Annual Report
June 30, 1997
WWW
Internet
Fund
Investing in the fastest
growing segment of
technology
www.webfund.com
1-(888)263-2204
<PAGE>
Over the next decade we think that the Internet will become as common place as
the VCR and telephone are today. Along the way, like a giant jigsaw puzzle,
missing pieces of technology will be invented or discovered and put into place.
New, formerly unknown companies will emerge to dominate profitable market
niches."
- -- Lawrence York
- -- Jim Greene
Portfolio Managers
Letter to Shareholders.............................................. Page 1
Financial Graphs.................................................... Page 4
Financial Statements................................................ Page 6
Notes to Financial Statements....................................... Page 11
Independent Auditor's Letter........................................ Page 17
<PAGE>
FELLOW SHAREHOLDERS
Last year on August 1st, we launched the the world's first, no load mutual fund
to invest in companies developing and building the Internet and World Wide Web.
Our idea was to create a mutual fund to capitalize on the explosive growth we
envisioned with the emergence of the new Internet industry.
During our first 6 months from August 1, 1996 through January 1, 1997, the WWW
Internet Fund gained 18.5%, or 37.5% when annualized. For our eleven month
fiscal year ended June 30, 1997, the fund earned a + 13.08% annualized return,
down from our earlier high reflecting the severe market correction among
Internet, Technology and Small Company stocks during the first quarter 1997 and
extending through April.
<TABLE>
<CAPTION>
Total Annualized
WWW Internet Fund Return Total Return
----------------- ------ ------------
<S> <C> <C>
6 Months (8/1/96 - 1/31/97) 18.5% 37.0%
11 Months (FYE: 6/30/97) 12.0% 13.1%
12 Months (8/1/96 - 8/1/97) 27.9% 27.9%
</TABLE>
Although the S&P 500 Index, representing large company stocks, sharply exceeded
our performance over the same period, we expect to out perform the S&P 500 Index
over time by a full 3%. We have agreed to a performance based fee schedule to
adjust our management fees by up to 50% relative to our performance against the
S&P Index (see prospectus).
On a comparable basis over the same period the benchmark indices recorded the
following results:
<TABLE>
<S> <C>
WWW Internet Fund + 13.1%
Hambrecht & Quist Internet Index - 2.1%
Internet World ISDEX index - 56.1%
Inter@tive Week Internet Index (IIX) + 13.4%
S&P 500 Index + 41.9%
</TABLE>
Note: Benchmark indices are "baskets of stocks" that may
be used for comparative evaluation purposes but do not pay
dividends, do not incur transaction costs and may not own
the same stocks held by the Fund.
- 1 -
<PAGE>
One investment discipline we practice is to take profits to capture a gain on
stocks of companies that get ahead of our short-to-intermediate term price
targets even though we may still want to own those issues over the long term. We
do this in an attempt to avoid losses or sharp price declines in small, emerging
growth Internet and technology issues. Examples of stocks meeting this Sell
criteria and the profit percentage realized are as follows:
Issue % Profit Realized Issue % Profit Realized
Ace Com 43% Analyst Intl 39%
CKS Group 58% Compaq 34%
C-Cube 33% Intel Corp 75%
MCI 60% Micro Touch 86%
Newbrdg Netwks 47% Charles Schwab 60%
Seagate Tech. 100% Texas Inst. 59%
Verifone, Inc. 47% Yahoo, Inc. 91%
We are pleased with this performance given our objective to deliver investment
results that capture the growth of the Internet without all the commensurate
downside risk. We attribute these favorable results to our stock selection
methodology and to our Net Niche(tm) investment structure which utilizes a three
(3) tier mix of Mature, Mid-life and Adolescent companies rather than solely
investing in start-up and emerging growth companies that may experience price
declines of 50% or more on poor or below estimate earnings reports.
Our investment focus is on Return On Invested Capital (ROIC) because we believe
that the best companies to own are those that effectively invest their capital
and earn more than their cost of capital. With regard to our Adolescent stock
picks, this means measuring the deployment of capital in R&D, in technology
alliances and in brand name development as an integral part of the measurement
of returns on invested capital. This approach, needless to say, is a medium to
long term investment methodology that requires monitoring and patience. We are
searching to discover and own the best high growth companies; the next
Microsoft, Intel and Compaq Computer. We sell stocks of companies when we
discover a fundamental deterioration or weakness, a significant change in
management or when prices of stocks we own become overvalued so that our price
targets are realized in the near term.
