealer of record, if any;
C. Number of shares held of each series;
D. Historical information regarding the account of each shareholder,
including dividends and distributions in cash or invested in shares;
E. Information with respect to the source of all dividends and
distributions allocated among income, realized short-term gains and
realized long-term gains;
F. Any instructions from a shareholder including all forms furnished by
the Trust and executed by a shareholder with respect to (i) dividend
or distribution elections and (ii) elections with respect to payment
options in connection with the redemption of shares;
<PAGE>
G. Any correspondence received by Countrywide relating to the current
maintenance of a shareholder's account;
H. Certificate numbers and denominations for any shareholder holding
certificates;
I. Any stop or restraining order placed against a shareholder's account;
J. Information with respect to withholding in the case of a foreign
account or any other account for which withholding is required by the
Internal Revenue Code of 1986, as amended; and
K. Any information required in order for Countrywide to perform the
calculations contemplated under this Agreement.
19. TAX RETURNS AND REPORTS.
------------------------
Countrywide will prepare in the appropriate form, file with the
Internal Revenue Service and appropriate state agencies and, if required, mail
to shareholders of the Trust such returns for reporting dividends and
distributions paid by the Trust as are required to be so prepared, filed and
mailed and shall withhold such sums as are required to be withheld under
applicable federal and state income tax laws, rules and regulations.
20. OTHER INFORMATION TO THE TRUST.
-------------------------------
Subject to such instructions, verification and approval of the
Custodian and the Trust as shall be required by any agreement or applicable law,
Countrywide will also maintain such records as shall be necessary to furnish to
the Trust the following: annual shareholder meeting lists, proxy lists and
mailing materials, shareholder reports and confirmations and checks for
disbursing redemption proceeds, dividends and other distributions or expense
disbursements.
21. ACCESS TO SHAREHOLDER INFORMATION.
----------------------------------
Upon request, Countrywide shall arrange for the Trust's investment
adviser to have direct access to shareholder information contained in
Countrywide's computer system, including account balances, performance
information and such other information which is available to Countrywide with
respect to shareholder accounts.
Countrywide agrees on behalf of itself and its agents and employees to
treat confidentially all records and other information relating to the Trust and
its various series and any prior, present or potential shareholders thereof,
except after prior notification to, and approval of release of information in
writing by, the Trust, which approval shall not be unreasonably withheld where
Countrywide may be exposed to civil or criminal contempt proceedings for failure
to comply, when requested to divulge such information by duly constituted
authorities, or when so requested by the Trust.
<PAGE>
22. COOPERATION WITH ACCOUNTANTS.
-----------------------------
Countrywide shall cooperate with the Trust's independent public
accountants and shall take all reasonable action in the performance of its
obligations under this Agreement to assure that the necessary information is
made available to such accountants for the expression of their unqualified
opinion where required for any document for the Trust.
23. FURTHER ACTIONS.
----------------
Each party agrees to perform such further acts and execute such
further documents as are reasonably necessary to effectuate the purposes hereof.
24. COMPENSATION.
-------------
For the performance of Countrywide's obligations under this Agreement,
StockJungle.com, the investment advisor to the Trust (the "Advisor") shall pay
Countrywide, on the first business day following the end of each month, a
monthly fee in accordance with the schedule attached hereto as Schedule A. The
Advisor shall promptly reimburse Countrywide for any out-of-pocket expenses and
advances which are to be paid by the Trust in accordance with Paragraph 25.
25. EXPENSES.
---------
Countrywide shall furnish, at its expense and without cost to the
Trust (i) the services of its personnel to the extent that such services are
required to carry out its obligations under this Agreement and (ii) the use of
data processing equipment as required to carry out its services hereunder. All
costs and expenses not expressly assumed by Countrywide under this Paragraph 25
shall be paid by the Advisor, including, but not limited to, costs and expenses
of officers and employees of Countrywide in attending meetings of the Board of
Trustees and shareholders of the Trust, as well as costs and expenses for
postage, envelopes, checks, drafts, continuous forms, reports, communications,
statements and other materials, telephone, telegraph and remote transmission
lines, use of outside pricing services, use of outside mailing firms, necessary
outside record storage, media for storage of records (e.g., microfilm,
microfiche, computer tapes), printing, confirmations and any other shareholder
correspondence and any and all assessments, taxes or levies assessed on
Countrywide for services provided under this Agreement. Postage for mailings of
dividends, reports and other mailings to all shareholders shall be advanced to
Countrywide three business days prior to the mailing date of such materials.
26. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS.
---------------------------------------------------
The parties hereto acknowledge and agree that nothing contained herein
shall be construed to require Countrywide to perform any services for the Trust
which services could
<PAGE>
cause Countrywide to be deemed an "investment adviser" of the Trust within the
meaning of Section 2(a)(20) of the 1940 Act or to supersede or contravene the
Trust's prospectus or statement of additional information or any provisions of
the 1940 Act and the rules thereunder. Except as otherwise provided in this
Agreement or in any other agreement between the Trust and Countrywide, and
except for the accuracy of information furnished to it by Countrywide, the Trust
assumes full responsibility for complying with all applicable requirements of
the 1940 Act, the Securities Act of 1933, as amended, and any other laws, rules
and regulations of governmental authorities having jurisdiction.
27. REFERENCES TO COUNTRYWIDE.
--------------------------
The Trust shall not circulate any printed matter which contains any
reference to Countrywide without the prior written approval of Countrywide
(which approved shall not be withheld unreasonably), excepting solely such
printed matter as merely identifies Countrywide as Administrative Services
Agent, Transfer, Shareholder Servicing and Dividend Disbursing Agent and
Accounting Services Agent. The Trust will submit printed matter requiring
approval to Countrywide in draft form, allowing reasonable time for review by
Countrywide and its counsel prior to any deadline for printing.
28. EQUIPMENT FAILURES.
-------------------
Countrywide shall take all steps necessary to minimize or avoid
service interruptions, and has entered into one or more agreements making
provision for emergency use of electronic data processing equipment. Countrywide
shall have no liability with respect to equipment failures beyond its control.
Countrywide represents and warrants that it has taken reasonable steps
to make its transaction processing and recordkeeping and other systems and
equipment compatible with the change in the year 1999 to 2000 without any
related errors in reports or material disruption to services provided hereunder
and Countrywide expects full compatibility before December 31, 1999.
29. INDEMNIFICATION.
----------------
A. In performing its services hereunder, Countrywide may rely on
information reasonably believed by it to be accurate and reliable. Except as may
otherwise be required by the 1940 Act and the rules thereunder, neither
Countrywide nor its shareholders, officers, directors, employees, agents,
control persons or affiliates of any thereof shall be subject to any liability
for, or any damages, expenses or losses incurred by the Trust in connection
with, any error of judgment, mistake of law, any act or omission connected with
or arising out of any services rendered under or payments made pursuant to this
Agreement or any other matter to which this Agreement relates, except by reason
of willful misfeasance, bad faith or negligence on the part of any such persons
in the performance of the duties of Countrywide under this Agreement or by
reason of reckless disregard by any of such persons of the obligations and
duties of Countrywide under this Agreement.
<PAGE>
B. Any person, even though also a director, officer, employee,
shareholder or agent of Countrywide, or any of its affiliates, who may be or
become an officer, trustee or employee of the Trust, shall be deemed, when
rendering services to the Trust or acting on any business of the Trust, to be
rendering such services to or acting solely as an officer, trustee or employee
of the Trust and not as a director, officer, employee, shareholder or agent of
or one under the control or direction of Countrywide or any of its affiliates,
even though paid by one of these entities.
