REGISTRATION
No. 333 -81359
ICA No. 811-09403
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON September 15, 1999
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933 | |
Pre-Effective Amendment No. 1 |X|
Post-Effective Amendment No. | |
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 | |
Pre-Effective Amendment No. 1 |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
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(Address of Principal Executive Offices)(Zip Code)
(310) 841-4010
----------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
Michael Miola
American Data Services, Inc.
The Hauppauge Corporate Center
150 Motor Parkway
Hauppauge, New York 11788
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(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)
<PAGE>
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 is 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
REGISTRATION STATEMENT ON FORM N-1A
Cross Reference Sheet for Items Required by Form N-1A
ITEM NO. CAPTION IN PROSPECTUS
- -------- ---------------------
1 Front and Back Cover Pages
2 Investment Objectives and Policies
3 Transaction and Operating Expense Table
4 Investment Objectives and Policies
5 Dividends and Distributions; Performance Comparisons
6 Management
7 How to Purchase Shares; How to Redeem Shares; Shareholder Services;
Dividends and Distributions; Valuation of Shares; Tax Status and
General Information
8 Not Applicable
9 Not Applicable
CAPTION IN STATEMENT OF ADDITIONAL INFORMATION
----------------------------------------------
10 Cover Page and Table of Contents
11 Investment Objectives, Policies and Restrictions
12 Directors and Executive Officers
13 Ownership of Common Stock
14 Investment Advisory and Other Services
15 Portfolio Transactions and Allocation of Brokerage
16 Ownership of Common Stock
17 Net Asset Value and Public Offering Price; Redemption of Shares
18 Taxation
19 Investment Advisory and Other Services
20 Performance Comparisons
21 Financial Statements
<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 the common stocks of a select
number of U.S. corporations identified by STOCKJUNGLE.COM investment Advisors,
Inc. (the "Adviser") that have consistently demonstrated fundamental investment
value and hold strong competitive positions in various business sectors . In
addition, the Fund may invest a small but not insignificant portion (generally
between five (5%) and twenty (20%) percent) of its net assets in the common
stock of companies identified by the Adviser as new and emerging leaders in
smaller, but potentially important sectors.
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 the common stocks of Pure Play
Internet companies .
STOCKJUNGLE.COM COMMUNITY INTELLIGENCE FUND seeks to provide investors with
capital appreciation by investing in a diversified portfolio of common stocks of
U.S. companies with market capitalizations of no less than $100 million which
have been identified to StockJungle.com, Inc., the parent of the Adviser, by
visitors to the StockJungle.com website and are then researched by the adviser
using its proprietary quantitative analysis and, if acceptable, selected by the
Adviser for investment by the Fund.
Each of the StockJungle.com Funds are designed and created primarily for
investment by on-line investors. In order to keep costs to a minimum,
shareholders in the Funds are requested to consent to the acceptance of all
information about the Fund or Funds in which they invest through means of
electronic delivery.
As a web-based mutual fund company, STOCKJUNGLE.COM, INC. will provide investors
and public visitors the ability to access information and features exclusively
via the Adviser and the parent of the Adviser's website, located at
http://www.StockJungle.Com. With the goal of providing investors a 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.
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*"STOCKJUNGLE.COM(R)" IS A REGISTERED 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 STOCKJUNGLE.COM INVESTMENT ADVISORS, INC. FOR USE IN
CONNECTION WITH THE STOCKJUNGLE.COM NO FEE S&P 500 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.
2
<PAGE>
TABLE OF CONTENTS
PAGE
RISK RETURN SUMMARY..........................................................3
FEES AND EXPENSES OF EACH FUND...............................................6
STOCKJUNGLE.COM MARKET LEADERS GROWTH FUND...................................8
STOCKJUNGLE.COM NO FEE S&P 500 INDEX FUND ..................................9
STOCKJUNGLE.COM PURE PLAY INTERNET FUND.....................................10
STOCKJUNGLE.COM COMMUNITY INTELLIGENCE FUND ................................11
MAIN RISKS..................................................................12
MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE..............................16
VALUATION OF SHARES.........................................................18
HOW TO PURCHASE SHARES......................................................18
HOW TO REDEEM SHARES........................................................20
SHAREHOLDER SERVICES........................................................22
DIVIDENDS AND DISTRIBUTIONS.................................................23
TAX STATUS..................................................................24
PERFORMANCE INFORMATION.....................................................24
GENERAL INFORMATION.........................................................25
CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT................................25
COUNSEL AND INDEPENDENT AUDITORS............................................25
FOR MORE INFORMATION........................................................26
3
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RISK/RETURN SUMMARY
1. STOCKJUNGLE.COM MARKET LEADERS GROWTH FUND
------------------------------------------
INVESTMENT OBJECTIVE:
---------------------
- -- The Fund seeks to provide investors with long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGY:
------------------------------
- -- Long-term investment in the common stocks of a select number of U.S.
companies that have consistently demonstrated fundamental investment value
and hold strong competitive positions in various business sectors as
determined by the Adviser. The Fund may also invest a smaller portion
(generally between five (5%) and twenty (20%) percent) of its net assets
in the common stocks of companies identified by the Adviser as new and
emerging leaders in smaller, but potentially important sectors. The
adviser will determine the fundamental investment value of a security by
screening certain fundamental 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:
---------------------------
- -- MARKET RISK. THE LOSS OF MONEY IS A RISK OF INVESTING IN THIS FUND. 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.
- -- EMERGING LEADERS. Companies identified by the Adviser as emerging leaders
may include issuers with small or mid-sized capital structures (generally
a market cap of $5 billion or less). Consequently, the Fund may be subject
to the additional risks associated with investment in these companies.
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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 more volatile than
those of larger companies. Further, these securities tend to trade at a
lower volume than those of larger more established companies. The net
asset value of the Fund will be more susceptible to sudden and significant
losses if the value of these securities declines.
2. STOCKJUNGLE.COM NO FEE S&P 500 INDEX FUND
-----------------------------------------
INVESTMENT OBJECTIVE:
---------------------
- -- The Fund seeks to provide investors with a total return equivalent to that
of the S&P 500 Index.
PRINCIPAL INVESTMENT STRATEGY:
------------------------------
- -- 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.
- -- Provide investors with a total return equivalent to that of the S&P 500
Index .
- -- Prior to the Fund's commencement of investment operations, there will be a
sixty (60) day subscription period in order to accumulate sufficient funds
(approximately $5 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:
--------------------------
- -- 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.
5
<PAGE>
- -- 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 (unless extended by the board of trustees), the
fund will be unable to achieve its investment objective, all subscriptions
plus any interest earned will be returned to the subscribers, and the fund
will terminate.
3. STOCKJUNGLE.COM PURE PLAY INTERNET FUND
---------------------------------------
- -- The Fund seeks to provide investors with long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGY:
------------------------------
- -- Investment in the common stocks 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 the are U.S. companies that (i)
derive at least 50% of their revenue from or assets in the internet and/or
the world wide web ("WWW"); and (ii) have business models which are
substantially dependent on the internet and/or WWW.
PRINCIPAL INVESTMENT RISKS:
---------------------------
- -- MARKET VOLATILITY AND INDUSTRY RISK. THE LOSS OF MONEY IS A RISK OF
INVESTING IN THIS FUND. The value of this Fund's shares are 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 industry.
Furthermore, securities of companies in this industry tend to be more
volatile than securities- of companies in other industries. 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.