- 2 -
<PAGE>
Looking forward we expect the financial markets to become more volatile with 100
point swings in the Dow Jones Industrial Average becoming the norm, not the
exception. We expect Small Cap stocks to continue their historical, long term
performance advantage over large company stocks, but we will always rebalance
our portfolio weightings toward the market segments (Mature, Mid-life &
Adolescent companies) which offer the highest mid to long term value.
Over the next decade we think that the Internet will become as common place as
the VCR and telephone are today. Along the way, like a giant jigsaw puzzle,
missing pieces of technology will be invented or discovered and put into place.
New, formerly unknown companies will emerge to dominate profitable market
niches. Our objective is to own the winners of this battle for the Internet in
the WWW Internet Fund by investing in various Internet themes (Agent Software,
eCommerce, Security, Bandwidth, Content, Datamining, etc.) and by owning shares
of the few companies, holding leadership positions in their market niches. Over
time, as we follow the changes and developments taking place, we will increase
the fund's ownership of those companies gaining dominant market share positions
thereby increasing our shareholders' long-term upside potential. We will stay
seventy (70% ) percent, or more, invested in stocks at all times in our
continuing goal to deliver above-average growth to shareholders.
I thank you for becoming one of our valued shareholders. We hope to make the WWW
Internet Fund a key component of your individual and retirement savings plan.
Very truly,
Lawrence S. York
Chairman
- 3 -
<PAGE>
[This page depicts a chart showing the performance of the Fund versus its
indices.]
<TABLE>
<CAPTION>
WWW Internet Fund vs. Market Indices
Date WWW S&P 500 Interactive Week
- ---- --- ------- ----------------
<S> <C> <C> <C>
Starting $10,000.00 $10,000.00 $10,000.00
Aug-96 10,110.00 10,188.14 10,465.00
Sep-96 11,110.00 10,740.06 11,979.18
Oct-96 10,700.00 11,020.70 11,404.88
Nov-96 11,740.00 11,829.36 12,507.77
Dec-96 11,298.87 11,574.97 11,499.10
Jan-97 11,859.23 12,284.71 12,242.63
Feb-97 10,473.61 12,357.53 10,093.75
Mar-97 9,607.51 11,830.82 9,242.44
Apr-97 9,821.56 12,521.92 9,292.85
May-97 11,421.13 13,253.41 11,638.09
Jun-97 11,196.93 13,831.29 11,230.57
ANNUALIZED TOTAL RETURN +13.08%
</TABLE>
- 4 -
<PAGE>
WWW Internet Fund Sector Diversification
[This page depicts a pie chart with the following information:]
<TABLE>
<S> <C>
Broadcast & Information Resources 2.54%
Communication & Telecom Services 11.00%
Computers & Computer Peripherals 1.55%
Computer Software & Internet Tools 10.75%
Data Communication & Networking Equipment 23.97%
Data Processing Services 1.82%
Cash 18.82%
Firewall & Internet Security 3.36%
On-Line Retailing 4.50%
Semiconductors & Equipment Makers 10.07%
Electronic Commerce 13.86%
</TABLE>
- 5 -
<PAGE>
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
WWW Internet Fund
Statement of Net Assets
June 30, 1997
Number Market
of shares Value
--------- -----
<S> <C> <C>
COMMON STOCK - 83.42%
Broadcast & Information Resources - 2.54%
(Advertising, Content & Distribution)
Alliance Comm B **........................................... 4,000 $ 39,500
Mecklermedia Corp. ** ....................................... 500 9,500
--------
49,000
--------
Communication & Telecom Services - 11.00%
(Browsers & Internet Service Providers)
Cincinnati Bell, Inc. ....................................... 1,000 31,500
GTE Corp. ................................................... 700 30,712
Glenayre Technologies**...................................... 2,000 32,750
Lucent Technologies, Inc. ................................... 400 28,825
SBC Communications, Inc. .................................... 400 24,750
Worldcom, Inc.**............................................. 2,000 64,000
--------
212,537
--------
Computers & Computer Peripherals - 1.55%
(Computers & Network Servers)
Silicon Graphics, Inc.** .................................... 1,000 15,000
Sun Microsystems, Inc.** .................................... 400 14,887
--------
29,887
--------
Computer Software & Internet Tools - 10.75%
(Prepackaged & Customized Software)
Computer Associates International, Inc. ..................... 600 33,412
HNC Software, Inc.** ........................................ 500 19,062
Hummingbird Comm** .......................................... 1,000 25,687
Informix Corp.** ............................................ 500 4,500
Intuit, Inc.** ............................................. 1,000 22,938
Legato System** ............................................. 2,000 37,000
Macromedia, Inc.** .......................................... 4,000 34,500
Onewave, Inc.** ............................................. 2,000 5,375
Oracle Corp.** .............................................. 500 25,188
--------
207,662
--------
- 6 -
<PAGE>
Number Market
of shares Value
--------- -----
Data Communication & Networking Equipment - 23.97%
(Routers, Hubs & Switches)
