Form N-1A
Registration Statement Under the securities act of 1933 X
and
The Investment Company Act of 1940 X
Pre-Effective Amendment Number 2
The Internet Fund, Inc.
(Exact Name of Registrant as Specified in Charter)
473 Martling Avenue, Tarrytown, NY 10591
(Address of Principal Executive Offices)
914-631-9030
(Registrants Telephone Number)
Leonid Polyakov 473 Martling Avenue, Tarrytown, NY 10591
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practicable
after the effective date of this registration.
Calculation of Registration Fee Under the Securities Act of 1933
Title of Securities Amount Being Proposed Max Proposed Max Amount of
being Registered Registered Offering Aggregate Registra-
Price Offering Price tion Fee
The Internet Fund, Inc. *
Common Stock $.01 1,500,000 $5.00 $7,500,000 $2,343.75
par value
* Estimated for the purpose of determining the amount of the
registration fee. This is the actual Net Asset value per share as of the
starting date.
The Registrant hereby amends this Registration Statement on such date
or dates that may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states
that this Registration Statement shall thereafter become effective in
accordance with Section 8(A) of the Securities Act of 1933 or until this
Registration Statement shall become effective on such date as the
Commission acting to section 8(A) may determine.
<PAGE>
Cross Reference Sheet
INFORMATION REQUIRED CAPTIONS IN FILING
Part C: OTHER INFORMATION
Item 24. Financial Statements & Exhibits Financial Statements &
Exhibits
Item 25. Persons Controlled by/or under Control Persons
Common Control
Item 26. Number of Holders of Securities Number of Shareholders
Item 27. Indemnifications Indemnification
Item 28. Business & Other Connections of Activities of Investment
Advisor
Advisor
Item 29 Principal Underwriters Principal Underwriter
Item 30. Location of Accounts & Records Location of Accounts &
Records
Item 31. Management Services Not Applicable
Item 32. Undertakings Not Applicable
<PAGE>
THE INTERNET FUND, INC.
473 Martling Avenue,
Tarrytown, NY 10591
(914) 631 9030
(888) FUND-WWW
October 17, 1996
PROSPECTUS
The Internet Fund, Inc. (the "Fund") is a diversified, open-end
management investment company. The Fund's primary investment
objective is long-term growth of capital, a goal it seeks by
investing primarily in the common stocks and securities
convertible into common stocks of domestic and foreign
companies engaged in the Internet and Internet-related activities.
Current income is a secondary objective. No assurance can be
given that the Fund will realize its objectives. This Prospectus sets
forth certain information about The Internet Fund, Inc., that a
prospective investor should know before investing. Investors
should read and retain this Prospectus for future reference.
A STATEMENT OF ADDITIONAL INFORMATION about
the Fund dated October 17, 1996, has been filed with the Securities and
Exchange Commission and contains further information about the
Fund. A copy of the Statement of Additional Information may be
obtained without charge by calling or writing the Fund at the
telephone number or address listed above. The Statement of
Additional Information is incorporated herein by reference.
THESE SECURITIES HAVE NOT BEEN APPROVED
OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSIONER NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSIONER PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
THE INTERNET FUND, INC.
Investment Adviser:
Kinetics Asset Management, Inc.
Distributor:
The Fund serves as its own distributor.
FUND EXPENSES . . . . . . . . . . . . . . . . . . . . . . .3
FINANCIAL HIGHLIGHTS. . . . . . . . . . . . . . . . . . . .4
INVESTMENT OBJECTIVES AND POLICIES. . . . . . . . . . . . .4
OTHER INVESTMENTS AND INVESTMENT
PRACTICES. . . . . . . . . . . . . . . . . . . . . . .5
RISK FACTORS. . . . . . . . . . . . . . . . . . . . . . . .6
INVESTMENTS RESTRICTIONS. . . . . . . . . . . . . . . . . .7
PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . .8
MANAGEMENT OF THE FUND. . . . . . . . . . . . . . . . . . .9
PURCHASING SHARES . . . . . . . . . . . . . . . . . . . . 11
DISTRIBUTION AND TAXES. . . . . . . . . . . . . . . . . . 12
REDEMPTION AND REPURCHASE OF SHARES . . . . . . . . . . . 14
DETERMINATION OF NET ASSET VALUE. . . . . . . . . . . . . 15
STOCKHOLDER SERVICES. . . . . . . . . . . . . . . . . . . 16
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . 16
SHARE PURCHASE APPLICATION. . . . . . . . . . . . . . . . 18
No dealer, salesman, or any other person has been authorized to
give any information or to make any representations, other than
those contained in this Prospectus, in connection with the offer
contained in this Prospectus and, if given or made, such other
information or representations must not be relied upon as having
been authorized by the Fund or its Distributor. This Prospectus
does not constitute an offer by the Fund or by the Distributor to sell
or a solicitation of an offer to buy any of the securities offered
hereby in any jurisdiction to any person to whom it is unlawful for
the fund or the Distributor to make such offer or solicitation in
such jurisdiction.
<PAGE>
FUND EXPENSES
Shareholder Transaction Expenses
FUND EXPENSES
Shareholder Transaction Expenses
Sales Load on Purchases (as a percentage of offering price) - None
Sales Load on Reinvested Dividends (as a percentage of offering price) - None
Deferred Sales Load - None
Redemption Fee - None
Exchange Fee - None
IRA Trustee Fees (per account) - $10 annually
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management and Administration Fees - 1.25%
12b-1 Fees* - 0.25%
Other Expenses - 0.50%
-----
Total Fund Operating Expenses - 2.00%
EXAMPLE
You would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return and (2) redemption at the end of
each time period:
1 year 3 years 5 years 10 years
$20 $63 $108 $234
* Under the rules of the National Association of Securities
Dealers, Inc. (The "NASD"), a 12b-1 fee may be treated as a
sales charge for certain purposes under those rules. Because
a 12b-1 fee is an annual fee charged against the assets of a
Fund, long-term stockholders may indirectly pay more in total
sales charges than the economic equivalent of the maximum
front-end sales charge permitted by rules of the NASD (see
"Distributor").
