As filed with the securities and exchange commission on April 14, 2000
REGISTRATION NO. 333-81359
ICA NO. 811-09403
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 1
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Post-Effective Amendment No. 3
STOCKJUNGLE.COM TRUST
(Exact Name of Registrant as Specified in Charter)
5750 Wilshire Boulevard, Suite 560
Los Angeles, California 90036
(Address of Principal Executive Offices)(Zip Code)
(323) 602-2000
(Registrant's Telephone Number, Including Area Code)
TINA D. HOSKING, ESQ.
Countrywide Fund Services, Inc.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
(Name and Address of Agent For Service)
With a copy to:
MICHAEL GLAZER, ESQ.
Paul, Hastings, Janofsky & Walker LLP
555 So. Flower Street
Twenty-Third Floor
Los Angeles, California 90071-2371
It is proposed that this filing will become effective (check appropriate box):
[X] immediately upon filing pursuant to paragraph (b).
[ ] on (date) pursuant to paragraph (b).
[ ] 60 days after filing pursuant to paragraph (a)(1).
[ ] on (date) pursuant to paragraph (a)(1).
[ ] 75 days after filing pursuant to paragraph (a)(2).
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485.
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PART A
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STOCKJUNGLE.COM* TRUST
STOCKJUNGLE.COM MARKET LEADERS GROWTH FUND
STOCKJUNGLE.COM PURE PLAY INTERNET FUND
STOCKJUNGLE.COM COMMUNITY INTELLIGENCE FUND
PROSPECTUS
April 11, 2000
STOCKJUNGLE.COM MARKET LEADERS GROWTH FUND seeks to provide investors with
long-term capital appreciation by investing in a diversified portfolio of the
equity securities of U.S. companies that have consistently demonstrated
fundamental investment value and hold strong competitive positions in various
industries. In addition, the Fund may invest up to 20% of its net assets in the
common stock of companies identified by StockJungle.com Investment Advisors,
Inc. (the "Adviser") as relatively new leaders in smaller, less established
industries which have favorable growth prospects.
STOCKJUNGLE.COM PURE PLAY INTERNET FUND seeks to provide investors with
long-term capital appreciation by investing in a diversified portfolio of the
equity securities of U.S. Internet companies based on the Adviser's analysis of
their fundamental investment value.
STOCKJUNGLE.COM COMMUNITY INTELLIGENCE FUND seeks to provide investors with
long-term capital appreciation by investing principally in a diversified
portfolio of the equity securities of U.S. companies with market capitalizations
of no less than $100 million which have demonstrated potential for long-term
growth.
The Adviser selects portfolio securities for each of the Funds from a pool of
equity investment opportunities which are (i) recommended to StockJungle.com,
Inc., the parent of the Adviser, by visitors to the parent's website, , (ii)
researched by the Adviser and analyzed to determine the potential for capital
appreciation and, if deemed acceptable by the Adviser, (iii) selected for
investment by the Fund.
Each of the Funds is designed and created primarily for investment by on-line
investors. In order to keep costs to a minimum, shareholders in the Funds are
requested to consent to the acceptance of all information about the Fund or
Funds in which they invest through access to the StockJungle.com website and
electronic delivery. Notwithstanding the above however, each Fund will deliver
paper-based documents upon request by shareholders and reserves the right to
deliver paper-based documents at no cost to the investor.
StockJungle.com, Inc. provides investors and public visitors the ability to
access information and features exclusively via its website, located at
http://www.stockjungle.com. With the goal of providing investors a more complete
and educational mutual fund investment experience, it is the Adviser's intention
to fully disclose all mutual fund holdings and activities, to the extent
practical, on the StockJungle.com website. The Adviser reserves the right to
alter this full disclosure policy as needed at any time.
*"StockJungle.com" is a trademark and the exclusive property of StockJungle.com,
Inc., the parent to the Adviser. StockJungle.com, Inc. is an Internet-based
company which offers a wide array of web-based services and information to
visitors to the StockJungle.com website.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
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TABLE OF CONTENTS
Page
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RISK/RETURN SUMMARY............................................................1
PERFORMANCE....................................................................2
FEES AND EXPENSES OF THE FUNDS.................................................3
INVESTMENT STRATEGIES .........................................................4
MAIN RISKS.....................................................................8
MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE................................11
VALUATION OF SHARES...........................................................13
HOW TO PURCHASE SHARES........................................................13
HOW TO REDEEM SHARES..........................................................16
SHAREHOLDER SERVICES..........................................................18
DIVIDENDS AND DISTRIBUTIONS...................................................19
TAX STATUS....................................................................19
PERFORMANCE INFORMATION.......................................................20
GENERAL INFORMATION...........................................................20
FOR MORE INFORMATION..........................................................22
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RISK/RETURN SUMMARY
INVESTMENT OBJECTIVES
Each Fund seeks to provide investors with long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
The Adviser uses the StockJungle.com Community Site (the "Community Site") as a
resource to identify potential candidates for the Funds' respective 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 and, if deemed acceptable by
the Adviser, selects for purchase by a Fund.
Each Fund normally will be fully invested (subject to liquidity needs) in a
diversified portfolio of equity securities of U.S. companies.
THE STOCKJUNGLE.COM MARKET LEADERS GROWTH FUND invests in companies that, in the
opinion of the Adviser, have demonstrated consistently fundamental investment
value, hold strong competitive positions in their respective industries and have
favorable long-term growth prospects. In addition, the Fund may invest up to 20%
of its net assets in the common stock of companies the Adviser identifies as
relatively new leaders in smaller, less established industries that have
favorable growth prospects.
THE STOCKJUNGLE.COM PURE PLAY INTERNET FUND invests in companies 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.
THE STOCKJUNGLE.COM COMMUNITY INTELLIGENCE FUND invests in companies with market
capitalizations of at least $100 million and favorable growth prospects.
PRINCIPAL INVESTMENT RISKS
RISK OF LOSS. The loss of money is a risk of investing in any of the Funds.
MARKET RISK. The net asset value of each Fund fluctuates based on changes in the
value of the securities in which the Fund invests. Market prices of these
securities may be adversely affected by an issuer's having experienced losses or
by the lack of earnings or the issuer's failure to meet the market's
expectations with respect to new products or services, or even by factors wholly
unrelated to the value or condition of the issuer. The U.S. stock market is
generally susceptible to volatile fluctuations in market price. Investments in
equity securities generally are affected by changes in the stock markets, which
fluctuate substantially over time, sometimes suddenly and sharply.
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INVESTMENT IN SMALL AND MID-SIZE COMPANIES. The Funds may invest in issuers with
small or mid-sized capital structures (generally a market capitalization of $5
billion or less). These companies may have a relatively limited operating
history and less capital resources than larger companies. In addition, the
market prices of the securities of such companies tend to be more volatile than
those of larger companies. Further, these securities tend to trade at a lower
volume than those of larger more established companies. Accordingly, the net
asset value of each Fund will be more susceptible to significant losses if the
value of these securities suddenly declines.
INVESTMENT IN NEW AND UNSEASONED COMPANIES. The Funds may invest in companies
that are relatively new and unseasoned and in their early stages of development,
which may not be well known to the investing public or have significant
institutional ownership. In addition, these companies may be developing or
marketing new products or services for which markets are not yet established and
may never become established. Finally, new and unseasoned companies may have
relatively small revenues and limited product lines, markets, or financial
resources; their securities are often traded over-the-counter or on a regional
exchange and may trade less frequently and in more limited volume than those of
larger, more mature companies. As a result, the market prices of these
securities may be more subject to volatile fluctuations than those of more
mature issuers. Such fluctuations could have an adverse effect on the net asset
value of each Fund and could result in the loss of your investment.
SECTOR RISK. The value of the Pure Play Internet Fund's shares is susceptible to
factors affecting the Internet and WWW such as heightened regulatory scrutiny
and impending changes in government policies which may have a material effect on
the products and services of this sector, as well as other factors affecting
capital markets generally and the Internet sector of those markets. Furthermore,
securities of companies in this sector tend to be more volatile than securities
of companies in other sectors. Competitive pressures and changing demand may
have a significant effect on the financial condition of Internet companies.
These companies spend heavily on research and development and are especially
sensitive to the risk of product obsolescence. The occurrence of any of these
factors, individually or collectively, may adversely affect the value of the
Fund's shares and could result in the loss of your investment.
RELIANCE ON COMMUNITY INTELLIGENCE. The effectiveness of the Funds' investment
strategies is directly contingent upon widespread participation by visitors to
the Community Site and the Adviser's ability to select investments from the pool
recommended by visitors to the Community Site. There are no assurances that
visitors to the Community Site will participate or that the Adviser will be able
to select profitable investment opportunities from the pool recommended by
visitors to the Community Site.
PERFORMANCE
The Funds first offered shares for sale in November 1999. Returns for the Funds
will be presented after January 1, 2001, when the Funds have been in operation
for a complete calendar year.
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FEES AND EXPENSES OF THE FUNDS
The following table describes the fees and expenses that you may pay if you buy
and hold shares of each of the Funds:
Community
Market Leaders Pure Play Intelligence
Growth Fund Internet Fund Fund
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SHAREHOLDER FEES (paid directly
from your investments):
Maximum Sales Load Imposed on
Purchases (as a percentage of the
offering price) NONE NONE NONE
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from
Fund assets):
Management Fees(1) 1.00% 1.00% 1.00%
Other Expenses NONE NONE NONE
Total Annual
Fund Operating Expenses 1.00% 1.00% 1.00%
Fee Waiver and Expense Reimbursement NONE NONE NONE
Net Expenses(1) 1.00% 1.00% 1.00%
(1) The Adviser's Management Fees with respect to each Fund are "all inclusive"
which means that the Adviser is contractually responsible for the payment of all
of a Fund's other expenses, except litigation or other extraordinary expenses
and, as a result, each Fund's Total Fund Operating Expenses will not exceed 1%
of the Fund's average daily net assets.
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EXAMPLE:
This Example is intended to help you compare the cost of investing in each
Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in each Fund for the time
periods indicated and then redeem all of your shares at the end of these
periods. The Example also assumes that your investment has a 5% return each year
and that the Fund's operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your cost would be:
Market Leaders Pure Play Internet Community
Growth Fund Fund Intelligence Fund
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One Year $102 $102 $102
Three Years $318 $318 $318
INVESTMENT STRATEGIES
StockJungle.com, Inc., the Adviser's corporate parent, has established a
website on the Internet at http://www.stockjungle.com. One section of the
website has been designated by StockJungle.com as a community forum, the
Community Site, in which visitors to the website can suggest investment
opportunities and ideas by posting short written analyses of companies.
StockJungle.com, Inc. forwards the visitor recommendations posted in the
community forum to the Adviser for consideration as possible investments by the
Funds. The Adviser believes that a vast amount of knowledge and experience
exists among the visitors to the StockJungle.com website, and that by using the
Community Site, the Adviser has a greater breadth of investment ideas for the
Funds' portfolios. The Adviser analyzes each recommendation presented using
quantitative analysis in order to determine whether a recommendation suggests a
security that is consistent with a Fund's investment objective and strategy. The
Adviser, in its sole discretion, determines whether and what to extent the stock
of any recommended company should be purchased or sold by a Fund.
To achieve its investment objective, each Fund invests primarily in common
stocks, but may also invest in the 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).
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The principal investment strategies of the Funds are described below.
Additional information regarding these investment strategies can be found in the
Statement of Additional Information ("SAI").
STOCKJUNGLE.COM MARKET LEADERS GROWTH FUND
Under normal market conditions, the Market Leaders Growth Fund invests at
least 80% of its assets in a diversified portfolio of equity securities of U.S.
companies which, in the opinion of the Adviser, have consistently demonstrated
fundamental investment value and hold strong competitive positions in their
respective industries. In addition, the Fund may invest a small but not
insignificant portion (up to 20%) of its net assets in the equity securities of
companies identified by the Adviser as relatively new leaders in smaller, less
established industries
The Adviser focuses on the market leaders of core industries that have
consistent operating histories, strong management teams and favorable long-term
growth prospects. The Fund focuses primarily on industries represented in the
S&P 500 Index including, but not limited, to Utilities, Transportation,
Technology, Chemicals, Pharmaceuticals, Retail Sales, Oil, Capital Goods,
Financial Services and Communications.
The Adviser determines the fundamental investment value of a security by
screening certain financial indicators such as the price-to-earnings ratio, the
return on equity, and cash flow using proprietary quantitative techniques. In
assessing the strength of a company's competitive position, the Adviser may
consider such factors as technology leadership, market share, rights to patents
and other intellectual property, strength of management, marketing prowess and
product development capabilities.
The Fund may invest up to 20% of its net assets in the common stock of
companies identified by the Adviser as relatively new leaders in smaller, less
established industries which have favorable growth prospects. In selecting the
companies, the Adviser takes into consideration not only the current size of the
market, but also the potential market size of the industry as determined by the
Adviser's own research. The Adviser also considers the company's revenue growth
rate compared to similar companies in the same industry, the company's market
share of that industry and the quality of the management team.
The Adviser uses a buy and hold approach, generally maintaining its
position in a company's stock without regard to day-to-day fluctuations in the
market. However, the Adviser frequently re-evaluates portfolio holdings, as it
deems necessary, and typically sells a stock when the reasons for buying it no
longer apply or when the company begins to show deteriorating fundamentals or
poor relative performance.
Solely as a temporary defensive measure, the Fund may invest up to 20% of
its assets in long or short positions in options on various market indices or
securities held by the Fund and in financial and index futures contracts in
order to reduce the Fund's exposure to adverse conditions. The Fund may also
invest a portion of its assets in U.S. Government securities, Standard & Poor's
Depositary Receipts, money market instruments or similar short-term securities
for liquidity purposes. When the Fund is making defensive investments, the Fund
may not achieve its investment objective.
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PORTFOLIO TURNOVER. The frequency of this Fund's portfolio transactions
will vary from year to year. Higher portfolio turnover rates resulting from more
actively traded portfolio securities generally result in higher transaction
costs, including brokerage commissions. However, since the Fund's investment
policies emphasize long-term investment in the securities of established
companies, the Adviser does not anticipate frequent changes in investments and
the Fund's portfolio turnover rate is expected to be relatively low. The Adviser
expects that the annual portfolio turnover rate for the Fund will be
approximately 50%.
STOCKJUNGLE.COM PURE PLAY INTERNET FUND
The StockJungle.com Pure Play Internet Fund invests, under normal
conditions, at least 80% of its assets in a diversified portfolio of the equity
securities of U.S. Internet companies identified by the Adviser to be "Pure Play
Internet" companies. Internet companies for purposes of investment by the Fund
include companies principally engaged in businesses that design, develop and/or
manufacture hardware and software products and services for the Internet and the
WWW.
The Adviser, in its sole discretion, determines which companies properly
constitute "Pure Play Internet" companies. The Adviser's determination is based,
generally, on whether, in its view, such companies derive more than 50% of their
revenues from the Internet and/or WWW. "Pure Play Internet" companies may
include media and content providers, companies that use e-commerce as their
principal means of selling goods and services to the public, companies that
develop or manufacture business solutions that enable businesses to implement
Internet strategies, and companies engaged in the transmission of voice, video
and data over the Internet or WWW. These companies may include entities which
are new and unseasoned in which the Fund invests pursuant to an initial public
offering or otherwise where the Adviser believes that the opportunity for rapid
growth is above average. The companies in which the Fund invests are reevaluated
on as frequent a basis as deemed appropriate by the Adviser.
The Fund selects portfolio securities from the pool of U.S. Internet
companies designated by the Adviser as "Pure Play Internet" companies based on
its review of the fundamental investment value of those companies. This review
involves an analysis of various indicators such as the strength or potential
strength of a company's competitive position, strength of management, marketing
prowess and product development capabilities. Securities are sold as a result of
factors such as lack of performance, change in business direction, or adverse
changes in other factors that were the basis for their purchase.
The Internet is a world-wide network of computers designed to permit users
to share information and transfer data quickly and easily. The WWW, which is a
means of graphically interfacing with the Internet, is a hyper-text based
publishing medium containing text, graphics, interactive feedback mechanisms and
links within the WWW and to other WWW documents. Consequently, the Adviser
believes there are vast opportunities for continued growth in demand for
components, products, media, services and systems to assist, facilitate,
enhance, store, process, record, reproduce, retrieve and distribute information,
products and services for use by businesses, institutions and consumers.