3Com Corp Com. ** ........................................... 2,500 $ 112,500
Act Networks ** ............................................. 1,500 19,125
Andrew Corp. ................................................ 2,250 63,281
Ascend Communication, Inc.** ................................ 300 11,813
Cabletron Systems, Inc.** ................................... 1,000 28,313
Cascade Comm Corp.** ........................................ 2,000 55,250
Cisco Systems, Inc.**........................................ 2,000 134,250
Fore Systems, Inc.** ........................................ 1,000 13,625
PairGain Technology **....................................... 1,600 24,800
--------
462,957
--------
Data Processing Services - 1.82%
First Data Corp. ............................................ 800 35,150
--------
Electronic Commerce - 13.86%
American Express Company..................................... 500 37,250
Checkfree Corp. **........................................... 4,000 70,500
Electronic Data System Corp. ................................ 500 20,500
National Data Corp........................................... 1,000 43,313
Netscape Communications, Inc. ** ............................ 3,000 96,187
--------
267,750
--------
Firewall & Internet Security - 3.36%
Checkpoint Software** ....................................... 800 18,700
Raptor Systems, Inc. ** ..................................... 1,500 16,781
Security Dynamics Technologies, Inc. ** ..................... 800 29,500
--------
64,981
--------
On-Line Retailing - 4.50%
E-Trade ** ................................................. 1,500 29,438
Ingram Micro Corp. ** ....................................... 1,000 24,125
TicketMaster Group** ........................................ 2,000 33,250
--------
86,813
--------
Semiconductors & Equipment Makers - 10.07%
Atmel Corp. Com**............................................ 500 14,000
C-Cube Microsystem**......................................... 1,500 26,344
Cognex, Inc.**............................................... 1,500 39,750
Intel Corp. ................................................. 300 42,544
Motorola, Inc. .............................................. 800 60,800
S3, Inc.**................................................... 1,000 11,000
--------
194,438
--------
Total Common Stock (cost $1,743,240) ....................... 1,611,175
---------
Mutual Funds - 18.82%
Star Bank Treasury Fund (cost $363,499) ................... 363,499
---------
- 7 -
<PAGE>
Statement of Net Assets (Continued)
Market
Value
TOTAL MARKET VALUE OF SECURITIES
OWNED - 102.24% (Note 6) (cost $2,106,739) ................... 1,974,674
RECEIVABLES AND OTHER ASSETS NET
OF LIABILITIES - (2.24%) (Note 3).............................. ( 43,312)
----------
NET ASSETS - 100.00% (Note 5)
($10.99 per share, based on 175,806 shares outstanding)........$1,931,362
==========
<FN>
** Non-income security for the year ended June 30, 1997.
</FN>
</TABLE>
===============================================================================
<TABLE>
<S> <C>
COMPONENTS OF NET ASSETS AT JUNE 30, 1997:
Paid in capital (Note 5) ..........................................$1,824,800
Accumulated undistributed income:
Net realized gain/(loss) from security transactions (Note 8) ... 238,627
Net unrealized appreciation/(depreciation) of investments.......( 132,065)
----------
Total net assets................................................... $1,931,362
==========
</TABLE>
See accompanying notes
- 8 -
<PAGE>
<TABLE>
<CAPTION>
WWW Internet Fund
Statement of Operations
June 30, 1997
<S> <C> <C>
INVESTMENT INCOME:
Interest ........................................ $ 8,041
Dividends........................................ 3,806
TOTAL INVESTMENT INCOME............................................ $ 11,847
EXPENSES:
Administrative fees (Note 3)..................... 35,658
Investment advisory fees (Note 3)................ 13,470
Amortization of organization expenses (Note 2)... 12,099
Printing fees.................................... 7,384
Distribution fees (Note 4)....................... 6,489
Accounting fees.................................. 6,348
Custodian fees................................... 5,547
Legal fees....................................... 4,700
Registration fees................................ 3,540
E & O Insurance.................................. 1,014
Transfer agent fee............................... 1,101
Total expenses................................... 97,350
Reimbursed expenses (Note 4)..................... ( 63,676)
TOTAL EXPENSES .................................................... 33,674
NET INVESTMENT LOSS................................................ ( 21,827)
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS (Note 2):
Net realized gain from investment transactions..................... 289,508
Net unrealized depreciation of investments......................... (132,065)
-------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS................................................ 157,443
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS......................................... $ 135,616