- -- INVESTMENT IN NEW AND UNSEASONED COMPANIES. The fund may invest, pursuant
to an initial public offering or otherwise, in the equity securities of
companies that 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. 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;
6
<PAGE>
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.
4. STOCKJUNGLE.COM COMMUNITY INTELLIGENCE FUND
-------------------------------------------
INVESTMENT OBJECTIVE:
---------------------
- -- The Fund seeks to provide investors with capital appreciation.
PRINCIPAL INVESTMENT STRATEGY:
------------------------------
- -- Investment in a diversified portfolio of the common stocks of those U.S.
companies having market capitalizations of no less than $100 million which
have been (i) recommended to the parent of the Adviser by visitors to the
StockJungle.com website ; (ii) researched by the Adviser using proprietary
quantitative analysis; and (iii) determined by the Adviser to be
consistent with the investment objective of the fund.
PRINCIPAL INVESTMENT RISKS:
---------------------------
- -- RELIANCE ON COMMUNITY INTELLIGENCE. LOSS OF MONEY IS A RISK OF INVESTING
IN THIS FUND. The effectiveness of this Fund's investment strategy is
directly contingent upon widespread participation by visitors to the
StockJungle.com website who submit detailed and reasoned analyses
identifying bona fide potential investments for the Fund. There are no
assurances that visitors to the website will participate or provide such
detailed and reasoned analyses or that the Adviser will be able to
successfully screen the information provided and select appropriate
securities for this Fund.
- -- 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.
- -- INVESTMENT IN NEW AND UNSEASONED COMPANIES. Subject to the Fund's
investment strategy regarding minimum market capitalization requirements
of portfolio securities, the Fund may invest, pursuant to an initial
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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. 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 your investment.
** 1 PERFORMANCE
NO BAR CHART OR PERFORMANCE TABLE IS PRESENTED FOR THE STOCKJUNGLE.COM FUNDS
BECAUSE THE FUNDS DO NOT HAVE ANNUAL RETURNS FOR A FULL CALENDAR YEAR.
FEES AND EXPENSES OF THE STOCKJUNGLE.COM FUNDS
The following table describes the fees and expenses that you may pay if you buy
and hold shares of each of the Funds:
8
<PAGE>
<TABLE>
<CAPTION>
STOCKJUNGLE.COM
---------------
MARKET NO FEE PURE PLAY COMMUNITY
LEADERS S&P INTERNET INTELLIGENCE
GROWTH 500 FUND FUND
FUND INDEX
FUND
- ---------------------------------------------------------------------------------------------
SHAREHOLDER FEES
(paid directly from your investments):
<S> <C> <C> <C> <C>
Maximum Sales Load Imposed on
Purchases (as a percentage of the None None None None
offering price)
ANNUAL FUND
OPERATING EXPENSES (expenses
that are deducted from Fund
assets):
Management Fees(1,2) 1.00% NONE 1.00% 1.00%
Distribution NONE NONE NONE NONE
(12B-1) Fees
Other Expenses .__% .__% .__% .__%
Total Estimated Fund Operating 1.00 % NONE 1.00% 1.00%
Expenses(1,2)
- ---------------------------------------------------------------------------------------------
<FN>
EXAMPLE:
- ----------------------
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 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, and, as a result, each Fund's Total Fund
Operating Expenses will not exceed 1% of the Fund's average
daily net assets.
</FN>
</TABLE>
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
* 1 moved from here; text not shown
Ticker Symbol: ________
INVESTMENT STRATEGY
The StockJungle.com Market Leaders Growth Fund invests substantially
all of its assets in a diversified portfolio of the common stocks of companies
which, in the opinion of the Adviser, have consistently demonstrated fundamental
investment value and hold strong competitive positions in their respective
business sectors. In addition, the Fund may invest a small but not insignificant
portion (generally between five (5%) and twenty (20%) percent) of its net assets
in the common stocks of companies identified by the Adviser as new and emerging
leaders in smaller, but potentially important sectors.
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
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value of the assets and business of the entity after all of its obligations and
preferred stock are satisfied. Common stock fluctuates in price in response to
many factors, including historical and prospective earnings of the issuer, the
value of its assets, general economic conditions, interest rates, investor
perceptions and market liquidity. 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.
As solely a temporary defensive measure, the Fund may invest up to
20% of its assets in long or short positions in financial futures and/or options
on various market indices in order to reduce the Fund's exposure to adverse
market conditions. Any use of futures or options by the adviser will be in
compliance with the Fund's long-term investment objective. The Fund may also
invest a portion of its assets in U.S. Government securities, money market
instruments or similar short-term securities for liquidity purposes. During
adverse market conditions, the Fund may not achieve its investment objective.
The Adviser focuses on the market leaders of core business sectors
that have consistent operating histories, strong management teams and favorable
long-term growth prospects. The Fund will focus primarily on business sectors
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 sector is to be represented
in the Fund's portfolio and will purchase or sell a portfolio security if it
believes that a particular sector 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 fundamental 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.
This Fund is committed to long-term investment. The Adviser will
utilize a buy and hold approach, generally maintaining its position in the
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.
PORTFOLIO TURNOVER. The frequency of this Fund's portfolio
transactions will vary from year to year. However, since the Fund's investment
policies emphasize long-term investment in the securities of established
companies with strong competitive positions and whose securities consistently
demonstrate fundamental investment value, the Adviser does not anticipate
frequent changes in investments and the
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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
Ticker Symbol: ________
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. Under normal market conditions, the Fund invests all of its net
assets in the common stock of the companies which comprise the S&P 500 Index
("S&P 500 Index Securities"). 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 condition of the Fund's no-fee feature, the Adviser requests that, with the
exception of executing purchases and sales of this Fund's shares, every investor
consent to communicate with the Fund exclusively on-line in order to reduce the
higher costs of paper-based information delivery. All Fund reports, statements
and prospectuses may be downloaded or viewed electronically. As a result of the
Fund's no-fee feature, the investor has the opportunity to realize a return on
investment equivalent to the return of the S&P 500 Index 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 sixty (60) day subscription period during which all subscriptions
for the purchase of shares will be deposited in an interest-bearing escrow
account at the fund's custodian, union bank of california (the "custodian"). The
purpose of the subscription period is to accumulate at least $5 million in
subscriptions for the fund's shares 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 $5
million prior to the expiration of the subscription period (unless extended by
the board of trustees), all subscriptions plus any interest earned will be
returned to the subscribers and the fund will terminate.
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%.
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STOCKJUNGLE.COM PURE PLAY INTERNET FUND
Ticker Symbol: ________
The StockJungle.com Pure Play Internet Fund invests, under normal
conditions, at least 80% of its assets in a diversified portfolio of the common
stocks of U.S. Internet companies identified by the Adviser . 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. Common stock fluctuates in price in response
to many factors, including historical and prospective earnings of the issuer,
the value of its assets, general economic conditions, interest rates, investor
perceptions and market liquidity. 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.
The Fund will invest in U.S. Internet companies based on their
designation by the Adviser as a "Pure Play Internet" company and the size of
such companies' market capitalization. The Adviser, in its sole discretion,
determines which companies properly constitute "Pure Play Internet" companies.
The Adviser's determination is based, generally, on whether such companies (i)
derive more than 50% of their revenues from or assets in the internet or WWW;
and/or (ii) have business models which are substantially dependent on the
internet or WWW. "Pure Play Internet" companies may include media and content
providers, companies which use e-commerce as their principal means of selling
goods and services 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. Should the adviser's evaluation reveal
significant changes among portfolio securities, the Adviser will seek to adjust
the Fund's portfolio accordingly.