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The Fund may also invest up to 20% of its net assets in U.S. Government
securities, high quality money market instruments and repurchase agreements. In
order to reduce the Fund's exposure to adverse conditions and solely as a
temporary defensive measure, the Fund may invest a more substantial portion of
its net assets in U.S. Government securities, high quality money market
instruments or similar short-term securities or hold either long or short
positions in options on the S&P 500 Index and financial index futures contracts
in order to reduce exposure to market fluctuations. When the Fund is making such
defensive investments, the Fund may not achieve its investment objective.
PORTFOLIO TURNOVER. The frequency of the Fund's portfolio transactions will
vary from year to year and depend on changes in the companies designated by the
Adviser as "Pure Play Internet" companies. Higher portfolio turnover rates
resulting from more actively traded portfolio securities generally result in
higher transaction costs, including brokerage commissions. The Adviser expects
that the annual portfolio turnover rate for the Fund will be approximately 50%.
STOCKJUNGLE.COM COMMUNITY INTELLIGENCE FUND
The Community Intelligence Fund invests, under normal conditions, at least
80% of its assets in a diversified portfolio of the common stocks and other
equity securities of those U.S. companies that have market capitalizations of at
least $100 million. These may include the securities of companies which are new
and unseasoned in which the Fund invests pursuant to an initial public offering
or otherwise where the Adviser believes that the opportunity for rapid growth is
above average.
Although it is not currently a principal aspect of the Fund's investment
strategy, the Fund is also authorized to make short sales of securities it owns
or has the right to acquire at no added cost through conversion or exchange of
other securities it owns (referred to as short sales "against the box") and to
make short sales of securities which it does not currently own or have the right
to acquire. In addition, for liquidity purposes or pending the purchase of
investments in accordance with its policies, the Fund may, from time to time,
invest a portion of the Fund's assets in U.S. Government securities or money
market instruments.
PORTFOLIO TURNOVER. The frequency of the Fund's portfolio transactions will
vary from year to year. The Fund's investment policies may lead to frequent
changes in investments and the Fund's portfolio turnover rate may be
significantly higher than that of most other mutual funds. These transactions
may also result in realization of taxable capital gains, much or all of which
are short-term capital gains subject to federal and state taxation as ordinary
income and not eligible for favored long term capital gains tax treatment.
Higher portfolio turnover rates resulting from actively trading portfolio
securities will generally result in higher transaction costs, including
brokerage commissions. The Fund expects that its annual portfolio turnover rate
will be approximately 100%.
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MAIN RISKS
The principal risks of investing in the Funds are described below.
Additional information regarding these risks can be found in the SAI.
GENERAL RISKS
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 Funds' investment
strategies 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.
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 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.
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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.
MARKET LEADERS GROWTH FUND RISKS
RISK OF INVESTING IN INDUSTRIES REPRESENTED IN THE S&P 500 INDEX. Investing
in the various industries represented in the S&P 500 Index exposes the Fund to a
broad variety of risk factors. The risks that could adversely affect the value
of your investment in the Fund include changes in economic conditions and
interest rates, the exposure of companies within these industries to foreign
economic and political developments and currency fluctuations, the ability of
companies (especially those in the Chemical and Pharmaceutical sectors) to pass
their products through regulatory bodies, changes in the spending patterns of
consumers, the creation of new technology which might make obsolete the
technology sold, serviced, utilized, or otherwise relied upon by companies held
by the Fund, and the fluctuation of energy prices.
RISK OF 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). 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 the
Fund's portfolio decline, the Fund may be adversely affected and you could lose
money on your investment.
PURE PLAY INTERNET FUND RISKS
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.
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INVESTMENT IN SMALL AND MID-CAP COMPANIES. Companies identified by the
Adviser as being principally engaged in the Internet and/or WWW may include
issuers with small or mid-sized capital structures (generally a market
capitalization of $5 billion or less). Accordingly, the Fund may be subject to
the additional risks associated with investment in these companies. The market
prices of the securities of such companies tend to be more volatile than those
of larger companies. Further, these securities tend to trade at a lower volume
than those of larger more established companies. If the Fund is heavily invested
in these securities and the value of these securities suddenly declines, the
Fund will be susceptible to significant losses.
COMMUNITY INTELLIGENCE FUND RISKS
SHORT SALES. Although it is not currently a principal investment technique,
the Community Intelligence Fund may take short positions in securities. A short
sale is the sale by the Fund of a security which has been borrowed from a third
party in the expectation that the market price will drop. If the price drops,
the Fund will make a profit by purchasing the security in the open market at a
lower price. If the price rises, the Fund may have to cover its short position
at a higher price, resulting in a loss. A short sale may be covered or
uncovered. In a covered short sale, the Fund either borrows and sells the
securities it already owns, or deposits in a segregated account liquid assets
equal to the difference between the market value of the securities and the short
sales price. Use of short sales is a speculative investment technique that has
potentially unlimited risk of loss. Investment via short positions presents the
risk that if the stock markets move against the short position, the Fund will be
more susceptible to a sudden and significant decline in the net asset value of
the Fund.
ADDITIONAL RISKS
RISK FACTORS IN OPTIONS TRANSACTIONS. The successful use of a Fund's
options strategies depends on the ability of the Adviser to forecast correctly
interest rate and market price movements. For example, if a Fund were to write a
call option based on the Adviser's expectation that the price of the underlying
security would fall, but the price were to rise instead, the Fund could be
required to sell the security upon exercise at a price below the current market
price. Similarly, if a Fund were to write a put option based on the Adviser's
expectation that the price of the underlying security would rise, but the price
were to fall instead, the Fund could be required to purchase the security upon
exercise at a price higher than the current market price.
When a Fund purchases an option, it runs the risk that it will lose its
entire investment in the option in a relatively short period of time, unless the
Fund exercises the option or enters into a closing sale transaction before the
option's expiration. If the price of the underlying security does not rise (in
the case of a call) or fall (in the case of a put) to an extent sufficient to
cover the option premium and transaction costs, a Fund will lose part or all of
its investment in the option. This contrasts with an investment by the Fund in
the underlying security, since the Fund will not realize a loss if the
security's price does not change.
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The effective use of options also depends on a Fund's ability to terminate
option positions at times when the Adviser deems it desirable to do so. There is
no assurance that a Fund will be able to effect closing transactions at any
particular time or at an acceptable price.
RISK FACTORS IN FUTURES TRANSACTIONS. Successful use of futures contracts
by a Fund is subject to the Adviser's ability to predict movements in various
factors affecting securities markets, including interest rates. Compared to the
purchase or sale of futures contracts, the purchase of call or put options on
futures contracts involves less potential risk to a Fund because the maximum
amount at risk is the premium paid for the options (plus transaction costs).
However, there may be circumstances when the purchase of a call or put option on
a futures contract would result in a loss to a Fund when the purchase or sale of
a futures contract would not, such as when there is no movement in the prices of
the hedged investments. The writing of an option on a futures contract involves
risks similar to those risks relating to the sale of futures contracts.
The use of options and futures strategies also involves the risk of
imperfect correlation among movements in the prices of the securities underlying
the futures and options purchased and sold by a Fund, of the options and futures
contracts themselves, and, in the case of hedging transactions, of the
securities which are the subject of a hedge. The successful use of these
strategies further depends on the ability of the Adviser to forecast interest
rates and market movements correctly.
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, the 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.
MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE
THE ADVISER
StockJungle.com Investment Advisors, Inc. has been retained under an
Investment Advisory Agreement with StockJungle.com Trust (the "Trust") on behalf
of each Fund to serve as the investment adviser to each of the Funds, subject to
the authority of the Board of Trustees. The Adviser is a newly organized,
privately-held investment advisory and money management company, registered as
an investment adviser with the Securities and Exchange Commission. The Adviser's
principal office is located at 5750 Wilshire Boulevard, Suite 560, Los Angeles,
California 90036. The Adviser can also be contacted by telephone at (877)
884-3147.
The Adviser provides each Fund with investment advice, supervises the
Fund's management and investment programs, and provides investment advisory
facilities and executive and supervisory personnel for managing the investments
and effecting the portfolio transactions of each Fund. The Adviser also
furnishes, at its own expense, all necessary administrative services, office
space, equipment and clerical personnel for servicing the investments of each
Fund. In addition, the Adviser pays the salaries and fees of all officers of the
Trust who are affiliated with the Adviser.
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PORTFOLIO MANAGERS
Each of the Funds is co-managed by Michael Petrino, Gordon Gustafson and
Akber Zaidi.
Michael Petrino is the Chief Investment Officer of the Adviser. Mr. Petrino
has more than 20 years of asset management experience, most recently as the
founder of Calport Asset Management, an independent investment adviser
specializing in the management of small and large size domestic equities, global
stocks and global bonds in partnership with GE Investments and Dr. Arthur
Laffer. At Calport, Mr. Petrino was responsible for day-to-day portfolio
management for all of the firm's investment products, as well as their sales and
marketing efforts. In 1985, Mr. Petrino founded Matrix Capital Management, Inc.,
an asset management firm, where he served as President and Chief Investment
Officer. Matrix grew from a start-up to $1 billion in assets under management in
3 years, with offerings ranging from large cap equity portfolios to
derivative-based products. Mr. Petrino previously served as a Vice President at
Prudential Insurance, where he managed balanced global portfolios as second in
command of a department that managed $9 billion for over 90 plan sponsors. Mr.
Petrino received his undergraduate degree from Amherst College and his M.B.A.
from the University of Chicago. In addition to belonging to the New York Society
of Security Analysts, Mr. Petrino is also a member of the Board of Directors of
Fleming Capital Mutual Fund Group.
Gordon Gustafson joined the Adviser in March 1999. Mr. Gustafson has a B.A.
in Economics from the University of California, Los Angeles. Before joining the
Adviser, Mr. Gustafson worked in the film industry as a Production Manager and
was pursuing his M.A. in Mass Communications at California State University,
Northridge. Before moving to Los Angeles, Mr. Gustafson lived in Seattle where
he was self-employed as a writer.
Akber Zaidi joined the Adviser in October 1999. Before joining the Adviser,
he served for two years as the stock portfolio manager for Island View Funds
LLC, a hedge fund, where his responsibilities included daily portfolio
management and the creation of process-driven strategies. Mr. Zaidi previously
was a commodity trading adviser for ANZ Capital Management for two years, where
he developed trading systems and models using fundamental and technical
analysis, and an independent commodity trading adviser. Mr. Zaidi received his
undergraduate degree in Operations Research and Industrial Engineering and an
M.B.A. in Finance from Cornell University.
MANAGEMENT FEE AND OTHER EXPENSES
Under its Investment Advisory Agreement, each of the Funds pays the Adviser
monthly in arrears an annual investment advisory fee equal to 1.0% of its
average daily net assets. This serves as an all-inclusive fee out of which the
Adviser will be responsible to pay each Fund's operating expenses (other than
litigation or other extraordinary expenses). Therefore, none of these Funds is
required to pay any expenses such as fees for transfer agency, administrative or
shareholder servicing, legal, insurance, audit, and trustees' fees or operating
costs such as printing, mailing and registration fees.
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ADMINISTRATOR
The Trust's administrator is Countrywide Fund Services, Inc. ("CFS" or the
"Transfer Agent"), which has its principal office at 312 Walnut Street, 21st
Floor, Cincinnati, Ohio 45202, and is primarily in the business of providing
administrative, fund accounting and transfer agency services to retail and
institutional mutual funds with approximately $16 billion of total assets
throughout the United States.
CFS provides administrative, executive and regulatory services to each
Fund, supervises the preparation of each Fund's tax returns and coordinates the
preparation of reports to and filings with the SEC and state securities
authorities, subject to the supervision of the Trust's Board of Trustees.
For the services rendered to each Fund by CFS, the Adviser pays CFS, on
behalf of each Fund, a monthly fee at the annual rate of .15% of the average
daily net assets of each Fund, up to $100 million; .10% of such assets from $100
million to $500 million; .075% of such assets from $500 million to $900 million;
and .05% of such assets in excess of $900 million. The minimum fee is $2,000 per
month per Fund. In addition, CFS serves as each Fund's transfer agent and
performs fund accounting services for which it is paid separately by the
Adviser. For additional information, see "Custodian, Transfer, Dividend
Disbursing and Shareholder Servicing Agent."
DISTRIBUTOR
CW Fund Distributors, Inc. (the "Distributor"), an affiliate of CFS, has
entered into an underwriting agreement with the Trust to serve as the principal
underwriter of each Fund and the exclusive agent for the distribution of each
Fund's shares. The Distributor will serve as the statutory underwriter for the
direct sale of the shares of each Fund to the public, and will be responsible
for contracting and managing relationships with investment dealers.
VALUATION OF SHARES
On each day that the Trust is open for business, the share price (net asset
value) of the shares of each Fund is determined as of the close of the regular
session of trading on the New York Stock Exchange ("NYSE"), normally 4:00 p.m.,
eastern standard time. The Trust is open for business on each day the NYSE is
open for business. The net asset value per share of a Fund is calculated by
dividing the sum of the value of the securities held by the Fund plus cash minus
all liabilities (including estimated accrued expenses) attributable to the Fund
by the total number of shares outstanding of the Fund, rounded to the nearest
cent. The price at which a purchase or redemption of a Fund's shares is effected
is based on the next calculation of net asset value after the order is received
in good order.
U.S. Government obligations are valued at their most recent bid prices as
obtained from one or more major market makers for such securities. Other
portfolio securities are valued as follows: (1) securities which are traded on
stock exchanges or are quoted on NASDAQ are valued at the last reported sale
price as of the close of the regular trading session on the NYSE on the day the
securities are being valued, or, if not traded on a particular day, at the
closing bid price; (2) securities traded in the over-the-counter market, and
which are not quoted by NASDAQ are valued at the last sale price (or, if the
last sale price is not readily available, at the last bid price as quoted by
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brokers that make markets in the securities) as of the close of the regular
session of trading on the NYSE on the day the securities are being valued; and
(3) securities for which market quotations are not readily available are valued
at their fair value as determined in good faith in accordance with consistently
applied procedures established by and under the general supervision of the Board
of Trustees. The net asset value per share of a Fund will fluctuate with the
value of the securities it holds.
Fixed income securities for which market quotations are not considered
readily available, are stated at fair value on the basis of valuations furnished
by a pricing service approved by the Board of Trustees, which pricing service
determines valuations for normal and institutional-size trading units of such
securities using methods based on market transactions for comparable securities
and various relationships between securities which are generally recognized by
institutional traders.
Short-term investments held by any of the Funds that mature in sixty days
or less are valued at amortized cost, which approximates market value. All other
securities and assets are valued at their fair value following procedures
approved by the Board of Trustees.
HOW TO PURCHASE SHARES
GENERAL PURCHASE INFORMATION
Each Fund sells shares on a continuous basis. There is no minimum initial
investment requirement for any of the Funds, nor is there a minimum additional
investment requirement for any of the Funds. A Fund may waive or reduce its
minimum or maximum investment amount from time to time. If an order is received
by a Fund or its authorized agent after the Fund's net asset value is
determined, the purchase will become effective on the next determined NAV. The
purchase price paid for each Fund's shares is the next determined net asset
value of the shares after the order is placed. See "VALUATION OF SHARES" herein.
The Trust and the Distributor reserve the right to reject any purchase order.
Additional investments may be made at any time by purchasing shares of each
Fund at net asset value by mailing a check to the appropriate Fund at the
address noted under "PURCHASES BY MAIL" or by wiring monies to the clearing bank
as outlined below from the bank with which the shareholder has an account and
which is a member of the Federal Reserve system with instructions to transmit
federal funds by wire to the appropriate Fund. Each additional purchase request
must also contain the account name and account number to permit proper
crediting. Before making additional investments by bank wire, please telephone
the Trust for instructions.
All purchases of each Fund's shares will be made in full and fractional
shares calculated to three decimal places. No Fund will issue stock certificates
evidencing ownership of its shares.
Although shares of the Funds cannot currently be purchased through the
Trust's website, the Trust is planning to permit such sales as soon as
practicable.