The purpose of the foregoing table is to assist investors in
understanding the various costs and expenses that an investor in
the Fund will bear directly or indirectly.
THE EXAMPLE WHICH IMMEDIATELY FOLLOWS THE
TABLE USES THE "TOTAL FUND OPERATING
EXPENSES" FIGURE ABOVE AND ASSUMES IT WILL
REMAIN CONSTANT OVER THE ILLUSTRATED
PERIOD. THE EXAMPLE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL FUND EXPENSES MAY BE
GREATER OR LESSER THAN THOSE SHOWN IN THE
EXAMPLE OR IN THE TABLE.
<PAGE>
FINANCIAL HIGHLIGHTS
As a newly formed company, the Fund does not have historical
performance data.
INVESTMENT OBJECTIVES AND POLICIES
The Fund's primary investment objective is long-term growth
of capital, a goal it seeks by investing primarily in common stocks
and securities convertible into common stocks of domestic
companies engaged in the Internet and Internet-related activities or
services. Current income is a secondary objective. No assurance
can be given that the Fund will realize its objectives. See "Taxes."
Except during temporary defensive periods, not less than 80%
of the Fund's total assets will be invested in the securities of
companies engaged in Internet and Internet-related
activities, and, except during temporary defensive periods, the
Fund would normally expect at least 90% of its total assets to be
so invested. As a diversified investment company, at least 75% of
the Fund's total assets are required to be invested in securities
limited in respect of any one issuer to not more than 5% of the
Fund's total assets and to not more than 10% of the issuer's voting
securities.
The Adviser believes that favorable investment opportunities
are offered by companies that provide products or services
designed for the Internet. The Internet is a global collection of
connected computers that allows commercial and professional
organizations, educational institutions, government agencies, and
consumers to communicate electronically, access and share
information, and conduct business. The Adviser believes that the
dramatic growth of Internet activity will provide many investment
opportunities. Accordingly, the Fund seeks to invest in common
stock, and other securities, of companies whose research and
development efforts, in the opinion of the Adviser, may result in
higher stock values.
An important yardstick the Adviser employs in making portfolio
selections, in addition to evaluating trends in corporate revenues,
earnings, and dividends, is the amount of capital currently being
expended on research and development, and the nature thereof.
The Adviser believes that dollars invested in research and
development today frequently have significant bearing on future
growth.
Portfolio securities generally will be selected from companies
in the following groups:
Internet Access Providers - Companies that provide users with
access to the Internet.
Software Developers - Companies that develop software tools
to access the Internet, to facilitate information distribution and
gathering, to secure Internet-based transactions, etc.
<PAGE>
Hardware Manufactures - Companies that develop and
manufacture communication equipment, such as modems, switches
and routers, used to access the Internet, and those that develop and
manufacture workstations and Personal Communications Systems
used to access the Internet and provide Internet services.
Content Developers - Companies that supply information and
entertainment content, such as games, music, and video, on the
Internet.
Publishing Companies - Companies that provide information
about the Internet through publication of books, magazines, and
newspapers.
OTHER INVESTMENTS AND INVESTMENT
PRACTICES
Due to the changing nature of the Internet, the national
economy, and market conditions, the Fund may, as a temporary
defensive measure, invest, without limitation as to the amount, in
money market securities with a rating of A2-P2 or higher.
In order to have funds available for redemption and investment
opportunities, the Fund may also hold a portion of its portfolio in
cash or U.S. short-term money market instruments. Certificates of
deposit purchased by the Fund will be those of U.S. banks having
total assets at the time of purchase in excess of $1 billion, and
bankers' acceptances purchased by the Fund will be guaranteed by
U.S. or foreign banks having total assets at the time of purchase in
excess of $1 billion. The Fund anticipates that not more than 10%
of its total assets will be so invested in money market instruments
or held in cash at any given time, except when the Fund is in a
temporary defensive posture. The Fund may invest in debt
securities convertible into common stocks. Debt purchased by the
Fund will consist of obligations of medium grade or higher, having
at least adequate capacity to pay interest and repay principal. Non-
convertible debt obligations will be rated BBB or higher by S&P,
or Baa or higher by Moody's at the time of purchase. Convertible
debt obligations will be rated B or higher by S&P or B or higher by
Moody's at the time of purchase. Securities rated Baa by Moody's
are considered by Moody's to be medium-grade securities and have
adequate capacity to pay principal and interest.
Bonds in the lowest investment grade category (BBB) have
speculative characteristics, with changes in the economy or other
circumstances more likely to lead to a weakened capacity of the
bonds to make principal and interest payments than would occur
with bonds rated in higher categories. Securities rated B are
referred to as "high-risk" securities, generally lack characteristics
of a desirable investment, and are deemed speculative with respect
to the issuer's capacity to pay interest and repay principal over a
long period of time. See "Appendix" of the Statement of Additional
Information" for a description of debt security ratings.
<PAGE>
The fixed-income securities in which the Fund may invest are
generally subject to two kinds of risk: credit risk and market risk.
Credit risk relates to the ability of the issuer to meet interest and
principal payments, as they come due. The ratings given a security
by Moody's and S&P provide a generally useful guide as to such
credit risk. The lower the rating given a security by such rating
service, the greater the credit risk such rating service perceives to
exist with respect to such security. Increasing the amount of Fund
assets invested in unrated or lower-grade securities, while intended
to increase the yield produced by those assets, also will increase
the credit risk to which those assets are subject.
Market risk relates to the fact that the market values of
securities in which the Fund may invest generally will be affected
by changes in the level of interest rates. An increase in interest
rates will tend to reduce the market values of such securities,
whereas a decline in interest rates will tend to increase their values.