The Fund may 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 market conditions and solely as a
temporary defensive measure, the Fund may invest a significant 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
financial futures and/or options 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. During adverse market
conditions, 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. The Adviser believes that the
Internet is the emerging frontier interlinking computers, telecommunications and
broadcast media. Consequently, 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.
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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. Changes in the companies could
include such things as a change in the companies' business direction, a lack of
performance as judged by the advisor, or mergers and/or acquisitions which
affect the companies. Historically, Internet stocks have been subject to higher
than normal market volatility which may result in relatively high portfolio
turnover. Higher portfolio turnover rates resulting from more actively traded
portfolio securities generally result in higher transaction costs, including
brokerage commissions. The Adviser to the StockJungle.com Pure Play Internet
Fund expects that the Fund's annual portfolio turnover rate will be
approximately 50%.
STOCKJUNGLE.COM COMMUNITY INTELLIGENCE FUND
Ticker Symbol: ______
INVESTMENT STRATEGY
The StockJungle.com Community Intelligence Fund invests 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 and which are then
researched and, if acceptable, selected by the Adviser for investment by the
Fund. 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 increased access to a greater breadth of
investment ideas for the Fund's portfolio.
StockJungle.com has established a website on the Internet through
which it offers a wide array of products and services. 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 about companies that they believe would make
bona-fide investments. Participants' investment suggestions will be tracked and
their performance rated against the rest of the community. In addition,
participants will be asked to provide the reasons why they believe a particular
company would make a good investment in light of the Fund's investment objective
of long term growth. StockJungle.com will then 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 a proprietary
quantitative investment model developed by the Adviser in order to determine
whether such recommendation suggests securities which have the potential for
long term growth. While it will be possible for the Adviser to receive numerous
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. Therefore, the Adviser, in its sole
discretion, determines whether and to what extent the common stock of any
recommended company should be purchased or sold by the Fund.
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Under normal market conditions, the Fund invests at least 80% of its
net assets in the securities recommended on the StockJungle.com website and
selected by the Adviser for investment by the Fund. 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, however, 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. The Fund's portfolio
may, from time to time, include shares of common stock, preferred stock and
convertible preferred stock of the companies identified by participants . 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. Common stock
fluctuates in price in response to many factors, including historical and
prospective earnings of the issuer, the value of its assets, general economic
conditions, interest rates, investor perceptions and market liquidity. 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. For liquidity 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 Adviser expects that the annual portfolio
turnover rate for the StockJungle.com Community Intelligence Fund will be
approximately 100%.
GENERAL
Additional information concerning the investment strategies of each
Fund can be found in the Statement of Additional Information ("SAI").
MAIN RISKS
GENERAL
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 the primary
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risks that are common to all of the StockJungle.com trust funds summarized above
as well as risks which are particular to each Fund as a result of each 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. 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.
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 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 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
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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 A Fund and
your investment.
INVESTMENT IN DERIVATIVES. Each of the StockJungle.com Market Leaders
Growth Fund and StockJungle.com Pure Play Internet Fund may invest a portion of
their assets in futures and options transactions for hedging purposes and for
non-hedging purposes, such as to adjust its exposure to relevant markets or as a
substitute for direct investment. 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. Further information about these instruments and the risks
involved in their use is included in the sai.
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 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.
Risks of transactions in futures contracts and related options.
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 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.
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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.
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.
OTHER SECURITIES A FUND MIGHT PURCHASE. Under normal market
conditions, each Fund will invest A majority of its total assets in equity
securities, consisting of common stocks or securities having the characteristics
of common stocks. If the Adviser believes that adverse market conditions warrant
a temporary defensive posture, each of the Funds may invest A significant
portion of assets 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. More information about
these investments is contained in the SAI.
SECURITIES LENDING. Each Fund may lend its portfolio securities to
broker-dealers by entering into lending arrangements or indirectly through
repurchase agreements, amounting to no more than 10% of its assets. 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.
STOCKJUNGLE.COM MARKET LEADERS GROWTH FUND RISKS
------------------------------------------------
EMERGING LEADERS/RISK OF INVESTMENT IN SMALL AND MID-CAP COMPANIES.
Although the Fund will focus on investment in the common stocks of U.S.
companies which have established themselves as market leaders in traditionally
strong business sectors, the Fund may invest a small but not insignificant
portion (generally between five (5%) and twenty (20%) percent) of its net assets
in the common stocks of companies identified by the Adviser as new and emerging
leaders in smaller and less developed but potentially important business
sectors. These companies may include issuers with small or mid-sized capital
structures (generally a market cap 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. The net asset
value of the Fund will be more susceptible to sudden and significant losses if
the value of these securities declines.
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RISK OF INVESTING IN BUSINESS SECTORS. Investing in the various
business sectors represented in the S&P 500 index will expose the Fund to a
broad variety of risk factors. Some of the risks which could adversely affect
the value of your investment in the Fund include, but are not limited to the
following: changes in interest rates, the exposure of companies within these
sectors to foreign currency fluctuations, the ability of companies (especially
those in the chemical and pharmaceutical sectors) to pass their products through
regulatory bodies, fluctuation of oil and fuel prices, 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.
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.
STOCKJUNGLE.COM PURE PLAY INTERNET FUND RISKS
---------------------------------------------
INDUSTRY RISK. The value of the Pure Play Internet Fund's shares will
be susceptible to factors affecting the Internet and WWW. This industry may be
subject to greater governmental regulation than many other industries and
changes in government policies and the need for regulatory approvals may have a
material effect on the products and services of this industry. In addition,
because of its narrow industry focus, the Fund's performance is closely tied to,
and affected by, this industry as a whole. Companies in an industry are often
faced with the same obstacles, issues or regulatory burdens and their securities
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 industries. 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.
INVESTMENT IN SMALL AND MID-CAP COMPANIES. Although securities of
large and well-established companies principally engaged in the Internet and/or
WWW will be held in the Fund's portfolio, the Fund will also invest in small or
mid-cap companies. Accordingly, the Fund may be subject to the additional risks
associated with investment in companies with small or mid-sized capital
structures (generally a market cap of $5 billion or less). 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, the net asset value of the Fund will be more susceptible to sudden
and significant losses if the value of these securities decline.
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STOCKJUNGLE.COM COMMUNITY INTELLIGENCE FUND RISKS
-------------------------------------------------
RELIANCE ON RECOMMENDATIONS. The Adviser will invest in securities
identified to its parent company by visitors to the StockJungle.com website. The
effectiveness of the Fund's investment strategy is contingent upon the ongoing
participation by visitors to this website and the submission of detailed and
reasoned analyses which identify bona-fide potential investments for the Fund.
There are no assurances that the website will attract either such participation
or that visitors will provide detailed financial information that will be useful
to the Adviser for purposes of investing the Fund's assets and the Fund cannot
give any assurance that its investment objective will be achieved.