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OPENING AN ACCOUNT
Shareholders may open an account by mail by completing and signing an
account application and mailing it to the Fund at the following address:
StockJungle.com Trust
[NAME OF FUND]
P.O. Box 5354
Cincinnati, Ohio 45201-5354
PURCHASES BY WIRE
Subject to acceptance by the Fund, shares of each Fund may be purchased by
wiring immediately available federal funds (subject to the minimum investment)
to Fifth Third Bank from your bank which may charge a fee for doing so (see
instructions below). You should provide your bank with the following information
for purposes of wiring your investment:
Fifth Third Bank
ABA# 042000314
StockJungle.com Account # 999-43593
ffc: shareholder name and number
A completed, signed application is required to be provided to the Fund by
mail at the address listed above in order to complete an initial purchase of a
Fund's shares by wire. Wire orders will be accepted only on a day on which the
Fund whose shares are being purchased, and the Custodian and the Transfer Agent
are open for business. If the Fund does not receive timely and complete account
information, there may be a delay in the investment of an investor's money and
any accrual of dividends. A wire purchase will not be considered made until the
purchase order is received by the Fund. There is presently no fee for the
receipt of wired funds, but each Fund reserves the right to charge shareholders
for this service.
PURCHASES BY MAIL
Subject to acceptance by the Fund, shares of each Fund may be purchased by
mailing your check to the Fund at the address noted below, (subject to the
particular Fund's minimum investment) payable to:
[NAME OF FUND]
P.O. Box 5354
Cincinnati, Ohio 45201-5354
You are required to mail a signed application to the Fund at the address
listed above in order to complete your initial purchase. Payment for the
purchase of shares need not be converted into federal funds (monies credited to
a Fund's custodian bank by a Federal Reserve Bank) before acceptance by the
Transfer Agent. No third party checks will be accepted. In the event that there
are insufficient funds to cover a check, such prospective investor will be
assessed a $20 charge and will be responsible for any resulting losses incurred
by the Trust or the Transfer Agent.
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HOW TO REDEEM SHARES
GENERAL REDEMPTION INFORMATION
You may redeem shares of each Fund by telephone, if authorized, or by mail
after the receipt of your instructions in "good order" at the net asset value
next determined after receipt of the redemption request. Each Fund's net asset
value fluctuates on a daily basis. The value of shares redeemed may be more or
less than the purchase price, depending on the market value of the investment
securities held by each Fund.
To redeem your shares, you may send a written request directly to the Fund.
This request should contain: the dollar amount or number of shares to be
redeemed, your Fund account number and either a social security or tax
identification number (as applicable). You should sign your request in exactly
the same way the account is registered. If there is more than one owner of the
shares, all owners must sign. A signature guarantee is required for redemptions
over $25,000. Please contact the Fund for more details.
Although shares of the Trust cannot currently be redeemed through the
Trust's website, the Trust is planning to permit such redemptions as soon as
practicable.
BY MAIL
Each Fund will redeem its shares at the net asset value next determined
after the request is received in "good order." Requests should be addressed to:
StockJungle.com Trust/StockJungle.com Market Leaders Growth Fund,
StockJungle.com Pure Play Internet Fund or StockJungle.com Community
Intelligence Fund, as the case may be, P.O. Box 5354, Cincinnati, Ohio
45201-5354.
The Trust reserves the right to reject any redemption request that is not
in "good order". Requests in "good order" must include the following
documentation:
(a) a letter of instruction specifying the number of shares or dollar
amount to be redeemed signed by all registered owners of the shares in the exact
names in which they are registered;
(b) Any required signature guarantees (see "Signature Guarantees" below);
and
(c) other supporting legal documents, if required, in the case of estates,
trusts, guardianships, custodianship, corporations, pension and profit sharing
plans and other organizations.
SIGNATURE GUARANTEES
To protect your account, each Fund and the Transfer Agent from fraud,
signature guarantees are required to enable a Fund to verify the identity of the
person who has authorized a redemption of $25,000 or more from an account.
Signature guarantees are also required for redemptions when the proceeds are to
be sent to someone other than the registered shareholder(s) or the registered
address, if the name(s) or the address on the account has changed within 30 days
of the redemption request and in cases of share transfer requests. Signature
guarantees may be obtained from certain eligible financial institutions,
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including but not limited to, the following: banks, trust companies, credit
unions, securities brokers and dealers, savings and loan associations and
participants in the Securities Transfer Association Medallion Program ("STAMP"),
the Stock Exchange Medallion Program ("SEEP") or the NYSE Medallion Signature
Program ("M.P."). Shareholders may contact each Fund at 1(800) 945-4957 for
further details.
BY TELEPHONE
If you have authorized the Telephone Redemption Option, you may redeem your
shares by calling the Transfer Agent and requesting that the redemption proceeds
be mailed to the primary registration address or wired per the authorized
instructions. Provided that the Trust employs reasonable procedures to confirm
that the instructions are genuine, you bear the risk of loss in the event of
unauthorized instructions reasonably believed by the Fund or its Transfer Agent
to be genuine. The procedures employed by the Funds in connection with
transactions initiated by telephone may include tape recording of telephone
instructions and requiring some form of personal identification prior to acting
upon instructions received by telephone.
During times of drastic economic or market conditions, you may have
difficulty in contacting the Transfer Agent by telephone to request a redemption
or exchange of a Fund's shares. In those cases, you should consider using the
other redemption procedures described herein. Use of these other redemption
procedures may result in your redemption request being processed at a later time
than it would have been if telephone redemption had been used. However, the Fund
will still redeem the redemption request at the next determined NAV after
receipt of the request in good order. During the delay, the Fund's net assets
may fluctuate.
PAYMENT OF REDEMPTION PROCEEDS
After your shares have been redeemed, proceeds will normally be mailed
within 3 business days. In no event will payment be made more than 7 days after
receipt of your order in "good order", except that payment may be postponed or
the right of redemption suspended for more than 7 days under unusual
circumstances, such as when trading is not taking place on the NYSE. Payment of
redemption proceeds may also be delayed if the shares to be redeemed were
purchased by a check drawn on a bank which is not a member of the Federal
Reserve System until such time as the check has cleared the banking system
(normally up to 15 days from the purchase date). This delay may be eliminated by
purchasing shares of the Funds by certified check or wire.
You may request that redemption proceeds (minimum of $1,000) be wired to
your account at a bank which is a member of the Federal Reserve System, or a
correspondent bank if your bank is not a member. The Trust's Custodian will
charge you an $8 fee to process wire redemptions.
If the Board of Trustees determines that it would be detrimental to the
best interests of the remaining shareholders of any Fund to make a payment,
wholly or partly in cash, the Fund may pay the redemption proceeds in whole or
in part by a distribution in-kind of readily marketable securities held by the
Fund in lieu of cash in conformity with applicable rules of the SEC.
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INVOLUNTARY REDEMPTION
Each Fund reserves the right to redeem your account at any time the net
asset value of the account falls below $500 in any of the Funds as the result of
a redemption or exchange request. You will be notified in writing prior to any
such involuntary redemption and will be allowed thirty days to make additional
investments before the redemption is processed.
SHAREHOLDER SERVICES
We offer several shareholder service options listed on the account
application which make your account easier to manage. Please make note of these
options and select the ones that are appropriate for you.
AUTOMATIC INVESTMENT PROGRAM
You may arrange to make additional automated purchases of each Fund's
shares. You can automatically transfer any amount per month from your bank,
savings and loan or other financial institution to purchase additional shares.
There is no minimum investment required for automatic purchases. You should
contact your broker-dealer or financial institution or the Transfer Agent for
additional information.
TAX-QUALIFIED RETIREMENT PLANS
Each Fund is available for your tax-deferred retirement plan. Call or write
us and request the appropriate forms for:
* Individual Retirement Accounts ("IRAs"), Simple IRAs and Roth IRAs;
* 401(k) Plans; or
* Profit-sharing plans and pension plans for corporations and other
employees.
You can also transfer your tax-deferred plan to us from another company or
custodian. Call or write the Funds for instructions.
CONFIRMATION OF TRANSACTIONS AND REPORTING OF OTHER INFORMATION VIA ELECTRONIC
DELIVERY
The Funds each provide electronically delivered confirmations of all of
your purchases or redemptions of each Fund's shares. In addition, you will
receive electronically delivered account statements on a quarterly basis from
the Funds. You will also receive various IRS forms via regular mail after the
first of each year detailing important tax information and each Fund will supply
electronically delivered annual and semi-annual reports that list securities
held by that Fund and include its then current financial statements.
Each of the Funds has been designed and created for investment by on-line
investors. In order to keep cost to a minimum, shareholders in the Funds are
requested to consent to the acceptance of all information about the Fund or
Funds in which they invest through access to the StockJungle.com website and
electronic delivery. Such shareholder information may, from time to time,
include prospectuses, statements of additional information, proxy statements,
financial reports, confirmations and financial statements. Notwithstanding the
above however, each Fund will deliver paper-based documents upon request by
shareholders and reserves the right to deliver paper-based documents at no cost
to the investor.
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EXCHANGE PRIVILEGE
You may exchange your shares in any StockJungle.com Fund for shares of any
other Fund at no charge. The prospectus and statement of additional information
of the Fund for which you exchange your shares should be read carefully prior to
any exchange for new shares and retained for future reference. Be advised that
exercising the exchange privilege is really two transactions: a sale of shares
in one fund and the purchase of shares in another. Further, exchanges may have
certain tax consequences and you could realize short- or long-term capital gains
or losses. Exchanges are generally made only between identically registered
accounts unless you send written instructions with a signature guarantee
requesting otherwise.
Call 1 (800) 945-4957 to learn more about exercising your exchange
privilege.
DIVIDENDS AND DISTRIBUTIONS
Each Fund will distribute its net investment income, if any, and net
realized capital gains, if any, annually. Distributions from capital gains are
made after applying any available capital loss carry-overs.
As a shareholder in any of the Funds described above, you can choose from
three distribution options:
* Reinvest all distributions in additional shares;
* Receive distributions from net investment income and short-term
capital gains in cash while reinvesting long-term capital gains
distributions, if any, in additional shares; or
* Receive all distributions in cash.
You can change your distribution option by notifying the Fund in writing.
If you do not select an option when you open your account, all distributions
will be reinvested in additional shares of the Fund at net asset value. You will
receive a statement via electronic delivery confirming reinvestment of
distributions in additional shares at the then current NAV promptly following
the end of each calendar year.
If a check representing a distribution is not cashed within one year, the
distribution and all future distributions from the Fund may be reinvested in the
Fund in which you were invested at the then-current net asset value per share.
Similarly, if correspondence sent by a Fund or the Transfer Agent is returned as
"undeliverable," all Fund distributions will automatically be reinvested in the
Fund in which you were invested. No interest will accrue on uncashed checks.
TAX STATUS
Each Fund is treated as a separate corporation for federal income tax
purposes under the Internal Revenue Code of 1986, as amended. Each Fund intends
to qualify and to elect to be treated as a regulated investment company. If so
qualified, no StockJungle.com Fund will be liable for federal income taxes to
the extent it distributes taxable income to shareholders.
Distributions to shareholders by the StockJungle.com Funds, whether
received in cash or reinvested in additional shares of the Fund, are generally
subject to federal income tax at varying rates depending on whether such
distributions are treated as ordinary income or capital gains distributions.
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Interest income from direct investment by non-corporate taxpayers in United
States Government obligations (but not repurchase agreements) generally is not
subject to state taxation. However, some states may tax mutual fund dividends
attributable to such income.
Any redemption of a Fund's shares is a taxable event that may result in a
capital gain or loss.
Before investing in any of these Funds, you should consult your tax adviser
regarding the consequences of your local and state tax laws.
PERFORMANCE INFORMATIONO
Each Fund's investment performance may, from time to time, be included in
advertisements about such Fund. "Total Return" for the one, five and ten year
periods (or for the life of each Fund, if shorter) through the most recent
quarter represents the average annual compounded rate of return on an investment
of $1,000 in a Fund invested at the public offering price. Total return may also
be presented for other periods.
All performance data is based on each Fund's past investment results and
does not predict future performance. Investment performance, which will vary, is
based on many factors, including market conditions and the composition of each
Fund's portfolio. Investment performance also often reflects the risks
associated with each Fund's investment objective and policies. These factors
should be considered when comparing the Funds' investment results to those of
other mutual funds and other investment vehicles. Quotation of investment
performance for any period when a fee waiver or expense limitation was in effect
will be greater than if the waiver or limitation had not been in effect. A
Fund's performance may be compared to other mutual funds, relevant indices and
rankings prepared by independent services.
GENERAL INFORMATION
The Market Leaders Growth Fund, the Pure Play Internet Fund, and the
Community Intelligence Fund are each a series of StockJungle.com Trust, a
Massachusetts business trust.
CUSTODIAN, TRANSFER, DIVIDED DISBURSING, AND SHAREHOLDER SERVICING AGENT
The Fifth Third Bank serves as Custodian for each Fund's cash and
securities. The Custodian does not assist in, and is not responsible for,
investment decisions involving assets of any of the Funds. The Adviser pays the
Custodian's annual fees charged for each Fund on behalf of the Trust.
CFS, the Trust's administrator, also acts as each Fund's Transfer, Dividend
Disbursing, and Shareholder Servicing Agent. For these services, the Adviser
pays the CFS, in addition to the fee for administrative services, a monthly fee
of $15 per month per account with a minimum of $2,000 per month per Fund, plus
out-of-pocket expenses for rendering such transfer, dividend disbursing, and
shareholder servicing agency services. CFS also serves as Accounting Services
Agent for each Fund for which it receives a minimum monthly fee of $2,500.
COUNSEL AND INDEPENDENT AUDITORS
Legal matters in connection with the Trust, including the issuance of
shares of beneficial interest of each Fund, are passed upon by Paul, Hastings,
Janofsky & Walker, LLP, 555 South Flower Street, 23rd Floor, Los Angeles,
California 90071. Arthur Andersen LLP, located at 425 Walnut Street, Suite 1500,
Cincinnati, Ohio 45202, has been selected to serve as the independent auditors
for each Fund.
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FOR MORE INFORMATION
STOCKJUNGLE.COM TRUST
STOCKJUNGLE.COM MARKET LEADERS GROWTH FUND
STOCKJUNGLE.COM PURE PLAY INTERNET FUND
STOCKJUNGLE.COM COMMUNITY INTELLIGENCE FUND
More Information on each of these Funds is available free upon request,
including the following:
ANNUAL AND SEMIANNUAL REPORTS TO SHAREHOLDERS
Describe each Fund's performance, lists each Fund's holdings and contains a
letter from the Funds' Adviser discussing recent market conditions, economic
trends and investment strategies that significantly affected each particular
Fund's performance.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
Provides more details about each Fund and its policies. A current SAI is on file
with the Securities and Exchange Commission (SEC) and is incorporated by
reference herein (and is legally considered part of this prospectus).
TO OBTAIN INFORMATION OR MAKE SHAREHOLDER INQUIRIES:
BY TELEPHONE:
(800) 945-4957
ON THE INTERNET:
Text only versions of each Fund's documents can be viewed online or downloaded
from:
SECURITIES AND EXCHANGE COMMISSION: http://www.sec.gov
STOCKJUNGLE.COM, INC.: http://www.stockjungle.com
You can also review and copy the SAI and other information about the Funds by
visiting the SEC's Public Reference Room in Washington D.C. (phone at (1) (800)
SEC-0330) or by sending your request and a duplicating fee to the SEC's Public
Reference Section, Washington, DC 20549-6009.
