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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. 1 [X]
Post-Effective Amendment No. __ [ ]
(Check appropriate box or boxes)
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TRUST FOR INVESTMENT MANAGERS
(Exact Name of Registrant as Specified in Charter)
(626) 852-1033
(Area code and Telephone Number)
2020 East Financial Way - Suite 100
Glendora, California 91741
(Address of Principal Executive Offices, including Zip Code)
Robert H. Wadsworth
2020 East Financial Way - Suite 100
Glendora, California 91741
(Name and Address of Agent for Service)
Copy to: Michael Glazer
Paul, Hastings, Janofsky & Walker LLP
555 South Flower Street
Los Angeles, California 90071
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Approximate Date of Proposed Public Offering:
As soon as practicable following effective date.
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The registrant hereby amends this Registration Statement under the Securities
Act of 1933 on such date or dates as may be necessary to delay its effective
date until the registrant shall file a further amendment which specifically
states that this Registration Statement shall thereafter become effective in
accordance with the provisions of Section 8(a) of the Securities Act of 1933 or
until the Registration Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
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Title of Securities Being Registered: Shares of Beneficial Interest.
No filing fee is required because of Registrant's reliance on Rule 24f-2.
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<PAGE>
STOCKJUNGLE.COM TRUST
StockJungle.com Market Leaders Growth Fund
StockJungle.com Pure Play Internet Fund
StockJungle.com Community Intelligence Fund
NOTICE OF SPECIAL MEETING
To Be Held on [__________], 2000
A Special Meeting (the "MEETING") of shareholders of the StockJungle.com
Market Leaders Growth Fund, StockJungle.com Pure Play Internet Fund, and
StockJungle.com Community Intelligence Fund (collectively, the "FUNDS") will be
held on [__________], 2000, at 10:00 a.m., Pacific Time, at the offices of
StockJungle.com Trust, 5750 Wilshire Boulevard - Suite 560, Los Angeles,
California 90036.
At the Meeting, the shareholders of the Funds will be asked to consider and
vote on a proposed reorganization of the Funds into identical, newly created
portfolios (the "NEW FUNDS") of the Trust for Investment Managers ("TIM") and
such other business as may properly come before the Meeting or any adjournments.
Although the New Funds will be identical to the existing Funds in most respects,
the New Funds will pay some operating expenses not presently paid by the Funds.
The Board of Trustees has unanimously approved the proposed reorganization
and recommends that you vote FOR the proposal. Please read the accompanying
Combined Proxy Statement and Prospectus for a more complete discussion of the
proposed reorganization.
By Order of the Board of Trustees
Michael J. Witz, President
[__________], 2000
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Who can vote?
Any person owning shares of a Fund on [__________], 2000.
Why should I bother to vote?
YOUR VOTE IS IMPORTANT. If the Funds do not receive enough votes, they will have
additional expenses to mail proxies again or solicit shareholders by telephone
so the Meeting can take place.
How can I vote?
- By the INTERNET - Go to the website at [__________].
- By FAX - Vote, sign, and fax the enclosed ballot to [__________].
- By MAIL - Vote, sign, and mail the enclosed ballot in the envelope
provided.
- By PHONE - Call [__________], extension [_____].
- IN PERSON at the Meeting - If you attend the Meeting in person, you may
change your vote at that time.
Questions?
Call us at [1-800-__________], extension [_____].
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<PAGE>
STOCKJUNGLE.COM TRUST
TRUST FOR INVESTMENT MANAGERS
StockJungle.com Market Leaders Growth Fund
StockJungle.com Pure Play Internet Fund
StockJungle.com Community Intelligence Fund
COMBINED PROXY STATEMENT AND PROSPECTUS
The Board of Trustees of StockJungle.com Trust (referred to below as "SJ
Trust") is soliciting the enclosed proxy in connection with a Special Meeting
(the "MEETING") of shareholders of the portfolios of SJ Trust. The portfolios
are the StockJungle.com Market Leaders Growth Fund ("GROWTH FUND"),
StockJungle.com Pure Play Internet Fund ("INTERNET FUND"), and StockJungle.com
Community Intelligence Fund ("COMMUNITY FUND"). These portfolios are sometimes
referred to below as the "Funds." The Meeting will be held on [__________], 2000
at 10:00 a.m. Pacific Time at 5750 Wilshire Boulevard - Suite 560, Los Angeles,
California.
The Meeting is being called to consider the proposed reorganization of the
Funds into identical, newly created portfolios (the "NEW FUNDS") of Trust for
Investment Managers ("TIM"), and to transact such other business as may properly
come before the Meeting or any adjournments. SJ Trust, a Massachusetts business
trust, and TIM, a Delaware business trust, both are open-end management
investment companies (referred to generally as "mutual funds").
The investment objectives and policies of each of the New Funds are
identical to those of the corresponding Funds. The investment adviser of the New
Funds is StockJungle.com Investment Advisers, Inc. (the "ADVISER"), which
currently serves as adviser to the Funds. However, the normal operating expenses
of each New Fund will be limited by the Adviser to 1.45% of average annual net
assets, compared to 1.00% for the existing Funds .
This Combined Proxy Statement and Prospectus (the "PROXY STATEMENT") is
furnished to the shareholders of each Fund on behalf of SJ Trust's Board of
Trustees in connection with the Funds' solicitation of voting instructions for
use at the Meeting. This Proxy Statement is being mailed to shareholders of the
Funds on or about [__________], 2000.
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This Proxy Statement is organized as follows:
1. Summary of Proxy Statement - begins on page 3.
2. Proposed Reorganization of the Funds - begins on page 9.
3. Voting and Meeting Procedures - begins on page 16.
4. General Information - begins on page 18.
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The New Funds will have the same names as the existing Funds. To avoid
confusion, the New Funds are referred to below as the "NEW GROWTH FUND," "NEW
INTERNET FUND," and "NEW COMMUNITY FUND," respectively.
A prospectus for the New Funds (the "PROSPECTUS") accompanies and is
incorporated into this Proxy Statement. This Proxy Statement and the Prospectus
set forth concisely the information about the proposed reorganization that you
should know before voting on the proposed reorganization. You should retain them
for future reference.
Additional information about TIM has been filed with the Securities and
Exchange Commission (the "COMMISSION"). You can review it at the Public
Reference Room of the Commission (for hours of operation, call 1-202-942-8090).
You may retrieve text-only copies at no charge from the "EDGAR" database on the
Commission's website at http://www.sec.gov. You also may get such copies for a
fee by writing the Commission's Public Reference Section, Washington, D.C.
20549-0102, or by e-mail to the Commission at [email protected].
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED ON THE ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Dated: __________, 2000
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SUMMARY OF PROXY STATEMENT
The Board of Trustees of SJ Trust has approved a plan to reorganize the
Funds into the New Funds. The New Funds are portfolios of TIM, a registered
investment company with multiple portfolios advised by a variety of independent
investment advisers. TIM is sponsored and administered by Investment Company
Administration L.L.C. ("ICA") to permit smaller advisers to offer the benefits
of mutual fund portfolios to their clients. Fund management believes that
reorganizing the Funds as part of the TIM fund group with other portfolios may
in the long run reduce certain expenses paid by shareholders (such as securities
registration fees, legal fees, insurance costs and trustee fees and expenses),
as economies of scale may result when Fund assets are aggregated with assets of
other TIM portfolios by spreading such expenses over a larger asset base.
COMPARISON OF FEES AND EXPENSES
The normal operating expenses of each New Fund will be limited by the
Adviser to 1.45% of average annual net assets, compared to 1.00% for the
existing Funds.
TIM has adopted a shareholder service plan under which the New Funds will
pay expenses of the Adviser and others associated with servicing of shareholders
of the New Funds up to 0.25% of the New Funds' average annual net assets. In
comparison, SJ Trust has no such plan.
The Investment Advisory Agreement between the Adviser and the New Funds
provides that each New Fund pays an advisory fee at the annual rate of 1.00% of
the New Fund's average net assets, and other normal New Fund operating expenses,
except that the Adviser is contractually obligated to reimburse each New Fund
for all operating expenses (other than brokerage commissions and extraordinary
expenses) over 1.45% of the New Fund's average net assets for the term of the
Agreement (currently through ________, 2002). In comparison, under the current
Investment Advisory Agreement between the Adviser and the Funds, the Funds pay
the Adviser a 1.00% advisory fee, but the Adviser pays all the Funds' normal
operating expenses (other than brokerage commissions and extraordinary
expenses), effectively capping annual expenses at 1.00%.
However, before management of SJ Trust had suggested the possibility of
reorganizing SJ Trust to its Board of Trustees, the Board had adopted a
shareholder service plan for the Funds similar to the plan adopted for the New
Funds, and had approved an increase in the expense cap of the Funds to 1.45%
(subject to approval of the shareholders of the Funds). Thus, if for any reason
the reorganization is not approved by the shareholders of the Funds, the Board
intends to hold another special meeting of shareholders to approve an amendment
to the Funds' current Investment Advisory Agreement to increase the expense cap
for the Funds to 1.45%.
The following table compares the annual operating expenses of each Fund
with the corresponding New Fund.
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<TABLE>
<CAPTION>
Annual Fund Operating Expenses Market Leaders Pure Play Community
(expenses deducted from Fund assets) Growth Fund Internet Fund Intelligence Fund
------------------ ------------------ ------------------
Existing New Existing New Existing New
-------- ------ -------- ------ -------- ------
<S> <C> <C> <C> <C> <C> <C>
Management Fee* 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Distribution (12b-1) Fee** None None None None None None
Other Expenses** 0.00% 25.97% 0.00% 16.79% 0.00% 5.98%
Total Annual Operating Expenses** 1.00% 26.97% 1.00% 17.79% 1.00% 6.98%
Fee Waivers and Expense
Reimbursements*** None -25.52% None -16.34% None -5.53%
Net Expenses*** 1.00% 1.45% 1.00% 1.45% 1.00% 1.45%
</TABLE>
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* The "Management Fee" is an annual fee, payable monthly out of each Fund's
net assets.
** "Other Expenses" for each Fund, and thus "Total Annual Fund Operating
Expenses" for each Fund, are estimates and may be higher or lower than
shown above.
*** The Adviser charges the existing Funds an all-inclusive 1.00% Management
Fee and pays all of the expenses of the Funds (other than brokerage
commissions and extraordinary costs). The New Funds' Investment Advisory
Agreement contractually requires the Adviser to limit its fees or reimburse
each New Fund for expenses to the extent necessary to keep Total Annual
Fund Operating Expenses at or below 1.45% for the term of the Agreement
(currently through ______, 2002).
The following example compares the cost of investing in the New Funds with
the cost of investing in the existing Funds. The example assumes that:
* you invest $10,000 the time periods indicated;
* your investment has a 5% return each year;
* Fund operating expenses remain the same; and
* you redeem your shares at the end of the relevant period.
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Although your actual costs may be
higher or lower, based on these
assumptions your costs would be as
follows: 1 Year 3 Years
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Market Leaders Growth Fund
Existing $102 $318
New $147 $458
Pure Play Internet Fund
Existing $102 $318
New $147 $458
Community Intelligence Fund
Existing $102 $318
New $147 $458
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES
The investment objectives and policies of each of the New Funds are
identical to those of the corresponding Funds. These are as follows:
INVESTMENT OBJECTIVES
Each Fund seeks to provide investors with long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
The Adviser uses the StockJungle.com Community Site as a resource to
identify potential candidates for the Funds' portfolios. The Community Site is a
rated community of stock-pickers maintained by the Adviser's parent company,
StockJungle.com, Inc. Visitors may recommend companies on the Community Site
that the Adviser then researches and analyzes to determine the companies'
potential for capital appreciation. The Community Site is the sole source of
potential investments for the Community Fund, but not for other Funds.
The Adviser analyzes potential investments using a "bottom-up" method
(I.E., on a company-by-company basis rather than on analysis of broader factors
related to the economy and the outlook for various industries). Each Fund
normally will be fully invested (subject to liquidity needs) in a diversified
portfolio of equity securities of U.S. companies.
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THE STOCKJUNGLE.COM MARKET LEADERS GROWTH FUND invests in companies with market
capitalizations of at least $20 billion at the time of purchase that, in the
opinion of the Adviser, have demonstrated consistently strong quantitative
measures of value (e.g., return on equity), hold strong competitive positions in
their respective industries, and have favorable long-term growth prospects
(based on the Adviser's qualitative analysis of the companies' business models).
In addition, the Fund may invest up to 20% of its net assets in the common stock
of companies the Adviser identifies as leaders in relatively new and less
established industries (e.g., genomics) that have favorable growth prospects.
THE STOCKJUNGLE.COM PURE PLAY INTERNET FUND invests in companies with market
capitalizations of at least $1 billion at the time of purchase that the Adviser
determines to be "Pure Play Internet" companies, i.e., companies that derive at
least 50% of their revenue from the Internet and/or the World Wide Web ("WWW"),
and whose stocks have the potential for long-term growth (based on the Adviser's
qualitative analysis of the companies' business models). At times, the Fund may
focus on particular sub-sectors of Internet companies, such as infrastructure
and software companies.
THE STOCKJUNGLE.COM COMMUNITY INTELLIGENCE FUND invests in companies with market
capitalizations of at least $100 million at the time of purchase and favorable
growth prospects. The Adviser selects portfolio securities for the Fund solely
from a pool of equity investment opportunities which are (i) recommended to
StockJungle.com, Inc. by visitors to its website, (ii) researched by the adviser
and analyzed to determine their potential for capital appreciation, and (iii) if
deemed acceptable by the Adviser, selected for investment by the Fund.
COMPARISON OF STRUCTURE AND OPERATION
Each New Fund will be advised and operated in substantially the same manner
as its corresponding Fund. The Adviser, which currently advises the Funds, will
continue to act as adviser to the New Funds. The other service providers to the
Funds will also be unchanged. There will be no significant change in
distribution and purchase procedures, exchange rights, or redemption procedures.
The New Funds are established and administered under Delaware law, while
the Funds are maintained under Massachusetts law. The two forms of organization
are very similar. The operations of TIM, like those of SJ Trust, are subject to
the provisions of the Investment Company Act of 1940 (the "1940 Act"), and to
the rules and regulations of the Commission thereunder.
The reorganization will have no material federal income tax consequences to
you, the Funds or the New Funds.
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COMPARISON OF RISK FACTORS
The principal investment risks of each of the New Fund are identical to
those of the corresponding Funds. These are as follows:
INVESTING IN MUTUAL FUNDS
All mutual funds carry risk. You may lose money on your investment in any
of the Funds. 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 assurance exists that any Fund's investment objective will be
achieved. In addition, you should be aware that none of the Funds has any
substantial operating history and the Adviser has no substantial 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 fluctuates 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.
RELIANCE ON RECOMMENDATIONS
The effectiveness of the Community Intelligence Fund's investment strategy
depends on the ongoing participation by visitors to the Community Site and the
submission of bona-fide potential investments for the Funds. There are no
assurances that the Community Site will continue to attract such participation.
TECHNOLOGY SECTOR RISK
Each of the Market Leaders Growth Fund and the Community Intelligence Fund
currently invests a significant portion of its total assets in companies in
various technology industries and may do so in the future, and the Pure Play
Internet Fund invests primarily in such companies. Market or economic factors
impacting technology companies could have a major effect on the value of each
Fund's investments. Stock prices of technology companies are particularly
vulnerable to rapid changes in product cycles, government regulation, high
personnel turnover and shortages of skilled employees, product development
problems, and aggressive pricing and other form of completion. In addition,
technology stocks, especially those of smaller, less seasoned companies, tend to
have high price/earning ratios and to be more volatile than the overall market.
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RISKS ASSOCIATED WITH WEBSITE
Since the Adviser intends to post updates of each Fund's holdings and
completed trading activity in real time, to the extent practicable, there is a
risk that certain investors may attempt to use such information to the detriment
of the Funds. The Board of Trustees has considered this issue and has determined
that each Fund's and the Adviser's use of the website is nonetheless in the best
interests of each Fund and its shareholders. The Board of Trustees monitors the
use of the website to determine that it continues to be in the best interests of
each Fund's shareholders.
The Community Site may attract visitors seeking to use the website to
influence the market price of a particular security. The Adviser researches and
analyzes all recommendations prior to investing in a company's stock. However,
there can be no assurances that this provides total protection against any
market manipulation.
Widespread network failure of the Internet and/or WWW could result in
delays or interruptions which could, in turn, delay or prevent persons from
posting investment recommendations to be submitted to the Adviser for analysis
and selection for investment by the Fund.
