WWW Trust
WWW Internet Fund
Semi-Annual Report
December 31, 1998
(unaudited)
wwifx
WWW
INTERNET
FUND
Investing in
the fastest
growing segment
of technology
<PAGE>
February 9, 1999
Fellow Shareholders:
The year of 1998 was remarkable for shareholders of the WWW Internet Fund. We
weathered a fourth quarter market correction and earned a net 70.5% return for
the twelve months ended 12/31/98. This placed us second among the top sector
funds and ranked us in the top 2% of all the mutual funds in the nation! The
Fund's Net Nichetm investment discipline of utilizing a 3 tier mix of Mature,
Midlife and Adolescent companies confirmed its merit and we believe it will
continue to be successful in the years to c ome.
Contributing to our outstanding 1998 performance were three factors: 1) good
stock selection, 2) broad diversification and 3) cash reserves available for
market opportunity. As of December 31, 1998, WWW Internet Fund held 48 domestic
common stock positions, a convertible note and cash. The stock positions were
allocated among the three tiers as follows: Mature Companies 21%, Midlife
companies 20% and Adolescent companies 59%. These weightings change from time to
time based upon market appreciation of p ositions and our judgement of market
opportunities, but solid weightings in each category are always maintained.
Additionally, we sold short seven stock positions held in the portfolio to
protect against market depreciation as we entered into the new year. These were
"shorts against the box"; not option or risky trading strategies and they have
already made a difference in our return so far for 1999. We expect to relinquish
most of the short positions in the near future, as market prices become
favorable.
Looking forward for 1999, we anticipate greater volatility arising out of the
problems related to the global financial crisis. We are continuing to monitor
each portfolio holding for the company's growth and earnings potential. Of late,
we have added many issues to the portfolio that further diversified the Fund.
New holdings include CBS Corp., Intel Corp., Time Warner, Inc., Sun
Microsystems, Compuware Corp., Dallas Semiconductor, Quest Communications,
Netgravity, Inc., Network Associates and Intermedi a Communications. We also
increased our positions in Peoplesoft, Inc., CIENA Corp., USA Networks, Inc.,
Alydaar Software Corp., Harbinger Corp., Broadcom Corp., and 800 Travel Systems,
Inc., through the acquisition of additional shares.
As the Internet industry evolves over the coming years, we intend to adhere to
our investment discipline while we strive to deliver the growth of this new
emerging industry without all the risk.
When we first began the Fund, many said that the Internet was a fad. Today, most
still believe it is merely a new retail channel to sell goods and services. When
the true impact of the Internet and the related technologies is widely known and
understood, we should be well ahead of those who under estimated its pervasive
use.
Sincerely,
Lawrence S. York
Chairman
- 1 -
<PAGE>
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
WWW Trust
WWW Internet Fund
Statement of Assets and Liabilities
December 31, 1998
Unaudited
ASSETS:
<S> <C>
Investments and securities, at fair value (Cost $4,563,940) ....... $ 6,488,249
Cash 939
Deposits with brokers for securities sold short ................... 799,804
Receivables:
Dividends and Interest ....................................... 4,120
Capital shares sold .......................................... 199,920
Due from Advisor ............................................. 35,360
Due from broker .............................................. 1,061
Sevice deposit .................................................... 5,000
Prepaid expense ................................................... 564
Deferred organization costs ....................................... 34,042
-----------
Total Assets ...................................................... 7,569,059
LIABILITIES:
Securities sold short, at fair value (Proceeds $799,804) .......... $ (880,062)
Payables:
Capital shares reacquired ..................................... (84,547)
Accrued expenses .............................................. (26,786)
-----------
Total Liabilities ................................................. (991,395)
-----------
Net Assets ........................................................ $ 6,577,664
===========
ANALYSIS OF NET ASSETS
Capital Shares .................................................... $ 4,839,609
Accumulated undistributed income/(loss):
Net investment income/(loss) ................................. (29,721)