FILE NO. 811-09403
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PART B
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STOCKJUNGLE.COM(1) TRUST
STOCKJUNGLE.COM MARKET LEADERS GROWTH FUND
STOCKJUNGLE.COM PURE PLAY INTERNET FUND
STOCKJUNGLE.COM COMMUNITY INTELLIGENCE FUND
STATEMENT OF ADDITIONAL INFORMATION
APRIL 11, 2000
TABLE OF CONTENTS
Page
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Investment Objective, Policies and Restrictions................................2
Trustees and Executive Officers...............................................16
Investment Advisory and Other Services........................................19
Portfolio Transactions and Allocation of Brokerage............................22
Taxation......................................................................24
Ownership of Shares...........................................................26
Dividends and Distributions...................................................27
Net Asset Value ..............................................................27
Performance Comparisons.......................................................27
Redemption of Shares..........................................................30
Organization of Trust.........................................................31
License Agreement.............................................................31
Other Information.............................................................31
Financial Statements..........................................................32
This Statement of Additional Information is not a prospectus, and should be
read in conjunction with the Prospectus dated April 11, 2000, as may be amended
from time to time, of the StockJungle.com Market Leaders Growth Fund,
StockJungle.com Pure Play Internet Fund and the StockJungle.com Community
Intelligence Fund, (individually or collectively, a "Fund" or the "Funds"), each
a series of StockJungle.com Trust (the "Trust"). StockJungle.com Investment
Advisors, Inc. (the "Adviser") is the investment adviser to each Fund.
Each of the StockJungle.com Funds is designed and created primarily for
investment by on-line investors. In order to keep costs to a minimum,
shareholders in the Funds are requested to consent to the acceptance of all
information about the Fund or Funds in which they invest through access to the
StockJungle.com website and electronic delivery. Notwithstanding the above
however, each Fund will deliver paper-based documents upon request by
shareholders and reserves the right to deliver paper-based documents at no cost
to the investor.
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(1) "StockJungle.com" is a trademark and the exclusive property of
StockJungle.com, Inc., the parent to the Adviser. StockJungle.com, Inc. is an
Internet-based company which offers a wide array of web-based services and
information to visitors to the StockJungle.com website.
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INVESTMENT OBJECTIVE, POLICIES, AND RESTRICTIONS
INVESTMENT OBJECTIVES
STOCKJUNGLE.COM MARKET LEADERS GROWTH FUND seeks to provide investors with
long-term capital appreciation by investing in a diversified portfolio of the
equity securities of U.S. corporations that have consistently demonstrated
fundamental investment value and hold strong competitive positions in various
industries. In addition, the Fund may invest up to 20% percent of its net assets
in the common stock of companies identified by the Adviser as relatively new
leaders in smaller, less established industries.
STOCKJUNGLE.COM PURE PLAY INTERNET FUND seeks to provide investors with
long-term capital appreciation by investing in a diversified portfolio of the
equity securities of U.S. Internet companies based on the Adviser's analysis of
their fundamental investment value.
STOCKJUNGLE.COM COMMUNITY INTELLIGENCE FUND seeks to provide investors with
long-term capital appreciation by investing principally in a diversified
portfolio of the equity securities of U.S. companies with market capitalizations
of no less than $100 million which have demonstrated potential for long-term
growth
The Adviser will select portfolio securities for each of the Funds from a
pool of equity investment opportunities which are (i) recommended to
StockJungle.com, Inc., the parent of the Adviser, by visitors to the parent's
website, http://www.stockjungle.com, (ii) researched by the Adviser and analyzed
to determine the potential for capital appreciation and, if deemed acceptable by
the Adviser, (iii) selected for investment by the Fund.
INVESTMENT POLICIES AND ASSOCIATED RISKS
The discussion below supplements the information contained in the
Prospectus with respect to the investment policies and primary risks that are
common to all of the Funds as well as risks which are particular to each Fund as
a result of such Fund's specific investment objective and strategies. As all
investment securities are subject to inherent market risks and fluctuations in
value due to earnings, economic and political conditions and other factors, no
Fund can give any assurance that its investment objective will be achieved.
Unless otherwise noted, the policies described in this Statement of Additional
Information are not fundamental and may be changed by the Board of Trustees.
MUTUAL FUNDS AS PART OF AN INVESTMENT PROGRAM. The loss of money is a risk
of investing in the Funds. None of the Funds, individually or collectively, is
intended to constitute a balanced or complete investment program and the net
asset value of each Fund's shares will fluctuate based on the value of the
securities held by each Fund. Each of the Funds is subject to the general risks
and considerations associated with equity investing as well as additional risks
and restrictions discussed herein.
MARKET RISK OF EQUITY INVESTING. An investment in a Fund should be made
with an understanding of the risks inherent in an investment in equity
securities, including the risk that the general condition of the stock market
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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.
OTHER SECURITIES A FUND MIGHT PURCHASE. Under normal market conditions,
each Fund will invest at least 80% of its total assets in equity securities,
consisting of common and preferred stocks. If the Adviser believes that market
conditions warrant a temporary defensive posture, or for liquidity purposes,
each of the Funds may invest without limit in high quality, short-term debt
securities and money market instruments. These short-term debt securities and
money market instruments include commercial paper, certificates of deposit,
bankers' acceptances, and U.S. Government securities and repurchase agreements.
SECURITIES LENDING. Repurchase transactions will be fully collateralized at
all times with cash and/or short-term debt obligations. These transactions
involve some risk to a Fund engaged in securities lending if the other party
should default on its obligation and the Fund is delayed or prevented from
recovering the collateral. In the event the original seller defaults on its
obligation to repurchase, the Fund will seek to sell the collateral, which could
involve costs or delays. To the extent proceeds from the sale of collateral are
less than the repurchase price, the Fund would suffer a loss.
INVESTMENT IN NEW AND UNSEASONED COMPANIES. The StockJungle.com Pure Play
Internet Fund and the StockJungle.com Community Intelligence Fund may each
invest, pursuant to an initial public offering or otherwise, in the equity
securities of companies which are relatively new and unseasoned and in their
early stages of development where the Adviser believes that the opportunity for
rapid growth is above average. These companies may not be well-known to the
investing public or have significant institutional ownership. They may lack
depth of management and may be unable to internally generate funds necessary for
growth or potential development or to generate such funds through external
financing on favorable terms. In addition, these companies may be developing or
marketing new products or services for which markets are not yet established and
may never become established. Finally, new and unseasoned companies may have
relatively small revenues and limited product lines, markets, or financial
resources; their securities are often traded over-the-counter or on a regional
exchange and may trade less frequently and in more limited volume than those of
larger more mature companies. When making larger sales, the Fund may have to
sell securities at discounts from quoted prices or may have to make a series of
small sales over an extended period of time. As a result, the market prices of
these securities may be more subject to volatile fluctuations than those of more
mature issuers. Such fluctuations could have an adverse effect on the net asset
value of the Fund and your investment.
SHORT-TERM INVESTMENTS. While seeking desirable equity mutual fund
investments or common stocks whose price history and expected performance lend
themselves to the Adviser's method for investment or for liquidity or temporary
defensive purposes, each Fund may invest in money market funds and/or money
market instruments consisting of the following:
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BANK CERTIFICATES OF DEPOSIT AND BANKERS' ACCEPTANCES. Each Fund may
acquire certificates of deposit, bankers' acceptances and time deposits.
Certificates of deposit are negotiable certificates issued against funds
deposited in a commercial bank for a definite period of time and earning a
specified return. Bankers' acceptances are negotiable drafts or bills of
exchange, normally drawn by an importer or exporter to pay for specific
merchandise, which are "accepted" by a bank, meaning in effect that the bank
unconditionally agrees to pay the face value of the instrument on maturity.
Certificates of deposit and bankers' acceptances acquired by any of the Funds
will be dollar-denominated obligations of domestic banks or financial
institutions which at the time of purchase have capital, surplus and undivided
profits in excess of $100 million (including assets of both domestic and foreign
branches), based on latest published reports, or less than $100 million if the
principal amount of such bank obligations are fully insured by the U.S.
Government.
Domestic banks are subject to different governmental regulations with
respect to the amount and types of loans which may be made and interest rates
which may be charged. In addition, the profitability of the banking industry
depends largely upon the availability and cost of funds for the purpose of
financing lending operations under prevailing money market conditions. General
economic conditions as well as exposure to credit losses arising from possible
financial difficulties of borrowers play an important part in the operations of
the banking industry.
As a result of federal and state laws and regulations, domestic banks are,
among other things, required to maintain specified levels of reserves, limited
in the amount which they can loan to a single borrower, and subject to other
regulations designed to promote financial soundness.
INVESTMENT IN DERIVATIVES. Both the StockJungle.com Market Leaders Growth
Fund and the StockJungle.com Pure Play Internet Fund may, as a non-principal
investment strategy, invest a portion of their assets in futures and options
transactions for hedging purposes or as a substitute for direct investment. The
purchaser of a futures contract has the obligation to take delivery of the type
of financial instrument covered by the contract at a specified time and price,
and the seller of the contract has the corresponding obligation to sell the
financial instrument at that time and price. The purchaser of an option contract
acquires the right to purchase or sell a specified security at a specified price
during the term of the option, and the seller of the option has the
corresponding option to sell or buy the security at that price if the purchaser
exercises the option. Futures and options are considered to be "derivatives;"
i.e., financial instruments whose value is derived from the value of an
underlying asset, such as a security or an index. The use of futures and options
involves certain special risks due to the possibility of imperfect correlations
among movements in the prices of options purchased or sold by a Fund and, in the
case of hedging transactions, of the securities that are the subject of the
hedge.
PURCHASING PUT AND CALL OPTIONS. The StockJungle.com Market Leaders Growth
Fund may purchase put and call options on securities eligible for purchase by
the Fund and on securities indices, and the StockJungle.com Pure Play Internet
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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.
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.
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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.
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.
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Disruptions in the markets for the securities underlying options purchased
or sold by a Fund could result in losses on the options. If trading is
interrupted in an underlying security, the trading of options on that security
is normally halted as well. As a result, the Fund as purchaser or writer of an
option will be unable to close out its positions until options trading resumes,
and it may be faced with considerable losses if trading in the security reopens
at a substantially different price. In addition, an options clearing corporation
or options market may impose exercise restrictions. If a prohibition on exercise
is imposed at the time when trading in the option has also been halted, the Fund
as purchaser or writer of an option will be locked into its position until one
of the two restrictions has been lifted. If an options clearing corporation were
to determine that the available supply of an underlying security appears
insufficient to permit delivery by the writers of all outstanding calls in the
event of exercise, it may prohibit indefinitely the exercise of put options. The
Fund, as holder of such a put option, could lose its entire investment if the
prohibition remained in effect until the put option's expiration.
DEALER OPTIONS. A Fund may engage in transactions involving dealer options
as well as exchange-traded options. Certain risks are specific to dealer
options. While a Fund might look to an exchange's clearing corporation to
exercise exchange-traded options, if the Fund purchases a dealer option it must
rely on the selling dealer to perform if the Fund exercises the option. Failure
by the dealer to do so would result in the loss of the premium paid by the Fund
as well as loss of the expected benefit of the transaction.
Exchange-traded options generally have a continuous liquid market while
dealer options may not. Consequently, a Fund can realize the value of a dealer
option it has purchased only by exercising or reselling the option to the
issuing dealer. Similarly, when a Fund writes a dealer option, the Fund can
close out the option prior to its expiration only by entering into a closing
purchase transaction with the dealer. While the Funds will seek to enter into
dealer options only with dealers who will agree to and can enter into closing
transactions with the Funds, no assurance exists that a Fund will at any time be
able to liquidate a dealer option at a favorable price at any time prior to
expiration. Unless a Fund, as a covered dealer call option writer, can effect a
closing purchase transaction, it will not be able to liquidate securities (or
other assets) used as cover until the option expires or is exercised. In the
event of insolvency of the other party, the Fund may be unable to liquidate a
dealer option. With respect to options written by a Fund, the inability to enter
into a closing transaction may result in material losses to the Fund. For
example, because a Fund must maintain a secured position with respect to any
call option on a security it writes, the Fund may not sell the assets which it
has segregated to secure the position while it is obligated under the option.
This requirement may impair the Fund's ability to sell portfolio securities at a
time when such sale might be advantageous.
The staff of the SEC takes the position that purchased dealer options are
illiquid securities. A Fund may treat the cover used for written dealer options
as liquid if the dealer agrees that the Fund may 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.
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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.
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.
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A Fund may elect to close some or all of its futures positions at any time
prior to their expiration in order to reduce or eliminate a hedge position then
currently held by the Fund. The Fund may close its positions by taking opposite
positions which will operate to terminate the Fund's position in the futures
contracts. Final determinations of variation margin are then made, additional
cash is required to be paid by or released to a Fund, and the Fund realizes a
loss or a gain. Such closing transactions involve additional commission costs.
RISKS OF TRANSACTIONS IN FUTURES CONTRACTS. Successful use of futures
contracts by the Fund is subject to the Adviser's ability to predict movements
in various factors affecting securities markets, including interest rates.
The use of futures strategies also involves the risk of imperfect
correlation among movements in the prices of the securities underlying the
futures purchased and sold by the Fund, of the futures contracts themselves,
and, in the case of hedging transactions, of the securities which are the
subject of a hedge. The successful use of these strategies further depends on
the ability of the Adviser to forecast market movements correctly.
There is no assurance that higher than anticipated trading activity or
other unforeseen events might not, at times, render certain market clearing
facilities inadequate, and thereby result in the institution by exchanges of
special procedures which may interfere with the timely execution of customer
orders.
To reduce or eliminate a position held by the Fund, the Fund may seek to
close out such position. The ability to establish and close out positions will
be subject to the development and maintenance of a liquid secondary market. It
is not certain that this market will develop or continue to exist for a
particular futures contract. Reasons for the absence of a liquid secondary
market on an exchange include the following: (i) there may be insufficient
trading interest in certain contracts; (ii) restrictions may be imposed by an
exchange on opening transactions or closing transactions or both; (iii) trading
halts, suspensions or other restrictions may be imposed with respect to
particular classes or series of contracts, or underlying securities; (iv)
unusual or unforeseen circumstances may interrupt normal operations on an
exchange; (v) the facilities of an exchange or a clearing corporation may not at
all times be adequate to handle current trading volume; or (vi) one or more
exchanges could, for economic or other reasons, decide or be compelled at some
future date to discontinue the trading of contracts (or a particular class or
series of contracts), in which event the secondary market on that exchange for
such contracts (or in the class or series of contracts) would cease to exist,
although outstanding contracts on the exchange that had 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.
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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.
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
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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.
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
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<PAGE>
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.
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.
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<PAGE>
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.
LIQUIDITY DETERMINATIONS. 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.
SPECIAL CONSIDERATIONS RELATING TO AMERICAN DEPOSITORY RECEIPTS. The
StockJungle.com Market Leaders Growth Fund, StockJungle.com Pure Play Internet
Fund and StockJungle.com Community Intelligence 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.
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<PAGE>
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.
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.
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<PAGE>
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
The Funds are each subject to the following restrictions that are not
fundamental and may therefore be changed by the Board of Trustees without
shareholder approval.
The Funds will not:
1. Acquire securities for the purpose of exercising control over
management.
2. Invest more than 15% of their respective net assets in illiquid
securities.
Unless otherwise indicated, percentage limitations included in the
restrictions apply at the time a Fund enters into a transaction. Accordingly,
any later increase or decrease beyond the specified limitation resulting from a
change in that Fund's net assets will not be considered in determining whether
it has complied with its investment restrictions.
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<PAGE>
TRUSTEES AND EXECUTIVE OFFICERS
BOARD OF TRUSTEES
The Funds are supervised by the Board of Trustees of StockJungle.com Trust
(the "Trust"). The Board of Trustees consist of three individuals, two of whom
are not "interested persons" of the Funds as that term is defined in the
Investment Company Act of 1940, as amended (the "1940 Act"). The Trustees are
fiduciaries for the Fund's shareholders and are governed by the laws of the
State of Massachusetts in this regard. They establish policies for the operation
of the Trust and the Funds and appoint the officers who conduct the daily
business of the Funds. Officers and Trustees are listed below with their
addresses, present positions with the Trust and principal occupations over at
least the last five years.
The following table contains information concerning the trustees and
executive officers of the Trust and their principal occupations during the past
five years.
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<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATION
NAME AND ADDRESS WITH THE TRUST LAST FIVE YEARS
- ---------------- -------------- ---------------
<S> <C> <C>
Michael J. Witz (Age 28) President, Chief Chairman & CEO of
5750 Wilshire Boulevard Executive Officer and StockJungle.com Investment
Suite 560 Chairman of the Advisors, Inc., a registered
Los Angeles, CA 90036 Board of Trustees investment adviser and the
Adviser to the Funds
Victor A. Canto (Age 50) Trustee Chairman and Founder of La
7608 La Jolla Boulevard Jolla Economics, an economics
La Jolla, CA 92037 consulting firm; Managing
Director of Cadinha
Institutional Services, an
asset management firm.