INVESTMENT IN NEW AND UNSEASONED COMPANIES
Companies which are relatively new and unseasoned and in their early stages
of development may not be well-known to the investing public or have significant
institutional ownership. They may lack depth of management and may be unable to
internally generate funds necessary for growth or potential development or to
generate such funds through external financing on favorable terms. In addition,
these companies may be developing or marketing new products or services for
which markets are not yet established and may never become established. Finally,
new and 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 Funds 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 Funds
and your investment.
INVESTMENT IN SMALL AND MID-CAP COMPANIES
Companies identified by the Adviser as relatively new leaders in smaller
and less established industries may include issuers with small or mid-sized
capital structures (generally a market capitalization of $5 billion or less).
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<PAGE>
Consequently, the Fund may be subject to the additional risks associated with
investment in these companies. The market prices of the securities of such
companies tend to be more volatile than those of larger companies. Further,
these securities tend to trade at a lower volume than those of larger more
established companies. Accordingly, if the value of the securities of small or
mid-capitalization companies held in a Fund's portfolio decline, the Fund may be
adversely affected and you could lose money on your investment.
INTERNET SECTOR RISK
The value of the Pure Play Internet Fund's shares is susceptible to factors
affecting the Internet and WWW . This sector may be subject to greater
governmental regulation than many other sectors and changes in government
policies and the need for regulatory approvals may have a material effect on the
products and services of this sector. In addition, because of its relatively
narrow focus, the Fund's performance is closely tied to, and affected by, this
sector as a whole. Companies in a specialized sector are often faced with the
same obstacles, issues or regulatory burdens and their securities may react
similarly and move in unison to these and other market conditions. As a result
of these factors, securities in which the Fund invests are more volatile than
securities of companies in other sectors. Competitive pressures and changing
demand may have a significant effect on the financial condition of Internet
companies. These companies spend heavily on research and development and are
especially sensitive to the risk of product obsolescence.
NEWLY ORGANIZED FUNDS
The Funds, as well as the Adviser and its parent corporation's
StockJungle.com website, are newly organized and are designed and created
primarily for on-line investors. Although the Funds and the Adviser believe that
investors' ability to access information and features via the website will
provide investors a more complete and educational mutual fund experience than is
generally available, this is a relatively new approach to mutual fund investing
which is still evolving. In April 2000, StockJungle.com Trust terminated
operation of its S&P 500 Index Fund series, which did not attract sufficient
investors to effectively track the performance of the S&P 500 Index. No
assurance exists that the current Funds will attract sufficient investors to
ensure that the Funds and the Investment Adviser can operate effectively and
profitably in the long run.
PROPOSED REORGANIZATION OF THE FUNDS
The Board of Trustees of SJ Trust has approved a plan to reorganize the
Funds into the New Funds. The purpose of the reorganization is to lower the
expenses paid by the shareholders of the Funds. To proceed, we need the approval
of the shareholders of each Fund. The following pages outline the important
details of the reorganization in response to the following questions:
* Why do we want to reorganize the Funds?
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<PAGE>
* How will we accomplish the reorganization?
* What are some of the differences between the Funds and the New Funds?
* What aspects of the Funds will not change as a result of the
reorganization?
* How will the capitalization of the New Funds compare with that of the
existing Funds?
WHY DO WE WANT TO REORGANIZE THE FUNDS?
As Internet-based investment company portfolios, the Funds are pioneering
relatively new methods of mutual fund operation and distribution. The proposed
reorganization is part of the continuing evolution of the Funds' concept.
At their meeting on March 23, 2000, the Board of Trustees of SJ Trust
determined that it would be in the best interest of the Funds' shareholders to
approve a shareholder service plan permitting the Funds to pay expenses of the
Adviser and others associated with servicing of Fund shareholders up to 0.25% of
the Funds' average annual net assets, and an increase in the annual expense cap
of the Funds from 1.00% to 1.45% of average annual net assets (subject to
approval by the shareholders of the Funds).
The Funds are currently distributed only through the website maintained by
the Adviser's parent, Stockjungle.com, Inc. As of [__________], 2000, the total
assets of the Funds were $[___] million. The annual expenses of the Funds are
currently capped by the Adviser at 1.00% of the Funds' average daily net assets
(as a result of the Adviser's "unitary fee" structure, in which the Adviser is
paid a single fee from which it pays all normal Fund expenses), and the
resulting expense subsidies to the Funds are provided by the Adviser and its
parent company (which has other sources of income from its operation of the
Stockjungle.com web site). However, at the current asset level of the Funds,
these subsidies would amount to more than $__ million per year. The Adviser and
the Board of Trustees believe that, to remain viable in the long run, the Funds
will have to substantially increase their assets, so that any expense subsidies
will be lower or can be eliminated. The Board of Trustees and management of the
Funds believe that obtaining exposure to shareholders from other unaffiliated
sources of distribution will assist in increasing the Funds' assets, and that
adoption of a shareholder service plan will enable the Funds to do so.
At the March 23 Board meeting, management also recommended and the Board
approved an amendment to the current Investment Advisory Agreement of the Funds
to depart from the current "unitary fee" structure, and to increase the annual
expense cap of the Funds from 1.00% to 1.45% of average annual net assets. Of
this amount, 0.25% is attributable to the addition of the plan of distribution.
The additional increase of 0.20% of average annual net assets was recommended to
help reduce the impact on the Adviser and its parent of the current expense cap,
and to ensure that they can continue to maintain and improve the technology
platform on which Fund operations are based in order to provide Fund
shareholders with the proper level of service and support. In addition,
management believes that the existing "unitary fee" structure has proved to be
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<PAGE>
confusing to prospective investors, and that a more traditional expense
methodology will be easier for most shareholders to understand and compare with
other mutual funds. As is the current case, the Adviser will not be reimbursed
in the future for any remaining expense subsidies to the Funds. Your vote in
favor of the reorganization will also in effect be a vote in favor of this
amendment.
At their meeting of June 1, 2000, the Board of Trustees of SJ Trust
approved the retention of ICA to provide administration services to the Funds,
of First Fund Distributors, Inc. (an affiliate of ICA) to provide distribution
services to SJ Trust, and of Unified Fund Services, Inc. ("Unified") to provide
fund accounting and transfer agency services to SJ Trust, in place of
Countrywide Fund Services, Inc., which was then providing such services. ICA and
its affiliate began providing such services to SJ Trust on June 15, 2000, and
Unified will begin doing so on October 1, 2000.
As discussions on the implementation of the transition to ICA continued,
management concluded that the Funds could obtain the services of ICA and its
affiliate at the same cost through reorganization of the Funds into portfolios
of TIM (which is sponsored by ICA), and that such a reorganization could in the
long run assist in reducing the expenses of the Funds (such as securities
registration fees, legal fees, insurance costs and trustee fees) as a result of
the economies of scale which may result when Fund assets were aggregated with
the assets of other TIM portfolios and spread over a larger asset base.
Accordingly, after further consideration of these matters, management of SJ
Trust recommended and the Board of Trustees of SJ Trust approved the proposed
reorganization at their meeting of July 18, 2000. In that connection, the Board
specifically determined, as required by the 1940 Act, that the proposed
reorganization is in the best interests of the shareholders of each of the
Funds, and that the interests of the shareholders will not be diluted as a
result of the reorganization.
HOW WILL WE ACCOMPLISH THE REORGANIZATION?
The Board of Trustees has approved a reorganization agreement between
SJ Trust (on behalf of the Funds) and TIM (on behalf of the New Funds). This
agreement spells out the terms and conditions of the reorganization of the
Funds.
If the shareholders of each Fund approve the reorganization, the
reorganization essentially will involve the following steps, which will occur
more or less simultaneously:
* First, each Fund will transfer all of its assets and liabilities to
the corresponding New Fund. (In other words, the Growth Fund will
transfer its assets and liabilities to the New Growth Fund; the
Internet Fund will transfer its assets and liabilities to the New
Internet Fund; and the Community Fund will transfer its assets and
liabilities to the New Community Fund.)
* Second, in exchange for the assets transferred to the New Funds, each
Fund will receive shares of the corresponding New Fund having a total
value equal to the value of the assets the Fund transferred to the New
Fund (net of any liabilities).
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* Third, each Fund will distribute the New Fund shares it receives to
its shareholders and dissolve.
* Fourth, each New Fund will open an account for each shareholder of the
corresponding dissolving Fund, and will credit the shareholder with
shares of the New Fund having the same total value as the Fund shares
that he or she owned on the date of the reorganization. Share
certificates will not be issued.
The Adviser will pay the expenses of the reorganization. As a tax free
reorganization under Section 368 of the Internal Revenue Code, the
reorganization will not have any adverse tax consequences to you, to the Funds,
or to the New Funds.
If the reorganization is approved by the Funds' shareholders, it will take
place as soon as feasible. Fund management believes this should be accomplished
by [__________], 2000. However, at any time before the reorganization the Board
of Trustees may decide that it is not in the best interest of the Funds or their
respective shareholders to go forward.
WHAT ARE SOME OF THE DIFFERENCES BETWEEN THE FUNDS AND THE NEW FUNDS?
GOVERNING DOCUMENTS AND LAW.
The New Funds were established pursuant to an Agreement and Declaration of
Trust (the "TIM DECLARATION OF TRUST") under Delaware law. The New Funds'
operations are governed by the TIM Declaration of Trust and Delaware law
applicable to business trusts in Delaware.
The Funds were established pursuant to an Agreement and Declaration of
Trust (the "SJTRUST DECLARATION OF TRUST") under Massachusetts law. The Funds'
operations are governed by the SJ Trust Declaration of Trust and by Chapter 182
of the General Laws of the Commonwealth of Massachusetts, which governs business
trusts in Massachusetts.
The two forms of organization are very similar. The operations of the New
Funds, like those of the Funds, are subject to the provisions of the 1940 Act,
and to the rules and regulations of the Commission thereunder.
STATE LAWS.
SJ Trust is organized as a Massachusetts business trust. Massachusetts law
does not expressly provide that claims of third parties against shareholders,
trustees, officers, employees, and agents of SJ Trust for any act, omission, or
obligation of SJ Trust are limited to the assets of SJ Trust. Because
Massachusetts business trust law is silent on this issue, some commentators
believe that under Massachusetts law shareholders of Massachusetts trusts such
as SJ Trust could, under certain circumstances, be held personally liable for
trust obligations.
TIM is organized as a Delaware business trust. Under Delaware law, the
shareholders, trustees, officers, employees, and agents of TIM are not liable to
third persons for any act, omission, or obligation of TIM unless otherwise
-12-
<PAGE>
provided in the certificate of trust. The TIM certificate of trust does not
contain any such provisions, and under Delaware law the shareholders of the New
Funds are therefore not liable to third parties for obligations of the New
Funds.
This is only a brief summary of certain similarities between the SJ Trust
Declaration of Trust and Massachusetts law, and the TIM Declaration of Trust and
Delaware law. It is not a complete list of similarities or differences.
Shareholders should refer to the provisions of the SJ Trust Declaration of
Trust, Massachusetts law, the TIM Declaration of Trust, and Delaware law for a
more thorough comparison. Copies of the TIM Declaration of Trust and By-Laws are
available to shareholders without charge upon written request to TIM at 2020
East Financial Way, Suite 100, Glendora, California 91741.
THE NEW FUNDS WILL HAVE A SHAREHOLDER SERVICE PLAN.
The New Funds have adopted a shareholder service plan. This plan allows
each New Fund to pay fees for services provided by the Adviser and others to its
shareholders. The plan provides for the payment of a service fee at the annual
rate of up to 0.25% of each New Fund's average daily net assets. The Board of
Trustees has approved a similar plan for the Funds which is not yet in effect.
EXPENSES OF THE NEW FUNDS WILL BE GREATER THAN THOSE OF THE FUNDS.
The Investment Advisory Agreement between the Adviser and the New Funds
provides that the Adviser will be paid a fee equal to 1.00% of the average daily
net assets of each of the New Funds -- the same as the existing Investment
Advisory Agreement for the Funds. There is, however, a difference between the
two Agreements with respect to overall operating expenses.
The existing Investment Advisory Agreement provides for a "unitary"
advisory fee - i.e., that the Adviser will pay all of the Funds' normal
operating expenses, other than brokerage commissions and extraordinary or
non-recurring expenses. The new Investment Advisory Agreement, on the other
hand, provides that the New Funds are responsible for the payment of normal
operating expenses, but that the Adviser will pay all such expenses in excess of
1.45% of the average daily net assets of the Fund, other than brokerage
commissions and extraordinary or non-recurring expenses.
TRUSTEES AND OFFICERS WILL BE DIFFERENT.
Subject to the provisions of the TIM Declaration of Trust, the business of
TIM is managed by its trustees. Like the trustees of SJ Trust, the trustees of
TIM serve indefinite terms and have all powers necessary or convenient to carry
out that responsibility. The responsibilities, powers, and fiduciary duties of
the TIM trustees are substantially the same as those of the trustees of SJ Trust
under the SJ Trust Declaration of Trust. The trustees and officers of TIM are
identified and their backgrounds are described in the TIM Statement of
Additional Information filed with the Commission.
-13-
<PAGE>
SHAREHOLDERS OF THE NEW FUNDS WILL VOTE BY SHARES RATHER THAN DOLLARS.
The SJ Trust Declaration of Trust provides that each Fund shareholder is
entitled to one vote for each dollar of net asset value of his or her shares of
the Fund. The TIM Declaration of Trust provides that each New Fund shareholder
is entitled to one vote for each of his or her shares of the New Fund, without
regard to the net asset value of such shares.
What Aspects of the Funds Will Not Change as a Result of the Reorganization?
After the reorganization, you will own shares of the New Fund that
corresponds to the Fund in which you presently hold shares.
THE INVESTMENT OBJECTIVES, POLICIES, AND RESTRICTIONS OF THE NEW FUNDS ARE
IDENTICAL TO THOSE OF THE CORRESPONDING FUNDS.
Each New Fund will seek to provide investors with long-term capital
appreciation, in the same manner as the corresponding existing Fund. See
PRINCIPAL INVESTMENT STRATEGIES at page 3 above for a description of the New
Funds' principal investment strategies and restrictions, which will be the same
as the corresponding existing Funds.
You should review the current prospectus for the Funds (dated June 7, 2000,
as supplemented on June 16 and June 21, 2000) and the "Investment Strategies"
and "Main Risks" sections of the Prospectus of the New Funds for additional
information.
THE INVESTMENT ADVISER AND SERVICE PROVIDERS WILL STAY THE SAME.
StockJungle.com Investment Advisors, Inc. is the investment adviser to the
Funds and will continue to manage the New Funds after the reorganization. The
Funds are co-managed by Gordon Gustafson and Akber Zaidi, who will continue to
have those responsibilities for the New Funds.
Investment Company Administration L.L.C. is the administrator of the Funds,
First Funds Distributors, Inc. is the distributor for the Funds, and Arthur
Andersen LLP is the Funds' independent public accountant. They will serve in the
same capacity for the New Funds after the reorganization. United Fund Services,
Inc. will become the fund accounting agent and transfer agent for the Funds on
October 1, 2000 (replacing Integrated Fund Services, Inc., which currently
provides these services and will serve in the same capacity for the New Funds
after the reorganization).
See the "Management" section of the Prospectus for further information.
THE TOTAL VALUE OF YOUR SHARES WILL NOT BE AFFECTED BY THE REORGANIZATION.
On the day of the reorganization, you will receive New Fund shares having
the same total value as your shares of the corresponding Fund. The number of New
Fund shares you receive, and the per share price of such shares, also will be
the same as your shares of the corresponding Fund.
-14-
<PAGE>
THE REORGANIZATION WILL HAVE NO MATERIAL FEDERAL INCOME TAX CONSEQUENCES.
We expect the reorganization will have no material federal income tax
consequences to you, to the Funds or to the New Funds. We will not proceed with
the reorganization unless this point is confirmed by an opinion of counsel.
Following the reorganization, the adjusted federal tax basis of your New Fund
shares will be the same as the basis of your Fund shares before the
reorganization. We do not expect Fund shareholders to incur any personal state
or local taxes as a result of the reorganization, but you should consult your
own tax adviser to make sure.
YOU WILL CONTINUE TO RECEIVE DIVIDENDS ANNUALLY.
The Funds currently declare and pay dividends annually, and the New Funds
will do the same. As was the case for the Funds, all dividends, if any, paid by
the New Funds will be reinvested in shares of the New Funds unless you request
otherwise in writing. (You can make such a request by writing to the Funds c/o
Unified Fund Services, Inc., 431 North Pennsylvania Street, Indianapolis, IN
46204-1806.) If you have such a request on file for a Fund, it will be applied
to your New Fund shares.
SHARE PURCHASE AND REDEMPTION PROCEDURES WILL NOT BE AFFECTED.