C. The Trust shall indemnify and hold harmless Countrywide, its
directors, officers, employees, shareholders, agents, control persons and
affiliates from and against any and all claims, demands, expenses and
liabilities (whether with or without basis in fact or law) of any and every
nature which Countrywide may sustain or incur or which may be asserted against
Countrywide by any person by reason of, or as a result of: (i) any action taken
or omitted to be taken by Countrywide in good faith in reliance upon any
certificate, instrument, order or share certificate reasonably believed by it to
be genuine and to be signed, countersigned or executed by any duly authorized
person, upon the oral instructions or written instructions of an authorized
person of the Trust or upon the opinion of legal counsel for the Trust or its
own counsel; or (ii) any action taken or omitted to be taken by Countrywide in
connection with its appointment in good faith in reliance upon any law, act,
regulation or interpretation of the same even though the same may thereafter
have been altered, changed, amended or repealed. However, indemnification under
this subparagraph shall not apply to actions or omissions of Countrywide or its
directors, officers, employees, shareholders or agents in cases of its or their
own negligence, willful misconduct, bad faith, or reckless disregard of its or
their own duties hereunder.
D. Notwithstanding any other provision of this Agreement, Countrywide
shall indemnify and hold harmless the Trust, its trustees, officers, employees,
shareholders, agents, control persons and affiliates from and against any and
all claims, demands, expenses and liabilities (whether with or without basis in
fact or in law) of any and every nature which any of them may sustain or incur
or which may be asserted against any of them by and person by reason of, or as a
result of, the willful misfeasance, bad faith or negligence on the part of
Countrywide, its employees or agents in the performance of the duties of
Countrywide under this Agreement or by reason of reckless disregard by any of
such persons of the obligations and duties of Countrywide under this Agreement.
E. Upon the assertion of a claim for which a party may be required to
provide indemnification hereunder, the person seeking indemnification shall
promptly notify such party of such assertion and shall keep the such party
advised with respect to all developments concerning such claim. The party who
may be required to indemnify shall have the option to participate with the
person seeking indemnification in the defense of such claim or to defend against
such claim with counsel reasonably acceptable to the indemnified person in such
party's own name or in the name of such person. The person seeking
indemnification shall in no case
<PAGE>
confess any claim or make any compromise in any case in which a party may be
required to indemnify it except with the such party's prior written consent. An
indemnifying party shall in no event be liable to bear the expenses of more than
one counsel for all indemnified persons in connection with any matter for which
it is providing indemnification hereunder.
30. TERMINATION
-----------
A. The provisions of this Agreement shall be effective on the date
first above written, shall continue in effect for two years from that date and
shall continue in force from year to year thereafter, but only so long as such
continuance is approved (1) by Countrywide, and (2) by vote of a majority of the
Trust's Board of Trustees.
B. Either party may terminate this Agreement for any reason, without
penalty, on any date by giving the other party at least sixty (60) days' prior
written notice of such termination specifying the date fixed therefor. Upon
termination of this Agreement, the Advisor shall pay to Countrywide such
compensation as may be due as of the date of such termination, and shall
likewise reimburse Countrywide for any out-of-pocket expenses and disbursements
reasonably incurred by Countrywide to such date and payable to Countrywide
hereunder.
C. In the event that in connection with the termination of this
Agreement a successor to any of Countrywide's duties or responsibilities under
this Agreement is designated by the Trust by written notice to Countrywide,
Countrywide shall, promptly upon such termination and at the expense of the
Advisor, transfer to such successor all records maintained by Countrywide under
this Agreement and shall cooperate in the transfer of such duties and
responsibilities, including provision for assistance from Countrywide's
cognizant personnel in the establishment of books, records and other data by
such successor.
31. SERVICES FOR OTHERS.
--------------------
Nothing in this Agreement shall prevent Countrywide or any affiliated
person (as defined in the 1940 Act) of Countrywide from providing services for
any other person, firm or corporation (including other investment companies);
provided, however, that Countrywide expressly represents that it will undertake
no activities which, in its judgment, will adversely affect the performance of
its obligations to the Trust under this Agreement.
<PAGE>
32. LIMITATION OF LIABILITY.
------------------------
It is expressly agreed that the obligations of the Trust hereunder
shall not be binding personally upon any of the Trustees, shareholders,
nominees, officers, agents or employees of the Trust, but shall bind only the
trust property of the Trust. It is further expressly agreed that the debts,
liabilities, obligations and expenses of any series of the Trust hereunder shall
be enforceable against the assets and property of such series only, and not
against the assets and property of any other series of the Trust. Neither the
authorization of this Agreement by the Trustees of the Trust nor its execution
and delivery by an officer of the Trust, shall be deemed to have been made by
any of them individually or to impose any liability on any of them personally,
but shall bind only the trust property of the Trust.
33. SEVERABILITY.
-------------
In the event any provision of this Agreement is determined to be void
or unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
34. QUESTIONS OF INTERPRETATION.
----------------------------
This Agreement shall be governed by the laws of the State of Ohio. Any
question of interpretation of any term or provision of this Agreement having a
counterpart in or otherwise derived from a term or provision of the 1940 Act
shall be resolved by reference to such term or provision of the 1940 Act and to
interpretations thereof, if any, by the United States Courts or in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the SEC issued pursuant to the 1940 Act. In addition, where the effect of a
requirement of the 1940 Act, reflected in any provision of this Agreement, is
revised by rule, regulation or order of the SEC, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
35. NOTICES.
--------
All notices, requests, consents and other communications required or
permitted under this Agreement shall be in writing (including telex and
telegraphic communication) and shall be (as elected by the person giving such
notice) hand delivered by messenger or courier service, telecommunicated, or
mailed (airmail if international) by registered or certified mail (postage
prepaid), return receipt requested, addressed to:
To the Trust: StockJungle.com Trust
3805 S. Canfield Avenue, Suite B
Culver City, CA 90232
Attention: Michael J. Witz
To Countrywide: Countrywide Fund Services, Inc.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Attention: Brian J. Manley
<PAGE>
or to such other address as any party may designate by notice complying with the
terms of this Section 35. Each such notice shall be deemed delivered (a) on the
date delivered if by personal delivery; (b) on the date telecommunicated if by
telegraph; (c) on the date of transmission with confirmed answer back if by
telex, telefax or other telegraphic method; and (d) on the date upon which the
return receipt is signed or delivery is refused or the notice is designated by
the postal authorities as not deliverable, as the case may be, if mailed.
36. AMENDMENT.
----------
This Agreement may not be amended or modified except by a written
agreement executed by both parties; provided, however, that no provision of
Sections 24, 25 and 30 hereof which would increase the expenses to be paid by
StockJungle.com Investment Advisors, Inc. shall be amended without its prior
written consent.
37. BINDING EFFECT.
---------------
Each of the undersigned expressly warrants and represents that to the
other that it has full power and authority to enter into and perform this
Agreement, that its execution and delivery of this Agreement has been duly
authorized by all necessary corporate or trust action, that the person signing
this Agreement on its behalf is duly authorized and has full power to do so, and
that this Agreement is its valid and binding obligation, duly enforceable
against in accordance with the terms hereof.
38. COUNTERPARTS.
-------------
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
39. FORCE MAJEURE.
--------------
Countrywide represents and warrants that it has taken reasonable steps
to make its transaction processing and recordkeeping and other systems and
equipment compatible with the change in the year 1999 to 2000 without any
related errors in reports or material disruption to services provided hereunder
and Countrywide expects full compatibility before December 31, 1999.