Medium- and lower-rated securities (Baa or BBB and lower) and
non-rated securities of comparable quality tend to be subject to
wilder fluctuations in yields and market values than higher-rated
securities. Medium-rated securities (those rated Baa or BBB) have
speculative characteristics while lower-rated securities are
predominantly speculative. The Fund is not required to dispose of
debt securities whose ratings are downgraded below these ratings
subsequent to the Fund's purchase of the securities. Relying in part
on ratings assigned by credit agencies in making investments will
not protect the Fund from the risk that fixed-income securities in
which the Fund invests will decline in value, since credit ratings
represent evaluations of the safety of principal, and dividend and
interest payments on preferred stocks and debt securities, not the
market values of such securities, and such ratings may not be
changed on a timely basis to reflect subsequent events.
At no time will the Fund have more than 5% of its total assets
invested in any fixed-income securities that are unrated or are rated
below investment grade either at the time of purchase or as a result
of a reduction in rating after purchase.
In order to qualify for the beneficial tax treatment afforded
regulated investment companies, and to be relieved of Federal tax
liabilities, the Fund must distribute substantially all of its net
income to stockholders generally on an annual basis. Thus, the
Fund may have to dispose of portfolio securities under
disadvantageous circumstances to generate cash or borrow cash in
order to satisfy the distribution requirement.
The Fund does not trade in securities for short-term profits, but,
when circumstances warrant, securities may be sold without regard
to the length of time they have been held.
For more information concerning these investment practices,
see "Investment Objectives and Policies" in, and Appendix B, to
the Statement of Additional Information.
<PAGE>
RISK FACTORS
There can be no assurance that a portfolio consisting primarily
of securities issued by companies engaged in the Internet and
Internet-related activities will achieve the Fund's investment
objectives. Because the Fund concentrates its investments in this
area, its shares do not represent a complete investment program
and their value may fluctuate more than shares invested in a
broader range of industries. The value of Fund shares will also be
especially susceptible to factors affecting companies engaged in
Internet and Internet-related activities. Such companies are
generally subject to the rate of change in technology which is
higher than in other industries. Changes in governmental policies,
such as telephone and cable regulations, freedom of speech, and
anti-trust regulations, may have a material effect on the demand for
Internet services. Many of the products and services of companies
engaged in the Internet and Internet-related activities are also
subject to relatively high risks of rapid obsolescence caused by
progressive scientific and technological advances.
Management has no previous experience managing a mutual
fund, see Management of the Fund.
INVESTMENT RESTRICTIONS
The Fund is subject to certain investment restrictions described
here and in the Statement of Additional Information, which may be
changed only with the approval of the holders of a majority of the
Fund's outstanding shares.
1. The Fund will not act as underwriter for securities of
other issuers except insofar as the Fund may be
deemed an underwriter in selling its own portfolio
securities.
2. The Fund will not make loans. The purchase of a
portion of a readily marketable issue of publicly
distributed bonds, debentures or other debt securities
will not be considered the making of a loan.
3. With respect to 75% of its total assets, the Fund will not
invest more than 5% of its assets in the securities of any
one issuer (except securities issued or guaranteed by the
U.S. Government, its agencies, and instrumentalities).
4. With respect to 75% of its total assets, the Fund will not
invest in the securities of any issuer if as a result the
Fund holds more than 10% of the outstanding securities
or more than 10% of the outstanding voting securities of
such issuer.
5. The Fund will not borrow money or pledge, mortgage,
or hypothecate its assets except to facilitate redemption
requests that might otherwise require untimely
disposition of portfolio securities and then only from
banks and in amounts not exceeding the lesser of 10% of
its total assets valued at cost or 5% of its total assets
valued at market at the time of such borrowing, pledge,
mortgage, or hypothecation and except that the Fund
may enter into futures contracts and related options.
6. The Fund will not invest more than 10% of the value of
its net assets in illiquid securities, restricted securities,
and other securities for which market quotations are not
readily available.
<PAGE>
7. The Fund will not invest in the securities of any one
industry, except the Internet and Internet-related
industries (and except securities issued or guaranteed by
the U.S. Government, its agencies, and instrumentalities)
if as a result more than 20% of the Fund's total assets
would be invested in the securities of such industry.
Except during temporary defensive periods, not less than
80% of the Fund's total assets will be invested in the
securities of companies engaged in Internet
and Internet-related activities, and, except during
temporary defensive periods, the Fund would normally
expect at least 90% of its total assets to be so invested.
8. The Fund will not purchase or sell commodities or
commodity contracts, or invest in oil, gas or mineral
exploration or development programs or real estate
except that the Fund may purchase and sell securities of
companies that deal in oil, gas, or mineral exploration or
development programs or interests therein.
9. The Fund will not issue senior securities.
If a percentage limitation is satisfied at the time of investment,
a later increase or decrease in such percentage resulting from a
change in value in the Fund's portfolio securities will not
constitute a violation of such limitation.
PERFORMANCE INFORMATION
The Fund may from time to time include figures indicating the
Fund's yield, total return, or average annual total return in
advertisements or reports to stockholders or prospective investors.
Quotations of the Fund's yield will be based on all investment
income per share earned during a given 30-day period (including
dividends and interest), less expenses accrued during the period
("net investment income"), and will be computed by dividing net
investment income by the maximum public offering price per share
on the last day of the period. Average annual return and total return
figures represent the increase (decrease) in the value of an
investment in the Fund over a specified period. Both calculations
assume that all income dividends and capital gain distributions
during the period are reinvested at net asset value in additional
Fund shares. Quotations of the average annual total return reflect
the deduction of a proportional share of Fund expenses on an
annual basis. The results, which are annualized, represent an
average annual compounded rate of return on a hypothetical
investment in the Fund over a period of 1, 5, and 10 years ending
on the most recent calendar quarter (but not for a period greater
than the life of the Fund). Quotations of total return, which are not
annualized, represent historical earnings and asset value
fluctuations. Total return is based on past performance and is not
a guarantee of future results.
