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
JUNE 7, 2000
TABLE OF CONTENTS
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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 June 7, 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 selects portfolio securities for the Fund solely from a pool
of equity investment opportunities which are (i) recommended to Stockjungle.com,
Inc. by visitors to its website, (ii) researched by the adviser and analyzed to
determine their potential for capital appreciation, and (iii) if deemed
acceptable by the Adviser, selected for investment by the Fund.
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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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.
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<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