If Countrywide shall be delayed in its performance of services or
prevented entirely or in part from performing services due to causes or events
beyond its control, including and without limitation, acts of God, interruption
of power or other utility, transportation or communication services, acts of
civil or military authority, sabotages, national emergencies, explosion, flood,
accident, earthquake or other catastrophe, fire, strike or other labor problems,
<PAGE>
legal action, present or future law, governmental order, rule or regulation, or
shortages of suitable parts, materials, labor or transportation, such delay or
non-performance shall be excused and a reasonable time for performance in
connection with this Agreement shall be extended to include the period of such
delay or non-performance.
40. MISCELLANEOUS.
--------------
The captions in this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
STOCKJUNGLE.COM TRUST
By:_______________________________
Its: President
COUNTRYWIDE FUND SERVICES, INC.
By:_______________________________
Its: President
The undersigned hereby agrees to the provisions of Sections 24, 25 and 30
of the foregoing Agreement.
STOCKJUNGLE.COM INVESTMENT
ADVISORS, INC.
By: ______________________________
Its: President
<PAGE>
Schedule A
----------
COMPENSATION
------------
Services FEE
- -------- ---
As Transfer Agent,
Dividend Disbursing Agent
and Shareholder Servicing and
Plan Agent: (Per Account)
StockJungle.com Market Leaders Payable monthly at a
Growth Fund rate of $15/account; subject to a
minimum of $2,000 per month
StockJungle.com Free S&P 500 Payable monthly at a rate of
Index Fund $15/account; subject to a minimum
of $2,000 per month
StockJungle.com Pure Play Payable monthly at a rate of
Internet Fund $15/account; subject to a minimum
of $2,000 per month
StockJungle.com Community Payable monthly at a rate of
Intelligence Fund $15/account; subject to a minimum
of $2,000 per month
ACCOUNTING SERVICES AGREEMENT
-----------------------------
AGREEMENT dated as of ______, 199__ between StockJungle.com Trust, a
Massachusetts business trust (the "Trust"), and Countrywide Fund Services, Inc.
("Countrywide"), an Ohio corporation.
WHEREAS, the Trust is an investment company registered under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust wishes to employ the services of Countrywide to provide
the Trust with certain accounting and pricing services; and
WHEREAS, Countrywide wishes to provide such services under the conditions
set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement, the Trust and Countrywide agree as follows:
1. APPOINTMENT.
------------
The Trust hereby appoints and employs Countrywide as agent to perform
those services described in this Agreement for the Trust. Countrywide shall act
under such appointment and perform the obligations thereof upon the terms and
conditions hereinafter set forth.
2. CALCULATION OF NET ASSET VALUE.
-------------------------------
Countrywide will calculate the net asset value of each series of the
Trust and the per share net asset value of each series of the Trust, in
accordance with the Trust's current prospectus and statement of additional
information, once daily as of the time selected by the Trust's Board of
Trustees. Countrywide will prepare and maintain a daily valuation of all
securities and other assets of the Trust in accordance with instructions from a
designated officer of the Trust or its investment adviser and in the manner set
forth in the Trust's current prospectus and statement of additional information.
In valuing securities of the Trust, Countrywide may contract with, and rely upon
market quotations provided by, outside services.
3. BOOKS AND RECORDS.
------------------
Countrywide will maintain and keep current the general ledger for each
series of the Trust, recording all income and expenses, capital share activity
and security transactions of the Trust. Countrywide will maintain such further
books and records as are necessary to enable it to perform its duties under this
Agreement, and will periodically provide reports to the Trust and its authorized
agents regarding share purchases and redemptions and trial balances of each
series of the Trust. Countrywide will prepare and maintain complete, accurate
and current all records with respect to the Trust required to be maintained by
the Trust under the Internal Revenue Code of 1986, as amended (the "Code"), and
under the rules and regulations of the 1940 Act, and will preserve said records
in the manner and for the periods prescribed in the Code and the 1940 Act. The
retention of such records shall be at the expense of the Trust.
<PAGE>
All of the records prepared and maintained by Countrywide pursuant to
this Section 3 which are required to be maintained by the Trust under the Code
and the 1940 Act will be the property of the Trust. In the event this Agreement
is terminated, all such records shall be delivered to the Trust at the expense
of StockJungle.com Investment Advisors, Inc., and Countrywide shall be relieved
of responsibility for the further preparation and maintenance of any such
records delivered to the Trust.
4. PAYMENT OF TRUST EXPENSES.
--------------------------
Countrywide shall process each request received from the Trust or its
authorized agents for payment of the Trust's expenses. Upon receipt of written
instructions signed by an officer or other authorized agent of the Trust,
Countrywide shall prepare checks in the appropriate amounts which shall be
signed by an authorized officer of Countrywide and mailed to the appropriate
party.
5. FORM N-SAR.
-----------
Countrywide shall maintain such records within its control as shall be
requested by the Trust to assist the Trust in fulfilling the requirements of
Form N-SAR.
6. COOPERATION WITH ACCOUNTANTS.
-----------------------------
Countrywide shall cooperate with the Trust's independent public
accountants and shall take all reasonable action in the performance of its
obligations under this Agreement to assure that the necessary information is
made available to such accountants for the expression of their unqualified
opinion where required for any document for the Trust.
7. FURTHER ACTIONS.
----------------
Each party agrees to perform such further acts and execute such
further documents as are reasonably necessary to effectuate the purposes hereof.
8. FEES.
-----
For the performance of the services under this Agreement,
StockJungle.com Investment Advisors, Inc., the investment advisers to the Trust,
shall pay Countrywide a monthly fee in accordance with the schedule attached
hereto as Schedule A. The fees with respect to any month shall be paid to
Countrywide on the last business day of such month. StockJungle.com Investment
Advisors, Inc. shall also promptly reimburse Countrywide for the cost of
external pricing services utilized by Countrywide.
<PAGE>
9. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS.
---------------------------------------------------
The parties hereto acknowledge and agree that nothing contained herein
shall be construed to require Countrywide to perform any services for the Trust
which services could cause Countrywide to be deemed an "investment adviser" of
the Trust within the meaning of Section 2(a)(20) of the 1940 Act or to supersede
or contravene the Trust's prospectus or statement of additional information or
any provisions of the 1940 Act and the rules thereunder. Except as otherwise
provided in this Agreement or in any other agreement between the Trust and
Countrywide and except for the accuracy of information furnished to it by
Countrywide, the Trust assumes full responsibility for complying with all
applicable requirements of the 1940 Act, the Securities Act of 1933, as amended,
and any other laws, rules and regulations of governmental authorities having
jurisdiction.
10. REFERENCES TO COUNTRYWIDE.
--------------------------
The Trust shall not circulate any printed matter which contains any
reference to Countrywide without the prior written approval of Countrywide
(which approval shall not be withheld unreasonably), excepting solely such
printed matter as merely identifies Countrywide as Administrative Services
Agent, Transfer, Shareholder Servicing and Dividend Disbursing Agent and
Accounting Services Agent. The Trust will submit printed matter requiring
approval to Countrywide in draft form, allowing reasonable time for review by
Countrywide and its counsel prior to any deadline for printing.
11. EQUIPMENT FAILURES.
-------------------
Countrywide shall take all steps necessary to minimize or avoid
service interruptions, and has entered into one or more agreements making
provision for emergency use of electronic data processing equipment. Countrywide
shall have no liability with respect to equipment failures beyond its control.
Countrywide represents and warrants that it has taken reasonable steps
to make its transaction processing and recordkeeping and other systems and
equipment compatible with the change in the year 1999 to 2000 without any
related errors in reports or material disruption to services provided hereunder
and Countrywide expects full compatibility before December 31, 1999.