The New Funds will have substantially the same purchase and redemption
procedures as the Funds. As was the case for the Funds, the distributor for the
New Funds does not charge any fees or sales charges on reinvestments in shares
of the New Funds. See the "How to Purchase Shares" and "How to Redeem Shares"
sections of the Prospectus.
HOW WILL THE CAPITALIZATION OF THE NEW FUNDS COMPARE WITH THAT OF THE EXISTING
FUNDS?
The following table sets forth as of September 1, 2000: (i) the
capitalization of the Funds; (ii) the capitalization of the New Funds; and (iii)
the pro forma capitalization of the New Funds, as adjusted to give effect to the
reorganizations. If the reorganizations are consummated, the capitalization of
the New Funds is likely to be different at the closing date as a result of daily
share purchase and redemption activity in the Funds after September 1, 2000.
Stockjungle.com
Market Leaders Growth Fund
----------------------------------------
Pro Forma
Existing New Combined
-------- ---- ---------
Total Net Assets $ 0
Shares Outstanding 0
Net Asset Value Per Share 0
-15-
<PAGE>
Stockjungle.com
Pure Play Internet Fund
----------------------------------------
Pro Forma
Existing New Combined
-------- ---- ---------
Total Net Assets $ 0
Shares Outstanding 0
Net Asset Value Per Share 0
Stockjungle.com
Community Intelligence Fund
----------------------------------------
Pro Forma
Existing New Combined
-------- ---- ---------
Total Net Assets $ 0
Shares Outstanding 0
Net Asset Value Per Share 0
VOTING AND MEETING PROCEDURES
You can vote by mail, phone, fax, internet, or in person at the Meeting.
* To vote by mail, sign and send us the enclosed Proxy voting card in
the envelope provided.
* To vote by fax, sign the enclosed Proxy card and fax both sides of it
to 1-800-______.
* To vote by phone, call us at 1-800-________.
* To vote by internet, go to www.__________.
If you vote electronically by phone or internet, SJ Trust or its agent will
use reasonable procedures (such as requiring an identification number) to verify
the authenticity of the vote cast. Each shareholder who casts an electronic vote
will also be able to validate that his or her vote was received correctly.
If you vote by Proxy, you can revoke your Proxy by notifying the Secretary
of SJ Trust in writing, or by returning a Proxy with a later date. You can also
revoke a Proxy by voting in person at the Meeting. Even if you plan to attend
the Meeting and vote in person, please return the enclosed Proxy card to vote
electronically. This will help us ensure that an adequate number of shares are
present at the Meeting.
In addition to the solicitation of proxies by electronic means, officers
and employees of SJ Trust, without additional compensation, may solicit proxies
in person or by telephone. The costs associated with that solicitation and the
Meeting will be paid by the Adviser and not by SJ Trust or any Fund. The
Adviser, and not SJ Trust or any Fund, will pay any costs associated with any
adjournments (discussed below) and further solicitation.
-16-
<PAGE>
The SJ Declaration of Trust provides that a quorum of the shareholders of a
Fund is 30% of the outstanding shares of the Fund entitled to vote. If
sufficient votes are not received by the date of the Meeting, a person named as
proxy may propose one or more adjournments of the Meeting for a period or
periods not more than 120 days in the aggregate to permit further solicitation
of proxies. All proxies voted, including abstentions, will be counted toward
establishing a quorum. The persons named as proxies will vote all proxies in
favor of adjournment that voted in favor of the reorganization (or abstained)
and vote against adjournment all proxies that voted against the reorganization.
The Funds will be reorganized only if approved by a majority of the
outstanding shares of each of the Funds. For this purpose, a "majority" of the
outstanding shares of a Fund means the lesser of (i) more than 50% of the shares
of the Fund entitled to vote at the Meeting, and (ii) 67% or more of the shares
of the Fund present at the Meeting in person or by proxy, if the holders of more
than 50% of the shares entitled to vote at the Meeting are present or
represented by proxy. Abstentions do not constitute a vote "for" the
reorganization and effectively result in a vote "against" the reorganization.
Shareholders of each Fund at the close of business on [__________], 2000
will be entitled to be present and vote at the Meeting. Shareholders of each
Fund will vote only with other shareholders of that Fund, separately from
shareholders of any other Fund. As of that date, each of the Funds had
outstanding and entitled to vote the following numbers of shares and total net
assets:
Name of Fund Shares Outstanding Total Net Assets
------------ ------------------ ----------------
Market Leaders Growth Fund [_____] $[_____]
Pure Play Internet Fund [_____] $[_____]
Community Intelligence Fund [_____] $[_____]
The following tables show, to the knowledge of SJ Trust's management, the
percentage of the aggregate shares of each Fund owned at the close of business
on [__________], 2000 by the officers and Trustees of SJ Trust and the Adviser
and by other persons owning beneficially more than 5% of the outstanding shares
of each Fund:
-17-
<PAGE>
Market Leaders Growth Fund
<TABLE>
<CAPTION>
Number of Total Net Percent of
Name and Address Shares Assets the Fund
---------------- --------- --------- ----------
<S> <C> <C> <C>
[Name] ([Title])
[Address] [_____] [_____] [___]%
All officers and Trustees of SJ Trust and the
Adviser (including the above) in the aggregate [_____] [_____] [___]%
Pure Play Internet Fund
Number of Total Net Percent of
Name and Address Shares Assets the Fund
---------------- --------- --------- ----------
[Name] ([Title])
[Address] [_____] [_____] [___]%
All officers and Trustees of the Trust and the
Adviser (including the above), in the aggregate [_____] [_____] [___]%
Community Intelligence Fund
Number of Total Net Percent of
Name and Address Shares Assets the Fund
---------------- --------- --------- ----------
[Name] ([Title])
[Address] [_____] [_____] [___]%
All officers and Trustees of the Trust and the
Adviser (including the above), in the aggregate [_____] [_____] [___]%
</TABLE>
GENERAL INFORMATION
The persons named in the accompanying Proxy will vote in each case as
directed in the Proxy, but in the absence of any direction, they intend to vote
FOR the reorganization and may vote in their discretion with respect to other
matters that may be presented to the Meeting.
-18-
<PAGE>
OTHER MATTERS TO COME BEFORE THE MEETING
SJ Trust's management does not know of any matters to be presented at the
Meeting other than those described in this Proxy Statement. If other business
should properly come before the Meeting, the Proxy holders will vote on them in
accordance with their best judgment.
SHAREHOLDER PROPOSALS
The Meeting is a special meeting of shareholders. Neither SJ Trust nor TIM
is required, nor does it intend, to hold regular annual meetings of its
shareholders. If such a meeting is called, any shareholder who wishes to submit
a proposal for consideration at the meeting should submit the proposal promptly
to the SJ Trust or TIM, as the case may be, at 2020 East Financial Way, Suite
105, Glendora, California 91741, Attention: Secretary. Any proposal to be
considered for submission to shareholders must comply with applicable federal
and state laws.
NAMES AND ADDRESSES
The Funds' investment adviser is StockJungle.com Investment Advisors, Inc.,
located at 5750 Wilshire Boulevard, Suite 560, Los Angeles, California 90036.
The Funds' administrator is Investment Company Administration, L.L.C., located
at 2020 East Financial Way, Suite 100, Glendora, California 91741. The Funds'
transfer agent and accountant is currently Countrywide Fund Services, Inc.,
located at 312 Walnut Street, 21st Floor, Cincinnati, Ohio 45202; after October
1, 2000, it will be Unified Fund Services, Inc., located at 431 North
Pennsylvania Street, Indianapolis, Indiana 46204. The Funds' distributor is
First Fund Distributors, Inc., an affiliate of ICA, located at the same address
as ICA indicated above. The Funds' custodian is Fifth Third Bank, located at 38
Fountain Square Plaza, Cincinnati, Ohio 45263.
PLEASE SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY TO ASSURE A QUORUM AT
THE MEETING.
Michael Witz, President
Los Angeles, California
[__________], 2000
-19-
<PAGE>
FORM N-14
-----------------------------------------------
PART B
-----------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
STOCKJUNGLE.COM MARKET LEADERS GROWTH FUND
STOCKJUNGLE.COM PURE PLAY INTERNET FUND
STOCKJUNGLE.COM COMMUNITY INTELLIGENCE FUND
2020 East Financial Way - Suite 100
Glendora, California 91741
Telephone: (626) 852-1033
This Statement of Additional Information relates specifically to the
proposed reorganization of the StockJungle.com Market Leaders Growth Fund,
StockJungle.com Pure Play Internet Fund, and StockJungle.com Community
Intelligence Fund, which are series of StockJungle.com Trust. It consists of
this cover page and the Statement of Additional Information of Trust for
Investment Managers filed with the Securities and Exchange Commission as part of
Registrant's Form N-1A Registration Statement on September 21, 2000.
This Statement of Additional Information is not a prospectus. A Combined
Proxy Statement and Prospectus dated [________], 2000 relating to the proposed
reorganization may be obtained from Trust for Investment Managers at the
telephone number and address above. This Statement of Additional Information
relates to, and should be read in conjunction with, that Combined Proxy
Statement and Prospectus.
The date of this Statement of Additional Information is [________], 2000.
B-1
<PAGE>
STOCKJUNGLE.COM(1) MARKET LEADERS GROWTH FUND
STOCKJUNGLE.COM PURE PLAY INTERNET FUND
STOCKJUNGLE.COM COMMUNITY INTELLIGENCE FUND
SERIES OF THE TRUST FOR INVESTMENT MANAGERS
STATEMENT OF ADDITIONAL INFORMATION
SEPTEMBER ___, 2000
This Statement of Additional Information is not a prospectus, and should be read
in conjunction with the Prospectus dated September ___, 2000, as may be amended
from time to time, for the StockJungle.com Market Leaders Growth Fund,
StockJungle.com Pure Play Internet Fund and the StockJungle.com Community
Intelligence Fund, (each individually a "Fund" and collectively the "Funds"),
each a series of the Trust for Investment Managers (the "Trust" or "TIM").
StockJungle.com Investment ADVISORS, Inc. (the "Adviser") is the investment
adviser to each Fund. The Prospectus may be obtained at http://stockjungle.com
or by calling the Funds at 1- 877-884-3147.
Page
----
The Trust......................................................................1
Investment Policies and Restrictions...........................................1
Trustees and Executive Officers...............................................15
Investment Advisory and Other Services........................................16
Portfolio Transactions and Allocation of Brokerage............................19
Ownership of Shares...........................................................21
Code of Ethics................................................................22
Additional Purchase and Redemption Information................................22
Determination of Share Price..................................................24
Distributions and Tax Information.............................................25
Performance Comparisons.......................................................27
Organization of Trust.........................................................29
Shareholder Services Plan.....................................................29
Financial Statements..........................................................29
Other Information.............................................................30
----------
(1) "StockJungle.com" is a trademark and the exclusive property of
StockJungle.com, Inc., the parent to the Adviser. StockJungle.com, Inc. is
an Internet-based company which offers a wide array of web-based services
and information to visitors to the StockJungle.com website.
<PAGE>
THE TRUST
TIM is an open-end management investment company organized as a Delaware
business trust on April 27, 1999. The Trust consists of various series which
represent separate investment portfolios. This SAI relates only to the Funds.
The Trust is registered with the Securities and Exchange Commission (the
"SEC") as a management investment company. Such a registration does not involve
supervision of the management or policies of the Funds. The Prospectus of the
Funds and this SAI omit certain of the information contained in the Registration
Statement filed with the SEC. Copies of such information may be obtained from
the SEC upon payment of the prescribed fee.
Before October ___, 2000, each of the Funds was a series of StockJungle.com
Trust, a registered investment company for which the Adviser served as
investment adviser, and which had the same investment objectives, policies and
strategies as the Funds. The various series of StockJungle.com Trust were
reorganized into the Trust on that date in a tax free transaction.
INVESTMENT POLICIES AND RESTRICTIONS
INVESTMENT POLICIES AND ASSOCIATED RISKS
The discussion below supplements the information contained in the
Prospectus with respect to the investment policies and primary risks that are
common to all of the Funds as well as risks which are particular to each Fund as
a result of such Fund's specific investment objective and strategies. As all
investment securities are subject to inherent market risks and fluctuations in
value due to earnings, economic and political conditions and other factors, no
Fund can give any assurance that its investment objective will be achieved.
Unless otherwise noted, the policies described in this Statement of Additional
Information are not fundamental and may be changed by the Board of Trustees.
MUTUAL FUNDS AS PART OF AN INVESTMENT PROGRAM. The loss of money is a risk
of investing in the Funds. None of the Funds, individually or collectively, is
intended to constitute a balanced or complete investment program and the net
asset value of each Fund's shares will FLCTUATE 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.
1
<PAGE>
EQUITY SECURITIES. To achieve its investment objective, each Fund invests
primarily in common stocks, but may also invest in preferred stock and
convertible preferred stock. Common stock represents the residual ownership
interest in an issuer and is entitled to the income and increase in the value of
the assets and business of the entity after all of its obligations and preferred
stock are satisfied. Preferred stock has a priority over common stock in
liquidation (and generally dividends as well) but is subordinate to the
liabilities of the issuer in all respects. As a general rule, the market value
of preferred stock with a fixed dividend rate and no conversion element varies
inversely with interest rates and perceived credit risk, while the market price
of convertible preferred stock generally also reflects some element of the
conversion value. A convertible security is a fixed income security (a debt
instrument or a preferred stock) that may be converted at a stated price within
a specified period of time into a certain quantity of the common stock of the
same or a different issuer. Convertible securities are senior to common stock in
an issuer's capital structure, but are usually subordinated to similar
non-convertible securities (e.g. preferred).
OTHER SECURITIES A FUND MIGHT PURCHASE. Under normal market conditions,
each Fund will invest at least 80% of its total assets in equity securities,
consisting of common and preferred stocks. If the Adviser believes that market
conditions warrant a temporary defensive posture, or for liquidity purposes,
each of the Funds may invest without limit in high quality, short-term debt
securities and money market instruments. These short-term debt securities and
money market instruments include commercial paper, certificates of deposit,
bankers' acceptances, and U.S. Government securities and repurchase agreements.
SECURITIES LENDING. Repurchase transactions will be fully collateralized at
all times with cash and/or short-term debt obligations. These transactions
involve some risk to a Fund engaged in securities lending if the other party
should default on its obligation and the Fund is delayed or prevented from
recovering the collateral. In the event the original seller defaults on its
obligation to repurchase, the Fund will seek to sell the collateral, which could
involve costs or delays. To the extent proceeds from the sale of collateral are
less than the repurchase price, the Fund would suffer a loss.
INVESTMENT IN NEW AND UNSEASONED COMPANIES. The StockJungle.com Pure Play
Internet Fund and the StockJungle.com Community Intelligence Fund may each
invest, pursuant to an initial public offering or otherwise, in the equity
securities of companies which are relatively new and unseasoned and in their
early stages of development where the Adviser believes that the opportunity for
rapid growth is above average. These companies may not be well-known to the
investing public or have significant institutional ownership. They may lack
depth of management and may be unable to internally generate funds necessary for
growth or potential development or to generate such funds through external
financing on favorable terms. In addition, these companies may be developing or
marketing new products or services for which markets are not yet established and
may never become established. Finally, new and unseasoned companies may have
relatively small revenues and limited product lines, markets, or financial
resources; their securities are often traded over-the-counter or on a regional
exchange and may trade less frequently and in more limited volume than those of
2
<PAGE>
larger more mature companies. When making larger sales, the Fund may have to
sell securities at discounts from quoted prices or may have to make a series of
small sales over an extended period of time. As a result, the market prices of
these securities may be more subject to volatile fluctuations than those of more
mature issuers. Such fluctuations could have an adverse effect on the net asset
value of the Fund and your investment.
SHORT-TERM INVESTMENTS. While seeking desirable equity investments whose
price history and expected performance lend themselves to the Adviser's method
for investment or for liquidity or temporary defensive purposes, each Fund may
invest in money market funds and/or money market instruments consisting of the
following:
Each Fund may acquire certificates of deposit, bankers' acceptances and
time deposits. Certificates of deposit are negotiable certificates issued
against funds deposited in a commercial bank for a definite period of time and
earning a specified return. Bankers' acceptances are negotiable drafts or bills
of exchange, normally drawn by an importer or exporter to pay for specific
merchandise, which are "accepted" by a bank, meaning in effect that the bank
unconditionally agrees to pay the face value of the instrument on maturity.
Certificates of deposit and bankers' acceptances acquired by any of the Funds
will be dollar-denominated obligations of domestic banks or financial
institutions which at the time of purchase have capital, surplus and undivided
profits in excess of $100 million (including assets of both domestic and foreign
branches), based on latest published reports, or less than $100 million if the
principal amount of such bank obligations are fully insured by the U.S.