<PAGE>
Performance information for the Fund may be compared, in
reports and promotional literature, to: (I) the Standard & Poor's
500 Stock Index ("S&P 500 "), the Dow Jones Industrial Average
("DJIA") and the National Association of Securities Dealers
Automated Quotations ("the NASDAQ") Composite Index; (ii)
other groups of mutual funds tracked by Lipper Analytical
Services, the widely used independent research firm that ranks
mutual funds by overall performance, investment objectives, and
sets; and (iii) the Consumer Price Index (measure of inflation) to
assess the real rate of return from an investment in the Fund. Un-
managed indices may assume the reinvestment of dividends but
generally do not reflect deductions for administrative and
management costs and expenses.
Performance information for the Fund reflects only the
performance of a hypothetical investment in the Fund during the
particular time period on which the calculations are based.
Performance information should be considered in the light of the
Fund's investment objectives and polices, the types and quality of
the Fund's portfolio investments, market conditions during the
particular time period, and operating expenses. Such information
should not be considered as a representation of the Fund's future
performance. For a description of the methods used to determine
the Fund's yield, average annual total return and total return, see
the Statement of Additional Information.
MANAGEMENT OF THE FUND
The Fund is an open-end diversified management investment
company, commonly called a mutual fund. Through the purchase
of shares of the Fund, investors with goals similar to the
investment objectives of the Fund can participate in the investment
performance of the portfolio of investments held by the Fund. The
management and affairs of the Fund are supervised by its Board of
Directors whose name and general background information appear
in the Statement of Additional Information. The Board meets six
times a year to review Fund's progress and status.
Adviser
Kinetics Asset Management, Inc., is a New York corporation
that acts as an Investment Adviser to the Fund. Leonid Polyakov
is the president of Kinetics Asset Management, Inc. Mr. Polyakov
has more than 15 years experience in a variety of professional and
managerial positions in the software industry. Mr. Francis J.
Alexander is an officer of Kinetics Asset Management, Inc., and
a portfolio manager. Mr. Alexander has more than 20 years of
investment experience as a portfolio manager.
<PAGE>
Officers and Directors of the Fund
Officers and directors of the Fund, together with their addresses
and principal occupations during the past five years, are:
Name and Address Position Principal Occupation Past
Five Years
Leonid Polyakov President President
473 Martling Ave. Interested Director The Internet Fund, Inc.
Tarrytown, NY 10591 Manager of Special Projects
Alltel Information Services
Francis J. Alexander Vice President Vice President
270 Greenwich Ave. Interested Director Portfolio manager
Greenwich, CT 06830 Secretary The Internet Fund, Inc.
Portfolio Manager
Alexander Capital
Management, Inc.
Jeffery B. Kelvin Non-interested Director President
14 Fox Hunt Circle Financial Planners Assistants
Plymouth Meeting,
PA 19462
Kathleen Campbell Non-interested Director Councellor-at-Law
13 Elm Road
Scarsdale, NY 10583
Douglas Cohen, C.P.A. Non-interested Director Certified Public Accountant
86 Samuel Street
Ponkonkoma, NY 11779
The fund does not compensate those officers and directors that
are affiliated with the Investment Adviser except as they may
benefit through payment of the Advisory fee.
Expenses
The Fund's expenses are accrued daily and are deducted from
its total income before dividends are paid. These expenses include,
but are not limited to: fees paid to the Adviser and the
Administrator; taxes; legal fees; custodian and auditing fees;
reimbursement of the costs incurred by the Administrator in
providing pricing and accounting services to the Fund; and printing
and other miscellaneous expenses paid by the Fund. The Adviser
and Administrator have agreed that in any fiscal year in which the
aggregate expenses of the Fund (including advisory,
administrative, and transfer agency fees, but excluding, to the
extent permitted by applicable state law, interest, local, state, and
Federal taxes, sales charges, distribution plan expenses, and
extraordinary expenses as determined by the Fund's directors who
are not "interested persons" of the Administrator or the Fund's
investment adviser as defined in the 1940 Act) exceed the expense
limitation of any state having jurisdiction over the Fund, the fees
paid to the Adviser and Administrator hereunder will be reduced
pro rata (but not below zero)) to the extent require by such expense
limitation. The Adviser and the Administrator have each agreed to
bear their pro rata share of any such fee reduction based on the
percentage that such person's fee bears to the total fees paid by the
Fund to the Adviser under the Investment Advisory Agreement and
to the Administrator under the Administration Agreement.
<PAGE>
Distributor
The Fund acts as its own transfer agent. The fund's custodian
is U.S. Clearing Corporation.
The Investment Company Act of 1940 prohibits a fund from
acting as a distributor of securities of which it is an issuer, except
through an underwriter or pursuant to a written distribution plan
meeting certain standards. Pursuant to these provisions, the Fund
has adopted the Plan, under which monthly payments made by the
Fund to the Distributor may not exceed an amount computed at an
annual rate of 0.25% of the Fund's average net assets. Of this
amount, at the end of each calendar quarter the Distributor may
reallocate to broker-dealers (which may include the Distributor
itself), financial institutions or other industry professionals
(collectively, the "Service Organizations") fees at annual rates of
up to 0.25% of the average net assets of Fund shares owned by
stockholders for whom the Service Organizations are the dealers
or holders of record and with whom the Service Organizations
have a servicing relationship pursuant to a Service Agreement or
a Dealer Agreement with the Distributor. Normally the expenses
paid by the Distributor will exceed the fees received by the
Distributor under the Plan (said fees will not be offset by any sales
charges received by the Distributor).
The staff of the Securities and Exchange Commission (the
"SEC") has proposed amendments to Rule 12b-1. If the Rule is
amended as proposed or in some other manner, it may be necessary
for the Fund to consider amending the Plan and any related
agreements.