12. INDEMNIFICATION OF COUNTRYWIDE.
-------------------------------
A. In performing its services hereunder, Countrywide may rely on
information reasonably believed by it to be accurate and reliable. Except as may
otherwise be required by the 1940 Act and the rules thereunder, neither
Countrywide nor its shareholders, officers, directors, employees, agents,
control persons or affiliates of any thereof shall be subject to any liability
for, or any damages, expenses or losses incurred by the Trust in connection
with, any error of judgment, mistake of law, any act or omission connected with
or arising out of any services rendered under or payments made pursuant to this
Agreement or any other matter to which this Agreement relates, except by reason
of willful misfeasance, bad faith or negligence on the part of any such persons
in the performance of the duties of Countrywide under this Agreement or by
reason of reckless disregard by any of such persons of the obligations and
duties of Countrywide under this Agreement.
<PAGE>
B. Any person, even though also a director, officer, employee,
shareholder, or agent of Countrywide, or any of its affiliates, who may be or
become an officer, trustee, or employee of the Trust, shall be deemed, when
rendering services to the Trust or acting on any business of the Trust, to be
rendering such services to or acting solely as an officer, trustee, or employee
of the Trust and not as a director, officer, employee, shareholder or agent of
or one under the control or direction of Countrywide or any of its affiliates,
even though paid by one of those entities.
C. Notwithstanding any other provision of this Agreement, the Trust
shall indemnify and hold harmless Countrywide, its directors, officers,
employees, shareholders, agents, control persons and affiliates from and against
any and all claims, demands, expenses and liabilities (whether with or without
basis in fact or law) of any and every nature which Countrywide may sustain or
incur or which may be asserted against Countrywide by any person by reason of,
or as a result of: (i) any action taken or omitted to be taken by Countrywide in
good faith in reliance upon any certificate, instrument, order or share
certificate reasonably believed by it to be genuine and to be signed,
countersigned or executed by any duly authorized person, upon the oral
instructions or written instructions of an authorized person of the Trust or
upon the opinion of legal counsel for the Trust or its own counsel; or (ii) any
action taken or omitted to be taken by Countrywide in connection with its
appointment in good faith in reliance upon any law, act, regulation or
interpretation of the same even though the same may thereafter have been
altered, changed, amended or repealed. However, indemnification under this
subparagraph shall not apply to actions or omissions of Countrywide or its
directors, officers, employees, shareholders or agents in cases of its or their
own negligence, willful misconduct, bad faith, or reckless disregard of its or
their own duties hereunder.
D. Notwithstanding any other provision of this Agreement, Countrywide
shall indemnify and hold harmless the Trust, its trustees, officers, employees,
shareholders, agents, control persons and affiliates from and against any and
all claims, demands, expenses and liabilities (whether with or without basis in
fact or in law) of any and every nature which any of them may sustain or incur
or which may be asserted against any of them by any person by reason of, or as a
result of, the willful misfeasance, bad faith or negligence on the part of
Countrywide, its employees or agents in the performance of the duties of
Countrywide under this Agreement or by reason of reckless disregard by any of
such persons of the obligations and duties of Countrywide under this Agreement.
<PAGE>
E. Upon the assertion of a claim for which a party may be required to
provide indemnification hereunder, the person seeking indemnification shall
promptly notify such party of such assertion and shall keep such party advised
with respect to all developments concerning such claim. The party who may be
required to indemnify shall have the option to participate with the person
seeking indemnification in the defense of such claim or to defend against such
claim with counsel reasonably acceptable to the indemnified person in such
party's own name or in the name of such person. The person seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which a party may be required to indemnify it except with the such
party's prior written consent. An indemnifying party shall in no event be liable
to bear the expenses of more than one counsel for all indemnified persons in
connection with any matter for which it is providing indemnification hereunder.
13. TERMINATION.
------------
A. The provisions of this Agreement shall be effective on the date
first above written, shall continue in effect for two years from that date and
shall continue in force from year to year thereafter, but only so long as such
continuance is approved (1) by Countrywide, and (2) by the Trust's Board of
Trustees.
B. Either party may terminate this Agreement for any reason, without
penalty, on any date by giving the other party at least sixty (60) days' prior
written notice of such termination specifying the date fixed therefor. Upon
termination of this Agreement, StockJungle.com Investment Advisors, Inc. shall
pay to Countrywide such compensation as may be due as of the date of such
termination, and shall likewise reimburse Countrywide for any out-of-pocket
expenses and disbursements reasonably incurred by Countrywide to such date and
payable to Countrywide hereunder.
C. In the event that in connection with the termination of this
Agreement a successor to any of Countrywide's duties or responsibilities under
this Agreement is designated by the Trust by written notice to Countrywide,
Countrywide shall, promptly upon such termination and at the expense of
StockJungle.com Investment Advisors, Inc., transfer to such successor all
records maintained by Countrywide under this Agreement and shall cooperate in
the transfer of such duties and responsibilities, including provision for
assistance from Countrywide's cognizant personnel in the establishment of books,
records and other data by such successor.
14. SERVICES FOR OTHERS.
--------------------
Nothing in this Agreement shall prevent Countrywide or any affiliated
person (as defined in the 1940 Act) of Countrywide from providing services for
any other person, firm or corporation (including other investment companies);
provided, however, that Countrywide expressly represents that it will undertake
no activities which, in its judgment, will adversely affect the performance of
its obligations to the Trust under this Agreement.
<PAGE>
15. LIMITATION OF LIABILITY.
------------------------
It is expressly agreed that the obligations of the Trust hereunder
shall not be binding personally upon any of the Trustees, shareholders,
nominees, officers, agents or employees of the trust, but bind only the trust
property of the Trust. It is further expressly agreed that the debts,
liabilities, obligations and expenses of any series of the Trust hereunder shall
be enforceable against the assets and property of such series only, and not
against the assets and property of any other series of the Trust. Neither the
authorization of this Agreement by the Trustees of the Trust, nor its execution
and delivery by an officer of the Trust, shall be deemed to have been made by
any of them individually or to impose any liability on any of them personally,
but shall bind only the trust property of the Trust.
16. SEVERABILITY.
-------------
In the event any provision of this Agreement is determined to be void
or unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
17. QUESTIONS OF INTERPRETATION.
----------------------------
This Agreement shall be governed by the laws of the State of Ohio. Any
question of interpretation of any term or provision of this Agreement having a
counterpart in or otherwise derived from a term or provision of the 1940 Act
shall be resolved by reference to such term or provision of the 1940 Act and to
interpretations thereof, if any, by the United States Courts or in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the Securities and Exchange Commission issued pursuant to the 1940 Act. In
addition, where the effect of a requirement of the 1940 Act, reflected in any
provision of this Agreement, is revised by rule, regulation or order of the
Securities and Exchange Commission, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
18. NOTICES.
--------
All notices, requests, consents and other communications required or
permitted under this Agreement shall be in writing (including telex and
telegraphic communication) and shall be (as elected by the person giving such
notice) hand delivered by messenger or courier service, telecommunicated, or
mailed (airmail if international) by registered or certified mail (postage
prepaid), return receipt requested, addressed to:
To the Trust: StockJungle.com Trust
3805 S. Canfield Avenue, Suite B
Culver City, CA 90232
Attention: Michael J. Witz
<PAGE>
To Countrywide: Countrywide Fund Services, Inc.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Attention: Brian J. Manley
or to such other address as any party may designate by notice complying with the
terms of this Section 18. Each such notice shall be deemed delivered (a) on the
date delivered if by personal delivery; (b) on the date telecommunicated if by
telegraph; (c) on the date of transmission with confirmed answer back if by
telex, telefax or other telegraphic method; and (d) on the date upon which the
return receipt is signed or delivery is refused or the notice is designated by
the postal authorities as not deliverable, as the case may be, if mailed.