SHORT SALES. The Adviser may take short positions in target securities
which may or may not include "boxed positions". For example, at times, the Fund
may hold short positions in securities traded in the U.S. markets whose
aggregate market value approximates the value of the Fund's net assets, or which
is substantially less than the value of the Fund's net assets, with any balance
of the Fund's assets held in some combination of money market instruments or
money market funds. At other times, the Fund may hold long-term equity positions
by purchasing shares of the same or other securities traded in U.S. markets, for
example, whose aggregate market value approximates the Fund's net assets, or
which is substantially less than the value of the Fund's net assets, with the
balance of the Fund's assets invested in fixed income mutual funds, money market
instruments and "boxed positions" in which a short position and a long position
in the same security offset each other, thereby eliminating market risk for
those positions. At still other times, the Fund may hold some long positions and
some short positions, but the aggregate market value of these securities will
typically not exceed the value of the Fund's net assets. 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.
EXCESSIVE PORTFOLIO TURNOVER. If the Adviser determines that it is
prudent to invest in numerous securities identified to the parent of the Adviser
by visitors to the StockJungle.com website, the Fund may be subject to a
significantly higher portfolio turnover rate than that of most other mutual
funds. The strategies of the Adviser contemplate the possibility of more
frequent trading at the end of each month in order to enter new positions or
modify existing positions in accordance with the Fund's investment policies.
Frequent portfolio turnover may involve significant expenses and costs for the
Fund, including brokerage commissions, dealer markups and other transaction
costs on the sale of securities and reinvestment in other securities. These
transactions may also result in realization of taxable capital gains, much or
all of which will be short-term capital gains subject to federal and state
taxation as ordinary income and not eligible for favored long term capital gains
tax treatment.
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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 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 Stockjngle.com Community Intelligence Fund is
co-managed by Messrs. Michael Petrino and Gordon Gustafson.
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 the Adviser as a Senior Financial Analyst in
February, 1999. Mr. Gustafson, who graduated from the University of California,
Los Angeles, in 1993 with a B.A. in Economics, previously worked for Red Planet
as a Production Coordinator and Production Manager from 1996 to 1999.
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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. 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 director's 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. See the SAI for a more detailed
discussion of the management fee and other expenses.
ADMINISTRATOR
The Administrator is American Data Services, Inc. ("ADS" or the
"Administrator"), which has its principal office at The Hauppauge Corporate
Center, 150 Motor Parkway, Hauppauge, New York 11788, and is primarily in the
business of providing administrative, fund accounting and stock transfer
services to retail and institutional mutual funds with approximately $6 billion
of total assets through its offices in New York, Denver and Los Angeles.
ADS provides all administrative services necessary for each Fund,
subject to the supervision of the Trust's Board of Trustees.
For the services rendered to each Fund by the Administrator, the
Adviser pays the Administrator, on behalf of each Fund, an annual monthly fee
equal to___% of the daily average net assets of such Fund. The Adviser also pays
the Administrator for any out-of-pocket expenses. In addition, the Administrator
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 Agent and Dividend Agent."
DISTRIBUTOR
ADS Distributors, Inc. ("the Distributor"), an affiliate of the
Administrator, has entered into a distribution agreement with the Trust to serve
as the distributor of each Fund's shares. The Distributor will be paid by the
Adviser an annual fee equal to $_______ and will be responsible for the
promotional and advertising expenses related to the distribution of each Fund's
shares and for the printing of each Fund prospectus used in connection with the
distribution and sale of each Fund's shares. The Distributor will use its annual
fees to pay these expenses and compensate financial intermediaries for providing
distribution assistance with respect to the sale of each Fund's shares. See
"MANAGEMENT OF FUND" in the SAI.
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VALUATION OF SHARES
Each Fund computes its respective net asset value (or price per
share) on each day the New York Stock Exchange ("NYSE") is open for business.
The calculation is made as of the regular close of the NYSE (currently 4:00
p.m., New York time).
Each Fund's securities for which market quotations are readily
available are valued at market value. Fund 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
(60) 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 each Fund is $200.00. The maximum investment by any
investor in the StockJungle.com No Fee S&P 500 Index Fund is limited to $50,000.
A Fund may waive or reduce its minimum initial investment from time to time. If
funds are received after the close of business, 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.
Additional investments of $100 or more 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 $50,000, 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. Further, once the total assets of
the StockJungle.com No Fee S&P 500 index fund is equivalent to $1 billion, the
Fund will be closed and no additional shares in the fund will be sold.
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PURCHASES BY TELEPHONE
Shareholders may open an account by telephone prior to mailing or
wiring his or her initial investment proceeds to the Fund. To open an account by
telephone, call (877) 732-7696 to obtain an account number and instructions.
Information, including the appropriate federal tax identification number,
concerning the account will be taken over the phone. Subject to acceptance by
the Transfer Agent, 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
The Chase Manhattan 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:
The Chase Manhattan Bank
Huntington, New York
ABA# 021000021
Account# _______________
F/B/O [NAME OF FUND]
Shareholder Account #
You are required to mail a signed application to the Transfer Agent
at the address listed below in order to complete your initial wire purchase.
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 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 Transfer Agent, an account may be opened
by completing and signing an account application and mailing it to the
appropriate Fund at the address noted below, together with a check (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]
c/o American Data Services, Inc.
P.O. Box 5536
Hauppauge, NY 11788-0132
Payment for the purchase of shares received by mail will be credited
to your account at the net asset value per share next determined after receipt.
Such payment 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. In the event that there are insufficient funds to cover a check,
such prospective investor will be assessed a $15.00 charge.
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.
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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 either contact the Fund's
Administrator with an oral request or send a written request directly to the
Transfer Agent. 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 $5,000. Please contact the Transfer Agent or refer to the SAI
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.
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, c/o
American Data Services, Inc., P.O. Box 5536, Hauppauge, NY 11788-0132.
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, custodianships,
corporations, pension and profit sharing plans and other
organizations.
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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 $5,000 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 ("SEMP") or the NYSE Medallion Signature Program ("MSP"). Shareholders
may contact each Fund at (877) 732-7696 for further details.
BY TELEPHONE
If the Telephone Redemption Option has been authorized, you may redeem
your shares by calling the appropriate Fund 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.
PAYMENT OF REDEMPTION PROCEEDS
After your shares have been redeemed, proceeds will normally be
mailed within three (3) business days. In no event will payment be made more
than seven (7) 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 (7) 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 (15) days from the purchase date).
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.
Involuntary Redemption
Each Fund reserves the right to redeem your account at any time the
net asset value of the account falls below $200 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 (30) days to make additional investments
before the redemption is processed.
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 $100 or more per month from your bank,
savings and loan or other financial institution to purchase additional shares.
You should contact the Administrator, your broker-dealer or financial
institution or the Transfer Agent to obtain authorization forms or 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:
--Individual Retirement Accounts ("IRAs"), Simple IRAs and Roth IRAs;
--403(b) plans for employees of public school systems and non-profit
organizations;
--401(k) Plans; or
--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 Transfer Agent or the Administrator for
a "REQUEST TO TRANSFER" form.
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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 basis from
the Transfer Agent. 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 have been designed and
created primarily for investment by on-line investors. Accordingly, each Fund
requests that each shareholder consent to the receipt of all shareholder
information about the Fund electronically in order to reduce the higher costs of
paper-based information delivery. Shareholder information may, from time to
time, include, for purposes of electronic delivery, prospectuses, 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. Each Fund will also deliver
paper-based documents upon request by shareholders.
EXCHANGE PRIVILEGE
You can exchange your shares in any StockJungle.com Fund for shares
of the same class of any other series of StockJungle.com Trust for 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) ___-____ 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:
-- Reinvest all distributions in additional shares;
-- Receive distributions from net investment income in cash while
reinvesting capital gains distributions, if any, in additional
shares; or
-- Receive all distributions in cash.