PURCHASING SHARES
Shares of the Fund are sold in a continuous offering and may be
purchased on any business day though authorized investment
dealers or directly from the Fund's Distributor. Except for the Fund
itself, only the Distributor and investment dealers that have a sales
agreement with the Distributor are authorized to sell shares of the
Fund. For further information, reference is made to the caption
"Distributor" in the Fund's Statement of Additional Information.
Shares of the Fund are sold at net asset value, without a sales
charge, and will be credited to a stockholder's account at the net
asset value next computed after an order is received. The minimum
initial investment is $1,000, and the minimum investment for
subsequent purchases is $100. The Fund does not intend to issue
stock certificates representing shares purchased. The Fund's
management reserves the right to reject any purchase order if, in its
opinion, it is in the Fund's best interest to do so.
An account may be opened by mailing a check or other
negotiable bank draft (payable to The Internet Fund, Inc.) for
$1,000 or more together with the completed investment application
form to the Fund. Subsequent investments in the amount of $100
or more may be mailed directly to the Fund. All such investments
are effected at the net asset value of Fund shares next computed
following receipt of payment by the Fund. Confirmations of the
opening of an account and of all subsequent transactions in the
account are forwarded by the Fund to the stockholder's address of
record.
<PAGE>
At various times the Distributor may implement programs under
which a dealer's sales force may be eligible to win nominal awards
for certain sales efforts or recognition program conforming to
criteria established by the Distributor, or participates in sales
programs sponsored by the Distributor. In addition, the Adviser,
the Administrator, and/or the Distributor in their discretion may
from time to time, pursuant to objective criteria established by the
Adviser, the Administrator, and/or the distributor, sponsor
programs designed to reward selected dealers for certain services
or activities that are primarily intended to result in the sale of
shares of the Fund. These programs will not change the price you
pay for your shares or the amount that the Fund will receive from
such sale.
Payment for all orders to purchase Fund shares must be received
by the Fund's Transfer Agent within three business days after such
orders are placed.
Investing Through Authorized Dealers
If any authorized dealer receives an order of at least $1,000, the
dealer may contact the Fund directly. Orders received by dealers
by the close of trading on the New York Stock Exchange on a
business day that are transmitted to the Fund by 4:00 p.m. EST on
that day will be effected at the net asset value per share determined
as of the close of trading on the New York Stock Exchange on that
day. Otherwise, the orders will be effected at the next determined
net asset value. It is the dealer's responsibility to transmit orders so
that they will be received by the Distributor before 4:00 p.m. EST.
After each investment, the stockholder and the authorized
investment dealer will receive confirmation statements of the
number of shares purchased and owned.
Telephone Purchase Authorization (Investing by Phone)
Stockholders who have completed the Telephone Purchase
Authorization section of the Investment Application Form may
purchase additional shares by telephoning the Fund at (914) 631-
9030, or toll-free at (888) FUND-WWW. The minimum telephone
purchase is $100 and the maximum is the greater of $100 or three
times the net asset value of shares (for which certificates have not
been issued) held by the stockholder on the day preceding such
telephone purchase for which payment has been received. The
telephone purchase will be effected at the net asset value next
computed after receipt of the call by the Fund. Payment for the
telephone purchase must be received by the Fund within three
business days after the order is placed. If payment is not received
within three business days after the order is placed, the stockholder
will be liable for all losses incurred as a result of the purchases.
<PAGE>
DISTRIBUTION AND TAXES
Payment Options
Distributions (whether treated for tax purposes as ordinary
income or long-term capital gains) to stockholders of the Fund are
paid in additional shares of the Fund, with no sales charge, based
on the Fund's net asset value as of the close of business on the
record date for such distributions. However, a stockholder may
elect on the application form to receive distributions as follows:
Option 1. To receive income dividends in cash and
capital gain distributions in additional Fund
shares, or
Option 2. To receive all income dividends and capital
gain distributions in cash.
The Fund intends to pay any dividends from investment
company taxable income and distributions representing capital gain
at least annually, usually in November. The Fund will advise each
stockholder annually of the amounts of dividends from investment
company taxable income and of net capital gain distributions
reinvested or paid in cash to the stockholder during the calendar
year.
If you select Option 1 or Option 2 and the U.S. Postal Service
cannot deliver your checks, or if your checks remain uncashed for
six months, your distribution checks will reinvested in your
account at the then current net asset value and your election will be
converted to the purchase of additional shares.
Taxes
The Fund intends to continue to qualify and elect to be taxed as
a regulated investment company under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"). In any
taxable year in which the Fund so qualifies and distributes at least
90% of its investment company taxable income (which includes,
among other items, dividends, interest, and the excess of realized
net short-term capital gain over realized net long-term capital loss),
the Fund generally will be relieved of Federal income tax on its
investment company taxable income and net capital gain (the
excess of realized net long-term capital gain over realized net
short-term capital loss) distributed to stockholders. Amounts not
distributed on a timely basis in accordance with a calendar
distribution requirement are also subject to a nondeductible 4%
excise tax. To prevent application of the excise tax, the Fund
intends to make its distributions in accordance with the calendar
year distribution requirement. A distribution will be treated as paid
on December 31 of the calendar year if it is declared by the Fund
in October, November, or December of that year to stockholders
of record on a date in such a month and paid by the Fund during
January of the following calendar year. Such distributions will be
taxable to stockholders in the calendar year the distributions are
declared, rather than the calendar year in which the distributions
are received.
Distributions from investment company taxable income are
taxable to stockholders as ordinary income. Distributions of net
capital gains designated by the Fund as capital gains dividends are
taxable as long-term capital gains regardless of the length of time
a stockholder may have held shares of the Fund. The tax treatment
of distributions treated as ordinary income or capital gains will be
the same whether the stockholder reinvests the distributions in
additional shares or elects to receive them in cash.