Government.
Domestic banks are subject to different governmental regulations with
respect to the amount and types of loans which may be made and interest rates
which may be charged. In addition, the profitability of the banking industry
depends largely upon the availability and cost of funds for the purpose of
financing lending operations under prevailing money market conditions. General
economic conditions as well as exposure to credit losses arising from possible
financial difficulties of borrowers play an important part in the operations of
the banking industry.
As a result of federal and state laws and regulations, domestic banks are,
among other things, required to maintain specified levels of reserves, limited
in the amount which they can loan to a single borrower, and subject to other
regulations designed to promote financial soundness.
INVESTMENT IN DERIVATIVES. Both the StockJungle.com Market Leaders Growth
Fund and the StockJungle.com Pure Play Internet Fund may, as a non-principal
investment strategy, invest UP TO 5% of their TOTAL assets in futures and
options transactions for hedging purposes or as a substitute for direct
investment. The purchaser of a futures contract has the obligation to take
delivery of the type of financial instrument covered by the contract at a
specified time and price, and the seller of the contract has the corresponding
obligation to sell the financial instrument at that time and price. The
purchaser of an option contract acquires the right to purchase or sell a
specified security at a specified price during the term of the option, and the
seller of the option has the corresponding option to sell or buy the security at
that price if the purchaser exercises the option. Futures and options are
3
<PAGE>
considered to be "derivatives;" I.E., financial instruments whose value is
derived from the value of an underlying asset, such as a security or an index.
The use of futures and options involves certain special risks due to the
possibility of imperfect correlations among movements in the prices of options
purchased or sold by a Fund and, in the case of hedging transactions, of the
securities that are the subject of the hedge.
PURCHASING PUT AND CALL OPTIONS. The StockJungle.com Market Leaders Growth
Fund may purchase put and call options on securities eligible for purchase by
the Fund and on securities indices, and the StockJungle.com Pure Play Internet
Fund may purchase put and call options on securities indices. Put and call
options are derivative securities traded on U.S. exchanges. If a Fund purchases
a put option, it acquires the right to sell the underlying security or index
value at a specified price at any time during the term of the option. If a Fund
purchases a call option, it acquires the right to purchase the underlying
security or index value at a specified price at any time during the term of the
option. Prior to exercise or expiration, the Fund may sell an option through a
"closing sale transaction," which is accomplished by selling an option of the
same series as the option previously purchased. The Fund generally will purchase
only those options for which the Adviser believes there is an active secondary
market to facilitate closing transactions.
A Fund may purchase call options to hedge against an increase in the price
of securities that the Fund wants ultimately to buy. Such hedge protection is
provided during the life of the call option since the Fund, as holder of the
call option, is able to buy the underlying security at the exercise price
regardless of any increase in the underlying security's market price. In order
for a call option to be profitable, the market price of the underlying security
must rise sufficiently above the exercise price to cover the premium and
transaction costs.
A Fund may purchase put options to hedge against a decrease in the price of
securities it holds. Such hedge protection is provided during the life of the
put option since the Fund, as the holder of the put option, is able to sell the
underlying security at the exercise price regardless of any decrease in the
underlying security's market price. In order for a put option to be profitable,
the market price of the underlying security must decrease sufficiently below the
exercise price to *cover the premium and transaction costs.
WRITING CALL OPTIONS. The StockJungle.com Market Leaders Growth Fund may
write covered call options on securities eligible for purchase by the Fund. A
call option is "covered" if a Fund owns the security underlying the call or has
an absolute right to acquire the security without additional cash consideration
(or, if additional cash consideration is required, cash or cash equivalents in
such amount are held in a segregated account by the Custodian). The writer of a
call option receives a premium and gives the purchaser the right to buy the
security underlying the option at the exercise price. The writer has the
obligation upon exercise of the option to deliver the underlying security
against payment of the exercise price during the option period. If the writer of
an exchange-traded option wishes to terminate its obligation, it may effect a
"closing purchase transaction." This is accomplished by buying an option of the
same series as the option previously written. A writer may not effect a closing
purchase transaction after it has been notified of the exercise of an option.
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Effecting a closing transaction in the case of a written call option will
permit a Fund to write another call option on the underlying security with
either a different exercise price, expiration date or both. Also, effecting a
closing transaction allows the cash or proceeds from the concurrent sale of any
securities subject to the option to be used for other investments of the Fund.
If a Fund desires to sell a particular security from its portfolio on which it
has written a call option, it will effect a closing transaction prior to or
concurrent with the sale of the security.
A Fund realizes a gain from a closing transaction if the cost of the
closing transaction is less than the premium received from writing the option or
if the proceeds from the closing transaction are more than the premium paid to
purchase the option. A Fund realizes a loss from a closing transaction if the
cost of the closing transaction is more than the premium received from writing
the option or if the proceeds from the closing transaction are less than the
premium paid to purchase the option. However, because increases in the market
price of a call option will generally reflect increases in the market price of
the underlying security, appreciation of the underlying security owned by a Fund
generally offsets, in whole or in part, any loss to the Fund resulting from the
repurchase of a call option.
RISK FACTORS IN OPTIONS TRANSACTIONS. The successful use of a Fund's
options strategies depends on the ability of the Adviser to forecast correctly
interest rate and market movements. For example, if the Fund were to write a
call option based on the Adviser's expectation that the price of the underlying
security would fall, but the price were to rise instead, the Fund could be
required to sell the security upon exercise at a price below the current market
price. Similarly, if the Fund were to write a put option based on the Adviser's
expectation that the price of the underlying security would rise, but the price
were to fall instead, the Fund could be required to purchase the security upon
exercise at a price higher than the current market price.
When a Fund purchases an option, it runs the risk that it will lose its
entire investment in the option in a relatively short period of time, unless the
Fund exercises the option or enters into a closing sale transaction before the
option's expiration. If the price of the underlying security does not rise (in
the case of a call) or fall (in the case of a put) to an extent sufficient to
cover the option premium and transaction costs, the Fund will lose part or all
of its investment in the option. This contrasts with an investment by the Fund
in the underlying security, since the Fund will not realize a loss if the
security's price does not change.
The effective use of options also depends on a Fund's ability to terminate
option positions at times when the Adviser deems it desirable to do so. There is
no assurance that a Fund will be able to effect closing transactions at any
particular time or at an acceptable price.
If a secondary market in options were to become unavailable, a Fund could
no longer engage in closing transactions. Lack of investor interest might
adversely affect the liquidity of the market for particular options or series of
options. A market may discontinue trading of a particular option or options
generally. In addition, a market could become temporarily unavailable if unusual
events, such as volume in excess of trading or clearing capability, were to
interrupt its normal operations.
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A market may at times find it necessary to impose restrictions on
particular types of options transactions, such as opening transactions. For
example, if an underlying security ceases to meet qualifications imposed by the
market or an options clearing corporation, new series of options on that
security will no longer be opened to replace expiring series, and opening
transactions in existing series may be prohibited. If an options market were to
become unavailable, the Fund as a holder of an option would be able to realize
profits or limit losses only by exercising the option, and the Fund, as option
writer, would remain obligated under the option until expiration or exercise.
Disruptions in the markets for the securities underlying options purchased
or sold by a Fund could result in losses on the options. If trading is
interrupted in an underlying security, the trading of options on that security
is normally halted as well. As a result, the Fund as purchaser or writer of an
option will be unable to close out its positions until options trading resumes,
and it may be faced with considerable losses if trading in the security reopens
at a substantially different price. In addition, an options clearing corporation
or options market may impose exercise restrictions. If a prohibition on exercise
is imposed at the time when trading in the option has also been halted, the Fund
as purchaser or writer of an option will be locked into its position until one
of the two restrictions has been lifted. If an options clearing corporation were
to determine that the available supply of an underlying security appears
insufficient to permit delivery by the writers of all outstanding calls in the
event of exercise, it may prohibit indefinitely the exercise of put options. The
Fund, as holder of such a put option, could lose its entire investment if the
prohibition remained in effect until the put option's expiration.
DEALER OPTIONS. A Fund may engage in transactions involving dealer options
as well as exchange-traded options. Certain risks are specific to dealer
options. While a Fund might look to an exchange's clearing corporation to
exercise exchange-traded options, if the Fund purchases a dealer option it must
rely on the selling dealer to perform if the Fund exercises the option. Failure
by the dealer to do so would result in the loss of the premium paid by the Fund
as well as loss of the expected benefit of the transaction.
Exchange-traded options generally have a continuous liquid market while
dealer options may not. Consequently, a Fund can realize the value of a dealer
option it has purchased only by exercising or reselling the option to the
issuing dealer. Similarly, when a Fund writes a dealer option, the Fund can
close out the option prior to its expiration only by entering into a closing
purchase transaction with the dealer. While the Funds will seek to enter into
dealer options only with dealers who will agree to and can enter into closing
transactions with the Funds, no assurance exists that a Fund will at any time be
able to liquidate a dealer option at a favorable price at any time prior to
expiration. Unless a Fund, as a covered dealer call option writer, can effect a
closing purchase transaction, it will not be able to liquidate securities (or
other assets) used as cover until the option expires or is exercised. In the
event of insolvency of the other party, the Fund may be unable to liquidate a
dealer option. With respect to options written by a Fund, the inability to enter
into a closing transaction may result in material losses to the Fund. For
example, because a Fund must maintain a secured position with respect to any
call option on a security it writes, the Fund may not sell the assets which it
has segregated to secure the position while it is obligated under the option.
This requirement may impair the Fund's ability to sell portfolio securities at a
time when such sale might be advantageous.
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The staff of the SEC takes the position that purchased dealer options are
illiquid securities. A Fund may treat the cover used for written dealer options
as liquid if the dealer agrees that the Fund may repurchase the dealer option it
has written for a maximum price to be calculated by a predetermined formula. In
such cases, the dealer option would be considered illiquid only to the extent
the maximum purchase price under the formula exceeds the intrinsic value of the
option. With that exception, however, the Funds will treat dealer options as
subject to the Funds' limitation on illiquid securities. If the SEC changes its
position on the liquidity of dealer options, the Funds will change their
treatment of such instruments accordingly.
FUTURES CONTRACTS. Subject to applicable law, the StockJungle.com Market
Leaders Growth Fund and the StockJungle.com Pure Play Internet Fund may each
invest in futures contracts for hedging purposes. A financial futures contract
sale creates an obligation by the seller to deliver the type of financial
instrument called for in the contract in a specified delivery month for a stated
price. A financial futures contract purchase creates an obligation by the
purchaser to take delivery of the type of financial instrument called for in the
contract in a specified delivery month at a stated price. The specific
instruments delivered or taken, respectively, at settlement date are not
determined until on or near that date. The determination is made in accordance
with the rules of the exchange on which the futures contract sale or purchase
was made. Futures contracts are traded in the United States only on commodity
exchanges or boards of trade, known as "contract markets," approved for such
trading by the Commodity Futures Trading Commission (the "CFTC"), and must be
executed through a futures commission merchant or brokerage firm which is a
member of the relevant contract market.
Although futures contracts (other than index futures) by their terms call
for actual delivery or acceptance of commodities or securities, in most cases
the contracts are closed out before the settlement date without the making or
taking of delivery.
Closing out a futures contract sale is effected by purchasing a futures
contract for the same aggregate amount of the specific type of financial
instrument or commodity with the same delivery date. If the price of the initial
sale of the futures contract exceeds the price of the offsetting purchase, the
seller is paid the difference and realizes a gain. Conversely, if the price of
the offsetting purchase exceeds the price of the initial sale, the seller
realizes a loss. If a Fund is unable to enter into a closing transaction, the
amount of the Fund's potential loss is unlimited. The closing out of a futures
contract purchase is effected by the purchaser's entering into a futures
contract sale. If the offsetting sale price exceeds the purchase price, the
purchaser realizes a gain, and if the purchase price exceeds the offsetting sale
price, he realizes a loss.
Unlike when a Fund purchases or sells a security, no price is paid or
received by the Fund upon the purchase or sale of a futures contract. Upon
entering into a contract, a Fund is required to deposit with its custodian in a
segregated account in the name of the futures broker an amount of liquid assets.
This amount is known as "initial margin." The nature of initial margin in
futures transactions is different from that of margin in security transactions
in that futures contract margin does not involve the borrowing of Funds to
finance the transactions. Rather, initial margin is similar to a performance
bond or good faith deposit which is returned to the Fund upon termination of the
futures contract, assuming all contractual obligations have been satisfied.
Futures contracts also involve brokerage costs.
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Subsequent payments, called "variation margin" or "maintenance margin," to
and from the broker (or the custodian) are made on a daily basis as the price of
the underlying security or commodity fluctuates, making the long and short
positions in the futures contract more or less valuable, a process known as
"marking to the market." For example, when the Fund has purchased a futures
contract on a security and the price of the underlying security has risen, that
position will have increased in value and the Fund will receive from the broker
a variation margin payment based on that increase in value. Conversely, when the
Fund has purchased a security futures contract and the price of the underlying
security has declined, the position would be less valuable and the Fund would be
required to make a variation margin payment to the broker.
A Fund may elect to close some or all of its futures positions at any time
prior to their expiration in order to reduce or eliminate a hedge position then
currently held by the Fund. The Fund may close its positions by taking opposite
positions which will operate to terminate the Fund's position in the futures
contracts. Final determinations of variation margin are then made, additional
cash is required to be paid by or released to a Fund, and the Fund realizes a
loss or a gain. Such closing transactions involve additional commission costs.
RISKS OF TRANSACTIONS IN FUTURES CONTRACTS. Successful use of futures
contracts by the Fund is subject to the Adviser's ability to predict movements
in various factors affecting securities markets, including interest rates.
The use of futures strategies also involves the risk of imperfect
correlation among movements in the prices of the securities underlying the
futures purchased and sold by the Fund, of the futures contracts themselves,
and, in the case of hedging transactions, of the securities which are the
subject of a hedge. The successful use of these strategies further depends on
the ability of the Adviser to forecast market movements correctly.
There is no assurance that higher than anticipated trading activity or
other unforeseen events might not, at times, render certain market clearing
facilities inadequate, and thereby result in the institution by exchanges of
special procedures which may interfere with the timely execution of customer
orders.
To reduce or eliminate a position held by the Fund, the Fund may seek to
close out such position. The ability to establish and close out positions will
be subject to the development and maintenance of a liquid secondary market. It
is not certain that this market will develop or continue to exist for a
particular futures contract. Reasons for the absence of a liquid secondary
market on an exchange include the following: (i) there may be insufficient
trading interest in certain contracts; (ii) restrictions may be imposed by an
exchange on opening transactions or closing transactions or both; (iii) trading
halts, suspensions or other restrictions may be imposed with respect to
particular classes or series of contracts, or underlying securities; (iv)
unusual or unforeseen circumstances may interrupt normal operations on an
exchange; (v) the facilities of an exchange or a clearing corporation may not at
all times be adequate to handle current trading volume; or (vi) one or more
exchanges could, for economic or other reasons, decide or be compelled at some
future date to discontinue the trading of contracts (or a particular class or
series of contracts), in which event the secondary market on that exchange for
such contracts (or in the class or series of contracts) would cease to exist,
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although outstanding contracts on the exchange that had been issued by a
clearing corporation as a result of trades on that exchange would continue to be
exercisable in accordance with their terms. If a Fund is unable to enter into a
closing transaction, the amount of the Fund's potential loss is unlimited.
INDEX FUTURES CONTRACTS. An index futures contract is a contract to buy or
sell an index at a specified future date at a price agreed upon when the
contract is made. Entering into a contract to buy an index is commonly referred
to as buying or purchasing a contract or holding a long position in the index.
Entering into a contract to sell an index is commonly referred to as selling a
contract or holding a short position. The StockJungle.com Market Leaders Growth
Fund and StockJungle.com Pure Play Internet Fund may enter into stock index
futures contracts or other index futures contracts appropriate to their
respective objectives.
For example, the S&P 500 Index is composed of 500 selected common stocks,
most of which are listed on the New York Stock Exchange. The S&P 500 Index
assigns relative weightings to the common stocks included in the Index, and the
value fluctuates with changes in the market values of those common stocks. In
the case of the S&P 500 Index, the value of one S&P 500 futures contract is $250
times the index. Thus, if the value of the S&P 500 Index were 1000, one contract
could be worth $250,000 (1000 x $250). The stock index futures contract
specifies that no delivery of the actual stocks making up the index will take
place. Instead, settlement in cash must occur upon the termination of the
contract, with the settlement being the difference between the contract price
and the actual level of the stock index at the expiration of the contract. For
example, if the Fund buys one S&P 500 futures contract at a contract price of
1000 and the S&P 500 Index is at 1100 on expiration date, the Fund will gain
$25,000 ($250 x gain of 100). If the Fund sells one S&P 500 futures contract at
a contract price of 1000 and the S&P 500 Index is at 1050 on expiration date,
the Fund will lose $12,500 ($250 x loss of $50).