19. AMENDMENT.
----------
This Agreement may not be amended or modified except by a written
agreement executed by both parties; provided, however, that no provision of
Sections 3, 8 and 13 hereof which would increase the expenses to be paid by
StockJungle.com Investment Advisors, Inc. shall be amended without its prior
written consent.
20. BINDING EFFECT.
---------------
Each of the undersigned expressly warrants and represents that to the
other that it has full power and authority to enter into and perform this
Agreement, that its execution and delivery of this Agreement has been duly
authorized by all necessary corporate or trust action, that the person signing
this Agreement on its behalf is duly authorized and has full power to do so, and
that this Agreement is its valid and binding obligation, duly enforceable
against in accordance with the terms hereof.
21. COUNTERPARTS.
-------------
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
22. FORCE MAJEURE.
--------------
If Countrywide shall be delayed in its performance of services or
prevented entirely or in part from performing services due to causes or events
beyond its control, including and without limitation, acts of God, interruption
of power or other utility, transportation or communication services, acts of
civil or military authority, sabotages, national emergencies, explosion, flood,
accident, earthquake or other catastrophe, fire, strike or other labor problems,
legal action, present or future law, governmental order, rule or regulation, or
shortages of suitable parts, materials, labor or transportation, such delay or
non-performance shall be excused and a reasonable time for performance in
connection with this Agreement shall be extended to include the period of such
delay or non-performance.
23. MISCELLANEOUS.
--------------
Countrywide agrees on behalf of itself and its agents and employees to
treat confidentially all records and other information relating to the Trust and
its various series and all prior, present or potential shareholders thereof,
except after prior notification to, and approval of release of information in
writing by, the Trust, which approval shall not be unreasonably withheld where
Countrywide may be exposed to civil or criminal contempt proceedings for failure
to comply, when requested to divulge such information by duly constituted
authorities, or when so requested by the Trust.
<PAGE>
The captions in this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
STOCKJUNGLE.COM TRUST
By:________________________
Its: President
COUNTRYWIDE FUND SERVICES, INC.
By:________________________
Its: President
The undersigned hereby agrees to the provisions of Section 3, 8 and 13
of the foregoing Accounting Services Agreement.
STOCKJUNGLE.COM TRUST
INVESTMENT ADVISORS, INC.
By:________________________
Its: President
<PAGE>
Schedule A
- ----------
COMPENSATION
------------
StockJungle.com Investment Advisors, Inc. will pay Countrywide a monthly
fee, according to the average monthly net assets of each series of the Trust
during such month, as follows:
Monthly Fee Average Net Assets of Series During Month
----------- -----------------------------------------
$2,500 $0 - $100,000,000
$3,500 $100,000,000 - $200,000,000
$4,500 $200,000,000 - $300,000,000
$5,500 + .001% of Over - $300,000,000
average net assets
in excess of $300,000,000
LICENSE AGREEMENT
-----------------
LICENSE AGREEMENT, dated as of _______________ (the "Commencement Date") by
and between STANDARD & POOR'S, a division of The McGraw-Hill Companies, Inc.
("S&P"), a New York corporation, having an office at 25 Broadway, New York, NY
10004, and _______________ ("Licensee"), a having an office at _______________.
WHEREAS, S&P compiles, calculates, maintains and owns rights in and to the
S&P 500 Composite Stock Price Index and to the proprietary data therein
contained (such rights being hereinafter individually and collectively referred
to as the "S&P 500 Index"); and
WHEREAS, S&P uses in commerce and has trade name and trademark rights to
the designations "Standard & Poor's(R)", "S&P(R)", "S&P 500(R)", "Standard &
Poor's 500" and "500", in connection with the S&P 500 Index (such rights being
hereinafter individually and collectively referred to as the "S&P Marks"); and
WHEREAS, Licensee wishes to use the S&P 500 Index as a component of the
product or products described in Exhibit A attached hereto and made a part
hereof (individually and collectively referred to as the "Product"); and
WHEREAS, Licensee wishes to use the S&P Marks in connection with the
marketing and/or promotion of the Product and in connection with making
disclosure about the Product under applicable law, rules and regulations in
order to indicate that S&P is the source of the S&P 500 Index; and
<PAGE>
WHEREAS, Licensee wishes to obtain S&P's authorization to use the S&P 500
Index and the S&P Marks in connection with the Product pursuant to the terms and
conditions hereinafter set forth.
NOW, THEREFORE, the parties hereto agree as follows:
1. Grant of License.
-----------------
(a) Subject to the terms and conditions of this Agreement, S&P hereby
grants to Licensee a non-transferable, non-exclusive license (i) to use the S&P
500 Index as a component of the Product to be marketed and/or promoted by
Licensee and (ii) to use and refer to the S&P Marks in connection with the
distribution, marketing and promotion of the Product (including in the name of
the Product) and in connection with making such disclosure about the Product as
Licensee deems necessary or desirable under any applicable law, rules,
regulations or provisions of this Agreement, but, in each case, only to the
extent necessary to indicate the source of the S&P 500 Index. It is expressly
agreed and understood by Licensee that no rights to use the S&P 500 Index and
the S&P Marks are granted hereunder other than those specifically described and
expressly granted herein.
(b) S&P agrees that no person or entity (other than the Licensee)
shall need to obtain a license from S&P with respect to the Product.
- 2 -
<PAGE>
2. Term.
-----
The term of this Agreement shall commence on the Commencement Date and
shall continue in effect thereafter until it is terminated in accordance with
its terms.
3. License Fees.
-------------
(a) Licensee shall pay to S&P the license fees ("License Fees")
specified and provide the data called for in Exhibit B, attached hereto and made
a part hereof.
(b) During the term of this Agreement and for a period of one (1) year
after its termination, S&P shall have the right, during normal business hours
and upon reasonable notice to Licensee, to audit on a confidential basis the
relevant books and records of Licensee to determine that License Fees have been
accurately determined. The costs of such audit shall be borne by S&P unless it
determines that it has been underpaid by five percent (5%) or more; in such
case, costs of the audit shall be paid by Licensee.
4. Termination.
------------
(a) At any time during the term of this Agreement, either party may
give the other party sixty (60) days prior written notice of termination if the
terminating party believes in good faith that material damage or harm is
occurring to the reputation or goodwill of that party by reason of its continued
performance hereunder, and such notice shall be effective on the date specified
therein of such termination, unless the other party shall correct the condition
causing such damage or harm within the notice period.
- 3 -
<PAGE>
(b) In the case of breach of any of the material terms or conditions
of this Agreement by either party, the other party may terminate this Agreement
by giving sixty (60) days prior written notice of its intent to terminate, and
such notice shall be effective on the date specified therein for such
termination unless the breaching party shall correct such breach within the
notice period.
(c) S&P shall have the right, in its sole discretion, to cease
compilation and publication of the S&P 500 Index and, in such event, to
terminate this Agreement if S&P does not offer a replacement or substitute
index. In the event that S&P intends to discontinue the S&P 500 Index, S&P shall
give Licensee at least one (1) year's written notice prior to such
discontinuance, which notice shall specify whether a replacement or substitute
index will be made available.
Licensee shall have the option hereunder within sixty (60) days after
receiving such written notice from S&P to notify S&P in writing of its intent to
use the replacement or substitute index, if any, under the terms of this
Agreement. In the event that Licensee does not exercise such option or no
substitute or replacement index is made available, this Agreement shall be
terminated as of the date specified in the S&P notice and the License Fees to
the date of such termination shall be computed as provided in Subsection 4(f).
- 4 -
<PAGE>
(d) Licensee may terminate this Agreement upon ninety (90) days prior
written notice to S&P if (i) Licensee is informed of the final adoption of any
legislation or regulation or the issuance of any interpretation that in
Licensee's reasonable judgment materially impairs Licensee's ability to market
and/or promote the Product; (ii) any material litigation or regulatory
proceeding regarding the Product is threatened or commenced; or (iii) Licensee
elects to terminate the public offering or other distribution of the Product, as
may be applicable. In such event the License Fees to the date of such
termination shall be computed as provided in Subsection 4(f).