<PAGE>
Stockholders will be notified each year of the amounts and
nature of dividends and distributions, including the amount (if any)
for that year that has been designated as capital gains distributions.
Investors should consult their tax advisers for specific information
on the tax consequences of particular types of distributions.
As a means of earning additional income, the Fund may write
covered options on the securities in its portfolio.
Upon the sale, redemption, or other disposition of shares of the
Fund, a stockholder generally will realize a taxable gain or loss
depending upon his basis in the shares. Such gain or loss will be
treated as a capital gain or loss if the shares are capital assets in the
stockholder's hands and generally will be long-term or short-term,
depending upon the stockholders's holding period for the shares.
Any loss realized as the result of sale or exchange will be
disallowed to the extent that the shares disposed of are replaced
(including shares acquired pursuant to the reinvestment plan)
within a period of 61 days, beginning 30 days before and ending 30
days after the shares are disposed of. In such a case, the basis of
the shares acquired will be adjusted to reflect the disallowed loss.
Any loss realized by a stockholder on a disposition of Fund shares
held by the stockholder for six months or less will be treated as a
long-term capital loss to the extent of any capital gains dividends
received by the stockholder with respect to such shares.
The Fund may be required to withhold Federal income tax at the
rate of 31% of all taxable distributions (including gross proceeds
from the redemption of Fund shares) payable to stockholders who
fail to provide the Fund with their correct taxpayer identification
number, or to make required certifications, or where the Fund or
the stockholder has been notified by the Internal Revenue Service
that the stockholder is subject to backup withholding. Corporate
stockholders and certain other stockholders specified in the Code
generally are exempt from such backup withholding. Backup
withholding is not an additional tax. Any amounts withheld may be
credited against the stockholder's Federal income tax liability.
REDEMPTION AND REPURCHASE OF SHARES
Generally, stockholders may require the Fund to redeem their
shares by sending a written request, signed by the record owner(s),
to The Internet Fund, Inc., 473 Martling Ave., Tarrytown, NY
10591. In addition, certain expedited redemption methods
described below are available. The written request with the
stockholder's signature guaranteed by an "eligible guarantor
institution" as defined in Rule 17Ad-15 under the Securities
Exchange Act of 1934. Eligible guarantor institutions include
banks, brokers, dealers, credit unions, national securities
exchanges, registered securities associations, clearing agencies,
and savings associations. A broker-dealer guaranteeing signatures
must be a member of a clearing corporation or maintain net capital
of at least $100,000. Credit unions must be authorized to issue
signature guarantees. Signature guarantees will be accepted from
any eligible guarantor institution that participates in a signature
guarantee program. No signature guarantees for shares for which
no certificates have been issued are required when an application
is on file at the Transfer Agent. However, if the proceeds of the
redemption are to be paid to someone other than the registered
holder, or to other than the stockholder's address of record, or if
the shares are to be transferred, the owner's signature must be
guaranteed as specified above. The redemption price shall be the
net asset value per share next computed after receipt of the
redemption request. See "Determination of Net Asset Value."
<PAGE>
The Fund reserves the right to pay any portion of a redemption
request in excess of $500,000 in readily marketable securities
from the Fund's portfolio. In this case, the stockholders may incur
brokerage charges on the sale of the securities.
The right of redemption and payment of redemption proceeds
are subject to suspension for any period during which the New
York Stock Exchange is closed, other than customary weekend and
holiday closings, or when trading on the New York Stock
Exchange is restricted as determined by the Securities and
Exchange commission; during any period when an emergency as
defined by the rules and regulations of the Securities and Exchange
Commission exists; or during any period when the Securities and
Exchange Commission has by order permitted such suspension.
The Fund will not mail redemption proceeds until checks
(including certified checks or cashier's checks) received for the
shares purchased have cleared, which can be as long as 15 days.
The value of shares on repurchase or redemption may be more
or less than the investor's cost depending upon the market value of
the Fund's portfolio securities at the time of redemption.
DETERMINATION OF NET ASSET VALUE
The net asset value per shares is computed daily, Monday
through Friday, as of the close of regular trading on the New York
Stock Exchange, which is currently 4:00 p.m., Eastern time, except
that the net asset value will not be computed on the following
holidays: New Year's Day, President's Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day,
and Christmas Day. The Fund's net asset value also will be
determined on any day in which there is sufficient trading in its
portfolio securities that the net asset value might be affected
materially, but only if on any such day the Fund is required to sell
or redeem shares. The net asset value per share is computed by
dividing the value of the securities held by the Fund plus any cash
or other assets (less accrued expenses) by the total number of the
Fund's shares outstanding at such time. The net asset value so
computed will be used for all purchase orders and redemption
requests received between such computation and the preceding
computation.
To the extent sales prices are available, securities that are traded
on a recognized stock exchange are valued at the last sale price on
that exchange prior to the time when assets are valued or prior to
the close of trading on the New York Stock Exchange. In the event
that there are no sales, the last available sale price will be used. If
a security is traded on more than one exchange, the Administrator
will use the latest price on the exchange where the stock is
primarily traded. If there is no sale that day or if the security is not
listed, the security is valued at its last sale quotation. The
calculation of the Fund's net asset value per share may not take
place contemporaneously with the times noted above for
determining the prices of certain of the Fund's portfolio securities,
including foreign securities. If an event materially effecting the
value of such securities occured between the time when their prices
are determined and the time the Fund's net asset value is
calculated, such securities will be valued at fair value as
determined in good faith by the directors. Also, for any security for
which application of the preceding methods of valuation results in
a price for a security that is deemed not to be representative of the
market value of such security, the security will be valued at fair
value in the best judgment of the Administrator under the
supervision and responsibility of the Board of Directors.