</TABLE>
See accompanying notes
- 9 -
<PAGE>
<TABLE>
<CAPTION>
WWW Internet Fund
Statement of Changes in Net Assets
For the period August 1, 1996
(Commencement of Operations)
through June 30, 1997
Year Ended
06/30/97
<S> <C>
OPERATIONS:
Net investment loss................................................ ($ 21,827)
Net realized gain from investment transactions .................... 289,508
Net unrealized depreciation of investments during the period....... (132,065)
----------
NET INCREASE IN NET ASSETS RESULTING FOR OPERATIONS................ 135,616
----------
DISTRIBUTION TO SHAREHOLDERS:
Net realized gain.................................................. ( 29,054)
----------
FUND SHARE TRANSACTIONS:
Shares sold....................................................... 1,770,779
Shares issued in reinvestment of dividends........................ 7,433
Shares redeemed................................................... ( 53,412)
----------
NET CAPITAL SHARE TRANSACTIONS (Note 5)........................... 1,724,800
----------
NET INCREASE IN NET ASSETS........................................ 1,831,362
NET ASSETS:
Beginning of period............................................... 100,000
----------
End of period..................................................... $1,931,362
==========
</TABLE>
See accompanying notes
- 10 -
<PAGE>
WWW Internet Fund
Notes to Financial Statements
June 30, 1997
Note 1. Organization
The WWW Internet Fund (the "Fund") was organized as an Ohio business trust (the
"Trust"), on April 23, 1996, and commenced operations on August 1, 1996. The
Trust is registered under the Investment Company Act of 1940, as amended, as a
diversified, open end management investment company. The Trust is authorized to
issue an indefinite number of shares of beneficial interest, par value $.001 per
share. The Trust was formed to achieve the investment objective of long term
growth through capital appreciation by investing primarily in equity securities
of companies that are designing, developing or manufacturing hardware or
software products or services for the Internet and / or World Wide Web.
Note 2. Significant Accounting Policies
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements:
Securities Valuations- Portfolio securities, including covered call options if
written by the Fund, are valued at the last sale price on the securities
exchange or national securities market on which such securities primarily are
traded. Securities not listed on an exchanged or national securities market, or
securities in which there were no transactions, are valued at the average of the
most recent bid and asked prices, except in the case of open short positions
where the asked is used for valuation purposes. Bid price is used when no asked
price is available. Short-term investments are carried at amortized cost, which
approximates value. Any securities or other assets for which recent market
quotations are not readily available are valued at fair value as determined in
good faith by the Trust's Board of Trustees. Expenses and fees, including the
management fee and distribution and service fees, are accrued daily and taken
into account for the purpose of determining the net asset value of the Fund's
shares. Federal Income Taxes- The Fund intends to qualify each year as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended. By so qualifying, the Fund will not be subject to federal income taxes
to the extent that it distributes substantially all of its net investment income
and any realized capital gains. Dividends and Distributions- The Fund intends to
distribute substantially all of its net investment income as dividends to its
shareholders on an annual basis. The Fund intends to distribute its net long
term capital gains and its net short term capital gains at least once a year.
- 11 -
<PAGE>
Notes to Financial Statements (Continued)
Note 2. Significant Accounting Policies (Continued)
Organization Expenses- During its organization and initial registration with the
Securities and Exchange Commission (the "SEC"), the Fund incurred organization
expenses of $65,993. The fund has elected to defer these expenses and amortize
them on a straight-line basis over a 60 month period beginning with the Funds'
commencement of operations. During the period ended June 30, 1997, $12,099 was
amortized. Other- The fund follows industry practice and records security
transactions on the trade date. The specific identification method is used for
determining gains or losses for financial statements and income tax purposes.
Dividend income is recorded on the ex-dividend date and interest income is
recorded on an accrual basis.
Note 3. Investment Advisory & Administrative Agreement
The Board of Trustees provides broad supervision over the affairs of the Fund.
Pursuant to a Management Agreement between the Fund and WWW Advisors, Inc. (the
"Manager") and subject to the authority of the Board of Trustees, the Manager
manages the investments of the Fund and is responsible for the overall
management of the business affairs of the Fund.