Previously served as Director,
Chief Investment Officer and
Portfolio Manager of Calport
Asset Management, an
investment adviser, and as
President and Director of
Research of A.B. Laffer, V.A.
Canto & Associates.
Charles A. Parker (Age 64) Trustee Director, T.C.W. Convertible
54 Huckleberry Hill Road Fund, a registered investment
New Canaan, CT 06840 company; Director,
Underwriters Real Estate
Group; Chairman and CEO of
Continental Asset Management
Company, an asset management
firm; Chief Investment Officer
and Director of Continental
Corp., an asset management
firm; Member, Business
Advisory Council of the
University of Colorado School
of Business; Member, Institute
of Chartered Financial
Analysts.
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
Michael Petrino (Age 53) Vice-President Founder of and Portfolio
191 Post Road West Manager at Calport Asset
Westport, CT 06880 Management, Inc., an
investment adviser
Tina D. Hosking, Esq. (Age 31) Secretary Vice President and Associate
312 Walnut Street General Counsel of Countrywide
21st Floor Fund Services, Inc., a
Cincinnati, OH 45202 registered mutual fund
transfer agent and service
provider
Theresa M. Samocki, CPA Treasurer Vice President and Fund
(Age 29) Accounting Manager of
312 Walnut Street Countrywide Fund Services,
21st Floor Inc., a registered mutual fund
Cincinnati, OH 45202 transfer agent and service
provider. Previously an
auditor for Arthur Andersen
LLP
Brian J. Manley, CPA (Age 35) Assistant Secretary Assistant Vice President and
312 Walnut Street Client Service Manager of
21st Floor Countrywide Fund Services,
Cincinnati, OH 45202 Inc., a registered mutual fund
transfer agent and service
provider.
</TABLE>
The members of the Audit Committee of the Board of Trustees are Messrs.
Canto and Parker. Mr. Parker acts as the chairperson of such committee. The
Audit Committee oversees each Fund's financial reporting process, reviews audit
results and recommends annually to the Trust a firm of independent certified
public accountants.
Those Trustees who are officers or employees of the Adviser, the
Administrator or their affiliates receive no remuneration from the Funds.
Members of the Board who are not affiliated with the Adviser or the
Administrator receive an annual fee of $5,000 per Fund. Each Fund will pay
Trustees' fees and expenses based on the net assets of the paying series of the
Trust. In addition, each Trustee who is not affiliated with the Adviser, the
Administrator or their affiliates is reimbursed for expenses incurred in
connection with attending meetings.
The following table sets forth the estimated compensation expected to be
received by each Trustee of the Trust during the fiscal year ending September
30, 2000. Trustees who are interested persons of the Trust, as defined by the
1940 Act, are indicated by asterisk.
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<PAGE>
<TABLE>
<CAPTION>
Pension or Total Compensation
Aggregate Retirement Benefits Estimated Annual From Fund and Fund
Compensation From Accrued as Part of Benefits Upon Complex Paid to
Name of Person, Position Each Fund Fund Expenses Retirement Trustees
- ------------------------ --------- ------------- ---------- --------
<S> <C> <C> <C> <C>
*Michael J. Witz NONE NONE NONE NONE
Chairman of the Board of
Trustees
Victor A. Canto $5,000 NONE NONE $20,000
Trustee
Charles A. Parker $5,000 NONE NONE $20,000
Trustee
</TABLE>
INVESTMENT ADVISORY AND OTHER SERVICES
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 Trust, and accordingly
has no substantial operating history as of the date of this Statement of
Additional Information, although some of its employees have experience in the
investment management industry. The Adviser will act as such pursuant to written
agreements with the Trust, on behalf of each Fund, which, after each agreement's
initial two-year period, must be 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 (877)
884-3147.
CONTROL OF THE ADVISER
The common stock of the Adviser is wholly-owned and controlled by
StockJungle.com, Inc., a Delaware corporation controlled by Messrs. Witz and
Julian Smerkovitz. StockJungle.com, Inc. is the sponsor of the StockJungle.com
website located at http://www.stockjungle.com upon which that company offers a
wide variety of products and services intended for use by investors with access
to the Internet. Additional information regarding these products and services is
available on the website.
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<PAGE>
INVESTMENT ADVISORY AGREEMENT
The Adviser acts as the investment adviser to each Fund under an Investment
Advisory Agreement which has been approved by the Board of Trustees (including a
majority of the Trustees who are not parties to the agreement, or interested
persons of any such party).
Each Investment Advisory Agreement will terminate automatically in the
event of its assignment. In addition, each agreement is terminable at any time,
without penalty, by the Board of Trustees of the Trust or by vote of a majority
of the Trust's outstanding voting securities (as defined in the 1940 Act) on not
more than 60 days' written notice to the Adviser, and by the Adviser on 60 days'
written notice to the Trust. Unless sooner terminated, each agreement shall
continue in effect for more than two years after its execution only so long as
such continuance is specifically approved at least annually by either the Board
of Trustees or by a vote of a majority of the Trust's outstanding voting
securities (as defined in the 1940 Act), provided that, in either event, such
continuance is also approved by a vote of a majority of the Trustees who are not
parties to such agreement, or interested persons of such parties (as defined in
the 1940 Act), cast in person at a meeting called for the purpose of voting on
such approval.
Under the Investment Advisory Agreement, the Adviser provides each Fund
with advice and assistance in the selection and disposition of the Fund's
investments. The Adviser is obligated to pay the salaries and fees of any
affiliates of the Adviser serving as officers of the Trust and/or the Funds.
Each Investment Advisory Agreement provides that the Adviser will not be
liable to the Trust or its shareholders for its acts or omissions in the course
of its services thereunder, except for willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations ("disabling conduct"). Each
Agreement also provides that each party will indemnify the other against
liabilities arising out of its performance under the Agreement, except for a
party's disabling conduct.
CODE OF ETHICS
Personnel of the Adviser may invest in securities for their own accounts
pursuant to a Code of Ethics that sets forth all employees' fiduciary
responsibilities regarding the Funds, establishes procedures for personal
investing and restricts certain transactions. For example, all personal trades
in most securities require pre-clearance, and participation in initial public
offerings is prohibited. In addition, restrictions on the timing of personal
investing in relation to trades by the Funds and on short-term trading have been
adopted. 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.
ADMINISTRATOR
The Trust's administrator is Countrywide Fund Services, Inc. ("CFS" or the
"Administrator"), which has its principal office at 312 Walnut Street, 21st
Floor, Cincinnati, Ohio 45202, and is primarily in the business of providing
administrative, fund accounting and transfer agency services to retail and
institutional mutual funds with approximately $16 billion of total assets
throughout the United States.
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<PAGE>
Pursuant to an Administration Agreement with the Trust on behalf of each
Fund, the Administrator provides all administrative services necessary for the
Funds, subject to the supervision of the Trust's Board of Trustees. The
Administrator may provide persons to serve as officers of each Fund. Such
officers may be trustees, officers or employees of the Administrator or its
affiliates.
The Administration Agreement is terminable by the Board of Trustees or the
Administrator on sixty days' written notice and may be assigned provided the
non-assigning party provides prior written consent. The Agreement will remain in
effect for two years from the date of its initial approval, and subject to
annual approval of the Board of Trustees for one-year periods thereafter. The
Agreement provides that in the absence of willful misfeasance, bad faith or
gross negligence on the part of the Administrator or reckless disregard of its
obligations thereunder, the Administrator shall not be liable for any action or
failure to act in accordance with its duties thereunder and contains mutual
indemnification provisions similar to those in the Investment Advisory
Agreement.
Under the Administration Agreement, the Administrator provides all
administrative services, including, without limitation: (i) providing services
of persons competent to perform such administrative and clerical functions as
are necessary to provide effective administration of each Fund; (ii) overseeing
the performance of administrative and professional services to the Fund by
others, including each Fund's Custodian; (iii) coordinating the preparation of,
but not paying for, the periodic updating of each Fund's Registration Statement,
Prospectus and Statement of Additional Information in conjunction with each
Fund's counsel, including the printing of such documents for the purpose of
filings with the SEC and state securities administrators, each Fund's tax
returns, and reports to each Fund's shareholders and the Securities and Exchange
Commission; (iv) coordinating the preparation of , but not paying for, all
filings under the securities or "Blue Sky" laws of such states or countries as
are designated by the distributor, which may be required to register or qualify,
or continue the registration or qualification, of each Fund and/or its shares
under such laws; (v) coordinating the preparation of notices and agendas for
meetings of the Board of Trustees and minutes of such meetings in all matters
required by the 1940 Act to be acted upon by the Board; and (vi) monitoring
daily and periodic compliance with respect to all requirements and restrictions
of the Investment Company Act, the Internal Revenue Code and the Prospectus.
The Administrator, pursuant to an Accounting Services Agreement with the
Trust, provides each Fund with all accounting services, including, without
limitation: (i) daily computation of net asset value; (ii) maintenance of
security ledgers and books and records as required by the Investment Company
Act; (iii) production of each Fund's listing of portfolio securities and general
ledger reports; (iv) reconciliation of accounting records; (v) calculation of
yield and total return for each Fund; (vi) maintaining certain books and records
described in Rule 31a-1 under the 1940 Act, and reconciling account information
and balances among each Fund's Custodian and Adviser; and (vii) monitoring and
evaluating daily income and expense accruals, and sales and redemptions of
shares of each Fund. The Agreement contains provisions regarding termination,
liability and indemnification similar to those in the Administration Agreement.
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<PAGE>
CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT
The Fifth Third Bank, 38 Fountain Square Plaza, Cincinnati, Ohio 45263,
serves as custodian for each Fund's cash and securities (the "Custodian").
Pursuant to a Custodian Agreement with the Trust on behalf of each Fund, the
Custodian is responsible for maintaining the books and records of each Fund's
portfolio securities and cash. The Custodian does not assist in, and is not
responsible for, investment decisions involving assets of the Funds. CFS, the
Administrator, also acts as each Fund's Transfer, Dividend Disbursing, and
Shareholder Servicing Agent. The Agreement contains provisions regarding
termination, liability and indemnification similar to those in the
Administration Agreement. All fees for these services are paid by the Adviser on
behalf of the Trust.
DISTRIBUTION AGREEMENT
CW Fund Distributors, Inc. ("the Distributor"), an affiliate of the
Administrator, has entered into an underwriting agreement with the Trust to
serve as the principal underwriter of each Fund and the exclusive agent for the
distribution of each Fund's shares. The Distributor will serve as the statutory
underwriter for the direct sale of the shares of each Fund to the public, and
will be responsible for contracting and managing relationships with investment
dealers. The Distributor has agreed to offer such shares for sale at all times
when such shares are available for sale and may lawfully be offered for sale and
sold.
The Distribution Agreement contains provisions with respect to renewal and
termination similar to those in the Investment Advisory Agreement described
above. Pursuant to the Distribution Agreement, the Trust has agreed to indemnify
the Distributor to the extent permitted by applicable law against certain
liabilities under the Securities Act of 1933.
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.
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<PAGE>
U.S. Government securities generally are traded in the over-the-counter
market through broker-dealers. A broker-dealer is a securities firm or bank that
makes a market for securities by offering to buy at one price and sell at a
slightly higher price. The difference between the prices is known as a spread.
In placing orders for the purchase and sale of portfolio securities for
each Fund, the Adviser seeks to obtain the best price and execution, taking into
account such factors as price, size of order, difficulty and risk of execution
and operational facilities of the firm involved. For securities traded in the
over-the-counter markets, the Adviser deals directly with the dealers who make
markets in the securities unless better prices and execution are available
elsewhere. The Adviser negotiates commission rates with brokers based on the
quality and quantity of services provided in light of generally prevailing
rates, and while the Adviser generally seeks reasonably competitive commission
rates, the Funds do not necessarily pay the lowest commissions available. The
Board of Trustees periodically reviews the commission rates and allocation of
orders.
When consistent with the objectives of best price and execution, business
may be placed with broker-dealers who furnish investment research or services to
the Adviser. Such research or services include advice, both directly and in
writing, as to the value of securities; the advisability of investing in,
purchasing or selling securities; and the availability of securities, or
purchasers or sellers of securities; as well as analyses and reports concerning
issues, industries, securities, economic factors and trends, portfolio strategy
and the performance of accounts. To the extent portfolio transactions are
effected with broker-dealers who furnish research services to the Adviser, the
Adviser receives a benefit, not capable of evaluation in dollar amounts, without
providing any direct monetary benefit to any Fund from these transactions. The
Adviser believes that most research services obtained by it generally benefit
several or all of the investment companies and private accounts which it
manages, as opposed to solely 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.
23
<PAGE>
TAXATION
Each of the Funds intends to qualify each year as a "regulated investment
company" under Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"). By so qualifying, no Fund will incur federal income or state taxes
on its net investment company taxable income or on its net realized capital
gains (net long-term capital gains in excess of the sum of net short-term
capital losses and capital loss carryovers from the prior 8 years) to the extent
distributed as dividends to shareholders.
To qualify as a regulated investment company, a Fund must, among other
things (a) derive in each taxable year at least 90% of its gross income from
dividends, interest, payments with respect to securities loans, and gains from
the sale or other disposition of stock, securities or foreign currencies, or
other income (including gains from options, futures and forward contracts)
derived with respect to its business of investing in such stock, securities or
currencies; (b) diversify its holdings so that, at the end of each quarter of
the taxable year, (i) at least 50% of the market value of a Fund's assets is
represented by cash, U.S. Government securities, the securities of other
regulated investment companies and other securities, with such other securities
of any one issuer limited for the purposes of this calculation to an amount not
greater than 5% of the value of a Fund's total assets and 10% of the outstanding
voting securities of such issuer, and (ii) not more than 25% of the value of its
total assets is invested in the securities of any one issuer (other than U.S.
Government securities or the securities of other regulated investment
companies); and (c) distribute to its shareholders at least 90% of its
investment company taxable income (which includes dividends, interest and net
short-term capital gains in excess of any net long-term capital losses) and 90%
of its net exempt interest income each taxable year.
Amounts not distributed on a timely basis in accordance with a calendar
year distribution requirement are subject to a nondeductible 4% excise tax at
the Fund level. To avoid the tax, each Fund must distribute during each calendar
year an amount equal to the sum of (a) at least 98% of its ordinary income (not
taking into account any capital gains or losses) for the calendar year, (b) at
least 98% of its capital gains in excess of capital losses (adjusted for certain
ordinary losses) for a one-year period generally ending on October 31st of the
calendar year, and (c) all ordinary income and capital gains for previous years
that were not distributed during such years.
Under the Code, dividends derived from interest, and any short-term capital
gains, are taxable to shareholders as ordinary income for federal and state tax
purposes, regardless of whether such dividends are taken in cash or reinvested
in additional shares. Distributions made from each Fund's net realized long-term
capital gains (if any) and designated as capital gain dividends are taxable to
shareholders as long-term capital gains, regardless of the length of time Fund
shares are held. Corporate investors are not eligible for the dividends-received
deduction with respect to distributions derived from interest on short-or
long-term capital gains from any Fund but may be entitled to such a deduction in
respect to distributions attributable to dividends received by a Fund. A
distribution will be treated as paid on December 31st of a calendar year if it
is declared by the Fund in October, November or December of the year with a
record date in such a month and paid by each Fund during January of the
following year. Such distributions will be taxable to shareholders in the
calendar year the distributions are declared, rather than the calendar year in
which the distributions are received.
24
<PAGE>
Distributions paid by each Fund from net long-term capital gains (excess of
long-term capital gains over long-term capital losses), if any, whether received
in cash or reinvested in additional shares, are taxable as long-term capital
gains, regardless of the length of time you have owned shares in the Fund.
Distributions paid by each Fund from net short-term capital gains (excess of
short-term capital gains over short-term capital losses), if any, whether
received in cash or reinvested in additional shares are taxable as ordinary
income. Capital gains distributions are made when any Fund realizes net capital
gains on sales of portfolio securities during the year.