<PAGE>
Call option contracts written on portfolio securities will be
priced at the latest sales price on the principal exchange on which
such options are normally traded or, if there have been no sales on
such exchange on that day, at the closing asked price. Short-term
investments having a maturity of 60 days or less are valued on the
basis of amortized cost. All other assets and securities held by the
Fund (including restricted securities) are valued at fair value as
determined in good faith by the Administrator under the
supervision and responsibility of the Board of Directors.
STOCKHOLDER SERVICES
The Internet Fund, Inc., provides its stockholders with a number
of services and conveniences designed to assist investors in the
management of their investments. These stockholder services
include the following:
Tax-Deferred Retirement Plans
Individual Retirement Accounts (for individuals who wish to
make limited contributions, which may be tax deductible in certain
circumstances, to a tax-deferred account for retirement).
Dividends and distributions will be automatically reinvested
without a sales charge. For further details, including fees charged,
tax consequences, and redemption information, see the specific
plan documents, which can be obtained from the Fund.
Investors should consult with their tax adviser before
establishing any of the tax-deferred retirement plans described
above.
<PAGE>
GENERAL INFORMATION
The Internet Fund, Inc., was incorporated in the State of New York
on March 20,1996, as an open-end diversified management
investment company, as defined in the Investment Company Act
of 1940, as amended. Its authorized capitalization currently
consists of ten million full and fractional shares of Common Stock,
$0.001 value per share. The Articles of Incorporation of the Fund
authorize the Board of Directors to classify or reclassify any
unissued shares of the Fund into one or more additional classes by
setting or changing in any one or more respects, from time to time
before the issuance thereof, their respective preferences,
conversion or other rights, voting powers, restrictions, limitations
as to dividends, qualification and terms and conditions of
redemption. All Fund shares are of the same class, with equal
rights and privileges. The Articles of Incorporation further
authorize the directors to classify or reclassify in a similar manner
any particular class of Fund shares into one or more series.
Stockholders are entitled to one vote for each full Fund share held
and fractional votes for fractional Fund shares held. Each Fund
share is entitled to participate equally in any dividend or
distribution declared by the Fund's Board of Directors and in the
net distributable assets of the Fund on liquidation. Fund shares
have no preemptive, conversion, or exchange rights. When issued
for payment as described in this Prospectus, Fund shares will be
fully paid and nonassessable. Fund share have noncumulative
voting rights and, accordingly, the holders of more than 50% of the
Fund's outstanding shares may elect all of the directors. The Fund
is not required to hold regular annual meetings, and will do so only
when required by law. Stockholders may, in accordance with the
By-Laws of the Fund, cause a meeting of stockholders to be held
for the purpose of voting on the removal of directors.
The Fund's securities are held by U.S. Clearing Corporation.
Inquiries by stockholders of the Fund should be addressed to the
Fund at the address stated on the cover page of this Prospectus.
<PAGE>
SHARE PURCHASE APPLICATION
Please make checks payable to:The Internet Fund, Inc.
473 Martling Ave.
Tarrytown, NY 10591
Amount of Investment attached $ (Minimum purchase $1,000)
All applications are accepted in New York and under New York laws.
Instructions
Fill in where applicable
Do not use this form to open an IRA account
- -----------------------------------------------------------------------------
Individual
Use Line 1
1. Individual
First Name Initial Last Name Social Security Number
- -----------------------------------------------------------------------------
Joint Account
Use Lines 1 and 2
2. Joint Tenant
First Name Initial Last Name Social Security Number
- -----------------------------------------------------------------------------
Gift to Minors
Use Line 3
3. Uniform Gift to Minors
Custodian's Name (Only one allowed by law) Minor's State of Residence
Minor's Name (Only one allowed by law) Minor's Social Security Number
- --------------------------------------------------------------------------------
Other
(Corporations, Trusts,
Plans, Associations and
Partnerships)
Use Line 4
4. Tax Identification Code
Full Address
Number and Street City State Zip Code
- --------------------------------------------------------------------------------
Citizen of: United States Other (Specify)
- --------------------------------------------------------------------------------
Home Telephone No. Busines Telephone No.
- --------------------------------------------------------------------------------
Signature Date
Individual (or Custodian) Corporate Officer or Trustee
Joint Tenant ( if any) Title of Corporate Officer or Trustee
The undersigned certify that I / we have full authority and legal capacity to
purchase shares of the Fund and affirm that I / we have received a current
Prospectus for the Interent Fund and agree to be bound by its terms.
DIVIDEND DIRECTION
Reinvest all distributions Pay in cash
- --------------------------------------------------------------------------------
<PAGE>
Form W-9
(October 1983)
Department of Treasury
Internal Revenue Service
Name as shown on account (if joint account, give joint owner's name)
Address
City, State and Zip code
Part I. - Taxpayer Identification Number Part II. -
Backup
Witholding
Enter the taxpayer identification number in the OR
appropriate box. For most individual taxpayers,
this is the social security number.
Certification. - Under the penalties of perjury, I certify that the
information provided on this form is true, correct and complete
Signature: Date:
- -------------------------------------------------------------------------------
THE INTERNET FUND, INC.
473 Martling Ave,
Tarrytown, NY 10591
(914) 631-9030
(888) FUND-WWW
October 17, 1996
STATEMENT OF ADDITIONAL INFORMATION
This Statement is not a prospectus but should be read in conjunction
with the Fund's current Prospectus dated October 17, 1996. To obtain the
Prospectus, please write the Fund or call either of the telephone numbers
that are shown above.
The Internet Fund, Inc. (the "Fund") is a diversified, open-end
management investment company. The Fund's primary investment
objective is long-term growth of capital, a goal it seeks by investing
primarily in the common stocks and securities convertible into common
stocks of domestic and foreign companies engaged in the Internet and
Internet-related activities. Current income is a secondary objective. No
assurance can be given that the Fund will realize its objectives. The
Prospectus sets forth certain information about The Internet Fund, Inc., that
a prospective investor should know before investing. Investors should read
and retain this Prospectus for future reference.