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<PAGE>
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 a
specified period, the Transfer Agent will notify you that you have the option of
requesting another check or reinvesting the distribution in one of the other
Funds. If the Transfer Agent does not receive your election, the distribution
will 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.
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, see "TAXATION" in
the SAI. 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 (1), five
(5) and ten (10) 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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<PAGE>
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, the composition of
each Fund's portfolio and each Fund's operating expenses. 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. See the SAI for
additional information concerning performance.
GENERAL INFORMATION
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.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT
Union Bank of California 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. American Data
Services, Inc., the Administrator, also acts as each Fund's transfer and
dividend agent. The Adviser pays the Administrator the greater of $______ per
month or $______ per year per account, plus out-of-pocket expenses for rendering
such transfer and dividend agency services.
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. [NAME/ADDRESS OF ACCOUNTANTS],
have been selected as independent accountants for each Fund.
29
<PAGE>
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
More Information on each of these Funds is available free upon request,
including the following:
ANNUAL AND SEMIANNUAL REPORTS
Describes each Fund's performance, lists each Fund's holdings and contains a
letter from each Fund's Investment Adviser discussing recent market conditions,
economic trends and strategies that significantly affect a 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 obtain copies 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 NOS. 333 -81359
811-09403
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------------------ COMPARISON OF FOOTNOTES ------------------
- -FOOTNOTE 1-
a 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 and, as a result, this
Fund's total Fund operating expenses will be zero.
- -FOOTNOTE 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, and, as a result,
each Fund's Total Fund Operating Expenses will not exceed 1% of the Fund's
average daily net assets.
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<PAGE>
STOCKJUNGLE.COM(1) 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
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
Purchase 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
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 primarily for investment by on-line
investors. Shareholders in the Funds are requested to consent to the acceptance
of all information about the Fund or Funds in which they invest only through
means of electronic delivery. A copy of the Prospectus for these Funds may be
obtained on-line at HTTP://WWW.STOCKJUNGLE.COM or from each Fund by writing c/o
American Data Services, Inc., The Hauppauge Corporate Center, 150 Motor Parkway,
Hauppauge, New York 11788 or by calling (516) 951- 0500.
- --------
(1) "StockJungle.com(R)" is a registered 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.
1
<PAGE>
INVESTMENT OBJECTIVE, POLICIES, AND RESTRICTIONS
STOCKJUNGLE.COM MARKET LEADERS GROWTH FUND seeks to provide investors with
long-term capital appreciation by investing in the common stocks of a select
number of U.S. corporations identified by the Adviser that have consistently
demonstrated fundamental investment value and hold the strongest competitive
position in various business sectors identified by the Adviser. In addition, the
Fund may invest a small but not insignificant portion (generally between five
(5%) and twenty (20%) percent) Of its net assets in the common stock of
companies identified by the Adviser as new and emerging leaders in smaller, but
potentially important sectors.
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 Index2 ("S&P 500 Index").
STOCKJUNGLE.COM PURE PLAY INTERNET FUND seeks to provide investors with
long-term capital appreciation by investing in the common stocks of Pure Play
Internet companies.
STOCKJUNGLE.COM COMMUNITY INTELLIGENCE FUND seeks to provide investors with
capital appreciation by investing in a diversified portfolio of common stocks of
U.S. companies with market capitalizations of no less than $100 million which
have been identified to StockJungle.com, Inc., the parent of the Adviser, by
visitors to the StockJungle.com website and are then researched by the Adviser
using proprietary quantitative analysis and, if acceptable, selected by the
Adviser for investment by the Fund.
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.
INVESTMENT POLICIES AND ASSOCIATED RISKS
----------------------------------------
Unless otherwise noted, the policies described in this Statement of
Additional Information are not fundamental and may be changed by the Board of
Trustees.
- --------
(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 __________________ for use in connection with the
StockJungle.com No Fee S&P 500 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.
2
<PAGE>
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 stocks or securities having the characteristics
of 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. More
information about these investments is contained in the SAI.
3
<PAGE>
INVESTMENT IN NEW AND UNSEASONED COMPANIES. The StockJungle.com Pure
Play Internet Funf 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.
4
<PAGE>
Domestic banks are subject to different governmental regulations with
respect to the amount and types of loans which may be made and interest rates
which may be charged. In addition, the profitability of the banking industry
depends largely upon the availability and cost of funds for the purpose of
financing lending operations under prevailing money market conditions. General
economic conditions as well as exposure to credit losses arising from possible
financial difficulties of borrowers play an important part in the operations of
the banking industry.
As a result of federal and state laws and regulations, domestic banks
are, among other things, required to maintain specified levels of reserves,
limited in the amount which they can loan to a single borrower, and subject to
other regulations designed to promote financial soundness.
PURCHASING CALL OPTIONS. The 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.
RISK FACTORS IN OPTIONS TRANSACTIONS. The successful use of the
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 the 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 the Fund's ability to
terminate option positions at times when the Adviser deems it desirable to do
so. There is no assurance that the Fund will be able to effect closing
transactions at any particular time or at an acceptable price.
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If a secondary market in options were to become unavailable, the Fund
could no longer engage in closing transactions. Lack of investor interest might
adversely affect the liquidity of the market for particular options or series of
options. A market may discontinue trading of a particular option or options
generally. In addition, a market could become temporarily unavailable if unusual
events -- such as volume in excess of trading or clearing capability -- were to
interrupt its normal operations.
A market may at times find it necessary to impose restrictions on
particular types of options transactions, such as opening transactions. For
example, if an underlying security ceases to meet qualifications imposed by the
market or the 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 the 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, the Options
Clearing Corporation or other options markets 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
the 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.
Over-the-counter ("OTC") options purchased by the Fund and assets
held to cover OTC options written by the Fund may, under certain circumstances,
be considered illiquid securities for purposes of any limitation on the Fund's
ability to invest in illiquid securities.
FUTURES CONTRACTS AND RELATED OPTIONS. Subject to applicable law, and
unless otherwise specified in the prospectus, the Fund may invest in futures
contracts and related options for hedging and non-hedging purposes, such as to
manage the effective duration of the Fund's portfolio or 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.
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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 the 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. In general, 40% of the gain or loss arising from the
closing out of a futures contract traded on an exchange approved by the CFTC is
treated as short-term gain or loss, and 60% is treated as long-term gain or
loss.
Unlike when the 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, the Fund is required to deposit with its custodian in
a segregated account in the name of the futures broker an amount of liquid
assets. This amount is known as "initial margin." The nature of initial margin
in futures transactions is different from that of margin in security
transactions in that futures contract margin does not involve the borrowing of
Funds to finance the transactions. Rather, initial margin is similar to a
performance bond or good faith deposit which is returned to the Fund upon
termination of the futures contract, assuming all contractual obligations have
been satisfied. Futures contracts also involve brokerage costs.
Subsequent payments, called "variation margin" or "maintenance
margin," to and from the broker (or the custodian) are made on a daily basis as
the price of the underlying security or commodity fluctuates, making the long
and short positions in the futures contract more or less valuable, a process
known as "marking to the market." For example, when the Fund has purchased a
futures contract on a security and the price of the underlying security has
risen, that position will have increased in value and the Fund will receive from
the broker a variation margin payment based on that increase in value.
Conversely, when the Fund has purchased a security futures contract and the
price of the underlying security has declined, the position would be less
valuable and the Fund would be required to make a variation margin payment to
the broker.