Under the terms of the Management Agreement, the Fund has agreed to pay the
manager a base monthly management fee at the annual rate of 1.00% of the Fund's
average daily net assets (the "Base Fee") which will be adjusted monthly (the
"Monthly Performance Adjustment") depending on the extent by which the
investment performance of the Fund, after expenses, exceeded or was exceeded by
the percentage change of the S&P 500 Index. Under terms of the Management
Agreement, the monthly performance adjustment may increase or decrease the total
management fee payable to the manager (the "Total Management Fee") by up to .50%
per year of the value of the Fund's average daily net assets.
All expenses incurred in the operation of the Fund will be borne by the Fund,
except to the extent specifically assumed by the manager. The expenses to be
borne by the Fund will include: organizational costs, taxes, interest, brokerage
fees and commissions, fees of board members who are not officers, directors or
employees of the of the Manager or its affiliates, Securities and Exchange
Commission fees, state Blue Sky qualification fees, advisory, administrative and
fund accounting fees, charges of custodians, transfer and dividend disbursing
agents' fees, insurance premiums, industry association fees, outside auditing
and legal expenses, costs attributable to investor services (including, without
limitation, telephone and personnel expenses), costs of
- 12 -
<PAGE>
shareholders' reports and meetings, costs of preparing and printing prospectuses
and statements of additional information, amounts payable under the Fund's
Distribution and Shareholder Servicing Plan (the "Plan") and any extraordinary
expenses.
The Manager has undertaken, until such time as it gives investors 60 days'
notice to the contrary, to waive its Management Fee in the amount, if any, by
which the total expenses of the Fund for any fiscal year, including amortization
of organizational expenses and amounts paid by the Fund under the Plan, exceed
2.50% of average annual net assets of the Fund, except that the amount of such
fee waiver shall not normally exceed the amount of fees received by the Manager
under the Management Agreement for such fiscal year. During the year ended June
30, 1997, the manager has reimbursed all expenses in excess of 2.50%. The fee
waiver, if any, will be on a monthly basis, subject to year-end adjustment.
Interest expenses, taxes, brokerage fees and commissions, and extraordinary
expenses are not included as expenses for these purposes.
The Fund will reimburse the Manager for organizational costs incurred on behalf
of the Fund only if and when net assets of the Fund exceed $3,000,000.
The Fund has a Fund Accounting and Administrative Agreement with American Data
Services, Inc. ("ADS"). ADS receives a fee, computed daily and payable monthly,
at an annual rate of .08% of average daily net assets, subject to a monthly
minimum.
Note 4. Distribution Agreement
Under a plan adopted by the Fund's Board of Trustees pursuant to Rule 12b-1
under the 1940 Act (the "Plan"), the Fund pays the Manager a shareholder
servicing and distribution fee at the annual rate of .50% of the average daily
net assets of the Fund. Such fee will be used in it's entirety by the Manager to
make payments for administration, shareholder services and distribution
assistance, including, but not limiting to (i) compensation to securities
dealers and other organizations (each, a "Service Organization" and
collectively, the "Service Organizations"), for providing distribution
assistance with respect to assets invested in the Fund, (ii) compensation to
Service Organizations for providing administration, accounting and other
shareholder services with respect to Fund shareholders, and (iii) otherwise
promoting the sale of shares of the Fund, including paying for the preparation
of advertising and sales literature and the printing and distribution of such
promotional materials to prospective investors. The fees paid to the Manager
under the Plan are in addition to the fees payable under the Management
Agreement and are payable without regard to actual expenses incurred. The Fund
understands that third parties also may charge fees to their clients who are
beneficial owners of Fund shares in connection with their client accounts.
- 13 -
<PAGE>
Notes Financial Statements (Continued)
Note 4. Distribution Agreement (Continued)
These fees would be in addition to any amounts which may be received by them
from the Manager under the Plan. For the period ended June 30, 1997, the amount
paid or accrued for such expenses was $6,489.
Note 5. Capital Share Transactions
As of June 30, 1997 there was an unlimited number of $.001 par value shares of
capital stock authorized for the Fund. Transactions in capital stock were as
follows:
<TABLE>
<CAPTION>
For the period from
August 1, 1996 (Commencement of Operations)
through June 30, 1997
<S> <C> <C>
Shares sold 170,067 $1,770,779
Shares issued in reinvestment of dividends 667 7,433
Shares redeemed (4,928) (53,412)
--------- ----------
Net increase 165,806 $1,724,800
Beginning balance 10,000 100,000
Total paid in capital 175,806 $1,824,800
</TABLE>
Note 6. Investments
For the period August 1, 1996 (commencement of operations) through June 30,
1997, purchases and sales of investment securities, other than short-term
investments, aggregated $2,827,910 and $1,374,178 respectively. The gross
unrealized appreciation for all securities totaled $125,193 and the gross
unrealized depreciation for all securities totaled $257,258 for a net unrealized
depreciation of $132,065. The aggregate cost of securities for federal income
tax purposes at June 30, 1997 was $2,106,739.