Many of the options and futures contracts used by the Funds are "section
1256 contracts." Any gains or losses on section 1256 contracts are generally
considered 60% long-term and 40% short-term capital gains or losses ("60/40").
Also, section 1256 contracts held by a Fund at the end of each taxable year
(and, for purposes of the 4% excise tax, on certain other dates as prescribed
under the Code) are "marked to market" with the result that unrealized gains or
losses are treated as though they were realized and the resulting gain or loss
is treated as ordinary or 60/40 gain or loss, depending on the circumstances.
Generally, the hedging transactions and certain other transactions in
options and futures contracts undertaken by a Fund may result in "straddles" for
U.S. federal income tax purposes. The straddle rules may affect the character of
gains (or losses) realized by a Fund. In addition, losses realized by a Fund on
positions that are part of a straddle may be deferred under the straddle rules,
rather than being taken into account in calculating the investment company
taxable income or net capital gain for the taxable year in which such losses are
realized. Because limited regulations implementing the straddle rules have been
promulgated, the tax consequences of transactions in options and future
contracts to a Fund are not entirely clear. The transactions may increase the
amount of short-term capital gain realized by a Fund which is taxed as ordinary
income when distributed to shareholders.
Each Fund may make one or more of the elections available under the Code
which are applicable to straddles. If a Fund makes any of the elections, the
amount, character and timing of the recognition of gains or losses from the
affected straddle positions will be determined under the rules that vary
according to the election(s) made. The rules applicable under certain of the
elections operate to accelerate the recognition of gains or losses from the
affected straddle positions. Because application of the straddle rules may
affect the character of gains or losses, defer losses and/or accelerate the
recognition of gains or losses from the affected straddle positions, the amount
which must be distributed to shareholders, and which will be taxed to
shareholders as ordinary income or long-term capital gain, may be increased or
decreased substantially as compared to a fund that did not engage in such
hedging transactions.
Any redemption or exchange of a Fund's shares is a taxable event and may
result in a gain or loss. Such gain or loss will be capital gain or loss if the
shares are capital assets in the shareholder's hands, and will be long-term or
short-term generally depending upon the shareholder's holding period for the
shares. Any loss realized on a disposition will be disallowed by "wash sale"
rules to the extent the shares disposed of are replaced within a period of 61
days beginning 30 days before and ending 30 days after the disposition. In such
a case, the basis of the shares acquired will be adjusted to reflect the
disallowed loss. Any loss realized by a shareholder on a disposition of shares
held by the shareholder for six months or less will be treated as a long-term
capital loss to the extent of any distributions of capital gain dividends
received by the shareholder with respect to such shares.
25
<PAGE>
Dividend distributions, capital gains distributions, and capital gains or
losses from redemptions and exchanges may also be subject to state and local
taxes.
Ordinarily, distributions and redemption proceeds paid to fund shareholders
are not subject to withholding of federal income tax. However, 31% of each
Fund's distributions and redemption proceeds must be withheld if a Fund
shareholder fails to supply the Fund or its agent with such shareholder's
taxpayer identification number or if the Fund shareholder who is otherwise
exempt from withholding fails to properly document such shareholder's status as
an exempt recipient.
The information above is only a summary of some of the tax considerations
generally affecting the Funds and their shareholders. No attempt has been made
to discuss individual tax consequences. To determine whether any of the Funds is
a suitable investment based on his or her tax situation, a prospective investor
may wish to consult a tax advisor.
OWNERSHIP OF SHARES
Each share of each Fund has one vote for each dollar of net asset value of
the share in the election of Trustees. Cumulative voting is not authorized for
any Fund. This means that the holders of more than 50% of the shares voting for
the election of Trustees can elect 100% of the Trustees if they choose to do so,
and, in that event, the holders of the remaining shares will be unable to elect
any Trustees.
Shareholders of the Funds and any other series of the Trust will vote in
the aggregate and not by series except as otherwise required by law or when the
Board of Trustees determines that the matter to be voted upon affects only the
interest of the shareholders of a particular series. Pursuant to Rule 18f-2
under the 1940 Act, the approval of an investment advisory agreement or any
change in a fundamental policy would be acted upon separately by the series
affected. Matters such as ratification of the independent public accountants and
election of Trustees are not subject to separate voting requirements and may be
acted upon by shareholders of the Trust voting without regard to series.
The directors and officers of the Trust as a group own 11.7% of the Market
Leaders Growth Fund, 6.6% of the Pure Play Internet Fund, and 3.57% of the
Community Intelligence Fund. The following are the name, address and percentage
of ownership of each person who owns of record or is known by a fund to own 5%
or more of any Fund's outstanding stock.
26
<PAGE>
MARKET LEADERS GROWTH FUND
StockJungle.Com, Inc.
3805 Sough Canfield Avenue
Suite B
Culver City, CA 90232 6.0%
StockJungle.Com, Inc.
3805 South Canfield Avenue
Culver City, CA 90232 48.0%
Ambient Advisors, LLC
Box 24976
Los Angeles, CA 90024 6.1%
Michael Anthony Petrino
6 Bluewater Lane
Westport, CT 06880 11.7%
Faye Lee
2710 Forrester Dr.
Los Angeles, CA 90064 6.1%
PURE PLAY INTERNET FUND
Julian Smerkovitz
101 East 52nd St.
New York, NY 10022 9.8%
Michael James Witz
327 Arnaz Dr.
Los Angeles, CA 90048 6.6%
Mark Edward Sale
1013 Dickinson Circle
Raleigh, NC 27614 11.1%
COMMUNITY INTELLIGENCE FUND
Parr Liv Trust
James & Traci Parr, Ttee
DTD 12/17/97
27731 Rolling Wood Lane
San Juan Capistrano, CA 92675 11.1%
27
<PAGE>
Ruta Investments Ltd.
14 South Swinton Avenue
Delray Beach, FL 33444 52.6%
DIVIDENDS AND DISTRIBUTIONS
Net investment income, if any, is declared as dividends and paid annually.
Substantially all the realized net capital gains for each Fund, if any, are also
declared and paid on an annual basis. Dividends and distributions are payable to
shareholders of record at the time of declaration.
Distributions from each Fund are automatically reinvested in additional
Fund shares unless the shareholder has elected to have them paid in cash.
NET ASSET VALUE
The method for determining each Fund's net asset value is summarized in the
Prospectus in the text following the heading "Valuation of Shares." The net
asset value of each Fund's shares is determined on each day on which the New
York Stock Exchange is open, provided that the net asset value need not be
determined on days when no Fund shares are tendered for redemption and no order
for Fund shares is received. The New York Stock Exchange is not open for
business on the following holidays (or on the nearest Monday or Friday if the
holiday falls on a weekend): New Year's Day, President's Day, Martin Luther
King, Jr. Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas.
PERFORMANCE COMPARISONS
Total return quoted in advertising and sales literature reflects all
aspects of each Fund's return, including the effect of reinvesting dividends and
capital gain distributions and any change in a Fund's net asset value during the
period.
Each Fund's total return must be displayed in any advertisement containing
the Fund's yield. Total return is the average annual total return for the 1-, 5-
and 10-year period ended on the date of the most recent balance sheet included
in the Statement of Additional Information, computed by finding the average
annual compounded rates of return over 1-, 5- and 10-year periods that would
equate the initial amount invested to the ending redeemable value according to
the following formula:
28
<PAGE>
n
P(1 + T) = ERV
Where:
P = a hypothetical initial investment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made at
the beginning of the 1-, 5- or 10-year periods at the end of the
1-, 5- or 10-year periods (or fractional portion).
Because the Funds have not had a registration in effect for 1, 5 or 10
years, the period during which the registration has been effective shall be
substituted.
Average annual total return is calculated by determining the growth or
decline in value of a hypothetical historical investment in each Fund over a
stated period and then calculating the annual compounded percentage rate that
would have produced the same result if the rate of growth or decline in value
had been constant throughout the period. For example, a cumulative total return
of 100% over 10 years would produce an average annual total return of 7.18%,
which is the steady annual rate that would result in 100% growth on a compounded
basis in 10 years. While average annual total returns are a convenient means of
comparing investment alternatives, investors should realize that the Fund's
performance is not constant over time, but changes from year to year, and that
average annual total returns represent averaged figures as opposed to actual
year-to-year performance.
In addition to average annual total returns, each Fund may quote unaveraged
or cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total returns may
be quoted as a percentage or as a dollar amount and may be calculated for a
single investment, a series of investments, or a series of redemptions over any
time period. Performance information may be quoted numerically or in a table,
graph, or similar illustration.
Each Fund's performance may be compared with the performance of other funds
with comparable investment objectives, tracked by fund rating services or with
other indexes of market performance. Sources of economic data that may be
considered in making such comparisons may include, but are not limited to,
rankings of any mutual fund or mutual fund category tracked by Lipper Analytical
Services, Inc. or Morningstar, Inc.; data provided by the Investment Company
Institute; major indexes of stock market performance; and indexes and historical
data supplied by major securities brokerage or investment advisory firms. The
Funds may also each utilize reprints from newspapers and magazines furnished by
third parties 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.
29
<PAGE>
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.
REDEMPTION OF SHARES
Redemption of shares, or payment for redemptions, may be suspended at times
(a) when the New York Stock Exchange is closed for other than customary weekend
or holiday closings, (b) when trading on said Exchange is restricted, (c) when
an emergency exists, as a result of which disposal by a Fund of securities owned
by it is not reasonably practicable, or it is not reasonably practicable for the
Fund fairly to determine the value of its net assets, or (d) during any other
period when the Securities and Exchange Commission, by order, so permits,
provided that applicable rules and regulations of the Securities and Exchange
Commission shall govern as to whether the conditions prescribed in (b) or (c)
exist.
30
<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 StockJungle.com Trust, a Massachusetts business trust organized on June 11,
1999.
The Board of Trustees may establish additional funds (with different
investment objectives and fundamental policies) and additional classes of shares
at any time in the future. Establishment and offering of additional portfolios
will not alter the rights of the Funds' shareholders. Shares do not have
preemptive rights or subscription rights. All shares when issued, will be fully
paid and non-assessable by the Trust. In liquidation of a Fund, each shareholder
is entitled to receive his pro rata share of the assets of the Fund.
The Trust's Amended and Restated Agreement and Declaration of Trust
provides that each series of the Trust will be charged only with the liabilities
of that series and a portion (as determined by the Board of Trustees) of any
general liabilities that are not readily identifiable as belonging to any
particular series, but not with the liabilities of any other series.
Under Massachusetts law, shareholders could, under certain circumstances,
be held personally liable for the obligations of a Fund. However, the Amended
and Restated Agreement and Declaration of Trust disclaims liability of the
shareholders of a Fund for acts or obligations of the Trust, which are binding
only on the assets and property of the Fund, and requires that notice of the
disclaimer be given in each contract or obligation entered into or executed by a
Fund or the Trustees. The Amended and Restated Agreement and Declaration of
Trust provides for indemnification out of Fund property for all loss and expense
of any shareholder held personally liable for the obligations of a Fund. The
risk of a shareholder incurring financial loss on account of shareholder
liability is limited to circumstances in which a Fund itself would be unable to
meet its obligations and thus should be considered to be remote.
LICENSE AGREEMENT
The Adviser has entered into a non-exclusive License Agreement with the
Trust which permits the Trust to use the name "StockJungle.com". The Adviser has
the right to require that the Trust stop using the name at such time as the
Adviser is no longer employed as investment manager to the Trust.
OTHER INFORMATION
The Adviser has been recently registered with the Securities Exchange
Commission ("SEC") under the Investment Advisers Act of 1940, as amended. The
Trust has filed a registration statement under the Securities Act of 1933 and
the 1940 Act with respect to the shares offered. Such registrations do not imply
approval or supervision of any Fund or the Adviser by the SEC.
For further information, please refer to the registration statement and
exhibits on file with the SEC in Washington, D.C. These documents are available
upon payment of a reproduction fee. Statements in the Prospectus and in this
Statement of Additional Information concerning the contents of contracts or
other documents, copies of which are filed as exhibits to the registration
statement, are qualified by reference to such contracts or documents.
FINANCIAL STATEMENTS
The Trust's balance sheet as of October 19, 1999 is set forth below. It has
been audited by the Trust's independent auditors, Arthur Andersen LLP, whose
report thereon is set forth below. The balance sheet is included herein in
reliance upon their authority as experts in accounting and auditing.
31
<PAGE>
STOCKJUNGLE.COM TRUST
Statement of Assets and Liabilities
October 19, 1999
StockJungle.com StockJungle.com StockJungle.com
Community Pure Play Market
Intelligence Fund Internet Fund Leaders Fund
------- ------- -------
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
======= ======= =======
32
<PAGE>
STOCKJUNGLE.COM TRUST
NOTES TO STATEMENTS OF ASSETS AND LIABILITIES
AS OF OCTOBER 19, 1999
(1) The StockJungle.com Community Intelligence Fund, the StockJungle.com
Pure Play Internet Fund, the StockJungle.com Market Leaders Fund and the
StockJungle.com No Fee S&P 500 Fund (the Funds) are each a non-diversified
series of the StockJungle.com Trust (the Trust), an open-end management
investment company organized as a Massachusetts business trust under a
Declaration of Trust dated June 11, 1999. On October 19, 1999, 5,000 shares of
the StockJungle.com Community Intelligence Fund, and 2,500 shares each of the
StockJungle.com Pure Play Internet Fund and the StockJungle.com Market Leaders
Fund were issued for cash at $10.00 per share. The Funds have had no operations
except for the initial issuance of shares.
(2) Expenses incurred in connection with the organization of the Funds and
the initial offering of shares will be permanently absorbed by StockJungle.com,
Inc. (the Adviser). As of October 19, 1999, all outstanding shares of the Funds
were held by the Adviser, who purchased these initial shares in order to provide
the Trust with its required capital.
(3) Reference is made to the Prospectus and the Statement of Additional
Information for a description of the Investment Advisory Agreement, the
Underwriting Agreement, the Administration Agreement, the Accounting Services
Agreement, the Transfer, Dividend Disbursing, Shareholder Service and Plan
Agency Agreement, tax aspects of the Fund and the calculation of the net asset
value of shares of the Funds.
33
<PAGE>
Report of Independent Public Accountants
To the Board of Trustees and Shareholders of the StockJungle.com Community
Intelligence Fund, StockJungle.com Pure Play Internet Fund and StockJungle.com
Market Leaders Fund of StockJungle.com Trust:
We have audited the accompanying statements of assets and liabilities of
the StockJungle.com Community Intelligence Fund, the StockJungle.com Pure Play
Internet Fund and the StockJungle.com Market Leaders Fund of StockJungle.com
Trust as of October 19, 1999. These financial statements are the responsibility
of the Trust's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statements of assets and liabilities are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the statements of assets and
liabilities. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the statements of assets and liabilities referred to above
present fairly, in all material respects, the financial position of the
StockJungle.com Community Intelligence Fund, the StockJungle.com Pure Play
Internet Fund and the StockJungle.com Market Leaders Fund of StockJungle.com
Trust as of October 19, 1999 in conformity with generally accepted accounting
principles.
Cincinnati, Ohio
October 20, 1999
/s/ Arthur Andersen LLP
34
<PAGE>
-----------------------------------------------
PART C
-----------------------------------------------
<PAGE>
FORM N-1A
-----------------------------------------------
PART C
-----------------------------------------------
ITEM 23. EXHIBITS.
**(1) Second Amended and Restated Agreement and Declaration of
Trust;
*(2) Bylaws of the Trust;
(3) Not Applicable.
**(4) Form of Investment Advisory Agreements.
**(5) Form of Underwriting Agreement.
(6) Not Applicable.
**(7) Form of Custody Agreement.
**(8.1) Form of Administration Agreement.
**(8.2) Form of Transfer, Dividend Disbursing, Shareholder Service
and Plan Agency Agreement.
**(8.3) Form of Accounting Services Agreement
****(8.4) License Agreement with StockJungle.com, Inc.
***(9) Opinion of Paul, Hastings Janofsky & Walker LLP as to the
legality of the securities being registered, including their
consent to the filing thereof and as to the use of their
names in the Prospectus.
**(10) Consent of Arthur Andersen LLP, independent auditors.
(11) Not Applicable.