(e) S&P may terminate this Agreement upon ninety (90) days (or upon
such lesser period of time if required pursuant to a court order) prior written
notice to Licensee if (i) S&P is informed of the final adoption of any
legislation or regulation or the issuance of any interpretation that in S&P's
reasonable judgment materially impairs S&P's ability to license and provide the
S&P 500 Index and S&P Marks under this Agreement in connection with such
Product; or (ii) any litigation or proceeding is threatened or commenced and S&P
reasonably believes that such litigation or proceeding would have a material and
adverse effect upon the S&P Marks and/or the S&P 500 Index or upon the ability
of S&P to perform under this Agreement. In such event the License Fees to the
date of such termination shall be computed as provided in Subsection 4(f).
(f) In the event of termination of this Agreement as provided in
Subsections 4(a), (b), (c), (d) or (e), the License Fees to the date of such
termination shall be computed by prorating the amount of the applicable License
Fees shown in Exhibit B on the basis of the number of elapsed days in the
current term.
- 5 -
<PAGE>
(g) Upon termination of this Agreement, Licensee shall cease to use
the S&P 500 Index and the S&P Marks in connection with the Product; provided
that Licensee may continue to utilize any previously printed materials which
contain the S&P Marks for a period of ninety (90) days following such
termination.
5. S&P's Obligations.
------------------
(a) It is the policy of S&P to prohibit its employees who are directly
responsible for changes in the components of the S&P 500 Index from purchasing
or beneficially owning any interest in the Product and S&P believes that its
employees comply with such policy. Licensee shall have no responsibility for
ensuring that such S&P employees comply with such S&P policy and shall have no
duty to inquire whether any investors or sellers of the Product are such S&P
employees. S&P shall have no liability to the Licensee with respect to its
employees' adherence or failure to adhere to such policy.
(b) S&P shall not and is in no way obliged to engage in any marketing
or promotional activities in connection with the Product or in making any
representation or statement to investors or prospective investors in connection
with the promotion by Licensee of the Product.
- 6 -
<PAGE>
(c) S&P agrees to provide reasonable support for Licensee's
development and educational efforts with respect to the Product as follows: (i)
S&P shall provide Licensee, upon request but subject to any agreements of
confidentiality with respect thereto, copies of the results of any marketing
research conducted by or on behalf of S&P with respect to the S&P 500 Index; and
(ii) S&P shall respond in a timely fashion to any reasonable requests for
information by Licensee regarding the S&P 500 Index.
(d) S&P or its agent shall calculate and disseminate the S&P 500 Index
at least once each fifteen (15) seconds in accordance with its current
procedures, which procedures may be modified by S&P.
(e) S&P shall promptly correct or instruct its agent to correct any
mathematical errors made in S&P's computations of the S&P 500 Index which are
brought to S&P's attention by Licensee, provided that nothing in this Section 5
shall give Licensee the right to exercise any judgment or require any changes
with respect to S&P's method of composing, calculating or determining the S&P
500 Index; and, provided further, that nothing herein shall be deemed to modify
the provisions of Section 9 of this Agreement.
6. Informational Materials Review.
-------------------------------
Licensee shall use its best efforts to protect the goodwill and
reputation of S&P and of the S&P Marks in connection with its use of the S&P
Marks under this Agreement. Licensee shall submit to S&P for its review and
approval all informational materials pertaining to and to be used in connection
with the Product, including, where applicable, all prospectuses, plans,
registration statements, application forms, contracts, videos,
- 7 -
<PAGE>
advertisements, brochures and promotional and any other similar informational
materials (including documents required to be filed with governmental or
regulatory agencies) that in any way use or refer to S&P, the S&P 500 Index, or
the S&P Marks (the "Informational Materials"). S&P's approval shall be required
with respect to the use of and description of S&P, the S&P Marks and the S&P 500
Index and shall not be unreasonably withheld or delayed by S&P. Specifically,
S&P shall notify Licensee of its approval or disapproval of any Informational
Materials within forty-eight (48) hours (excluding Saturday, Sunday and New York
Stock Exchange Holidays) following receipt thereof from Licensee. Any
disapproval shall indicate S&P's reasons therefor. Any failure by S&P to respond
within such forty-eight (48) hour period shall be deemed to constitute a waiver
of S&P's right to review such Informational Materials. Informational Materials
shall be addressed to S&P, c/o Sandra Weinberger, Specialist - Index
Licensing/Marketing, Equity Index Services, at the address specified in
Subsection 12(d). Informational Materials may be submitted via facsimile (to
212-208-8911 or 212-412-0429) if they are less than 20 pages and legible after
transmission. Once Informational Materials have been approved by S&P, subsequent
Informational Materials which do not alter the use or description of S&P, the
S&P Marks or the S&P 500 Index need not be submitted for review and approval by
S&P.
7. Protection of Value of License.
-------------------------------
(a) During the term of this Agreement, S&P shall use its best efforts
to maintain in full force and effect federal registrations for "Standard &
Poor's(R)", "S&P(R)", and "S&P 500(R)". S&P shall at S&P's own expense and sole
discretion exercise S&P's common law and statutory rights against infringement
of the S&P Marks, copyrights and other proprietary rights.
- 8 -
<PAGE>
(b) Licensee shall cooperate with S&P in the maintenance of such
rights and registrations and shall take such actions and execute such
instruments as S&P may from time to time reasonably request, and shall use the
following notice when referring to the S&P 500 Index or the S&P Marks in any
Informational Material:
"Standard & Poor's(R)", "S&P(R)", "S&P 500(R)", "Standard & Poor's 500",
and "500" are trademarks of The McGraw-Hill Companies, Inc. and have been
licensed for use by . The Product is not sponsored, endorsed, sold or
promoted by _______________ Standard & Poor's and Standard & Poor's makes
no representation regarding the advisability of investing in the Product.
or such similar language as may be approved in advance by S&P, it being
understood that such notice need only refer to the specific S&P Marks referred
to in the Informational Material.
8. Proprietary Rights.
-------------------
(a) Licensee acknowledges that the S&P 500 Index is selected,
coordinated, arranged and prepared by S&P through the application of methods and
standards of judgment used and developed through the expenditure of considerable
work, time and money by S&P. Licensee also acknowledges that the S&P 500 Index
and the S&P Marks are the exclusive property of S&P, that S&P has and retains
all proprietary rights therein (including, but not limited to trademarks and
copyrights) and that the S&P 500 Index and its compilation and composition and
changes therein are in the control and discretion of S&P.
- 9 -
<PAGE>
(b) S&P reserves all rights with respect to the S&P 500 Index and the
S&P Marks except those expressly licensed to Licensee hereunder.
(c) Each party shall treat as confidential and shall not disclose or
transmit to any third party any documentation or other written materials that
are marked as "Confidential and Proprietary" by the providing party
("Confidential Information"). Confidential Information shall not include (i) any
information that is available to the public or to the receiving party hereunder
from sources other than the providing party (provided that such source is not
subject to a confidentiality agreement with regard to such information) or (ii)
any information that is independently developed by the receiving party without
use of or reference to information from the providing party. Notwithstanding the
foregoing, either party may reveal Confidential Information to any regulatory
agency or court of competent jurisdiction if such information to be disclosed is
(a) approved in writing by the other party for disclosure or (b) required by
law, regulatory agency or court order to be disclosed by a party, provided, if
permitted by law, that prior written notice of such required disclosure is given
to the other party and provided further that the providing party shall cooperate
with the other party to limit the extent of such disclosure. The provisions of
this Subsection 8(c) shall survive any termination of this Agreement for a
period of five (5) years from disclosure by either party to the other of the
last item of such Confidential Information.