The 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.
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OPTIONS ON FUTURES CONTRACTS. The Fund may purchase and write call and
put options on futures contracts it may buy or sell and enter into closing
transactions with respect to such options to terminate existing positions.
Options on futures contracts give the purchaser the right in return for the
premium paid to assume a position in a futures contract at the specified option
exercise price at any time during the period of the option. The Fund may use
options on futures contracts in lieu of writing or buying options directly on
the underlying securities or purchasing and selling the underlying futures
contracts. For example, to hedge against a possible decrease in the value of its
portfolio securities, the Fund may purchase put options or write call options on
futures contracts rather than selling futures contracts. Similarly, the Fund may
purchase call options or write put options on futures contracts as a substitute
for the purchase of futures contracts to hedge against a possible increase in
the price of securities which the Fund expects to purchase. Such options
generally operate in the same manner as options purchased or written directly on
the underlying investments.
As with options on securities, the holder or writer of an option may
terminate his position by selling or purchasing an offsetting option. There is
no guarantee that such closing transactions can be effected.
The Fund will be required to deposit initial margin and maintenance
margin with respect to put and call options on futures contracts written by it
pursuant to brokers' requirements similar to those described above in connection
with the discussion of futures contracts.
RISKS OF TRANSACTIONS IN FUTURES CONTRACTS AND RELATED OPTIONS.
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. Compared to the purchase or sale of futures contracts,
the purchase of call or put options on futures contracts involves less potential
risk to the 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
the 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 the 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.
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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 or option. 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 or options; (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 options, 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 options
(or a particular class or series of contracts or options), in which event the
secondary market on that exchange for such contracts or options (or in the class
or series of contracts or options) would cease to exist, although outstanding
contracts or options on the exchange that had been issued by a clearing
corporation as a result of trades on that exchange would continue to be
exercisable in accordance with their terms.
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 Fund may enter into stock index futures
contracts, debt index futures contracts, or other index futures contracts
appropriate to its objective. The Fund may also purchase and sell options on
index futures contracts.
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).
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There are several risks in connection with the use by the 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 the 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 the Fund has sold futures to hedge its
portfolio against a decline in the market, the index on which the futures are
written may advance and the value of securities held in the Fund's portfolio may
decline. If this occurred, the Fund would lose money on the futures and also
experience a decline in value in its portfolio securities. It is also possible
that, if the Fund has hedged against the possibility of a decline in the market
adversely affecting securities held in its portfolio and securities prices
increase instead, the Fund will lose part or all of the benefit of the increased
value of those securities it has hedged because it will have offsetting losses
in its futures positions. In addition, in such situations, if the Fund has
insufficient cash, it may have to sell securities to meet daily variation margin
requirements at a time when it is disadvantageous to do so.
In addition to the possibility that there may be an imperfect
correlation, or no correlation at all, between movements in the index futures
and the portion of the 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.
OPTIONS ON STOCK INDEX FUTURES. Options on index futures are similar
to options on securities except that options on index futures give the purchaser
the right, in return for the premium paid, to assume a position in an index
futures contract (a long position if the option is a call and a short position
if the option is a put) at a specified exercise price at any time during the
period of the option. Upon exercise of the option, the delivery of the futures
position by the writer of the option to the holder of the option will be
accompanied by delivery of the accumulated balance in the writer's futures
margin account which represents the amount by which the market price of the
index futures contract, at exercise, exceeds (in the case of a call) or is less
than (in the case of a put) the exercise price of the option on the index
future. If an option is exercised on the last trading day prior to its
expiration date, the settlement will be made entirely in cash equal to the
difference between the exercise price of the option and the closing level of the
index on which the future is based on the expiration date. Purchasers of options
who fail to exercise their options prior to the exercise date suffer a loss of
the premium paid.
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OPTIONS ON INDICES. As an alternative to purchasing call and put
options on index futures, the Fund may purchase and sell call and put options on
the underlying indices themselves. Such options would be used in a manner
identical to the use of options on index futures.
GOVERNMENT OBLIGATIONS. Each Fund may invest in U.S. Government
obligations. Such obligations include Treasury bills, certificates of
indebtedness, notes and bonds, and issues of such entities as the Government
National Mortgage Association ("GNMA"), Export-Import Bank of the United States,
Tennessee Valley Authority, Resolution Funding Corporation, Farmers Home
Administration, Federal Home Loan Banks, Federal Intermediate Credit Banks,
Federal Farm Credit Banks, Federal Land Banks, Federal Housing Administration,
Federal National Mortgage Association ("FNMA"), Federal Home Loan Mortgage
Corporation, and the Student Loan Marketing Association.
Certain of these obligations, such as those of the GNMA, are
supported by the full faith and credit of the U.S. Treasury; others, such as
those of the Export-Import Bank of United States, are supported by the right of
the issuer to borrow from the Treasury; others, such as those of the FNMA, are
supported by the discretionary authority of the U.S. Government to purchase the
agency's obligations; still others, such as those of the Student Loan Marketing
Association, are supported only by the credit of the instrumentality. No
assurance can be given that the U.S. Government would provide financial support
to U.S. Government- sponsored instrumentalities if it is not obligated to do so
by law.
SHORT SALES. The StockJungle.com Community Intelligence Fund is
authorized to make short sales of securities it owns or has the right to acquire
at no added cost through conversion or exchange of other securities it owns
(referred to as short sales "against the box") and to make short sales of
securities which it does not currently own or have the right to acquire.
In a short sale that is not "against the box," the Fund sells a
security which it does not own, in anticipation of a decline in the market value
of the security. To complete the sale, the Fund must borrow the security
(generally from the broker through which the short sale is made) in order to
make delivery to the buyer. The Fund is then obligated to replace the security
borrowed by purchasing it at the market price at the time of replacement. The
Fund is said to have a "short position" in the securities sold until it delivers
them to the broker. The period during which the Fund has a short position can
range from one day to more than a year. Until the security is replaced, the
proceeds of the short sale are retained by the broker, and the Fund is required
to pay to the broker a negotiated portion of any dividends or interest which
accrue during the period of the loan. To meet current margin requirements, the
Fund is also required to deposit with the broker additional cash or securities
so that the total deposit with the broker is maintained daily at 150% of the
current market 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).
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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 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.
Short sales transactions may sometimes be executed by borrowing
securities from margin accounts established by the Adviser for this purpose.
Some interest may be charged within these margin accounts as a result of price
fluctuations of boxed positions, even though no leverage is employed, since the
offsetting long and short positions within that boxed position will generally
offset each other's market risk.
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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 have legal or
contractual restrictions on resale or are otherwise 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), that Fund will promptly receive additional collateral (so the total
collateral is an amount at least equal to the repurchase price plus accrued
interest).
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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 investment of the cash
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
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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. Non- fundamental investment restrictions of a Fund may be
changed by the Board of Trustees.
As 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 Investment Company Act
of 1940, as amended (the "1940 Act"), except as set forth in restriction number
4 below.
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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 not in excess of 15% of the value of
its total assets.
4. Act as an underwriter of securities of other issuers, except insofar
as the Trust may be technically deemed an underwriter under the federal
securities laws in connection with the disposition of each Fund's portfolio
securities.
5. Purchase or sell real estate or commodities, including oil, gas or
other mineral exploration or developmental programs or commodity futures
contracts. 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 more than 5% of the value of its total assets in any
closed-end investment company and will not hold more than 3% of the outstanding
voting stock of any other mutual fund.