**(12) Subscription Letter.
(13) Not Applicable.
(14) Not Applicable.
***(15.1) Code of Ethics of the Trust and the Adviser
***(15.2) Code of Ethics of the Principal Underwriter
* Filed as part of Registration Statement on Form N-1A of the Trust filed
with the SEC via EDGAR on June 23, 1999.
** Filed as part of Pre-effective Amendment No. 2 to the Registration
Statement on Form N-1A of the Trust filed with the SEC via EDGAR on October
26, 1999.
*** Filed herewith.
**** To be filed by amendment.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
Not applicable
C-I
<PAGE>
ITEM 25. INDEMNIFICATION.
In accordance with Section 1 of Chapter 182 of the Massachusetts General
Laws of the Commonwealth of Massachusetts, Sections 6.4 and 6.6 of the
Registrant's Second Amended and Restated Agreement and Declaration of Trust,
respectively, provide as follows:
"Section 6.4. The Trust shall indemnify (from the assets of the Sub-Trust
or Sub-Trusts in question) each of its Trustees and officers (including persons
who serve at the Trust's request as directors, officers or trustees of another
organization in which the Trust has any interest as a shareholder, creditor or
otherwise (hereinafter referred to as a "Covered Person")) against all
liabilities, including but not limited to amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and expenses, including
reasonable accountants' and counsel fees, incurred by any Covered Person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or
legislative body, in which such Covered Person may be or may have been involved
as a party or otherwise or with which such person may be or may have been
threatened, while in office or thereafter, by reason of being or having been
such a Trustee or officer, director or trustee, except with respect to any
matter as to which it has been determined that such Covered Person had acted
with willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of such Covered Person's office (such conduct
referred to hereafter as "Disabling Conduct"). A determination that the Covered
Person is entitled to indemnification may be made by:
(i) a final decision on the merits by a court or other body before
whom the proceeding was brought that the person to be indemnified was not
liable by reason of Disabling Conduct,
(ii) dismissal of a court action or an administrative proceeding
against a Covered Person for insufficiency of evidence of Disabling
Conduct, or
(iii) a reasonable determination, based upon a review of the facts,
that the indemnitee was not liable by reason of Disabling Conduct by (a) a
vote of a majority of a quorum of Trustees who are neither "interested
persons" of the Trust as defined in section 2(a)(19) of the 1940 Act nor
parties to the proceeding, or (b) an independent legal counsel in a written
opinion.
Expenses, including accountants' and counsel fees so incurred by any such
Covered Person (but excluding amounts paid in satisfaction of judgments, in
compromise or as fines or penalties), may be paid from time to time by the
Sub-Trust in question in advance of the final disposition of any such action,
suit or proceeding, provided that the Covered Person shall have undertaken to
repay the amounts so paid to the Sub-Trust in question if it is ultimately
determined that indemnification of such expenses is not authorized under this
Article VI and:
(i) the Covered Person shall have provided security for such
undertaking,
(ii) the Trust shall be insured against losses arising by reason of
any lawful advances, or
(iii) a majority of a quorum of the disinterested Trustees who are not
a party to the proceeding, or an independent legal counsel in a written
opinion, shall have determined, based on a review of readily available
facts (as opposed to a full trial-type inquiry), that there is reason to
believe that the Covered Person ultimately will be found entitled to
indemnification."
"Section 6.6. The right of indemnification provided by this Article VI
shall not be exclusive of or affect any other rights to which any such Covered
Person may be entitled. As used in this Article VI, "Covered Person" shall
include such person's heirs, executors and administrators, an "interested
Covered Person" is one against whom the action, suit or other proceeding in
question or another action, suit or other proceeding on the same or similar
grounds is then or has been pending or threatened, and a "disinterested" person
is a person against whom none of such actions, suits or other proceedings or
another action, suit or other proceeding on the same or similar grounds is then
C-II
<PAGE>
or has been pending or threatened. Nothing contained in this Article shall
affect any rights to indemnification to which personnel of the Trust, other than
Trustees and officers, and other persons may be entitled by contract or
otherwise under law, nor the power of the Trust to purchase and maintain
liability insurance on behalf of any such person."
Registrant will comply with Rule 484 under the Securities Act of 1933 and
Release 11300 under the 1940 Act in connection with any indemnification.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
StockJungle.com Investment Advisors, Inc. serves as investment adviser to
each Fund. Set forth below are the names of the directors and officers of the
Adviser:
Michael J. Witz Chairman, Chief Executive Officer and Director
Brian A. Levy Chief Operating Officer
Julian Smerkovitz Chief Financial Officer and Director
ITEM 27. PRINCIPAL UNDERWRITER.
(a) The principal underwriter of the Trust's shares currently acts as a
principal underwriter for other investment companies.
(b) The following table contains information with respect to each director,
trustee, officer or partner of each principal underwriter named in the answer to
Item 20:
Unless otherwise noted, with an asterisk (*), the address of the persons
named below is 312 Walnut Street, Cincinnati, Ohio 45202.
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS* WITH UNDERWRITER WITH REGISTRANT
----------------- ---------------- ---------------
*Angelo R. Mozilo Chairman of the None
Board/Director
*Andrew S. Bielanski Director None
*Thomas H. Boone Director None
*Marshall M. Gates Director None
Robert H. Leshner President/Vice Chairman None
CEO/Director
Maryellen Peretzky Vice President, Secretary None
Robert L. Bennett Vice President, Chief None
Operations Officer
Terrie A. Wiedenheft Vice President, Chief None
Officer, Treasurer
* The address is 4500 Park Granada Blvd., Calabasas, CA 91302
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.
The accounts and records of the Trust required to be maintained by Section
31(a) of the 1940 Act and the rules promulgated thereunder are located, in whole
or in part, at the office of the Adviser at 5750 Wilshire Boulevard, Suite 560,
Los Angeles, CA 90036, except transfer agency records which are maintained at
the offices of the Administrator, Countrywide Fund Services, Inc. which has its
principal office at 312 Walnut Street, Floor, Cincinnati, Ohio 45202, and
custodial records which are maintained at the offices of the Custodian. The
Adviser can also be contacted by telephone at 602-2000.
ITEM 29. MANAGEMENT SERVICES.
Not Applicable
ITEM 30. UNDERTAKINGS.
Not Applicable
C-III
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940 the registrant has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Los Angeles and State of California, on the 14th day
of April, 2000
STOCKJUNGLE.COM TRUST
By: /s/ Michael J. Witz
------------------------------------
Michael J. Witz, Chairman
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the date indicated.
/s/ Michael J. Witz Chairman of the April 14, 2000
- ----------------------------- Board of Trustees and
Michael J. Witz
/s/ Victor A. Canto Chief Executive Officer
- ----------------------------- Trustee April 14, 2000
Victor A. Canto
C-IV
Law Offices of
Paul, Hastings, Janofsky & Walker LLP
555 South Flower Street, 23rd Floor
Los Angeles, California 90071
Telephone (213) 683-6125
Facsimile (213) 996-3125
Internet www.phjw.com
April 14, 2000
StockJungle.com Trust
5750 Wilshire Boulevard, Suite 560
Los Angeles, CA 90036
RE: VALIDITY OF SHARES
Ladies and Gentlemen:
We have acted as legal counsel to you, Stockjungle.com Trust, a
Massachusetts business trust (the "Trust"), in connection with Post-Effective
Amendment No. 1 to the Trust's Registration Statement on Form N-1A filed with
the United States Securities and Exchange Commission (the "Post-Effective
Amendment") relating to the issuance by the Trust of an indefinite number of
$0.001 par value shares of beneficial interest (the "Shares") of the
StockJungle.com Market Leaders Growth Fund, StockJungle.com Pure Play Internet
Fund, and StockJungle.com Community Intelligence Fund series of the Trust (the
"Funds").
In connection with this opinion, we have assumed the authenticity of all
records, documents and instruments submitted to us as originals, the genuineness
of all signatures, the legal capacity of all natural persons, and the conformity
to the originals of all records, documents, and instruments submitted to us as
copies. We have based our opinion on the following:
(a) the Trust's Amended and Restated Declaration of Trust dated
October 20, 1999 (the "Declaration of Trust"), as certified to us by an
officer of the Trust as being true and complete and in effect on the date
hereof;
(b) the By-laws of the Trust certified to us by an officer of the
Trust as being true and complete and in effect on the date hereof;
(c) resolutions of the Trustees of the Trust adopted at a meeting on
October 5, 1999 authorizing the establishment of the Funds, and the
issuance of the Shares;
<PAGE>
StockJungle.com Trust
April 14, 2000
Page 2
(d) the Post-Effective Amendment; and
(e) a certificate of an officer of the Trust as to certain factual
matters relevant to this opinion.
Our opinion below is limited to the federal law of the United States of
America and the business trust law of the Commonwealth of Massachusetts. We are
not licensed to practice law in the Commonwealth of Massachusetts, and we have
based our opinion below solely on our review of Chapter 182 of the Massachusetts
General Laws and the case law interpreting such Chapter as reported in the
Annotated Laws of Massachusetts (Aspen Law & Business, supp. 1998, as updated on
April 14, 2000). We have not undertaken a review of other Massachusetts law or
of any administrative or court decisions in connection with rendering this
opinion. We disclaim any opinion as to any law other than that of the United
States of America and the business trust law of the Commonwealth of
Massachusetts as described above, and we disclaim any opinion as to any statute,
rule, regulation, ordinance, order or other promulgation of any regional or
local governmental authority.
We note that, pursuant to certain decisions of the Supreme Judicial Court
of the Commonwealth of Massachusetts, shareholders of a Massachusetts business
trust may, in certain circumstances, be assessed or held personally liable as
partners for the obligations or liabilities of the Trust. However, we also note
that Article VI, Section 6.1 of the Declaration of Trust provides that all
persons extending credit to, contracting with or having any claim against a
sub-trust shall look only to the assets of the sub-trust for payment thereof and
that the shareholders shall not be personally liable therefor, and further
provides that every note, bond, contract, instrument, certificate or undertaking
made or issued on behalf of the Trust or the Portfolios may include a notice
that such instrument was executed on behalf of a sub-trust and that the
obligations of such instruments are not binding upon any of the shareholders of
the Trust individually, but are binding only on the assets and property of that
sub-trust.
Based on the foregoing and our examination of such questions of law as we
have deemed necessary and appropriate for the purpose of this opinion, and
assuming that (i) all of the Shares will be issued and sold for cash or other
valid consideration at the per-share public offering price on the date of their
issuance in accordance with statements in the Fund's Prospectus included in the
Post-Effective Amendment and in accordance with the Declaration of Trust, (ii)
all consideration for the Shares will be actually received by the Funds, and
(iii) all applicable securities laws will be complied with, it is our opinion
that, when issued and sold by the Funds, the Shares will be legally issued,
fully paid and nonassessable.
This opinion is rendered to you in connection with the Post-Effective
Amendment and is solely for your benefit. This opinion may not be relied upon by
you for any other purpose or relied upon by any other person, firm, corporation
<PAGE>
StockJungle.com Trust
April 14, 2000
Page 3
or other entity for any purpose, without our prior written consent. We disclaim
any obligation to advise you of any developments in areas covered by this
opinion that occur after the date of this opinion.
We hereby consent to (i) the reference to our firm as Legal Counsel in the
Prospectus and Statement of Additional Information included in the
Post-Effective Amendment, and (ii) the filing of this opinion as an exhibit to
the Post-Effective Amendment.
Very truly yours,
/s/ PAUL, HASTINGS, JANOFSKY & WALKER LLP
STOCKJUNGLE.COM
CODE OF ETHICS:
October 8, 1999
INSIDER TRADING AND SECURITIES TRANSACTIONS
I. NEED FOR POLICY
StockJungle.com is committed to ensuring compliance with all laws regarding
Insider Trading and Stock Tipping. In addition, as registered investment
advisers, StockJungle.com and its employees have additional ethical and legal
obligations that must be fulfilled in order to maintain the confidence and trust
of our clients and to protect the assets entrusted to us.
The purpose of this Policy is to state the Company's requirement that all
employees comply fully with the laws prohibiting insider trading and tipping,
and to set forth additional requirements and guidelines relating to employees'
personal securities transactions.
This Policy is designed to avoid even the appearance of impropriety,
criminal liability, or civil liability.
II. INSIDER TRADING, TIPPING, AND CONFIDENTIAL INFORMATION
The guiding principle behind the StockJungle.com policy is that client
interests come first. In keeping with this principle, StockJungle.com requires
that its employees:
* Must not buy, sell, recommend or suggest that anyone else buy, sell,
or retain, the securities of any company while in possession of inside
information regarding that company. This prohibition on insider
trading applies not only to personal transactions, but also bars
trading for client accounts when in possession of insider information.
* Must not disclose inside information to anyone, inside or outside of
StockJungle.com (including family members, except to those who have a
need to know such information) in order for StockJungle.com to carry
on its business properly and effectively. Also, any permitted
disclosure may only be made under circumstances that make it
reasonable to believe that the information will not be misused or
improperly disclosed by the recipient.
* Must use StockJungle.com's confidential information solely for
legitimate Company purposes and must not improperly disclose such
information.
* Must use and protect all confidential information received from others
strictly in accordance with the terms of the agreement or
understanding that the information was received and with at least the
same degree of care that would be applied to comparable
StockJungle.com confidential information.
* Must disclose the number and types of accounts that the employee
controls.
<PAGE>
III. REQUIREMENTS FOR EMPLOYEES' SECURITIES TRANSACTIONS
StockJungle.com employees are permitted to invest for their own account,
provided that such investment activities comply with applicable laws and
regulations, and are carried out in a manner consistent with StockJungle.com's
policy. In addition, personal securities transactions must avoid even the
appearance of a conflict of interest. The procedures and guidelines that follow
set forth reporting obligations and additional rues of conduct that must be
adhered to all StockJungle.com employees.
Pre-clearance and reporting of personal securities transactions and other
rules under this policy do not relieve employees from responsibility for
compliance with the proscriptions against insider trading and tipping set forth
above.
All requirements of this policy pertain to each employee's transactions and
transactions of associated accounts (Section IV (B)).
A. TRADING AND PRE-CLEARANCE REQUIREMENTS (See also Appendix B, attached).
* All employees must receive pre-clearance from the Trading
Desk/Pre-Clearance Officer prior to engaging in a transaction
involving any publicly traded equity and/or fixed income security (or
any options or futures relating to such a security and/or fixed income
security). Pre-clearance must be obtained by filing Form C with the
Pre-Clearance Officer and receiving an approval log number. If
clearance is not given, the employee must not proceed with the
transaction. The fact that clearance is denied should be considered as
confidential information and must not be disclosed.
* Employees must provide the ticker, security name, type of order
(market, limit, buy/sell), price, and quantity to the Trading Desk.
Clearance will not be granted if there is a pending buy or sell for a
managed account.
* Transactions not effected the day clearance is granted must be
re-cleared.
* All transactions for the employee, his/her spouse, minor child, other
household members accounts subject to your discretion and control
(e.g. custodial and trust accounts), other accounts in which you have
a beneficial interest and ability to influence transactions (e.g.
joint accounts, co-trustee accounts, partnerships, investment clubs,
associated accounts) must be pre-cleared in accordance with this
policy.
* Employees of StockJungle.com who are directly involved in either
trading or investment management activities are prohibited from
participating in initial public offerings (IPOs). Any purchases of new
issues are allowed only in the secondary markets. StockJungle.com's
Trading Desk must be notified prior to any transaction in the IPO
market to ensure that it (StockJungle.com) does not have established
relationships with broker-dealers participating in the offering.
* Any employee directly participating in the decision or recommendation
to buy, sell or retain a particular security must disclose any direct
or indirect personal ownership of the security or any affiliation
which the issuer which is the subject of the decision or
recommendation.
* No analyst or portfolio manager may buy or sell a security for his/her
own account within 7 calendar days before or after transactions for
his/her assigned accounts have been completed for that security. The
<PAGE>
clients' interests must always take precedence even if it requires the
employee to delay taking action and suffer financial loss.