- 10 -
<PAGE>
9. Warranties; Disclaimers.
------------------------
(a) S&P represents and warrants that S&P has the right to grant the
rights granted to Licensee herein and that the license granted herein shall not
infringe any trademark, copyright or other proprietary right of any person not a
party to this Agreement.
(b) Licensee agrees expressly to be bound itself by and furthermore to
include all of the following disclaimers and limitations in each prospectus or
each Statement of Additional Information ("SAI") relating to the Product,
provided the SAI is incorporated by reference into the prospectus and the
prospectus contains disclosure regarding the S&P 500 Index that conforms to the
notice in Subsection 7(b), including a cross reference to the SAI disclosure.
Licensee shall furnish a copy of the prospectus and SAI thereof to S&P:
The Product is not sponsored, endorsed, sold or promoted by Standard &
Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"). S&P makes no
representation or warranty, express or implied, to the owners of the Product or
any member of the public regarding the advisability of investing in securities
generally or in the Product particularly or the ability of the S&P 500 Index to
track general stock market performance. S&P's only relationship to the Licensee
is the licensing of certain trademarks and trade names of S&P and of the S&P 500
Index which is determined, composed and calculated by S&P without regard to
- 11 -
<PAGE>
the Licensee or the Product. S&P has no obligation to take the needs of the
Licensee or the owners of the Product into consideration in determining,
composing or calculating the S&P 500 Index. S&P is not responsible for and has
not participated in the determination of the prices and amount of the Product or
the timing of the issuance or sale of the Product or in the determination or
calculation of the equation by which the Product is to be converted into cash.
S&P has no obligation or liability in connection with the administration,
marketing or trading of the Product.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P
500 INDEX OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE NO LIABILITY FOR ANY
ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR
IMPLIED, AS TO RESULTS TO BE OBTAINED BY LICENSEE, OWNERS OF THE PRODUCT, OR ANY
OTHER PERSON OR ENTITY FROM THE USE OF THE S&P 500 INDEX OR ANY DATA INCLUDED
THEREIN. S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH
RESPECT TO THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY
OF THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY SPECIAL,
PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF
NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
Any changes in the foregoing disclaimers and limitations must be
approved in advance in writing by an authorized officer of S&P.
- 12 -
<PAGE>
(c) Each party represents and warrants to the other that it has the
authority to enter into this Agreement according to its terms and that its
performance does not violate any laws, regulations or agreements applicable to
it.
(d) Licensee represents and warrants to S&P that the Product shall at
all times comply with the description in Exhibit A.
(e) Licensee represents and warrants to S&P that the Product shall not
violate any applicable law, including but not limited to banking, commodities
and securities laws.
(f) Neither party shall have any liability for lost profits or
indirect, punitive, special, or consequential damages arising out of this
Agreement, even if notified of the possibility of such damages. Without
diminishing the disclaimers and limitations set forth in Subsection 9(b), in no
event shall the cumulative liability of S&P to Licensee exceed the average
annual License Fees actually paid to S&P hereunder.
(g) Use of any marks by Licensee in connection with its Product
(including in the name of such Product) which are not the S&P Marks is at
Licensee's sole risk.
(h) The provisions of this Section 9 shall survive any termination of
this Agreement.
- 13 -
<PAGE>
10. Indemnification.
----------------
(a) Licensee shall indemnify and hold harmless S&P, its affiliates and
their officers, directors, employees and agents against any and all judgments,
damages, costs or losses of any kind (including reasonable attorneys' and
experts' fees) as a result of any claim, action, or proceeding that arises out
of or relates to (a) this Agreement, except insofar as it relates to a breach by
S&P of its representations or warranties hereunder, or (b) the Product;
provided, however, that S&P notifies Licensee promptly of any such claim, action
or proceeding. Licensee shall periodically reimburse S&P for its reasonable
expenses incurred under this Subsection 10(a). S&P shall have the right, at its
own expense, to participate in the defense of any claim, action or proceeding
against which it is indemnified hereunder; provided, however, it shall have no
right to control the defense, consent to judgment, or agree to settle any such
claim, action or proceeding without the written consent of Licensee without
waiving the indemnity hereunder. Licensee, in the defense of any such claim,
action or proceeding except with the written consent of S&P, shall not consent
to entry of any judgment or enter into any settlement which either (a) does not
include, as an unconditional term, the grant by the claimant to S&P of a release
of all liabilities in respect of such claims or (b) otherwise adversely affects
the rights of S&P. This provision shall survive the termination or expiration of
this Agreement.
(b) S&P shall indemnify and hold harmless Licensee, its affiliates and
their officers, directors, employees and agents against any and all judgments,
damages, costs or losses of any kind (including reasonable attorneys' and
experts' fees) as a result of any claim, action, or proceeding that arises out
of or
- 14 -
<PAGE>
relates to any breach by S&P of its representations or warranties under this
Agreement; provided, however, that (a) Licensee notifies S&P promptly of any
such claim, action or proceeding; (b) Licensee grants S&P control of its defense
and/or settlement; and (c) Licensee cooperates with S&P in the defense thereof.
S&P shall periodically reimburse Licensee for its reasonable expenses incurred
under this Subsection 10(b). Licensee shall have the right, at its own expense,
to participate in the defense of any claim, action or proceeding against which
it is indemnified hereunder; provided, however, it shall have no right to
control the defense, consent to judgment, or agree to settle any such claim,
action or proceeding without the written consent of S&P without waiving the
indemnity hereunder. S&P, in the defense of any such claim, action or
proceeding, except with the written consent of Licensee, shall not consent to
entry of any judgment or enter into any settlement which either (a) does not
include, as an unconditional term, the grant by the claimant to Licensee of a
release of all liabilities in respect of such claims or (b) otherwise adversely
affects the rights of Licensee. This provision shall survive the termination or
expiration of this Agreement.
11. Suspension of Performance.
--------------------------
Neither S&P nor Licensee shall bear responsibility or liability for
any losses arising out of any delay in or interruptions of their respective
performance of their obligations under this Agreement due to any act of God, act
of governmental authority, act of the public enemy or due to war, the outbreak
or escalation of hostilities, riot, fire, flood, civil commotion, insurrection,
labor difficulty (including, without limitation, any strike, or other work
stoppage or slow down), severe or adverse weather conditions, communications
line failure, or other similar cause beyond the reasonable control of the party
so affected.
- 15 -
<PAGE>
12. Other Matters.
--------------
(a) This Agreement is solely and exclusively between the parties
hereto and shall not be assigned or transferred by either party, without prior
written consent of the other party, and any attempt to so assign or transfer
this Agreement without such written consent shall be null and void.
(b) This Agreement constitutes the entire agreement of the parties
hereto with respect to its subject matter and may be amended or modified only by
a writing signed by duly authorized officers of both parties. This Agreement
supersedes all previous agreements between the parties with respect to the
subject matter of this Agreement. There are no oral or written collateral
representations, agreements, or understandings except as provided herein.
(c) No breach, default, or threatened breach of this Agreement by
either party shall relieve the other party of its obligations or liabilities
under this Agreement with respect to the protection of the property or
proprietary nature of any property which is the subject of this Agreement.
(d) Except as set forth in Section 6 hereof with respect to
Informational Materials, all notices and other communications under this
Agreement shall be (i) in writing, (ii) delivered by hand, by registered or
certified mail,
- 16 -
<PAGE>
return receipt requested, or by facsimile transmission to the address or
facsimile number set forth below or such address or facsimile number as either
party shall specify by a written notice to the other and (iii) deemed given upon
receipt.