8. Change the nature of its business so as to cease to be an investment
trust.
9. Purchase or retain securities of any issuer if any officer or trustee
of the Trust or the Adviser owns individually more than one-half (1/2%) percent
of the securities of that issuer, or collectively the officers and trustees of
the Trust and Adviser together own more than 5% of the securities of that
issuer.
10. Purchase from or sell to any officer or trustee of the Trust or its
Adviser any securities other than the shares of common stock of each Fund.
11. 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
12. On a joint or joint and several basis, participate in any trading
account in securities.
13. Allow its Adviser or officers or trustees of itself or its Adviser
to take long or short positions in shares of a Fund, except that such persons
may purchase shares for their own account for investment purposes only at the
price available to the public at the moment of purchase.
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14. With the exception of the StockJungle.com Community Intelligence
Fund and StockJungle.com Pure Play Internet Fund, cause more than 5% of a Fund's
total assets to be invested in the securities of companies that (including
predecessors) have been in continuous operation for less than three years. 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 its 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.
TRUSTEES AND EXECUTIVE OFFICERS
The following table contains information concerning the trustees and
officers of the Trust and their principal occupations during the past five
years. Trustees who are interested persons, as defined by the 1940 Act, are
indicated by asterisk.
NOTE: IDENTITY AND DESCRIPTIONS OF THREE DISINTERESTED DIRECTORS TO COME
16
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATION
NAME AND ADDRESS WITH THE TRUST LAST FIVE YEARS
<S> <C> <C>
*Michael J. Witz (Age 27) President, Secretary, Chairman & CEO of
and Chairman of the StockJungle.com Investment
327 Arnaz Drive Board of Trustees Advisors, Inc., a registered
investment adviser and the
Los Angeles, California 90048 Adviser to the Funds
*Julian Smerkovitz (Age 38) Vice President, Director of StockJungle.com
Treasurer and Trustee Investment Advisors, Inc., a
600 Harbor Street, No. 5 registered investment adviser and
the Adviser to the Funds
Venice, California 90291
</TABLE>
The members of the Audit Committee of the Board of Trustees are Messrs.
______________ and __________________. Mr. ______________ 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 Administrator or its
affiliates receive no remuneration from the Funds. Each disinterested Trustee
receives a fee from each of the Funds for each regular quarterly and in-person
special meeting of the Board of Trustees attended. Members of the Board who are
not affiliated with the Adviser or the Administrator receive an annual fee of
$___________ plus $_____ for each Board meeting attended. Each Fund will pay a
pro rata portion of the Trustees' fees and expenses based on the net assets of
the Fund and the other series of the Trust. In addition, each Trustee who is not
affiliated with the Adviser or the Administrator is reimbursed for expenses
incurred in connection with attending meetings.
17
<PAGE>
The following table sets forth the estimated compensation expected to be
received by each Trustee of the Trust during the fiscal year ending as of
December 31, 1999.
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
PENSION OR TOTAL
RETIREMENT COMPENSATION
BENEFITS ESTIMATED FROM FUND AND
ACCRUED AS ANNUAL FUND COMPLEX
NAME OF PERSON, AGGREGATE PART OF FUND BENEFITS UPON PAID TO
POSITION COMPENSATION EXPENSES RETIREMENT DIRECTORS
FROM FUND
<S> <C> <C> <C> <C>
Michael J. Witz $0.00 NONE NONE NONE
Julian Smerkovitz $0.00 NONE NONE NONE
NAMES OF
INDEPENDENT
DIRECTORS TO
COME
</TABLE>
1. There are no family relationships among the trustees, officers and/or
management of the Trust or the Adviser.
INVESTMENT ADVISORY AND OTHER SERVICES
The investment adviser for each of the Funds is StockJungle.com
Investment Advisors, Inc., a Delaware corporation. The Adviser will act as such
pursuant to a written agreement which, after its initial two-year period, must
be annually reapproved 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.
18
<PAGE>
CONTROL OF THE ADVISER
The common stock of the Adviser is wholly-owned and controlled by
StockJungle.com, Inc., a Nevada corporation. 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.
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).
The Investment Advisory Agreement will terminate automatically in the
event of its assignment. In addition, the 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 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, the 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 outstanding shares of the Trust, 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, 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. All investment decisions are subject to review by the Board of
Trustees of the Trust. 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.
The same security may be suitable for each of the Funds or other private
accounts managed by the Adviser. If and when a Fund and two or more accounts
simultaneously purchase or sell the same security, the transactions will be
allocated as to price and amount in accordance with arrangements equitable to
the Fund and account. The simultaneous purchase or sale of the same securities
by a Fund and other accounts may have a detrimental effect on the Fund, as this
may affect the price paid or received by the Fund or the size of the position
obtainable or able to be sold by the Fund.
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 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 shall serve as an
all-inclusive fee out of which the Adviser will be responsible to pay each of
these Funds' operating 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.
19
<PAGE>
ADMINISTRATOR
The Administrator for each Fund is American Data Services, Inc. (the
"Administrator"), which has its principal office at The Hauppauge Corporate
Center, 150 Motor Parkway, Hauppauge, New York 11788, and is primarily in the
business of providing administrative, fund accounting and stock transfer
services to retail and institutional mutual funds through its offices in New
York, Denver and Los Angeles.
Pursuant to an Administrative Service 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 Administrative Service 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
shall 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.
Under the Administrative Service Agreement, the Administrator provides
all administrative services, including, without limitation: (i) provides
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 Securities and Exchange Commission 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
in conjunction with each Fund's counsel, 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 with
respect to all requirements and restrictions of the Investment Company Act, the
Internal Revenue Code and the Prospectus.
20
<PAGE>
The Administrator, pursuant to the Accounting Service Agreement,
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.
ADMINISTRATOR'S FEES
For the administrative services rendered to the Funds by the
Administrator, the Adviser pays the Administrator a monthly fee based on each
Fund's average net assets. The Administrator will also provide certain
accounting-related services to the Funds for which the Adviser will pay a
monthly fee based on the Fund's average net assets, plus any out-of-pocket
expenses for such services. These fees are set forth in the Funds' Prospectus.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT
Union Bank of California 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, it 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.
American Data Services, Inc., the Administrator, also acts as each Fund's
transfer and dividend agent.
DISTRIBUTION AGREEMENT
Pursuant to a Distribution Agreement with the Trust on behalf of each
Fund, ADS Distributors, Inc. (the "Distributor") has agreed to act as the
principal underwriter for each Fund in the sale and distribution to the public
of shares of that Fund, either through dealers or otherwise. 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.
21
<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.
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 will use its best efforts to obtain the best possible
price and execution and will otherwise place orders with broker-dealers subject
to and in accordance with any instructions the Board of Trustees may issue from
time to time. The Adviser will select broker-dealers including, the Distributor,
to execute portfolio transactions on behalf of each Fund primarily on the basis
of best price and execution.
When consistent with the objectives of prompt execution and favorable
net price, 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.
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.