Net realized gain/(loss) from security transactions .......... (76,274)
Net unrealized appreciation of investments ................... 1,844,050
-----------
NET ASSETS
($15.92 per share, based on 413,105
shares outstanding) .......... .............................. $ 6,577,664
===========
</TABLE>
See accompanying notes
- 2 -
<PAGE>
<TABLE>
<CAPTION>
WWW Trust
WWW Internet Fund
Schedule of Investments and Securities
December 31, 1998
Unaudited
Number Fair
of shares Value
COMMON STOCKS
<S> <C> <C>
Broadcast & Information Resources - 4.45%
Alliance Atlantis Communications Corp. Cl B ** ........ 4,000 $ 65,750
CMGI Inc. ** ......................................... 1,000 106,500
USA Networks Inc. ** .................................. 3,500 115,938
288,188
Commercial Services - 1.89%
Cendant Corp. ......................................... 2,000 38,125
Comdisco Inc. ......................................... 5,000 84,375
122,500
Communication & Telecom Services - 18.79%
Alpha Microsystems ** ................................. 10,000 41,875
General Instrument Corp. ** ........................... 2,000 67,875
Glenayre Technologies Inc. ** ......................... 2,000 8,875
Leap Wireless International Inc. ** ................... 500 3,625
Lucent Technologies Inc. .............................. 1,200 132,000
Teligent Inc. Cl A ** ................................ 2,000 57,500
USA Talks.com Inc. ** (restricted securitiy) ......... 80,000 810,000
WinStar Communication Inc. ** ......................... 2,500 97,500
1,219,250
Computers & Computer Peripherals - 7.68%
Adaptec Inc. ** ...................................... 2,000 35,125
Compaq Computer Corporation ........................... 4,000 167,750
Dell Computer Corporation ** ........................ 2,000 146,375
Egghead.Com Inc. ** ................................... 5,000 104,062
Tech Squared Inc. ** .................................. 15,000 45,000
498,312
Computer Software / Internet Tools - 9.77%
ACTV, Inc. ** ......................................... 30,000 114,375
Alydaar Software Corporation ** ....................... 2,000 16,500
Edify Corporation ** .................................. 4,500 37,406
INSO Corporation ** ................................... 3,000 75,000
Lycos Inc. ** ......................................... 1,000 55,563
Novell Inc. ** ........................................ 3,000 54,375
Peoplesoft Inc. ** .................................... 2,000 37,875
Spyglass Inc. ** ...................................... 8,000 176,000
Verio Inc. ** ......................................... 3,000 67,125
634,219
Data Communication / Networking Equipment - 8.28%
3Com Corporation ** .................................. 2,500 112,031
Ascend Communication Inc. ** . ...................... 3,200 210,400
CIENA Corp. ** ........................................ 2,000 29,250
Cisco Systems Inc. ** ................................ 2,000 185,625
537,306
- 3 -
<PAGE>
WWW Trust
WWW Internet Fund
Schedule of Investments and Securities (continued)
December 31, 1998
Unaudited
NUMBER FAIR
OF SHARES VALUE
--------- -----
Data Processing Services - 0.82%
USWEB Corp. ** ....................................... 2,000 $ 52,750
Electronic Commerce - 5.86%
800 Travel Systems Inc. ** ............................ 5,000 61,250
Checkfree Holdings Corporation ** .................... 4,000 93,500
Data Broadcasting Corporation ** . ................... 9,000 160,875
Harbinger Corporation ** .............................. 2,025 16,200
National Data Corporation ............................. 1,000 48,688
380,513
Firewall & Internet / Network Security - 5.02%
Check Point Software Technologies Ltd ** ............. 2,000 91,625
Pilot Network Services Inc. ** ........................ 5,000 44,687
Security Dynamics Technologies Inc. ** ................ 1,800 41,400
Verisign Inc. ** ...................................... 2,500 147,813
325,525
On-Line Retailing - 2.88%
E Trade Group Inc. ** ................................. 4,000 187,125
Semiconductors & Equipment Makers - 6.44%
Altera Corporation .................................... 2,000 121,750
Broadcom Corp. Class A ** ............................. 1,000 120,750
C-Cube Microsystems Inc. ** ........................... 2,500 67,812
S3 Inc. ** ............................................ 3,000 22,078
Texas Instruments Inc. ................................ 1,000 85,563
417,953
Training & Certification - 1.78%
ProSoft I-Net Solutions Inc. ** ....................... 50,000 115,625
TOTAL COMMON STOCK - 73.66% (Cost $2,854,957) 4,779,266
CONVERTIBLE NOTE - 1.54%
POSO Convertible Note, 13%, 11/30/2003