There are several risks in connection with the use by a Fund of index
futures. One risk arises because of the imperfect correlation between movements
in the prices of the index futures and movements in the prices of securities
which are the subject of the hedge. The Adviser will, however, attempt to reduce
this risk by buying or selling, to the extent possible, futures on indices the
movements of which will, in its judgment, have a significant correlation with
movements in the prices of the securities sought to be hedged.
Successful use of index futures by a Fund is also subject to the Adviser's
ability to predict movements in the direction of the market. For example, it is
possible that, where a Fund has sold futures to hedge its portfolio against a
decline in the market, the index on which the futures are written may advance
and the value of securities held in the Fund's portfolio may decline. If this
occurred, the Fund would lose money on the futures and also experience a decline
in value in its portfolio securities. It is also possible that, if the Fund has
hedged against the possibility of a decline in the market adversely affecting
securities held in its portfolio and securities prices increase instead, the
Fund will lose part or all of the benefit of the increased value of those
securities it has hedged because it will have offsetting losses in its futures
positions. In addition, in such situations, if the Fund has insufficient cash,
it may have to sell securities to meet daily variation margin requirements at a
time when it is disadvantageous to do so.
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In addition to the possibility that there may be an imperfect correlation,
or no correlation at all, between movements in the index futures and the portion
of a Fund's portfolio being hedged, the prices of index futures may not
correlate perfectly with movements in the underlying index due to certain market
distortions. First, all participants in the futures market are subject to margin
deposit and maintenance requirements. Rather than meeting additional margin
deposit requirements, investors may close futures contracts through offsetting
transactions which could distort the normal relationship between the index and
futures markets. Second, margin requirements in the futures market are less
onerous than margin requirements in the securities market, and as a result the
futures market may attract more speculators than the securities market does.
Increased participation by speculators in the futures market may also cause
temporary price distortions. Due to the possibility of price distortions in the
futures market and also because of the imperfect correlation between movements
in the index and movements in the prices of index futures, even a correct
forecast of general market trends by the Adviser may still not result in a
profitable position over a short time period.
STANDARD & POOR'S DEPOSITARY RECEIPTS ("SPDRS"). SPDR shares trade on the
American Stock Exchange at approximately one-tenth the value of the S&P 500
Index. SPDR shares are relatively liquid and, because they exactly replicate the
S&P 500 Index, any price movement away from the value of the underlying stocks
is generally quickly eliminated by professional traders. Thus, the Adviser
believes that the movement of SPDR share prices should closely track the
movement of the S&P 500 Index. The administrator of the SPDR program, the
American Stock Exchange, receives a fee to cover its costs of about 0.19% per
year. This fee is deducted from the dividends paid to SPDR investors.
GOVERNMENT OBLIGATIONS. Each Fund may invest in U.S. Government
obligations. Such obligations include Treasury bills, certificates of
indebtedness, notes and bonds, and issues of such entities as the Government
National Mortgage Association ("GNMA"), Export-Import Bank of the United States,
Tennessee Valley Authority, Resolution Funding Corporation, Farmers Home
Administration, Federal Home Loan Banks, Federal Intermediate Credit Banks,
Federal Farm Credit Banks, Federal Land Banks, Federal Housing Administration,
Federal National Mortgage Association ("FNMA"), Federal Home Loan Mortgage
Corporation, and the Student Loan Marketing Association.
Certain of these obligations, such as those of the GNMA, are supported by
the full faith and credit of the U.S. Treasury; others, such as those of the
Export-Import Bank of United States, are supported by the right of the issuer to
borrow from the Treasury; others, such as those of the FNMA, are supported by
the discretionary authority of the U.S. Government to purchase the agency's
obligations; still others, such as those of the Student Loan Marketing
Association, are supported only by the credit of the instrumentality. No
assurance can be given that the U.S. Government would provide financial support
to U.S. Government-sponsored instrumentalities if it is not obligated to do so
by law.
SHORT SALES. The StockJungle.com Community Intelligence Fund is authorized
to make short sales of securities it owns or has the right to acquire at no
added cost through conversion or exchange of other securities it owns (referred
to as short sales "against the box") and to make short sales of securities which
it does not currently own or have the right to acquire.
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In a short sale that is not "against the box," the Fund sells a security
which it does not own, in anticipation of a decline in the market value of the
security. To complete the sale, the Fund must borrow the security (generally
from the broker through which the short sale is made) in order to make delivery
to the buyer. The Fund is then obligated to replace the security borrowed by
purchasing it at the market price at the time of replacement. The Fund is said
to have a "short position" in the securities sold until it delivers them to the
broker. The period during which the Fund has a short position can range from one
day to more than a year. Until the security is replaced, the proceeds of the
short sale are retained by the broker, and the Fund is required to pay to the
broker a negotiated portion of any dividends or interest which accrue during the
period of the loan. To meet current margin requirements, the Fund is also
required to deposit with the broker additional cash or securities so that the
total deposit with the broker is maintained daily at 150% of the current market
value of the securities sold short (100% of the current market value if a
security is held in the account that is convertible or exchangeable into the
security sold short within 90 days without restriction other than the payment of
money).
Short sales by the Fund that are not made "against the box" create
opportunities to increase the Fund's return but, at the same time, involve
specific risk considerations and may be considered a speculative technique.
Since the Fund in effect profits from a decline in the price of the securities
sold short without the need to invest the full purchase price of the securities
on the date of the short sale, the Fund's net asset value per share will tend to
increase more when the securities it has sold short decrease in value, and to
decrease more when the securities it has sold short increase in value, than
would otherwise be the case if it had not engaged in such short sales. The
amount of any gain will be decreased, and the amount of any loss increased, by
the amount of any premium, dividends or interest the Fund may be required to pay
in connection with the short sale. Furthermore, under adverse market conditions,
the Fund might have difficulty purchasing securities to meet its short sale
delivery obligations, and might have to sell portfolio securities to raise the
capital necessary to meet its short sale obligations at a time when fundamental
investment considerations would not favor such sales.
If the Fund makes a short sale "against the box," the Fund would not
immediately deliver the securities sold and would not immediately receive the
proceeds from the sale. The seller is said to have a short position in the
securities sold until it delivers the securities sold, at which time it receives
the proceeds of the sale. To secure its obligation to deliver securities sold
short, the Fund will deposit in escrow in a separate account with the Custodian
an equal amount of the securities sold short or securities convertible into or
exchangeable for such securities. The Fund can close out its short position by
purchasing and delivering an equal amount of the securities sold short, rather
than by delivering securities already held by the Fund, because the Fund might
want to continue to receive interest and dividend payments on securities in its
portfolio that are convertible into the securities sold short.
The Fund's decision to make a short sale "against the box" may be a
technique to hedge against market risks when the Adviser believes that the price
of a security may decline, causing a decline in the value of a security owned by
the Fund or a security convertible into or exchangeable for such security. In
such case, any future losses in the Fund's long position would be reduced by a
gain in the short position. The extent to which such gains or losses in the long
position are reduced will depend upon the amount of securities sold short
relative to the amount of the securities the Fund owns, either directly or
indirectly, and, in the case where the Fund owns convertible securities, changes
in the investment values or conversion premiums of such securities.
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ILLIQUID SECURITIES. No Fund may invest more than 15% of the value of its
net assets in securities that at the time of purchase are illiquid. The Adviser
will monitor the amount of illiquid securities in each Fund's portfolio, under
the supervision of the Trust's Board of Trustees, to ensure compliance with each
Fund's investment restrictions.
Historically, illiquid securities have included securities subject to
contractual or legal restrictions on resale because they have not been
registered under the Securities Act of 1933 (the "Securities Act"), securities
which are otherwise not readily marketable and repurchase agreements having a
maturity of longer than seven days. Securities which have not been registered
under the Securities Act are referred to as private placement or restricted
securities and are purchased directly from the issuer or in the secondary
market. Mutual funds do not typically hold a significant amount of these
restricted or other illiquid securities because of the potential for delays on
resale and uncertainty in valuation. Limitations on resale may have an adverse
effect on the marketability of each Fund's portfolio securities and the Funds
might be unable to dispose of restricted or other illiquid securities promptly
or at reasonable prices and might thereby experience difficulty satisfying
redemption requests within seven days. The Funds might also have to register
such restricted securities in order to dispose of them, resulting in additional
expense and delay. Adverse market conditions could impede such a public offering
of securities.
In recent years, however, a large institutional market has developed for
certain securities that are not registered under the Securities Act, including
repurchase agreements, commercial paper, foreign securities, municipal
securities and corporate bonds and notes. Institutional investors depend on an
efficient institutional market in which the unregistered security can be readily
resold or on an issuer's ability to honor a demand for repayment. The fact that
there are contractual or legal restrictions on resale to the general public or
to certain institutions may not be indicative of the liquidity of such
investments. If such securities are subject to purchase by institutional buyers
in accordance with Rule 144A promulgated by the Commission under the Securities
Act, the Trust's Board of Trustees may determine that such securities are not
illiquid securities notwithstanding their legal or contractual restrictions on
resale. In all other cases, however, securities subject to restrictions on
resale will be deemed illiquid.
The Board has delegated to the Adviser, pursuant to Board-approved
guidelines, the function of making day-to-day determinations of whether
securities are liquid. The Adviser, in implementing this delegated function,
takes into account a number of factors in determining liquidity, including but
not limited to: (1) how frequently the security is traded; (2) the number of
dealers that make quotes for the security; (3) the number of dealers that make a
market in the security; (4) the number of other potential purchasers; (5) the
nature of the security; and (6) how trading is effected (e.g., the time needed
to sell the security, how bids are solicited and the mechanics of transfer). The
Adviser monitors the liquidity of restricted securities in each Fund and reports
periodically on these securities to the Board.
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AMERICAN DEPOSITORY RECEIPTS. Each Fund may, from time to time, each invest
in the securities of foreign issuers, which securities include American
Depository Receipts ("ADRs"). Generally, ADRs, in registered form, are
denominated in U.S. dollars and are designed for use in the U.S. securities
markets. ADRs are receipts, typically issued by a U.S. bank or trust company,
evidencing ownership of the underlying securities. For purposes of the Funds'
investment policies, ADRs are deemed to have the same classification as the
underlying securities they represent. Thus, an ADR evidencing ownership of
common stock will be treated as common stock.
REPURCHASE AGREEMENTS. Each Fund may invest in repurchase agreements. A
repurchase agreement involves the purchase by a Fund of the securities with the
condition that after a stated period of time the original seller will buy back
the same securities at a predetermined price or yield. The Funds' custodian will
hold the securities underlying any repurchase agreement or such securities will
be part of the Federal Reserve Book Entry System. The market value of the
collateral underlying the repurchase agreement will be determined on each
business day. If at any time the market value of a Fund's collateral falls below
the repurchase price of the repurchase agreement (including any accrued
interest), that Fund will promptly receive additional collateral (so the total
collateral is an amount at least equal to the repurchase price plus accrued
interest).
SECURITIES LOANS. Each Fund may make secured loans of its portfolio
securities, on either a short-term or long-term basis, amounting to not more
than 25% of its total assets, thereby realizing additional income. The risks in
lending portfolio securities, as with other extensions of credit, consist of
possible delay in recovery of the securities or possible loss rights in the
collateral should the borrower fail financially. As a matter of policy,
securities loans are made to broker-dealers pursuant to agreements requiring
that the loans be continuously secured by collateral consisting of cash or
short-term debt obligations at least equal at all times to the value of the
securities on loan, "marked-to-market" daily. The borrower pays to a lender-Fund
an amount equal to any dividends or interest received on securities lent. Each
Fund retains all or a portion of the interest received on the collateral or
receives a fee from the borrower. Although voting rights, or rights to consent,
with respect to the loaned securities may pass to the borrower, each Fund
retains the right to call the loans at any time on reasonable notice, and it
will do so to enable that Fund to exercise voting rights on any matters
materially affecting the investment. The Funds may also call such loans in order
to sell the securities.
INVESTMENT RESTRICTIONS
In addition to the investment objectives and policies set forth in the
Prospectus and in this Statement of Additional Information, the Funds are each
subject to certain fundamental and non-fundamental investment restrictions, as
set forth below. Fundamental investment restrictions may not be changed with
respect to any Fund individually, without the vote of a majority of that Fund's
outstanding shares (as defined in the Investment Company Act of 1940, as amended
(the "1940 Act")). Non-fundamental investment restrictions of a Fund may be
changed by the Board of Trustees.
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Each Fund's investment objective as set forth in the "Risk/Return Summary"
portion of the Prospectus, is a fundamental policy. As additional fundamental
investment restrictions, the Funds will not:
1. Purchase the securities of any issuer (other than securities issued
or guaranteed by the U.S. Government, its agencies or instrumentalities), if, as
a result, as to 75% of a Fund's total assets, more than 5% of its net assets
would be invested in the securities of one issuer or the Fund would hold more
than 10% of the outstanding voting securities of any one issuer.
2. Issue any senior securities, as defined in the 1940 Act, except as
set forth in restriction number 3 below.
3. Borrow amounts in excess of 10% of the cost or 10% of the market
value of its total assets, whichever is less, and then only from a bank and as a
temporary measure for extraordinary or emergency purposes. To secure any such
borrowing, a Fund may pledge or hypothecate all or any portion of the value of
its total assets.
4. Act as an underwriter of securities of other issuers, except
insofar as the Trust may be technically deemed an underwriter under the federal
securities laws in connection with the disposition of each Fund's portfolio
securities.
5. Purchase or sell real estate or commodities, including oil, gas or
other mineral exploration or developmental programs or commodity futures
contracts, except as set forth in the Prospectus. This restriction shall not
preclude the Funds from investing in banks or other financial institutions that
have real estate or that buy and sell real estate or from investing in the
equity securities of companies who hold assets or do business in those sectors.
6. Make loans, in the aggregate, exceeding 25% of any Fund's total
assets or lend any Fund's portfolio securities to broker-dealers if the loans
are not fully collateralized or write call options on securities which are not
fully covered.
7. Invest in other registered investment companies, except as
permitted by the 1940 Act.
8. Purchase from or sell to any officer or trustee of the Trust or its
Adviser any securities other than the shares of any Fund.
9. Concentrate its investments in any one industry although it may
invest up to 25% of the value of its total assets in a particular industry. This
limitation shall not apply to securities issued or guaranteed by the U.S.
Government OR, FOR THE PURE PLAY INTERNET FUND, TO SECURITIES OF COMPANIES IN
INTERNET RELATED INDUSTRIES.
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.
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2. Invest more than 15% of their respective net assets in illiquid
securities.
Unless otherwise indicated, percentage limitations included in the
restrictions apply at the time a Fund enters into a transaction. Accordingly,
any later increase or decrease beyond the specified limitation resulting from a
change in that Fund's net assets will not be considered in determining whether
it has complied with its investment restrictions.
TRUSTEES AND EXECUTIVE OFFICERS
The Trustees of the Trust, who were elected for an indefinite term by the
initial shareholders of the Trust, are responsible for the overall management of
the Trust, including general supervision and review of the investment activities
of the Funds. The Trustees, in turn, elect the officers of the Trust, who are
responsible for administering the day-to-day operations of the Trust and its
separate series. The current Trustees and officers, their affiliations, dates of
birth and principal occupations for the past five years are set forth below.
Unless noted otherwise, each person has held the position listed for a minimum
of five years.
POSITION(S)
HELD WITH
NAME, ADDRESS AND AGE THE TRUST PRINCIPAL OCCUPATION LAST FIVE YEARS
--------------------- --------- ------------------------------------
George J. Rebhan (66) Trustee Retired. Formerly, President
1920 Mission Street Hotchkis and Wiley Fund (mutual
South Pasadena, CA 91030 funds) from 1985 to 1993.
Ashley T. Rabun (48) Trustee Founder and Chief Executive Officer,
2161 India St. InvestorReach, Inc. (financial
San Diego, CA 92101 services and marketing and
distribution consulting). Formerly,
Partner and Director,
Nicholas-Applegate Capital
Management (investment management)
from 1992 to 1996.
James Clayburn LaForce (72) Trustee Dean Emeritus, John E. Anderson
P.O. Box 1595 Graduate School of Management,
San Diego, CA 92101 University of California, Los
Angeles.