Notice to S&P: Standard & Poor's
25 Broadway
New York, NY 10004
Attn.: Robert Shakotko
Senior Vice President
Index Services
Fax #: (212) 208-8911
Notice to Licensee:
Attn:
Fax #:
(e) This Agreement shall be interpreted, construed and enforced in
accordance with the laws of the State of New York.
(f) Each party agrees that in connection with any legal action or
proceeding arising with respect to this Agreement, they will bring such action
or proceeding only in the United States District Court for the Southern District
of New York or in the Supreme Court of the State of New York in and for the
First Judicial Department and each party agrees to submit to the jurisdiction of
such court and venue in such court and to waive any claim that such court is an
inconvenient forum.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first set forth above.
- 17 -
<PAGE>
_______________________________ STANDARD & POOR'S
a division of
The McGraw-Hill Companies, Inc.
BY: ___________________________ BY: ___________________________
_______________________________ _______________________________
(Print Name) (Print Name)
_______________________________ _______________________________
(Print Title) (Print Title)
- 18 -
<PAGE>
EXHIBIT A
---------
PRODUCT DESCRIPTION
-------------------
Product: StockJungle.com No Fee S&P 500 ("Product") is a public mutual fund
whose investment objective is to track the price and yield performance of
publicly-traded common stocks of companies as represented by the S&P 500 Index.
- 19 -
<PAGE>
EXHIBIT B
---------
LICENSE FEES
------------
Licensee shall pay S&P License Fees computed as follows:
The annual License Fees shall be the greater of $10,000 (the "Minimum Annual
Fee") or one basis point (.0001) of the average daily net assets of the Product
computed quarterly. The Minimum Annual Fee shall be payable on the Commencement
Date and each one-year anniversary thereof. Amounts in excess of the Minimum
Annual Fee shall be paid to S&P within thirty (30) days after the close of each
calendar quarter in which they are incurred; each such payment shall be
accompanied by a statement setting forth the basis for its calculation.
The parties agree that the terms upon which License Fees are calculated pursuant
to this Exhibit B shall be considered "Confidential Information" for purposes of
Subsection 8(c) of this Agreement.
- 20 -
Spitzer & Feldman P.C.
405 Park Avenue
New York, NY 10022
October 22, 1999
StockJungle.com Trust
3805 South Canfield Avenue, Suite B
Culver City, California 90232
Gentlemen:
We have acted as counsel to StockJungle.com Trust (the "Trust"), a
Massachusetts business trust, in connection with the preparation and filing of
Registration Statement No. 333-81359; ICA No. 811-09403 on Form N-1A and
Pre-Effective Amendments No. 1 and No. 2 thereto (the "Registration Statement")
covering shares of beneficial interest of the Trust, par value $.001 per share.
We have examined copies of the Amended and Restated Agreement and
Declaration of Trust, the By-Laws of the Trust, the Registration Statement, and
such other trust records, proceedings and documents, including the draft minutes
of the Board of Trustees of the Trust, as we have deemed necessary for the
purpose of this opinion. In our examination of such material, we have assumed
the genuineness of all signatures and the conformity to original documents of
all copies submitted to us. As to various questions of fact material to such
opinion, we have relied upon statements and certificates of officers and
representatives of the Trust and others.
The opinions expressed herein are limited to matters governed by the laws
of the State of New York and the Investment Company Act of 1940, as amended (the
"1940 Act") and the rules and regulations promulgated thereunder. Matters
governed by the laws of the State of Massachusetts have been addressed in a
separate opinion letter issued by the firm of Goodwin, Procter & Hoar LLP,
special Massachusetts counsel, a copy of which is attached hereto.
Based upon and subject to the foregoing, we are of the opinion that the
shares of beneficial interest, par value $.001 per share, of the Trust, to be
issued in accordance with the terms of the offering, as set forth in the
Prospectus and Statement of Additional Information included as part of the
Registration Statement and when issued and paid for, will constitute validly
authorized and legally issued shares of beneficial interest, fully paid and
non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us in the Trust's Prospectus and
the Statement of Information, included as part of the Registration Statement.
Very truly yours,
Spitzer & Feldman P.C.
October 22, 1999
Spitzer & Feldman P.C.
405 Park Avenue
New York, New York 10022
Ladies and Gentlemen:
As special Massachusetts counsel to StockJungle.com Trust (the "Trust"), we
have been asked to render our opinion in connection with the issuance by the
Trust of an unlimited number of shares, $.001 par value per share (the
"Shares"), of the Trust representing interests in StockJungle.com Market Leaders
Growth Fund, StockJungle.com No Fee S&P 500 Index Fund, StockJungle.com Pure
Play Internet Fund and StockJungle.com Community Intelligence Fund
(collectively, the "Funds"), portfolio series of the Trust, each of which has
been established and designated in Section 4.2 of the Trust's Second Amended and
Restated Agreement and Declaration of Trust dated October 20, 1999 (the "Master
Trust Agreement") and as more fully described in the prospectus and statement of
additional information contained in Pre-Effective Amendment No. 2 (the
"Amendment") to the Registration Statement on Form N-1A (Registration No.
333-81359) of the Trust.
We have examined the Master Trust Agreement, the By-Laws of the Trust,
certain resolutions adopted by the Board of Trustees of the Trust, the
prospectus and statement of additional information which form a part of the
Amendment and such other documents as we deemed necessary for purposes of this
opinion.
Based upon the foregoing, we are of the opinion that the Shares, when sold
in accordance with the terms of the prospectus and statement of additional
information relating to the Shares, as in effect at the time of the sale, will
be legally issued, fully-paid and non-assessable by the Trust.
We also hereby consent to the reference to this firm in the prospectus and
statement of additional information which form a part of the Amendment and to a
copy of this opinion being filed as an exhibit to the Amendment.
Very truly yours,
GOODWIN, PROCTER & HOAR LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the use of our report
dated October 20, 1999 and to all references to our Firm included in or made a
part of this Pre-Effective Amendment No. 2.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Cincinnati, Ohio,
October 20, 1999
SUBSCRIPTION LETTER
October 19,1999
Board of Trustees of
StockJungle.com Trust
3805 South Canfield Avenue, Suite B
Culver City, California 90232
Gentlemen:
StockJungle.com Investment Advisors, Inc. ( AAdvisors") hereby subscribes
for two thousand five hundred (2,500) shares of beneficial interest of each of
the StockJungle.com Market Leaders Growth Fund and the StockJungle.com Pure Play
Internet Fund and five thousand (5,000) shares of beneficial interest of the
StockJungle.com Community Intelligence Fund (each a "Fund" and collectively the
"Funds"), each Fund being a series of StockJungle.com Trust, a Massachusetts
business trust, at $10.00 per share, for an aggregate purchase price of
$100,000.00. Advisors' payment in full is confirmed.
Advisors hereby represents and agrees that Advisors is purchasing these
shares of beneficial interest for investment purposes, for its own account and
risk and not with a view to any sale, division or other distribution thereof
within the meaning of the Securities Act of 1933 as amended, nor with any
present intention of distributing or selling such shares.
Very truly yours,
STOCKJUNGLE.COM INVESTMENT ADVISORS, INC.
By: /s/ Michael J. Witz
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Michael J. Witz
Chairman & Chief Executive Officer
CONFIRMED AND ACCEPTED:
STOCKJUNGLE.COM TRUST
On behalf of each of its series:
StockJungle.com Market Leaders Growth Fund,
StockJungle.com Pure Play Internet Fund, and
StockJungle.com Community Intelligence Fund
By: /s/ Theresa Samocki
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Name: Theresa Samocki
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Title: Treasurer
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