(Cost $100,000) ...................................100,000 100,000
MONEY MARKET - 24.80%
Star Bank Treasury Fund (Cost $1,608,983) ......... 1,608,983 1,608,983
-----------
TOTAL INVESTMENTS - 100% (Cost $4,563,940) $6,488,249
===========
<FN>
** Non-income producing security
</FN>
</TABLE>
See accompanying notes
- 4 -
<PAGE>
<TABLE>
<CAPTION>
WWW Trust
WWW Internet Fund
Schedule of Securities Sold Short
December 31, 1998
Unaudited
NUMBER FAIR
OF SHARES VALUE
--------- -----
COMMON STOCKS
<S> <C> <C>
Altera Corporation 2,000 $ 121,750
Ascend Communication Inc. 3,000 197,250
Broadcom Corp. Class A 1,000 120,750
Cisco Systems Inc. 2,000 185,625
Spyglass Inc. 4,000 88,000
Verisign Inc. 1,500 88,688
WinStar Communication Inc. 2,000 78,000
TOTAL SECURITIES SOLD SHORT (Proceeds $799,804) $ 880,063
==========
</TABLE>
See accompanying notes
- 5 -
<PAGE>
<TABLE>
<CAPTION>
WWW Trust
WWW Internet Fund
Statement of Operations
For the six months ended December 31, 1998
Unaudited
INVESTMENT INCOME:
<S> <C> <C>
Dividends ............................................. $ 1,613
Interest .............................................. 6,545
---------
TOTAL INVESTMENT INCOME ............................... $ 8,158
OPERATING EXPENSES:
Administrative fees ................................... $ 20,164
Investment advisory fees .............................. 14,365
Distributor fees ...................................... 7,576
Amortization of organization
expenses .......................................... 6,653
Registration fees ..................................... 4,663
Directors fees ....................................... 4,033
Custodian fees ........................................ 3,781
Printing fees ......................................... 2,924
Website ............................................. 2,773
Accounting fees ...................................... 2,521
Legal fees ............................................ 2,016
Errors & Omissions insurance .......................... 572
Miscellaneous ........................................ 202
---------
Total operating expenses .......................... 72,243
Less reimbursed expenses .......................... (34,364)
NET OPERATING EXPENSES 37,879
---------
NET INVESTMENT LOSS ................................... (29,721)
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) from investment transactions . $ (74,791)
Net unrealized appreciation of investments ............ 1,785,024
---------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS ............................. 1,710,233
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ............................ $ 1,680,512
============
</TABLE>
See accompanying notes
- 6 -
<PAGE>
<TABLE>
<CAPTION>
WWW Trust
WWW Internet Fund
Statement of Changes in Net Assets
For the six months ended December 31, 1998 and
Year ended June 30, 1998
Unaudited
FOR THE SIX MONTHS
ENDED FOR THE YEAR ENDED
DECEMBER 31, 1998 JUNE 30, 1998
----------------- -------------
OPERATIONS:
<S> <C> <C>
Net investment gain/(loss) $ (29,721) $ (46,174)
Net realized gain/(loss) from investment transactions (74,791) 224,862
Net unrealized appreciation (depreciation)
of investments 1,785,024 191,091
---------- ----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 1,680,512 369,779
DISTRIBUTION TO SHAREHOLDERS:
Realized gain (112,653) (306,145)
FUND SHARE TRANSACTIONS:
Proceeds from shares sold 3,453,055 1,490,785
Net asset value of
shares issued in reinvestment of dividends 87,495 303,629
Payment for shares redeemed
(net of redemption fees) (1,159,070) (1,161,085)
---------- ----------
NET CAPITAL SHARE TRANSACTIONS 2,381,480 633,329
---------- ----------
NET INCREASE IN NET ASSETS 3,949,339 696,963
NET ASSETS:
Beginning of period 2,628,325 1,931,362
---------- ----------
End of period $ 6,577,664 $ 2,628,325
=========== ===========
</TABLE>
See accompanying notes
- 7 -
<TABLE>
<CAPTION>
WWW Trust
WWW Internet Fund
Financial Highlights
FOR A FUND SHARE OUTSTANDING THROUGHOUT THE PERIOD:
FOR THE PERIOD
AUGUST 1, 1996
FOR THE SIX MONTHS (COMMENCEMENT OF
ENDED FOR THE YEAR OPERATIONS) THROUGH
DECEMBER 31, 1998 ENDED JUNE 30, 1998 JUNE 30, 1997
----------------- ------------------- -------------
<S> <C> <C> <C>
Net asset value, beginning of period .......................... $ 10.95 $ 10.99 $ 10.00
Income (loss) from investment operations
Net investment loss .......................................... (0.11) (0.21) (0.16)
Net realized and unrealized gains from security transactions . 5.41 1.70 1.36
------- ------- -------
Total ............................................... 5.30 1.49 1.20
------- ------- -------