Robert H. Wadsworth* (60) Trustee and President of Investment Company
4455 Camelback Rd. President Administration, LLC ("ICA") (mutual
Phoenix, AZ 85018 fund administrator and the Trust's
Administrator) and First Fund
Distributors, Inc. (registered
broker-dealer and the Trust's
Distributor).
----------
* Indicates an "interested person" of the Trust as defined in the 1940 Act.
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POSITION(S)
HELD WITH
NAME, ADDRESS AND AGE THE TRUST PRINCIPAL OCCUPATION LAST FIVE YEARS
--------------------- --------- ------------------------------------
Robert M. Slotky* (53) Treasurer Senior Vice President, ICA since May
2020 E. Financial Way 1997. Formerly instructor of
Glendora, CA 91741 accounting at California State
University-Northridge (1997); Chief
Financial Officer, Wanger Asset
Management L.P. (INVESTMENT MANAGER)
and Treasurer of Acorn Investment
Trust (REGISTERED INVESTMENT
COMPANY) (1992-1996).
Set forth below is the rate of compensation received by the following
Trustees from all portfolios of the Trust. This total amount is allocated among
the portfolios. Disinterested Trustees receive an annual retainer of $7,500. The
Trustees also receive a fee of $750 for any special meeting or committee meeting
attended on a date other than that of a regularly scheduled meeting.
Disinterested trustees are also reimbursed for expenses in connection with each
Board meeting attended. No other compensation or retirement benefits were
received by any Trustee or officer from the portfolios of the Trust.
NAME OF TRUSTEE TOTAL ANNUAL COMPENSATION
--------------- -------------------------
George J. Rebhan $7,500
Ashley T. Rabun $7,500
James Clayburn LaForce $7,500
As of the date of this SAI, the Trustees and officers of the Trust as a
group did not own more than 1% of the outstanding shares of any of the Funds.
INVESTMENT ADVISORY AND OTHER SERVICES
THE INVESTMENT ADVISER
The investment adviser for each of the Funds is StockJungle.com Investment
Advisors, Inc., a Delaware corporation organized on November 3, 1998. The
Adviser was organized to act as investment adviser to the predecessors of the
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Funds. The Adviser will act as such pursuant to written agreements with the
Trust, on behalf of each Fund, which, after each agreement's initial two-year
period, must be re-approved annually by the Board of Trustees. The address of
the Adviser is 5750 Wilshire Boulevard, Suite 560, Los Angeles, California
90036. The Adviser can also be contacted by telephone at 1-877-884-3147.
The common stock of the Adviser is wholly-owned and controlled by
StockJungle.com, Inc., a Delaware corporation controlled by Michael Witz and
Julian Smerkovitz. StockJungle.com, Inc. is the sponsor of the StockJungle.com
website located at http://www.stockjungle.com upon which that company offers a
wide variety of products and services intended for use by investors with access
to the Internet. Additional information regarding these products and services is
available on the website.
The Adviser acts as the investment adviser to each Fund under an Investment
Advisory Agreement which has been approved by the Board of Trustees (including a
majority of the Trustees who are not parties to the agreement, or interested
persons of any such party).
Each Investment Advisory Agreement will terminate automatically in the
event of its assignment. In addition, each agreement is terminable at any time,
without penalty, by the Board of Trustees of the Trust or by vote of a majority
of the Trust's outstanding voting securities (as defined in the 1940 Act) on not
more than 60 days' written notice to the Adviser, and by the Adviser on 60 days'
written notice to the Trust. Unless sooner terminated, each agreement shall
continue in effect for more than two years after its execution only so long as
such continuance is specifically approved at least annually by either the Board
of Trustees or by a vote of a majority of the Trust's outstanding voting
securities (as defined in the 1940 Act), provided that, in either event, such
continuance is also approved by a vote of a majority of the Trustees who are not
parties to such agreement, or interested persons of such parties (as defined in
the 1940 Act), cast in person at a meeting called for the purpose of voting on
such approval.
Under the Investment Advisory Agreement, the Adviser provides each Fund
with advice and assistance in the selection and disposition of the Fund's
investments. The Adviser is obligated to pay the salaries and fees of any
affiliates of the Adviser serving as officers of the Trust and/or the Funds.
Each Investment Advisory Agreement provides that the Adviser will not be
liable to the Trust or its shareholders for its acts or omissions in the course
of its services thereunder, except for willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations ("disabling conduct"). Each
Agreement also provides that each party will indemnify the other against
liabilities arising out of its performance under the Agreement, except for a
party's disabling conduct.
The Adviser has entered into a non-exclusive License Agreement with the
Trust which permits the Trust to use the name "StockJungle.com." The Adviser has
the right to require that the Trust stop using the name at such time as the
Adviser is no longer employed as investment manager to the Funds.
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<PAGE>
For the period from the commencement of operations of the Funds'
predecessors on November 17, 1999 through March 31, 2000, the Funds'
predecessors paid the Adviser fees as follows: Market Leaders Growth Fund,
$1,214; Pure Play Internet Fund, $2,226; and Community Intelligence Fund,
$2,284. During this period, the Adviser was responsible for the payment of all
other expenses of the Funds (other than brokerage fees and extraordinary
expenses), which were as follows: Market Leaders Growth Fund, $____; Pure Play
Internet Fund, $____; and Community Intelligence Fund, $_____.
THE ADMINISTRATOR
The Funds have an Administration Agreement with Investment Company
Administration, L.L.C. (the "Administrator"), a corporation owned and controlled
in part by Mr. Wadsworth with offices at 2020 E. Financial Way, Suite 100,
Glendora, California 91741. The Administration Agreement provides that the
Administrator will prepare and coordinate reports and other materials supplied
to the Trustees; prepare and/or supervise the preparation and filing of all
securities filings, periodic financial reports, prospectuses, statements of
additional information, marketing materials, tax returns, shareholder reports
and other regulatory reports or filings required of the Funds; prepare all
required notice filings necessary to maintain the Funds' ability to sell shares
in all states where each Fund currently does, or intends to do business;
coordinate the preparation, printing and mailing of all materials (e.g., annual
reports) required to be sent to shareholders; coordinate the preparation and
payment of Fund related expenses; monitor and oversee the activities of the
Funds' servicing agents (i.e., transfer agent, custodian, fund accountants,
etc.); review and adjust as necessary the Funds' daily expense accruals; and
perform such additional services as may be agreed upon by the Funds and the
Administrator.
Administrative services were provided to the Funds' predecessors by
Integrated Fund Services, Inc. ("IFS") from the commencement of operations
through July 17, 2000, and by the Administrator thereafter. The Adviser was
responsible for payment of all administrative expenses of the Funds'
predecessors, which were as follows for the period from commencement of
operations on November 17, 1999 through March 31, 2000: Market Leaders Growth
Fund, $_____; Pure Play Internet Fund, $______; and Community Intelligence Fund,
$_____.
THE DISTRIBUTOR
First Fund Distributors, Inc. (the "Distributor"), a corporation partially
owned by Mr. Wadsworth, acts as the Funds' principal underwriter in a continuous
public offering of the Funds' shares. After its initial two year term, the
Distribution Agreement between each Fund and the Distributor continues in effect
for periods not exceeding one year if approved at least annually by (i) the
Board of Trustees or the vote of a majority of the outstanding shares of that
Fund (as defined in the 1940 Act) and (ii) a majority of the Trustees who are
not interested persons of any such party, in each case cast in person at a
meeting called for the purpose of voting on such approval. The Distribution
Agreement may be terminated without penalty by the parties upon sixty days'
written notice, and is automatically terminated in the event of its assignment
as defined in the 1940 Act.
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<PAGE>
Distribution services were provided to the Funds' predecessors by IFS Fund
Distributors, Inc. ("IFS") from the commencement of operations through July 17,
2000, and by the Distributor thereafter. The Adviser was responsible for payment
of all distribution expenses of the Funds' predecessors, which were as follows
for the period from commencement of operations on November 17, 1999 through
March 31, 2000: Market Leaders Growth Fund, $500; Pure Play Internet Fund, $500;
and Community Intelligence Fund, $500.
CUSTODIAN, TRANSFER AGENT AND FUND ACCOUNTANT
Fifth Third Bank, 38 Fountain Square Plaza, Cincinnati, Ohio 45263, serves
as custodian for each Fund's cash and securities (the "Custodian"). Pursuant to
a Custodian Agreement with the Trust on behalf of each Fund, the Custodian is
responsible for maintaining the books and records of each Fund's portfolio
securities and cash. The Custodian does not assist in, and is not responsible
for, investment decisions involving assets of the Funds. The Adviser was
responsible for payment of all custodian expenses of the Funds' predecessors,
which were as follows for the period from commencement of operations on November
17, 1999 through March 31, 2000: Market Leaders Growth Fund, $____; Pure Play
Internet Fund, $______; Community Intelligence Fund, $______.
Unified Fund Services, Inc., 431 North Pennsylvania Street, Indianapolis,
Indiana 42604 ("Unified"), serves as transfer agent and fund accounting agent
for each Fund pursuant to a Mutual Fund Services Agreement with the Trust on
behalf of each Fund. These services were provided to the Funds' predecessors by
CFS from the commencement of operations through September 30, 2000, and by
Unified thereafter. The Adviser was responsible for payment of all transfer
agent and fund accounting expenses of the Funds' predecessors, which were as
follows for the period from commencement of operations on November 17, 1999
through March 31, 2000: Market Leaders Growth Fund, $______; Pure Play Internet
Fund, $_______; and Community Intelligence Fund, $______.
PORTFOLIO TRANSACTIONS AND ALLOCATION OF BROKERAGE
Each Fund's assets are invested by the Adviser in a manner consistent with
its investment objective, policies, and restrictions and with any instructions
the Board of Trustees may issue from time to time. Within this framework, the
Adviser is responsible for making all determinations as to the purchase and sale
of portfolio securities and for taking all steps necessary to implement
securities transactions on behalf of each of the Funds.
Transactions on U.S. stock exchanges, commodities markets and futures
markets and other agency transactions may involve the payment by the Adviser on
behalf of a Fund of negotiated brokerage commissions. Such commissions vary
among different brokers. A particular broker may charge different commissions
according to such factors as the difficulty and size of the transaction.
Transactions in foreign investments often involve the payment of fixed brokerage
commissions, which may be higher than those in the United States. There is
generally no stated commission in the case of securities traded in the
over-the-counter markets, but the price paid by the Adviser usually includes an
undisclosed dealer commission or mark-up. In underwritten offerings, the price
paid by the Adviser on behalf of each Fund includes a disclosed, fixed
commission or discount retained by the underwriter or dealer.
19
<PAGE>
U.S. Government securities and other fixed income securities generally are
traded in the over-the-counter market through broker-dealers. A broker-dealer is
a securities firm or bank that makes a market for securities by offering to buy
at one price and sell at a slightly higher price. The difference between the
prices is known as a spread.
In placing orders for the purchase and sale of portfolio securities for
each Fund, the Adviser seeks to obtain the best price and execution, taking into
account such factors as price, size of order, difficulty and risk of execution
and operational facilities of the firm involved. For securities traded in the
over-the-counter markets, the Adviser deals directly with the dealers who make
markets in the securities unless better prices and execution are available
elsewhere. The Adviser negotiates commission rates with brokers based on the
quality and quantity of services provided in light of generally prevailing
rates, and while the Adviser generally seeks reasonably competitive commission
rates, the Funds do not necessarily pay the lowest commissions available. The
Board of Trustees periodically reviews the commission rates and allocation of
orders.
When consistent with the objectives of best price and execution, business
may be placed with broker-dealers who furnish investment research or services to
the Adviser. Such research or services include advice, both directly and in
writing, as to the value of securities; the advisability of investing in,
purchasing or selling securities; and the availability of securities, or
purchasers or sellers of securities; as well as analyses and reports concerning
issues, industries, securities, economic factors and trends, portfolio strategy
and the performance of accounts. To the extent portfolio transactions are
effected with broker-dealers who furnish research services to the Adviser, the
Adviser receives a benefit, not capable of evaluation in dollar amounts, without
providing any direct monetary benefit to any Fund from these transactions. The
Adviser believes that most research services obtained by it generally benefit
several or all of the investment companies and private accounts which it
manages, as opposed to solely benefiting one specific managed fund or account.
The same security may be suitable for each of the Funds or other private
accounts managed by the Adviser. If and when a Fund and two or more accounts
simultaneously purchase or sell the same security, the transactions will be
allocated as to price and amount in accordance with arrangements equitable to
the Fund and account. The simultaneous purchase or sale of the same securities
by a Fund and other accounts may have a detrimental effect on the Fund, as this
may affect the price paid or received by the Fund or the size of the position
obtainable or able to be sold by the Fund.
Consistent with the Conduct Rules of the National Association of Securities
Dealers, Inc. and subject to seeking the most favorable price and execution
available and such other policies as the Trustees may determine, the Adviser may
consider sales of shares of each Fund as a factor in the selection of
broker-dealers to execute portfolio transactions for the Fund.
20
<PAGE>
OWNERSHIP OF SHARES
Each share of each Fund has one vote for each dollar of net asset value of
the share in the election of Trustees. Cumulative voting is not authorized for
any Fund. This means that the holders of more than 50% of the shares voting for
the election of Trustees can elect 100% of the Trustees if they choose to do so,
and, in that event, the holders of the remaining shares will be unable to elect
any Trustees.
Shareholders of the Funds and any other series of the Trust will vote in
the aggregate and not by series except as otherwise required by law or when the
Board of Trustees determines that the matter to be voted upon affects only the
interest of the shareholders of a particular series. Pursuant to Rule 18f-2
under the 1940 Act, the approval of an investment advisory agreement or any
change in a fundamental policy would be acted upon separately by the series
affected. Matters such as ratification of the independent public accountants and
election of Trustees are not subject to separate voting requirements and may be
acted upon by shareholders of the Trust voting without regard to series.
As of September 30, 2000, the directors and officers of the Trust as a
group owned _____% of the outstanding stock of the Market Leaders Growth Fund,
_____% of the outstanding stock of the Pure Play Internet Fund, and _____% of
the outstanding stock of the Community Intelligence Fund. The following are the
name, address and percentage of ownership of each person who owned of record or
is known by a Fund to have owned 5% or more of any Fund's outstanding stock as
of September 30, 2000.
MARKET LEADERS GROWTH FUND
PURE PLAY INTERNET FUND
COMMUNITY INTELLIGENCE FUND
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<PAGE>
CODE OF ETHICS
The Boards of the Trust, the Adviser and the Distributor have adopted Codes
of Ethics under Rule 17j-l of the 1940 Act. These Codes permit, subject to
certain conditions, personnel of the Adviser and Distributor to invest in
securities that may be purchased or held by the Fund. The Codes of Ethics for
the Adviser, the Trust and the principal underwriter of the Trust are on file
with and available from the SEC.
Personnel of the Adviser may invest in securities for their own accounts
pursuant to a Code of Ethics that sets forth all employees' fiduciary
responsibilities regarding the Funds, establishes procedures for personal
investing and restricts certain transactions. For example, all personal trades
in most securities require pre-clearance, and participation in initial public
offerings is prohibited. In addition, restrictions on the timing of personal
investing in relation to trades by the Funds and on short-term trading have been
adopted.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
The information provided below supplements the information contained in the
Funds' Prospectus regarding the purchase and redemption of Fund shares.
HOW TO BUY SHARES
The public offering price of Fund shares is the net asset value. Shares are
purchased at the public offering price next determined after the Transfer Agent
receives your order in proper form. In most cases, in order to receive that
day's public offering price, the Transfer Agent must receive your order in
proper form before the close of regular trading on the New York Stock Exchange
("NYSE"), normally 4:00 p.m., Eastern time.
The NYSE annually announces the days on which it will not be open for
trading. The most recent announcement indicates that it will not be open on the
following days: New Year's Day, Martin Luther King Jr. Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. However, the NYSE may close on days not included in that
announcement.
The Trust reserves the right in its sole discretion (i) to suspend the
continued offering of any Fund's shares, (ii) to reject purchase orders in whole
or in part when in the judgment of the Adviser or the Distributor such rejection
is in the best interest of a Fund, and (iii) to reduce or waive the minimum for
initial and subsequent investments for certain fiduciary accounts or under
circumstances where certain economies can be achieved in sales of a Fund's
shares.
HOW TO SELL SHARES
You can sell your Fund shares any day the NYSE is open for regular trading.
A Fund may require documentation for the sale of shares by a corporation,
partnership, agent or fiduciary, or a surviving joint owner. Contact the
Transfer Agent for details.