- 14 -
<PAGE>
Note 7. Related Party Transactions
Certain owners of WWW Advisors, Inc., are also owners and /or Directors of WWW
Internet Fund. These individuals may receive benefits from any Management fee
paid to the Advisor.
Note 8. Reclassification of Capital Accounts
The Fund has adopted Statement of Position 93-2, Determination, Disclosure and
Financial Statement Presentation of Income, Capital Gain and Return of Capital
Distributions by Investment Companies. As a result of this statement, the Fund
changed the classification of distributions to shareholders to better disclose
the differences between financial statement amounts and distributions determined
in accordance with income tax regulations. Accordingly, undistributed net
investment loss has been adjusted to Accumulated Undistributed Net Realized Gain
as of June 30, 1997 in the following amounts. These restatements did not affect
net investment income, net realized gain (loss) or net assets for the year ended
June 30, 1997.
Undistributed Net Realized Gain ($21,827)
Undistributed Net Investment Loss $21,827
Note 9. Distributions
During the Fiscal Year Ended June 30, 1997, Distributions of $0.21 aggregating
$29,054 were made from Short Term Capital Gains.
<TABLE>
<CAPTION>
Note 10. Financial Highlights
<S> <C>
Net asset value, beginning of period................... $ 10.00
-------
Income (loss) from investment operations:
Net investment loss.................................... ( 0.16)
Net realized and unrealized gains from security
transactions...................................... 1.36
-------
TOTAL FROM INVESTMENT OPERATIONS....................... 1.20
-------
Less distributions from realized gains from security
transactions:...................................... (0.21)
-------
Net asset value, end of period......................... $ 10.99
=======
Total return **....................................... 13.08%
</TABLE>
- 15 -
<PAGE>
Notes to Financial Statements (Continued)
<TABLE>
<CAPTION>
Note 10. Financial Highlights
Ratios/supplemental data
<S> <C>
Net assets end of period (in 000's)......................... 1,472
Ratio of expenses to average net assets,
before reimbursement................................... 7.23% *
Ratio of expenses to average net assets,
after reimbursement.................................... 2.50% *
Ratio of net investment income (loss) to average
net assets............................................. (1.62%)*
Ratio of net investment income (loss) to average
net assets, net of reimbursement....................... (0.62%)*
Portfolio turnover rate..................................... 109.52% *
Average commission rate paid................................ 0.0676
<FN>
*Annualized
** Based on net asset value per share
</FN>
</TABLE>
- 16 -
<PAGE>
Independent Auditor's Letter
To the Shareholders and Board of Directors
WWW Internet Fund
We have audited the accompanying statement of assets and liabilities of WWW
Internet Fund, including the schedule of portfolio investments, as of June 30,
1997, and the related statement of operations, the statement of changes in net
assets, and financial highlights for the period from August 1, 1996
(commencement of operations) to June 30, 1997 in the period then ended. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments and cash held by
the custodian as of June 30, 1997 by correspondence with the custodian. 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 audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of WWW
Internet Fund as of June 30, 1997, the results of its operations, the changes in
its net assets, and the financial highlights for the period from August 1, 1996
(commencement of operations) to June 30, 1997 in the period then ended, in
conformity with generally accepted accounting principles.
McCurdy & Associates CPA's, Inc.
Westlake, Ohio 44145
July 22, 1997
- 17 -
<PAGE>
WWW
Internet
Fund
Investment Manager & Fund
Distributor
WWW Advisors, Inc.
Lexington, KY
Shareholder Servicing,
Dividend Disbursing and Transfer Agent
American Data Services, Inc.
Huntington, NY
Portfolio Securities Custodian
Star Bank, N.A.
Cincinnati, OH
General Counsel
Benesch, Friedlander, Coplan & Aronoff, P.L.L.
Cleveland, OH
Shareholder Services
(888) 999-8331
Securities Dealers and
Financial Institutions Only
(888) 263-2204
(C) WWW Advisors, Inc. 1997 All rights reserved.