Less distributions from realized gains from security transactions (0.33) (1.53) (0.21)
------- ------- -------
Net asset value, end of period ................................. $ 15.92 $ 10.95 $ 10.99
======= ======= =======
Total return** ................................................. 49.08% 15.96% 13.08%*
Ratios/supplemental data:
Net assets, end of period (in 000's) ......................... $ 6,578 $ 2,628 $ 1,472
Ratio of expenses to average net assets before reimbursement . 4.63%* 5.10% 7.23%*
Ratio of expenses to average net assets after reimbursement .. 2.50%* 2.50% 2.50%*
Ratio of net investment income/(loss) to average net assets .. (4.09%)* (4.47%) (1.62%)*
Ratio of net investment income/(loss) to average net assets,
net of reimbursement ..................................... (1.96%)* (1.89%) (0.62%)*
Portfolio turnover rate ...................................... 65.70% 70.52% 109.52%*
<FN>
* Annualized
** Based on net asset value per share
</FN>
</TABLE>
- 8 -
<PAGE>
WWW Trust
WWW Internet Fund
Notes to Financial Statements
December 31, 1998
Unaudited
1. Organization
The WWW Trust (WWW Internet Fund), (the Fund) was organized as an Ohio business
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.
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 exchange 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 price 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 Fund'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.
- 10 -
<PAGE>
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. Amortization expense amounted to $6,653
for the six months ended December 31, 1998.
Investments - 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.
3. Investment advisory 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 it is 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 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 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,
- 11 -
<PAGE>
WWW Trust
WWW Internet Fund
Notes to Financial Statements (continued)
December 31, 1998
3. Investment advisory agreement (continued)
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. 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. For the
six months ended December 31, 1998, the manager has reimbursed all expenses in
excess of 2.50%.
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 its entirety by the Manager to
make payments for administration, shareholder services and distribution
assistance, including, but not limiting to (1) 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, (2) compensation to
Service Organizations for providing administration, accounting and other
shareholder services with respect to Fund shareholders, and (3) 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. These
fees would be in addition to any amounts which may be received by them from the
Manager under the Plan. For the six months ended December 31, 1998, the amount
paid or accrued for such expenses was $7,576.
5. Capital share transactions
As of December 31, 1998 there was an unlimited number of $.001 par value shares
of capital shares authorized for the Fund.
- 12 -
<PAGE>
Transactions in capital shares were as follows:
<TABLE>
FOR THE SIX MONTHS FOR THE YEAR
ENDED DECEMBER 31, 1998 ENDED JUNE 30, 1998
SHARES AMOUNT SHARES AMOUNT
------- ---------- ------- ----------
<S> <C> <C> <C> <C>
Shares sold ................... 264,358 $3,453,055 132,448 $1,490,785
Shares issued by
reinvestment of dividends ... 6,730 87,495 32,578 303,629
Shares redeemed ............... (97,998) (1,159,070) (100,817) (1,161,085)
------- ---------- -------- ----------
Net increase .................. 173,090 $2,381,480 64,209 $ 633,329
======= ========== ======== ==========
</TABLE>
6. Investments
For the six months ended December 31, 1998, purchases and sales of investment
securities, other than short-term investments, aggregated $1,404,913 and
$1,744,391 respectively. The gross unrealized appreciation for all securities
totaled $2,114,990 and the gross unrealized depreciation for all securities
totaled $270,940 for a net unrealized appreciation of $1,844,050. The aggregate
cost of securities for federal income tax purposes at December 31, 1998 was
$3,764,136.
7. Related party transactions
Certain owners of WWW Advisors, Inc. are also Owners and/or Trustees of the
Fund. These individuals may receive benefits from any Management fee paid to the
Advisor.
8. Distributions
For the six months ended December 31, 1998, distributions of $0.04 aggregating
$13,716 and $0.29 aggregating $98,937 were made from short term capital gains
and long term capital gains respectively.