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<PAGE>
SIGNATURE GUARANTEES
If you sell shares having a net asset value of $10,000 a signature
guarantee is required. Certain other transactions, including redemptions, also
require a signature guarantee. Signature guarantees may be obtained from a bank,
broker-dealer, credit union (if authorized under state law), securities exchange
or association, clearing agency or savings institution. A notary public cannot
provide a signature guarantee.
DELIVERY OF REDEMPTION PROCEEDS
Payments to shareholders for shares of a Fund redeemed directly from the
Fund will be made as promptly as possible but no later than seven days after
receipt by the Funds' Transfer Agent of the written request in proper form, with
the appropriate documentation as stated in the Prospectus, except that a Fund
may suspend the right of redemption or postpone the date of payment during any
period when (a) trading on the NYSE is restricted as determined by the SEC or
the NYSE is closed for other than weekends and holidays; (b) an emergency exists
as determined by the SEC making disposal of portfolio securities or valuation of
net assets of the Fund not reasonably practicable; or (c) for such other period
as the SEC may permit for the protection of the Fund's shareholders. Under
unusual circumstances, a Fund may suspend redemptions, or postpone payment for
more than seven days, but only as authorized by SEC rules.
The value of shares on redemption or repurchase may be more or less than
your cost, depending upon the market value of a Fund's portfolio securities at
the time of redemption or repurchase.
TELEPHONE REDEMPTIONS. Shareholders must have selected telephone
transactions privileges on the Account Application when opening a Fund account.
Upon receipt of any instructions or inquiries by telephone from a shareholder
or, if held in a joint account, from either party, or from any person claiming
to be the shareholder, a Fund or its agent is authorized, without notifying the
shareholder or joint account parties, to carry out the instructions or to
respond to the inquiries, consistent with the service options chosen by the
shareholder or joint shareholders in his or their latest Account Application or
other written request for services, including purchasing or redeeming shares of
a Fund or Funds and depositing and withdrawing monies from the bank account
specified in the Bank Account Registration section of the shareholder's latest
Account Application or as otherwise properly specified to the Funds in writing.
The Transfer Agent will employ these and other reasonable procedures to
confirm that instructions communicated by telephone are genuine; if it fails to
employ reasonable procedures, the Funds and the Transfer Agent may be liable for
any losses due to unauthorized or fraudulent instructions. If these procedures
are followed, an investor agrees, however, that to the extent permitted by
applicable law, neither the Funds nor their agents will be liable for any loss,
liability, cost or expense arising out of any redemption request, including any
fraudulent or unauthorized request. For information, consult the Transfer Agent.
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<PAGE>
During periods of unusual market changes and shareholder activity, you may
experience delays in contacting the Transfer Agent by telephone. In this event,
you may wish to submit a written redemption request, as described in the
Prospectus. The Telephone Redemption Privilege may be modified or terminated
without notice.
REDEMPTIONS-IN-KIND. The Trust has filed an election under SEC pursuant to
Rule 18f-1 under the 1940 Act committing to pay in cash all redemptions by a
shareholder of record up to amounts specified by the Rule (in excess of the
lesser of (i) $250,000 or (ii) 1% of the Fund's assets). Each Fund reserves the
right to pay the redemption price of its shares in excess of the amounts
specified by the Rule, either totally or partially, by a distribution in kind of
portfolio securities (instead of cash). The securities so distributed would be
valued at the same amount as assigned to them in calculating the net asset value
for the shares being sold. If a shareholder receives a distribution in kind, the
shareholder could incur brokerage or other charges in converting the securities
to cash.
AUTOMATIC INVESTMENT PLAN. As discussed in the Prospectus, the Funds
provide an Automatic Investment Plan for the convenience of investors who wish
to purchase shares of a Fund or Funds on a regular basis. All record keeping and
custodial costs of the Automatic Investment Plan are paid by the Funds. The
market value of each Fund's shares is subject to fluctuation, so before
undertaking any plan for systematic investment, the investor should keep in mind
that this plan does not assure a profit nor protect against depreciation in
declining markets.
DETERMINATION OF SHARE PRICE
The net asset value and offering price of shares of each Fund will be
determined once daily as of the close of public trading on the NYSE (normally
4:00 p.m., Eastern time) on each day that the NYSE is open for trading. None of
the Funds expects to determine the net asset value of its shares on any day when
the NYSE is not open for trading even if there is sufficient trading in its
portfolio securities on such days to materially affect the net asset value per
share. However, the net asset value of each Fund's shares may be determined on
days the NYSE is closed or at times other than 4:00 p.m. if the Board of
Trustees decides it is necessary.
In valuing a Fund's assets for calculating net asset value, readily
marketable portfolio securities listed on a national securities exchange or on
NASDAQ are valued at the last sale price on the business day as of which such
value is being determined. If there has been no sale on such exchange or on
NASDAQ on such day, the security is valued at the closing bid price on such day.
Readily marketable securities traded only in the over-the-counter market and not
on NASDAQ are valued at the current or last bid price. If no bid is quoted on
such day, the security is valued by such method as the Board of Trustees of the
Trust determines in good faith to reflect the security's fair value. All other
assets of the Funds are valued in such manner as the Board of Trustees in good
faith deems appropriate to reflect their fair value.
The net asset value per share of each Fund is calculated as follows: all
liabilities incurred or accrued are deducted from the valuation of total assets,
which includes accrued but undistributed income; the resulting net assets are
divided by the number of shares of the Fund outstanding at the time of the
valuation and the result (adjusted to the nearest cent) is the net asset value
per share.
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<PAGE>
DISTRIBUTIONS AND TAX INFORMATION
DISTRIBUTIONS
Dividends from net investment income and distributions from net profits
from the sale of securities are generally made annually. Also, each Fund expects
to distribute any undistributed net investment income on or about December 31 of
each year. Any net capital gains realized through the period ended October 31 of
each year will also be distributed by December 31 of each year.
Each distribution by a Fund is accompanied by a brief explanation of the
form and character of the distribution. In January of each year the Funds will
issue to each shareholder a statement of the federal income tax status of all
distributions.
TAX INFORMATION
Each series of the Trust is treated as a separate entity for federal income
tax purposes. Each Fund intends to continue to qualify and elect to be treated
as a "regulated investment company" under Subchapter M of the Internal Revenue
Code of 1986 (the "Code"), provided that it complies with all applicable
requirements regarding the source of its income, diversification of its assets
and timing of distributions. It is each Fund's policy to distribute to its
shareholders all of its investment company taxable income and any net realized
capital gains for each fiscal year in a manner that complies with the
distribution requirements of the Code, so that no Fund will be subject to any
federal income tax or excise taxes based on net income. To avoid the excise tax,
each Fund must also distribute (or be deemed to have distributed) by December 31
of each calendar year (i) at least 98% of its ordinary income for such year,
(ii) at least 98% of the excess of its realized capital gains over its realized
capital losses for the one-year period ending on October 31 during such year and
(iii) any amounts from the prior calendar year that were not distributed and on
which the Fund paid no federal excise tax.
Each Fund's ordinary income generally consists of interest and dividend
income, less expenses. Net realized capital gains for a fiscal period are
computed by taking into account any capital loss carryforward of each Fund.
Distributions of net investment income and net short-term capital gains are
taxable to shareholders as ordinary income. In the case of corporate
shareholders, a portion of the distributions may qualify for the intercorporate
dividends-received deduction to the extent the Portfolio designates the amount
distributed as a qualifying dividend. This designated amount cannot, however,
exceed the aggregate amount of qualifying dividends received by a Fund for its
taxable year. The deduction, if any, may be reduced or eliminated if Portfolio
shares held by a corporate investor are treated as debt-financed or are held for
fewer than 46 days.
Any long-term capital gain distributions are taxable to shareholders as
long-term capital gains regardless of the length of time they have held their
shares. Capital gains distributions are not eligible for the dividends-received
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<PAGE>
deduction referred to in the previous paragraph. Distributions of any ordinary
income and net realized capital gains will be taxable as described above,
whether received in shares or in cash. Shareholders who choose to receive
distributions in the form of additional shares will have a cost basis for
federal income tax purposes in each share so received equal to the net asset
value of a share on the reinvestment date. Distributions are generally taxable
when received. However, distributions declared in October, November or December
to shareholders of record on a date in such a month and paid the following
January are taxable as if received on December 31. Distributions are includable
in alternative minimum taxable income in computing a shareholder's liability for
the alternative minimum tax.
Under the Code, each Fund will be required to report to the Internal
Revenue Service all distributions of ordinary income and capital gains as well
as gross proceeds from the redemption of Portfolio shares, except in the case of
exempt shareholders, which includes most corporations. Pursuant to the backup
withholding provisions of the Code, distributions of any taxable income and
capital gains and proceeds from the redemption of Fund shares may be subject to
withholding of federal income tax at the current maximum federal tax rate of 31%
in the case of non-exempt shareholders who fail to furnish the Funds with their
taxpayer identification numbers and with required certifications regarding their
status under the federal income tax law. If the backup withholding provisions
are applicable, any such distributions and proceeds, whether taken in cash or
reinvested in additional shares, will be reduced by the amounts required to be
withheld. Corporate and other exempt shareholders should provide the Funds with
their taxpayer identification numbers or certify their exempt status in order to
avoid possible erroneous application of backup withholding. The Funds reserve
the right to refuse to open an account for any person failing to certify the
person's taxpayer identification number.
The Funds will not be subject to corporate income tax in the State of
Delaware as long as they qualify as regulated investment companies for federal
income tax purposes. Distributions and the transactions referred to in the
preceding paragraphs may be subject to state and local income taxes, and the tax
treatment thereof may differ from the federal income tax treatment.
The foregoing discussion of U.S. federal income tax law relates solely to
the application of that law to U.S. citizens or residents and U.S. domestic
corporations, partnerships, trusts and estates. Each shareholder who is not a
U.S. person should consider the U.S. and foreign tax consequences of ownership
of shares of the Fund, including the possibility that such a shareholder may be
subject to a U.S. withholding tax at a rate of 30% (or at a lower rate under an
applicable income tax treaty) on amounts constituting ordinary income.
In addition, the foregoing discussion of tax law is based on existing
provisions of the Code, existing and proposed regulations thereunder, and
current administrative rulings and court decisions, all of which are subject to
change. Any such charges could affect the validity of this discussion. The
discussion also represents only a general summary of tax law and practice
currently applicable to the Funds and certain shareholders therein, and, as
such, is subject to change. In particular, the consequences of an investment in
shares of the Fund under the laws of any state, local or foreign taxing
jurisdictions are not discussed herein. Each prospective investor should consult
his or her own tax adviser to determine the application of the tax law and
practice in his or her own particular circumstances.
26
<PAGE>
PERFORMANCE COMPARISONS
Total return quoted in advertising and sales literature reflects all
aspects of a Fund's return, including the effect of reinvesting dividends and
capital gain distributions and any change in a Fund's net asset value during the
period.
Each Fund's total return must be displayed in any advertisement containing
the Fund's yield. Total return is the average annual total return for the 1-, 5-
and 10-year period ended on the date of the most recent balance sheet included
in the Statement of Additional Information, computed by finding the average
annual compounded rates of return over 1-, 5- and 10-year periods that would
equate the initial amount invested to the ending redeemable value according to
the following formula:
n
P(1 + T) = ERV
Where: P = a hypothetical initial investment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the 1-, 5- or 10-year periods
at the end of the 1-, 5- or 10-year periods (or
fractional portion).
Because the Funds have not had a registration in effect for 1, 5 or 10
years, the period during which the registration has been effective shall be
substituted.
Average annual total return is calculated by determining the growth or
decline in value of a hypothetical historical investment in each Fund over a
stated period and then calculating the annual compounded percentage rate that
would have produced the same result if the rate of growth or decline in value
had been constant throughout the period. For example, a cumulative total return
of 100% over 10 years would produce an average annual total return of 7.18%,
which is the steady annual rate that would result in 100% growth on a compounded
basis in 10 years. While average annual total returns are a convenient means of
comparing investment alternatives, investors should realize that the Fund's
performance is not constant over time, but changes from year to year, and that
average annual total returns represent averaged figures as opposed to actual
year-to-year performance.
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.
27
<PAGE>
Each Fund's performance may be compared with the performance of other funds
with comparable investment objectives, tracked by fund rating services or with
other indexes of market performance. Sources of economic data that may be
considered in making such comparisons may include, but are not limited to,
rankings of any mutual fund or mutual fund category tracked by Lipper Analytical
Services, Inc. or Morningstar, Inc.; data provided by the Investment Company
Institute; major indexes of stock market performance; and indexes and historical
data supplied by major securities brokerage or investment advisory firms. The
Funds may also each utilize reprints from newspapers and magazines furnished by
third parties to illustrate historical performance.
The agencies listed below measure performance based on their own criteria
rather than on the standardized performance measures described in the preceding
section.
Lipper Analytical Services, Inc. distributes mutual fund rankings monthly.
The rankings are based on total return performance calculated by Lipper,
generally reflecting changes in net asset value adjusted for reinvestment of
capital gains and income dividends. They do not reflect deduction of any sales
charges. Lipper rankings cover a variety of performance periods, including
year-to-date, 1-year, 5-year, and 10-year performance. Lipper classifies mutual
funds by investment objective and asset category.
Morningstar, Inc. distributes mutual fund ratings twice a month. The
ratings are divided into five groups: highest, above average, neutral, below
average and lowest. They represent the fund's historical risk/reward ratio
relative to other funds in its broad investment class as determined by
Morningstar, Inc. Morningstar ratings cover a variety of performance periods,
including 1-year, 3-year, 5-year, 10-year and overall performance. The
performance factor for the overall rating is a weighted-average assessment of
the fund's 1-year, 3-year, 5-year, and 10-year total return performance (if
available) reflecting deduction of expenses and sales charges. Performance is
adjusted using quantitative techniques to reflect the risk profile of the fund.
The ratings are derived from a purely quantitative system that does not utilize
the subjective criteria customarily employed by rating agencies such as Standard
& Poor's and Moody's Investor Service, Inc.
CDA/Weisenberger's Management Results publishes mutual fund rankings and is
distributed monthly. The rankings are based entirely on total return calculated
by Weisenberger for periods such as year-to-date, 1-year, 3-year, 5-year and
10-year. Mutual funds are ranked in general categories (e.g., international
bond, international equity, municipal bond, and maximum capital gain).
Weisenberger rankings do not reflect deduction of sales charges or fees.
Independent publications may also evaluate each Fund's performance. The
Funds may from time to time each refer to results published in various
periodicals, including BARRON'S, FINANCIAL WORLD, FORBES, FORTUNE, INVESTOR'S
BUSINESS DAILY, KIPLINGER'S PERSONAL FINANCE MAGAZINE, MONEy, U.S. NEWS AND
WORLD REPORT and THE WALL STREET JOURNAL.
28
<PAGE>
ORGANIZATION OF TRUST
StockJungle.com Market Leaders Growth Fund, StockJungle.com Pure Play
Internet Fund, and StockJungle.com Community Intelligence Fund are each a series
of TIM, a Delaware business trust organized on April 27, 1999.
The Agreement and Declaration of Trust of TIM permits the Board of Trustees
to issue an limited number of full and fractional shares of beneficial interest,
without par value, which may be issued in any number of series. The Board of
Trustees may from time to time issue other series, the assets and liabilities of
which will be separate and distinct from any other series.
Shares issued by a Fund have no preemptive, conversion, or subscription
rights. Shareholders have equal and exclusive rights as to dividends and
distributions as declared by the Fund and to the net assets of the Fund upon
liquidation or dissolution. Each Fund, as a separate series of the Trust, votes
separately on matters affecting only that Fund (E.G., approval of the Advisory
Agreement); all series of the Trust vote as a single class on matters affecting
all series jointly or the Trust as a whole (E.G., election or removal of
Trustees). Voting rights are not cumulative, so that the holders of more than
50% of the shares voting in any election of Trustees can, if they so choose,
elect all of the Trustees. While the Trust is not required and does not intend
to hold annual meetings of shareholders, such meetings may be called by the
Trustees in their discretion, or upon demand by the holders of 10% or more of
the outstanding shares of the Trust, for the purpose of electing or removing
Trustees.
SHAREHOLDER SERVICES PLAN
The Trust, on behalf of each Fund, has adopted a Shareholder Services Plan
that permits the Fund to pay shareholder servicing fees. The Plan provides that
the Funds will pay a fee to the Adviser for shareholder servicing at an annual
rate of 0.25% of the Funds' average daily net assets. The Plan provides for the
compensation to the Adviser as Shareholder Servicing Coordinator regardless of
the Funds' shareholder servicing expenses. The Plan may be terminated at any
time by vote of a majority of the Trustees of the Trust who are not interested
persons. Continuation of the Plan is considered by such Trustees no less
frequently than annually.