* All information received by an employee as a result of the employee's
employment with StockJungle.com is received in trust for
StockJungle.com clients. Subject to the restriction on insider trading
and tipping, and any requirements to keep such information
confidential, it is the obligation of the employee to make such
information known to other analysts and portfolio managers whose
accounts might be interested in sum information and not to
misappropriate such information for the employee's own financial
benefit.
* Particular attention should be paid to transactions in thinly traded
issues where even small transactions for an employee's account might
affect the market. A similar concern attaches to trading in derivative
securities (options, futures, convertible bonds, etc.) where only a
small movement in a security's price may be significant due to
leverage.
* In order to avoid the appearance of opportunistic trading in front of
transactions for StockJungle.com accounts, employees should seek to
avoid day-trades and should be prepared to hold investments for a
significant interval (minimum of 60 days).
* No employee may solicit or accept any offer made by any person if as a
result the employee would be able to purchase or sell any security at
a price or under conditions more favorable than those offered to
StockJungle.com's clients.
* Although StockJungle.com employees may conduct trading for their own
account within the limits off his policy, trading during working hours
should be limited. Extensive trading that may affect on-the-job
performance may be considered a violation of this policy and
StockJungle.com. In addition, StockJungle.com reserves the right to
prohibit employees from trading in certain securities and markets.
* The Pre-Clearance Officer may rescind approval before the employee
completes the trade. In this case, the employee should not continue,
and should seek clearance on a future date.
B. TRANSACTIONS EXEMPT FROM PRE-CLEARANCE
The following transactions are not subject to the pre-clearance procedures:
1) All open-end mutual fund shares, dividend reinvestment plans and
optional cash purchases, "blind" managed accounts, or StockJungle.com
employee investment programs.
IV. RESPONSIBILITY
All employees must strictly observe the provisions of this Policy. An
employee's actions with respect to matters governed by this Policy are
significant indications of the individual's judgment, ethics, and competence.
Any actions in violation of the Policy will constitute an important element in
the evaluation of the employees for retention, assignment, and promotion.
Violations of this Policy will be grounds for appropriate disciplinary action.
Disciplinary action may include disgorging of profits, liquidation of holdings,
suspension of trading privileges, and discharge.
<PAGE>
All Managers are required to take appropriate measures to ensure that their
employees understand and comply with this Policy. All employees shall
acknowledge in writing, when first assigned to StockJungle.com and annually
thereafter, their commitment to comply with this Policy. A copy of the
Acknowledgment form appears as Attachment A.
The President of StockJungle.com shall be responsible for the
interpretation and enforcement of this Policy. Employees with questions
concerning whether conduct is consistent with the mandates of this Policy shall
consult the President prior to engaging in such conduct. Employees who believe
any other employee is engaged in conduct prohibited by this Policy, or that any
other person or firm representing StockJungle.com is engaged in such conduct
will promptly report such information to the appropriate level of management.
Upon request, employees shall submit copies of brokerage account
statements, confirmations, and other related materials with respect to their
personal and associated accounts to be used to audit compliance with these
reporting and clearance procedures and with the proscriptions against insider
trading and tipping set forth above. The statements should be provided no later
than ten (10) days after the request is made.
V. DEFINITIONS
"Inside information" means non-public information (i.e. information which
is not available to investors generally) that a reasonable investor would
consider to be important in deciding whether to buy, sell or retain a security
(e.g. stock; bond; option) including, for example, non-public information
relating to a pending merger, acquisition, disposition, joint venture, contact
award or termination, major lawsuit or claim, earnings announcement or change in
dividend policy, significant product development, or the gain or loss of a
significant customer or supplier. Any nonpublic information may be inside
information regardless of whether it is developed internally or obtained from
others (e.g. the issuer, current or prospective customers, suppliers or business
partners) and whether it relates to StockJungle.com or any other company or
entity. Information is still considered non-public until the market has had a
reasonable time after public announcement to assimilate and react to the
information.
"Confidential information" means any non-public information concerning
StockJungle.com activities or developed by StockJungle.com or received by
StockJungle.com under an express or implied agreement or understanding that the
information will be treated in confidence or used only for a limited purpose,
regardless of whether or not it would be considered to be important by
investors. Examples of confidential information include stocks recommended for
purchase or sale for client accounts, details of final transactions, and
identity and terms of customer accounts.
"Associated account" means securities and futures accounts of the
employee's (I) spouse, (II) minor children, and (III) other household members,
as well as (IV) any other accounts subject to an employee's discretion or
control (e.g. custodial and trust accounts, etc.), and (V) any other accounts in
which the employee has a beneficial interest and a substantial ability to
influence transaction (e.g. joint accounts, co-trustee accounts, partnerships,
investment clubs). The provisions of this Policy apply to transactions in any
personal account or "associated account".
<PAGE>
VI. PENALTIES FOR VIOLATION
Disciplinary action, up to and including discharge, may be taken against
employees who violate this policy. Violation of the laws prohibiting insider
trading and tipping could both damage StockJungle.com's reputation and subject
the Company, as a "controlling person" under applicable securities laws, to
significant civil liability and fines. Additionally, employees violating trade
laws could face individual criminal penalties of up to $1 million in fines and
imprisonment.
<PAGE>
APPENDIX A
StockJungle.com Insider Trading
and Securities Transaction Policy Acknowledgement
I hereby acknowledge that I have received previously or coincidently with this
Acknowledgment a copy of the StockJungle.com Insider Trading and Securities
Transaction Policy dated October 8, 1999. I have read and understand this
Policy. I understand my obligation to observe this Policy, including my
obligation report promptly to the appropriate level of management, or to legal
counsel, if I obtain information that gives me reason to believe that my
employee, person or firm is engaged in conduct prohibited by this Policy. To the
best of my knowledge, I have observed this policy in the past. I will observe it
in the future.
Signature: ____________________________________
Print: ________________________________________
Title or Position: ____________________________
Date: _________________________________________
<PAGE>
APPENDIX B
STOCKJUNGLE.COM
Insider Trading & Securities Transactions Summary Guidelines for Pre-clearance
TRANSACTION TYPE: PRE-CLEARANCE REQUIREMENTS:
Initial Public Offerings (IPOS) PROHIBITED FROM TRADING
Publically traded securities Pre-clear with Trading Desk
Derivatives (options, futures, warrants, etc.) Pre-clear with Trading Desk
Fixed income securities, tax-exempt Pre-clear with Trading Desk
Fixed income securities, taxable Pre-clear with Trading Desk
<PAGE>
APPENDIX C
PERSONAL TRADING REQUEST AND AUTHORIZATION FORM
Name: ___________________________ Date: __________________
Company Name and Ticker: ______________________________________________________
Type of Order: _________________________________________________________________
(Buy, Sell, Market or Limit)
Approximate Price: _____________________________________________________________
Number of Shares: ______________________________________________________________
To the best of your knowledge, are you, or is any member of your immediate
family, an officer or director of the issuer of the securities or any affiliate
of the issuer? Yes [ ] No [ ]
If yes, please describe:________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Describe any direct professional or business relationship you may have with the
issuer:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Signature: _______________________ Date: __________________
CODE OF ETHICS
CW FUND DISTRIBUTORS, INC.
I. STATEMENT OF GENERAL PRINCIPLES
This Code of Ethics has been adopted by CW Fund Distributors, Inc.
("Countrywide") for the purpose of instructing all employees, officers and
directors in their ethical obligations and to provide rules for their
personal securities transactions. All employees, officers and directors owe
a fiduciary duty to the clients of Countrywide. A fiduciary duty means a
duty of loyalty, fairness and good faith towards clients, and the
obligation to adhere not only to the specific provisions of this Code but
to the general principles that guide the Code. These general principles
are:
* The duty at all times to place the interests of clients first;
* The requirement that all personal securities transactions be
conducted in a manner consistent with the Code of Ethics and in
such a manner as to avoid any actual or potential conflict of
interest or any abuse of any individual's position of trust and
responsibility; and
* The fundamental standard that employees, officers and directors
should not take inappropriate advantage of their positions, or of
their relationship with clients.
It is imperative that the personal trading activities of the employees,
officers and directors of Countrywide be conducted with the highest regard
for these general principles in order to avoid any possible conflict of
interest, any appearance of a conflict, or activities that could lead to
disciplinary action. This includes executing transactions through or for
<PAGE>
the benefit of a third party when the transaction is not in keeping with
the general principles of this Code. All personal securities transactions
must also comply with our Insider Trading Policy and Procedures and the
Securities and Exchange Commission's Rule 17j-1. Under this rule, no
Employee may:
* employ any device, scheme or artifice to defraud any client of
Countrywide;
* make to any client of Countrywide any untrue statement of a
material fact or omit to state to such client a material fact
necessary in order to make the statements made, in light of the
circumstances under which they are made, not misleading;
* engage in any act, practice, or course of business which operates
or would operate as a fraud or deceit upon any client of
Countrywide; or
* engage in any manipulative practice with respect to any client of
Countrywide.
II. DEFINITIONS
A. CLIENTS: all open-end registered investment companies for which
Countrywide serves as the principal underwriter.
B. BENEFICIAL INTEREST: ownership or any benefits of ownership, including
the opportunity to directly or indirectly profit or otherwise obtain
financial benefits from any interest in a security.
C. COMPLIANCE OFFICER: John Splain or, in his absence, the alternate
Compliance Officer, Betsy Santen, or their successors in such positions.
-2-
<PAGE>
D. EMPLOYEE ACCOUNT: each account in which an Employee or a member of his
or her family has any direct or indirect Beneficial Interest or over which
such person exercises control or influence, including, but not limited to,
any joint account, partnership, corporation, trust or estate. An Employee's
family members include the Employee's spouse, minor children, any person
living in the home of the Employee, and any relative of the Employee
(including in-laws) to whose support an Employee directly or indirectly
contributes.
E. EMPLOYEES: the employees, officers, and directors of Countrywide. The
Compliance Officer will maintain a current list of all Employees.
F. EXEMPT TRANSACTIONS: transactions which are 1) effected in an amount or
in a manner over which the Employee has no direct or indirect influence or
control, 2) pursuant to a systematic dividend reinvestment plan, systematic
cash purchase plan or systematic withdrawal plan, 3) in connection with the
exercise or sale of rights to purchase additional securities from an issuer
and granted by such issuer pro-rata to all holders of a class of its
securities, 4) in connection with the call by the issuer of a preferred
stock or bond, 5) pursuant to the exercise by a second party of a put or
call option, 6) closing transactions no more than five business days prior
to the expiration of a related put or call option, or 7) with respect to
any affiliated or unaffiliated registered open-end investment company.
G. RELATED SECURITIES: securities issued by the same issuer or issuer under
common control, or when either security gives the holder any contractual
rights with respect to the other security, including options, warrants or
other convertible securities.
H. SECURITIES: any note, stock, treasury stock, bond, debenture, evidence
of indebtedness, certificate of interest or participation in any
-3-
<PAGE>
profit-sharing agreement, collateral-trust certificate, pre-organization
certificate or subscription, transferable share, investment contract,
voting-trust certificate, certificate of deposit for a security, fractional
undivided interest in oil, gas or other mineral rights, or, in general, any
interest or instrument commonly known as a "security," or any certificate
or interest or participation in temporary or interim certificate for,
receipt for, guarantee of, or warrant or right to subscribe to or purchase
(including options) any of the foregoing; except for the following: 1)
securities issued by the government of the United States, 2) bankers'
acceptances, 3) bank certificates of deposit, 4) commercial paper, 5) debt
securities, provided that (a) the security has a credit rating of Aa or Aaa
from Moody's Investor Services, AA or AAA from Standard & Poor's Ratings
Group, or an equivalent rating from another rating service, or is unrated
but comparably creditworthy, (b) the security matures within twelve months
of purchase, (c) the market is very broad so that a large volume of
transactions on a given day will have relatively little effect on yields,
and (d) the market for the instrument features highly efficient machinery
permitting quick and convenient trading in virtually any volume, and 6)
shares of registered open-end investment companies.
I. SECURITIES TRANSACTION: the purchase or sale, or any action to
accomplish the purchase or sale, of a Security for an Employee Account.
III. PERSONAL INVESTMENT GUIDELINES
A. Personal Accounts
1. Employees must conduct all securities transactions for Employee
Accounts through a Countrywide account, unless the Employee gives
prior written notice to the Compliance Officer of an account with
-4-
<PAGE>
another brokerage firm for transactions in registered, open-end
investment company shares only. If such notice is given, the
Employee may, subject to this Code, conduct registered, open-end
investment company transactions through that brokerage firm.
2. Employees must obtain prior written permission from the
Compliance Officer to open or maintain a margin account, or a
joint or partnership account with persons other than the
Employee's spouse, parent, or child (including custodial
accounts).
3. Settlement of Securities Transactions must be made on or before
settlement date. Extensions and pre-payments are not permitted.
4. The Personal Investment Guidelines in this section III do not
apply to Exempt Transactions. Employees must remember that
regardless of the transaction's status as exempt or not exempt,
the Employee's fiduciary obligations remain unchanged.
5. Directors of Countrywide who are not directly employed by
Countrywide are subject at all times to the fiduciary obligations
described in this Code; provided, however, that the Personal
Investment Guidelines and Compliance Procedures in Section III
and IV of this Code do not apply to such directors.
B. Limitations on Certain Transactions
1. Employees are not permitted to purchase and sell, or sell and
purchase, the same Securities or Related Securities within sixty
calendar days. Profits made in violation of this prohibition must
-5-
<PAGE>
be disgorged by the Employee to Countrywide or, if disgorgement
to Countrywide is inappropriate, to a charity chosen by the
Compliance Officer.
2. Employees are prohibited from acquiring any Securities in an
initial public offering. This restriction is imposed in order to
preclude any possibility of any Employee profiting improperly
from the Employee's position with Countrywide, and applies only
to the Securities offered for sale by the issuer, either directly
or through an underwriter, and not to Securities purchased on a
securities exchange or in conneciton with a secondary
distribution.
3. Employees are prohibited from acquiring low priced
over-the-counter equity securities (or "penny stock") as defined
in section 3(a) of the Securities Exchange Act of 1934.
C. Other Restrictions
1. Employees are prohibited from serving on the boards of directors
of publicly traded companies, absent prior authorization in
accord with the general procedures of this Code. The
consideration of prior authorization will be based upon a
determination that the board service will be consistent with the
interests of Clients.
2. No Employee may accept from a customer or vendor an amount in
excess of $50 per year in the form of gifts or gratuities, or as
compensation for services. If there is a question regarding
receipt of a gift, gratuity or compensation, it is to be reviewed
by the Compliance Officer.
-6-
<PAGE>
IV. COMPLIANCE PROCEDURES
A. Employee Disclosure and Certification
1. At the commencement of employment with Countrywide, each Employee
must certify that he or she has read and understands this Code
and recognizes that he or she is subject to it, and must disclose
all personal Securities holdings.
2. The above disclosure and certification is also required annually,
along with an additional certification that the Employee has
complied with the requirements of this Code and has disclosed or
reported all personal Securities Transactions required to be
disclosed or
B. Compliance
1. All Employees must direct their broker, dealer or bank to send
duplicate copies of all confirmations and periodic account
statements directly to the Compliance Officer. Each Employee must
report, no later than ten (10) days after the close of each
calendar quarter, on the Securities Transaction Report form
provided by Countrywide, all transactions in which the Employee
acquired any direct or indirect Beneficial Interest in a
Security, including Exempt Transactions, and certify that he or
she has reported all transactions required to be disclosed
pursuant to the requirements of this Code.
2. The Employee's annual disclosure of Securities holdings will be
reviewed by the Compliance Officer for compliance with this Code,
including transactions that reveal a pattern of trading
inconsistent with this Code.
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3. If an Employee violates this Code, the Compliance Officer will
report the violation to the management personnel of Countrywide
for appropriate remedial action which, in addition to the actions
specifically delineated in other sections of this Code, may
include a reprimand of the Employee, or suspension or termination
of the Employee's relationship with Countrywide.
4. The management personnel of Countrywide will prepare an annual
report to the board of directors of Countrywide that summarizes
existing procedures and any changes in the procedures made during
the past year. The report will identify any violations of this
Code and any significant remedial action during the past year.
The report will also identify any recommended procedural or
substantive changes to this Code based on management's experience
under this Code, evolving industry practices, or legal
developments.
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