9. Securities Sold Short
Securities sold short represent obligations of the Fund to make a future
delivery of a specific security and, correspondingly, create an obligation to
purchase the security at prevailing market prices (or deliver the security, if
owned by the Fund) at the later delivery date. As a result, these short sales
create the risk that the Fund's ultimate obligation to satisfy the delivery
requirements may exceed the amount recorded in the accompanying statement of
assets and liabilities.
The amount deposited with brokers for securities sold short is essentially
restricted to the extent that it serves as deposits for securities sold short.
It is the Fund's policy to continuously monitor the credit standing of the
brokers with whom it conducts business.
- 13 -
<PAGE>
WWW Trust
WWW Internet Fund
Notes to Financial Statements (continued)
December 31, 1998
10. Restricted and other illiquid securities
The Fund may acquire portfolio securities called restricted securities, which
can be sold only pursuant to an effective registration statement under the
Securities Act of 1933 or an exemption from such registration. In addition,
other securities held by the Fund may be illiquid which means they cannot be
sold or disposed of in the ordinary course of business at approximately the
quoted market value of such securities, or in the absence of such quoted market
value, the price at which the Fund has valued such securities. The Fund will not
invest in restricted and other illiquid securities if, as a result of such
investment, the value of the Fund's illiquid assets would exceed 15% of the
value of the Fund's net assets.
Restricted securities eligible for resale under Rule 144A under the Securities
Act of 1933 that have been determined to be liquid by the Fund's Board of
Directors based upon trading markets for the securities and any other restricted
securities that become registered under the Securities Act of 1933 or that may
be otherwise freely sold without registration thereunder are not subject to the
foregoing limitation, unless they are otherwise illiquid.
The Fund normally will be able to purchase restricted securities at a
substantial discount from the market value of similar unrestricted securities,
but there are certain risks which the Fund will necessarily assume in acquiring
restricted securities. The principal risk is that the Fund may have difficulty
in disposing of such securities without registration under the Securities Act of
1933, and the Fund will have to bear the risk of market conditions prior to such
registration. In the absence of an agreement obtained at the time of purchase of
such securities, there can be no assurance that the issuer will register the
restricted securities. Furthermore, if the Fund disposes of restricted
securities without registration, it may be necessary to sell such shares at a
discount similar to or greater than that at which the Fund purchased the shares.
The investment in 80,000 shares of USA Talks.com, Inc. common stock, the sale of
which is restricted, was acquired on December 18, 1998 for $200,000. This
investment has been valued by the board of directors at 75% of the current
market value of the issuer's unrestricted common stock shares. No quoted market
exists for the USA Talks restricted shares. It is possible that the estimated
value may differ significantly from the amount that might ultimately be realized
in the near term and the difference could be material.
On December 2, 1998 the Fund invested $50,000 in 50,000 common stock shares of
ProSoft I-Net Solutions, Inc. and $100,000 in a 13% convertible note, due
November 30, 2008. Under the terms of the note the borrower may pay upto 50% of
the quarterly interest payment in common stock shares. This note is exercisable
at $1.60 per common stock share.
- 14-
<PAGE>
In addition the Fund received warrants to purchase an additional 50,000 shares
of common stock at a price of $1.10 per share subject to terms and conditions
which among other things, provide for adjustments and notice of adjustments
based upon future events including the sale or acquisition of controlling
interest in the company. The warrants may be exercisable at any time by the
Fund.
The company filed to register said securities on January 31, 1999. Upon notice
of effective registration from the company, the Fund will include the warrants
priced at market value and price the convertible note at market value based on
the value of the underlying shares.
At December 31, 1998, the convertible note, which is considered to be illiquid,
has been valued by the board of directors at its purchase cost of $100,000.
- 15 -
<PAGE>
WWW Trust
WWW Internet Fund
Investment Management & Fund Distributor
WWW Advisors, Inc.
Lexington, KY
Shareholder Servicing,
Dividend Disbursing and Transfer Agent
American Data Services, Inc.
Hauppauge, NY
Portfolio Securities Custodian
Star Bank, N.A.
Cincinnati, OH
General Counsel
Benesch, Friedlander,
Coplan & Aranoff, P.L.L.
Cleveland, OH
Shareholder Services
(888) 999-8331
Securities Dealers &
Financial Institutions
(888) 263-2204
www.internetfund.com