FINANCIAL STATEMENTS
The balance sheet of the Funds' predecessors as of October 19, 1999 are
attached to this SAI. It has been audited by the Funds' independent auditors,
Arthur Andersen LLP, whose report thereon is also attached. The balance sheet is
included herein in reliance upon their authority as experts in accounting and
auditing.
The unaudited financial statements included in the semi-annual report to
shareholders of the Funds' predecessors for the period from commencement of
operations on November 17, 1999 through March 31, 2000 are incorporated herein
by reference. Copies of the report may be obtained for free by calling the Funds
toll-free at 1- 877-884-3147 or by writing the Funds at 431 North Pennsylvania
Street, Indianapolis, IN 46204-1806. It is also available without charge on the
Internet website at http://www.stockjungle.com.
29
<PAGE>
OTHER INFORMATION
The Adviser has been recently registered with the Securities Exchange
Commission ("SEC") under the Investment Advisers Act of 1940, as amended. The
Trust has filed a registration statement under the Securities Act of 1933 and
the 1940 Act with respect to the shares offered. Such registrations do not imply
approval or supervision of any Fund or the Adviser by the SEC.
For further information, please refer to the registration statement and
exhibits on file with the SEC in Washington, D.C. These documents are available
upon payment of a reproduction fee. Statements in the Prospectus and in this
Statement of Additional Information concerning the contents of contracts or
other documents, copies of which are filed as exhibits to the registration
statement, are qualified by reference to such contracts or documents.
30
<PAGE>
STOCKJUNGLE.COM TRUST
Statement of Assets and Liabilities
October 19, 1999
<TABLE>
<CAPTION>
StockJungle.com StockJungle.com StockJungle.com
Community Pure Play Market
Intelligence Fund Internet Fund Leaders Fund
----------------- ------------- ------------
<S> <C> <C> <C>
ASSETS
Cash $50,000 $25,000 $25,000
------- ------- -------
NET ASSETS $50,000 $25,000 $25,000
======= ======= =======
Shares of beneficial interest outstanding
(unlimited number of shares authorized,
no par value) $ 5,000 $ 2,500 $ 2,500
======= ======= =======
Net Asset Value, offering price and
redemption price per share $ 10.00 $ 10.00 $ 10.00
======= ======= =======
</TABLE>
STOCKJUNGLE.COM TRUST
NOTES TO STATEMENTS OF ASSETS AND LIABILITIES
AS OF OCTOBER 19, 1999
(1) The StockJungle.com Community Intelligence Fund, the StockJungle.com
Pure Play Internet Fund, the StockJungle.com Market Leaders Fund and the
StockJungle.com No Fee S&P 500 Fund (the Funds) are each a non-diversified
series of the StockJungle.com Trust (the Trust), an open-end management
investment company organized as a Massachusetts business trust under a
Declaration of Trust dated June 11, 1999. On October 19, 1999, 5,000 shares of
the StockJungle.com Community Intelligence Fund, and 2,500 shares each of the
StockJungle.com Pure Play Internet Fund and the StockJungle.com Market Leaders
Fund were issued for cash at $10.00 per share. The Funds have had no operations
except for the initial issuance of shares.
Expenses incurred in connection with the organization of the Funds and the
initial offering of shares will be permanently absorbed by StockJungle.com, Inc.
(the Adviser). As of October 19, 1999, all outstanding shares of the Funds were
held by the Adviser, who purchased these initial shares in order to provide the
Trust with its required capital.
Reference is made to the Prospectus and the Statement of Additional
Information for a description of the Investment Advisory Agreement, the
Underwriting Agreement, the Administration Agreement, the Accounting Services
Agreement, the Transfer, Dividend Disbursing, Shareholder Service and Plan
Agency Agreement, tax aspects of the Fund and the calculation of the net asset
value of shares of the Funds.
31
<PAGE>
ARTHUR ANDERSEN LLP
Report of Independent Public Accountants
To the Board of Trustees and Shareholders of the StockJungle.com Community
Intelligence Fund, StockJungle.com Pure Play Internet Fund and StockJungle.com
Market Leaders Fund of StockJungle.com Trust:
We have audited the accompanying statements of assets and liabilities of
the StockJungle.com Community Intelligence Fund, the StockJungle.com Pure Play
Internet Fund and the StockJungle.com Market Leaders Fund of StockJungle.com
Trust as of October 19, 1999. These financial statements are the responsibility
of the Trust's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statements of assets and liabilities are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the statements of assets and
liabilities. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the statements of assets and liabilities referred to above
present fairly, in all material respects, the financial position of the
StockJungle.com Community Intelligence Fund, the StockJungle.com Pure Play
Internet Fund and the StockJungle.com Market Leaders Fund of StockJungle.com
Trust as of October 19, 1999 in conformity with generally accepted accounting
principles.
/s/ Arthur Andersen LLP
Cincinnati, Ohio
October 20, 1999
32
<PAGE>
FORM N-14
-----------------------------------------------
PART C
-----------------------------------------------
OTHER INFORMATION
ITEM 15. INDEMNIFICATION.
ARTICLE VI of Registrant's By-Laws states as follows:
SECTION 1. AGENTS, PROCEEDINGS AND EXPENSES. For the purpose of this
Article, "agent" means any person who is or was a Trustee, officer, employee or
other agent of this Trust or is or was serving at the request of this Trust as a
Trustee, director, officer, employee or agent of another foreign or domestic
corporation, partnership, joint venture, trust or other enterprise or was a
Trustee, director, officer, employee or agent of a foreign or domestic
corporation which was a predecessor of another enterprise at the request of such
predecessor entity; "proceeding" means any threatened, pending or completed
action or proceeding, whether civil, criminal, administrative or investigative;
and "expenses" includes without limitation attorney's fees and any expenses of
establishing a right to indemnification under this Article.
SECTION 2. ACTIONS OTHER THAN BY TRUST. This Trust shall indemnify any
person who was or is a party or is threatened to be made a party to any
proceeding (other than an action by or in the right of this Trust) by reason of
the fact that such person is or was an agent of this Trust, against expenses,
judgments, fines, settlements and other amounts actually and reasonably incurred
in connection with such proceeding, if it is determined that person acted in
good faith and reasonably believed:
(a) in the case of conduct in his official capacity as a Trustee of the
Trust, that his conduct was in the Trust's best interests, and
(b) in all other cases, that his conduct was at least not opposed to the
Trust's best interests, and
(c) in the case of a criminal proceeding, that he had no reasonable cause
to believe the conduct of that person was unlawful.
The termination of any proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent shall not of
itself create a presumption that the person did not act in good faith and in a
manner which the person reasonably believed to be in the best interests of this
Trust or that the person had reasonable cause to believe that the person's
conduct was unlawful.
C-1
<PAGE>
SECTION 3. ACTIONS BY THE TRUST. This Trust shall indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action by or in the right of this Trust to procure a judgment in
its favor by reason of the fact that that person is or was an agent of this
Trust, against expenses actually and reasonably incurred by that person in
connection with the defense or settlement of that action if that person acted in
good faith, in a manner that person believed to be in the best interests of this
Trust and with such care, including reasonable inquiry, as an ordinarily prudent
person in a like position would use under similar circumstances.
SECTION 4. EXCLUSION OF INDEMNIFICATION. Notwithstanding any provision to
the contrary contained herein, there shall be no right to indemnification for
any liability arising by reason of willful misfeasance, bad faith, gross
negligence, or the reckless disregard of the duties involved in the conduct of
the agent's office with this Trust.
No indemnification shall be made under Sections 2 or 3 of this Article:
(a) In respect of any claim, issue, or matter as to which that person shall
have been adjudged to be liable on the basis that personal benefit was
improperly received by him, whether or not the benefit resulted from an action
taken in the person's official capacity; or
(b) In respect of any claim, issue or matter as to which that person shall
have been adjudged to be liable in the performance of that person's duty to this
Trust, unless and only to the extent that the court in which that action was
brought shall determine upon application that in view of all the circumstances
of the case, that person was not liable by reason of the disabling conduct set
forth in the preceding paragraph and is fairly and reasonably entitled to
indemnity for the expenses which the court shall determine; or
(c) of amounts paid in settling or otherwise disposing of a threatened or
pending action, with or without court approval, or of expenses incurred in
defending a threatened or pending action which is settled or otherwise disposed
of without court approval, unless the required approval set forth in Section 6
of this Article is obtained.
SECTION 5. SUCCESSFUL DEFENSE BY AGENT. To the extent that an agent of this
Trust has been successful on the merits in defense of any proceeding referred to
in Sections 2 or 3 of this Article or in defense of any claim, issue or matter
therein, before the court or other body before whom the proceeding was brought,
the agent shall be indemnified against expenses actually and reasonably incurred
by the agent in connection therewith, provided that the Board of Trustees,
including a majority who are disinterested, non-party Trustees, also determines
that based upon a review of the facts, the agent was not liable by reason of the
disabling conduct referred to in Section 4 of this Article.
C-2
<PAGE>
SECTION 6. REQUIRED APPROVAL. Except as provided in Section 5 of this
Article, any indemnification under this Article shall be made by this Trust only
if authorized in the specific case on a determination that indemnification of
the agent is proper in the circumstances because the agent has met the
applicable standard of conduct set forth in Sections 2 or 3 of this Article and
is not prohibited from indemnification because of the disabling conduct set
forth in Section 4 of this Article, by:
(a) A majority vote of a quorum consisting of Trustees who are not parties
to the proceeding and are not interested persons of the Trust (as defined in the
Investment Company Act of 1940); or
(b) A written opinion by an independent legal counsel.
SECTION 7. ADVANCE OF EXPENSES. Expenses incurred in defending any
proceeding may be advanced by this Trust before the final disposition of the
proceeding upon a written undertaking by or on behalf of the agent, to repay the
amount of the advance if it is ultimately determined that he or she is not
entitled to indemnification, together with at least one of the following as a
condition to the advance: (i) security for the undertaking; or (ii) the
existence of insurance protecting the Trust against losses arising by reason of
any lawful advances; or (iii) a determination by a majority of a quorum of
Trustees who are not parties to the proceeding and are not interested persons of
the Trust, or by an independent legal counsel in a written opinion, based on a
review of readily available facts that there is reason to believe that the agent
ultimately will be found entitled to indemnification. Determinations and
authorizations of payments under this Section must be made in the manner
specified in Section 6 of this Article for determining that the indemnification
is permissible.
SECTION 8. OTHER CONTRACTUAL RIGHTS. Nothing contained in this Article
shall affect any right to indemnification to which persons other than Trustees
and officers of this Trust or any subsidiary hereof may be entitled by contract
or otherwise.
SECTION 9. LIMITATIONS. No indemnification or advance shall be made under
this Article, except as provided in Sections 5 or 6 in any circumstances where
it appears:
(a) that it would be inconsistent with a provision of the Agreement and
Declaration of Trust of the Trust, a resolution of the shareholders, or an
agreement in effect at the time of accrual of the alleged cause of action
asserted in the proceeding in which the expenses were incurred or other amounts
were paid which prohibits or otherwise limits indemnification; or
C-3
<PAGE>
(b) that it would be inconsistent with any condition expressly imposed by a
court in approving a settlement.
SECTION 10. INSURANCE. Upon and in the event of a determination by the
Board of Trustees of this Trust to purchase such insurance, this Trust shall
purchase and maintain insurance on behalf of any agent of this Trust against any
liability asserted against or incurred by the agent in such capacity or arising
out of the agent's status as such, but only to the extent that this Trust would
have the power to indemnify the agent against that liability under the
provisions of this Article and the Agreement and Declaration of Trust of the
Trust.
SECTION 11. FIDUCIARIES OF EMPLOYEE BENEFIT PLAN. This Article does not
apply to any proceeding against any Trustee, investment manager or other
fiduciary of an employee benefit plan in that person's capacity as such, even
though that person may also be an agent of this Trust as defined in Section 1 of
this Article. Nothing contained in this Article shall limit any right to
indemnification to which such a Trustee, investment manager, or other fiduciary
may be entitled by contract or otherwise which shall be enforceable to the
extent permitted by applicable law other than this Article.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 ("Securities Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable. In the event
that a claim for indemnification against such liabilities (other than payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in connection with the successful defense
of any action, suit or proceeding) is asserted against the Registrant by such
director, officer or controlling person in connection with the shares being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
C-4
<PAGE>
ITEM 16. EXHIBITS.
(1) Agreement and Declaration of Trust.(a)
(2) By-Laws.(a)
(3) Not applicable.
(4) Form of Agreement and Plan of Reorganization.
(5) Specimen Share Certificate.(b)
(6) Form of Investment Advisory Agreement.(c)
(7) Form of Distribution Agreement.(d)
(8) Not applicable.
(9) Form of Custody Agreement.(c)
(10) Not applicable.
(11) Opinion and consent of Paul, Hastings, Janofsky & Walker LLP as
to the legality of the securities being registered.(c)
(12) Form of opinion and consent of Paul, Hastings, Janofsky & Walker
LLP regarding tax matters and consequences.
(13.1) Form of Administration Agreement.(b)
(13.2) Form of Transfer Agent and Fund Accounting Agreement.(c)
(13.3) License Agreement with StockJungle.com, Inc.(c)
(13.4) Shareholder Services Plan.(c)
(14) Consent of Arthur Andersen LLP, independent auditors.
(15) None.
(16) None.
(17.1) Form of proxy card.
(17.2) Prospectus.
(17.3) Semi-Annual Report of Stockjungle.com Trust for period ended
March 31, 2000.
(a) Filed as an exhibit to Registrant's Registration Statement on Form N-1A
filed via EDGAR on June 18, 1999 and incorporated herein by reference.
(b) Filed as an exhibit to Pre-Effective Amendment No. 1 to Registrant's
Registration Statement on Form N-1A filed via EDGAR on September 17, 1999
and incorporated herein by reference.
(c) Filed as an exhibit to Post-Effective Amendment No. 5 to Registrant's
Registration Statement on Form N-1A filed via EDGAR on August 4, 2000 and
incorporated herein by reference.
(d) Filed as an exhibit to Pre-Effective Amendment No. 3 to Registrant's
Registration Statement on Form N-1A filed via EDGAR on February 18, 2000
and incorporated herein by reference.
C-5
<PAGE>
ITEM 17. UNDERTAKINGS.
(1) The undersigned Registrant agrees that prior to any public offering of
the securities registered through the use of a prospectus which is part of this
registration statement by any person or party who is deemed to be an underwriter
within the meaning of Rule 145(c) of the Securities Act of 1933, as amended, the
reoffering prospectus will contain the information called for by the applicable
registration form for reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other items of the applicable
form.
(2) The undersigned Registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as part of an amendment to the
registration statement and will not be used until the amendment is effective,
and that, in determining any liability under the Securities Act of 1933, as
amended, each post-effective amendment shall be deemed to be a new registration
statement for the securities offered therein, and the offering of the securities
at that time shall be deemed to be the initial bona fide offering of them.
(3) The undersigned Registrant undertakes to file a final copy of tax
opinion and consent of counsel, the form of which is filed herewith as Exhibit
12, upon delivery thereof to Registrant.
C-6
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, this Pre-Effective Amendment to
Registration Statement has been signed on behalf of Registrant in the City of
Phoenix, State of Arizona, on the 25th day of September, 2000.
TRUST FOR INVESTMENT MANAGERS
By: /s/ Robert H. Wadsworth
------------------------------------
Robert H. Wadsworth
President
As required by the Securities Act of 1933, this Pre-Effective Amendment to
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Robert H. Wadsworth Trustee September 25, 2000
----------------------------
Robert H. Wadsworth
/s/ Robert M. Slotky Principal September 25, 2000
---------------------------- Financial Officer
Robert M. Slotky
/s/ George J. Rebhan Trustee September 25, 2000
----------------------------
George J. Rebhan
/s/ Ashley T. Rabun Trustee September 25, 2000
----------------------------
Ashley T. Rabun
/s/ James Clayburn Laforce Trustee September 25, 2000
----------------------------
James Clayburn Laforce
C-7
<PAGE>
EXHIBIT INDEX
TRUST FOR INVESTMENT MANAGERS
Pre-Effective Amendment No. 1 to
Form N-14 Registration Statement
(4) Form of Agreement and Plan of Reorganization*
(12) Form of opinion and consent of counsel as to tax matters and
consequences*
(14) Consent of Arthur Andersen LLP, independent auditors*
(17.1) Form of proxy card*
(17.2) Prospectus
(17.3) Semi-Annual Report of Stockjungle.com Trust for period ended March
31, 2000
----------
* Filed as an Exhibit to the Form N-14 Registration Statement on August 10,
2000 and incorporated herein by reference.