22
<PAGE>
It has for many years been a common practice in the investment advisory
business for advisers of investment companies and other institutional investors
to receive brokerage and research services (as defined in the Securities
Exchange Act of 1934, as amended (the "1934 Act")) from broker-dealers that
execute portfolio transactions for the clients of such advisers and from third
parties with which such broker-dealers have arrangements. Consistent with this
practice, the Adviser may receive brokerage and research services and other
similar services from many broker-dealers with which the Adviser may place a
Fund's portfolio transactions and from third parties with which these
broker-dealers have arrangements. These services include such matters as general
economic and market reviews, industry and company reviews, evaluations of
investments, recommendations as to the purchase and sale of investments,
newspapers, magazines, pricing services, quotation services, news services and
personal computers utilized by the Adviser. Where the services referred to above
are not used exclusively by the Adviser for research purposes, the Adviser,
based upon its own allocations of expected use, bears that portion of the cost
of these services which directly relates to their non-research use. Some of
these services are of value to the Adviser and its affiliates in advising
various of their clients (including the Funds), although not all of these
services are necessarily useful and of value in managing funds. The management
fees received by the Adviser from each Fund, other than the StockJungle.com No
Fee S&P 500 Fund, are not reduced because the Adviser and its affiliates receive
these services even though the Adviser might otherwise be required to purchase
some of these services for cash. As the Adviser will be responsible for the
payment of all fees and expenses of each Fund, the payment of any commissions or
mark-ups to dealers or underwriters by the Adviser will not have any effect on
the net asset value of a Fund or your investment.
As permitted by Section 28(e) of the 1934 Act, the Adviser may pay a
broker-dealer which provides "brokerage and research services" (as defined in
the 1934 Act) to the Adviser an amount of disclosed commission for effecting
securities transactions on stock exchanges and other transactions for a Fund on
an agency basis in excess of the commission which another broker-dealer would
have charged for effecting that transaction. The Adviser does not currently
intend to make such payments. It is the position of the staff of the Securities
and Exchange Commission that Section 28(e) does not apply to the payment of such
greater commissions in "principal" transactions or in cases where the Adviser is
responsible for the payment of all fees and expenses of a 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 trust" 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 income and on net realized capital gains to
the extent distributed as dividends to shareholders.
23
<PAGE>
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 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. Realized capital gains
are not expected to be a significant or predictable part of any Fund's
investment return.
Any redemption of a Fund's shares is a taxable event and may result in a
capital gain or loss. A capital gain or loss may be realized from an ordinary
redemption of 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.
24
<PAGE>
OWNERSHIP OF SHARES
Each share of each Fund has one vote 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.
On September __, 1999, the Adviser invested $25,000 in shares of each
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.
PURCHASE OF SHARES
Shares of each Fund are sold on a continuous basis. The minimum
initial investment for each Fund is $200.00. The maximum investment by any
investor in the StockJungle.com No Fee S&P 500 Index Fund is limited to $50,000.
A Fund may waive or reduce its minimum initial investment from time to time. If
funds are received after the close of business, 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.
Additional investments of $100 or more 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 $50,000, 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. Further, once the total assets of
the StockJungle.com No Fee S&P 500 Index Fund is equivalent to $1 billion, the
Fund will be closed and no additional shares in the Fund will be sold.
25
<PAGE>
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.
The net investment income of each Fund for each business day is
determined immediately prior to the determination of net asset value. Net
investment income for other days is determined at the time net asset value is
determined on the prior business day. See "Purchase of Shares" and "Redemption
of Shares" in the Prospectus.
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, 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:
26
<PAGE>
P(1 + T)n = ERV
Where:
P = a hypothetical initial investment of $1000
T = average annual total return
n = number of years
ERV = ending redeemable value of a
hypothetical $1000 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 fractions
thereof).
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 to illustrate historical performance.
27
<PAGE>
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
Exchange Commission shall govern as to whether the conditions prescribed in (b)
or (c) exist.
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<PAGE>
Shareholders who purchased shares through a broker-dealer other than
the Distributor may also redeem such shares by written request to the Transfer
Agent which shares are held by the Transfer Agent at the address set forth in
the Prospectus. To be considered in "good order", written requests for
redemption should indicate the dollar amount or number of shares to be redeemed,
refer to the shareholder's Fund account number, including either the social
security or tax identification number. The request should be signed in exactly
the same way the account is registered. If there is more than one owner of the
shares, all owners must sign. If shares to be redeemed have a value of $5,000 or
more or redemption proceeds are to be paid by someone other than the shareholder
at the shareholder's address of record, the signature(s) must be guaranteed by
an "eligible guarantor institution," which includes a commercial bank that is a
member of the Federal Deposit Insurance Corporation, a trust company, a member
firm of a domestic stock exchange, a savings association or a credit union that
is authorized by its charter to provide a signature guarantee. The Transfer
Agent may reject redemption instructions if the guarantor is neither a member of
nor a participant in a signature guarantee program. Signature guarantees by
notaries public are not acceptable. The purpose of a signature guarantee is to
protect shareholders against the possibility of fraud. Further documentation
will be requested from corporations, administrators, executors, personal
representatives, trustees, directors and custodians. Redemption requests given
by facsimile will not be accepted. Unless other instructions are given in proper
form, a check for the proceeds of the redemption will be sent to the
shareholder's address of record.
Share purchases and redemptions are governed by Massachusetts law.
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.
COUNSEL AND INDEPENDENT ACCOUNTANTS
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. [NAME/ADDRESS OF ACCOUNTANTS]
have been selected as independent accountants for each of the Funds.
OTHER INFORMATION
The Adviser has been recently registered with the Securities Exchange
Commission (SEC) under the 1940 Act. 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.
29
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FINANCIAL STATEMENTS
AUDITED BALANCE SHEET OF THE TRUST TO BE FILED AS AN ATTACHMENT TO PRE-
EFFECTIVE AMENDMENT NO. 2 ON FORM N-1A
30
<PAGE>
PART C
ITEM 23. EXHIBITS.
*(1) Amended and Restated Agreement and Declaration of Trust;
*(2) Bylaws of the Trust;
(3) Not Applicable.
**(4) Investment Advisory Agreements.
**(5) Distribution Agreement.
(6) Not Applicable.
**(7) Custody Agreement.
**(8.1) Administrative Service Agreement.
**(8.2) Transfer Agency Agreement.
**(9) 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.
**(10) Consent of __________________, independent accountants.
(11) Not Applicable.
**(12) Subscription Letter.
(13) Not Applicable.
**(14) Financial Data Schedule.
(15) Not Applicable.
* Filed as part of the Registration Statement on Form N-1A of the Trust
filed with the SEC by EDGAR on June 23, 1999.
** To be filed by Amendment.
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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 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.
C-ii
<PAGE>
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.
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:
C-iii
<PAGE>
(1) (2) (3)
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS* WITH UNDERWRITER WITH REGISTRANT
----------------- ---------------- ---------------
Michael Miola* Treasurer, Director None
Chairman
*The Hauppauge Corporate Center
150 Motor Parkway
Hauppauge, NY 11788
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. The Adviser can also be contacted by
telephone at (310) 841-4010; except transfer agency records which are maintained
at the offices of the Administrator, American Data Services, Inc., The Hauppauge
Corporate Center, 150 Motor Parkway, Hauppauge, New York 11788 and custodial
records which are maintained at the offices of the Custodian.
ITEM 29 MANAGEMENT SERVICES.
Not Applicable
ITEM 30. UNDERTAKINGS.
Not Applicable
C-iv
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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 15th day
of September, 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 September 15, 1999
- -------------------------- Board of Trustees
Michael J. Witz
/S/ JULIAN SMERKOVITZ Trustee September 15, 1999
Julian Smerkovitz
The above persons signing as Trustees are all of the current
members of the Trust's Board of Trustees.
xix