<PAGE>
THE INTERNET FUND, INC.
THE FUND. . . . . . . . . . . . . . . . . . . . . . . . . .2
INVESTMENT OBJECTIVES AND POLICIES. . . . . . . . . . . . .2
OTHER INVESTMENTS AND INVESTMENT PRACTICES. . . . . . . . .3
INVESTMENT RESTRICTIONS . . . . . . . . . . . . . . . . . .5
INVESTMENT ADVISER. . . . . . . . . . . . . . . . . . . . .6
OFFICERS AND DIRECTORS OF THE FUND. . . . . . . . . . . . .7
CAPITALIZATION. . . . . . . . . . . . . . . . . . . . . . .8
PURCHASING SHARES . . . . . . . . . . . . . . . . . . . . .8
RETIREMENT PLANS. . . . . . . . . . . . . . . . . . . . . .9
REDEMPTION OF SHARES. . . . . . . . . . . . . . . . . . . 10
BROKERAGE . . . . . . . . . . . . . . . . . . . . . . . . 10
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . 11
THE FUND
The Internet Fund, Inc. (also referred to as the "Fund" was incorporated
in New York on March 12, 1996. The Fund's registered office is in
Tarrytown, NY; mail may be addressed to 473 Martling Avenue,
Tarrytown, NY 10591.
INVESTMENT OBJECTIVES AND POLICIES
The Fund's primary investment objective is long-term growth of capital,
a goal it seeks by investing primarily in common stocks and securities of
domestic companies engaged in the Internet and Internet-related activities
or services. Current income is a secondary objective. No assurance can be
given that the Fund will realize its objectives. See "Taxes."
Except during temporary defensive periods, not less than 80% of the
Fund's total assets will be invested in the securities of companies
engaged in Internet and Internet-related activities, and, except during
temporary defensive periods, the Fund would normally expect at least 90%
of its total assets to be so invested. As a diversified investment company,
at least 75% of the Fund's total assets are required to be invested in
securities limited in respect of any one issuer to not more than 5% of the
Fund's total assets and to not more than 10% of the issuer's voting
securities.
The Adviser believes that favorable investment opportunities are offered
by companies that provide products or services designed for the Internet.
The Internet is a global collection of connected computers that allows
commercial and professional organizations, educational institutions,
government agencies, and consumers to communicate electronically, access
and share information, and conduct business. The Adviser believes that the
dramatic growth of Internet activity will provide many investment
opportunities. Accordingly, the Fund seeks to invest in common stock, and
other securities, of companies whose research and development efforts, in
the opinion of the Adviser, may result in higher stock values.
<PAGE>
An important yardstick the Adviser employs in making portfolio
selections, in addition to evaluating trends in corporate revenues, earnings,
and dividends, is the amount of capital currently being expended on
research and development, and the nature thereof. The Adviser believes
that dollars invested in research and development today frequently have
significant bearing on future growth.
Portfolio securities generally will be selected from companies in the
following groups:
Internet Access Providers - Companies that provide users with access
to the Internet.
Software Developers - Companies that develop software tools to access
the Internet, to facilitate information distribution and gathering, to secure
Internet-based transactions, etc.
Hardware Manufactures - Companies that develop and manufacture
communication equipment, such as modems, switches, and routers, used to
access the Internet, and those that develop and manufacture workstations
and personal computers used to access the Internet and provide Internet
services.
Content Developers - Companies that supply information and
entertainment content, such as games, music, and video, on the Internet.
Publishing Companies - Companies that provide information about the
Internet through publication of books, magazines, and newspapers.
OTHER INVESTMENTS AND INVESTMENT
PRACTICES
Due to the changing nature of the Internet, the national economy and
market conditions, the Fund may, as a temporary defensive measure, invest
without limitation as to the amount in money market securities with a rating
of A2-P2 or higher.
In order to have funds available for redemption and investment
opportunities, the Fund may also hold a portion of its portfolio in cash or
U.S. short-term money market instruments. Certificates of deposit
purchased by the Fund will be those of U.S. banks having total assets at the
time of purchase in excess of $1 billion, and bankers' acceptances
purchased by the Fund will be guaranteed by U.S. or foreign banks having
total assets at the time of purchase in excess of $1 billion. The Fund
anticipates that not more than 10% of its total assets will be so invested in
money market instruments or held in cash at any given time, except when
the Fund is in a temporary defensive posture. The Fund may invest in debt
securities convertible into common stocks. Debt purchased by the Fund will
consist of obligations of medium-grade or higher, having at least adequate
capacity to pay interest and repay principal. Non-convertible debt
obligations will be rated BBB or higher by S&P, or Baa or higher by
Moody's. Convertible debt obligations will be rated B or higher by S&P or
B or higher by Moody's. Securities rated Baa by Moody's are considered
by Moody's to be medium-grade securities and have adequate capacity to
pay principal and interest.
<PAGE>
Bonds in the lowest investment grade category (BBB) have speculative
characteristics, with changes in the economy or other circumstances more
likely to lead to a weakened capacity of the bonds to make principal and
interest payments than would occur with bonds rated in higher categories.
Securities rated B are referred to as "high-risk" securities, generally lack
characteristics of a desirable investment, and are deemed speculative with
respect to the issuer's capacity to pay interest and repay principal over a
long period of time. See "Appendix" of the Statement of Additional
Information" for a description of debt security ratings.
The fixed-income securities in which the Fund may invest are generally
subject to two kinds of risk: credit risk and market risk. Credit risk relates
to the ability of the issuer to meet interest and principal payments, as they
come due. The ratings given a security by Moody's and S&P provide a
generally useful guide as to such credit risk. The lower the rating given a
security by such rating service, the greater the credit risk such rating service
perceives to exist with respect to such security. Increasing the amount of
Fund assets invested in unrated or lower-grade securities, while intended
to increase the yield produced by those assets, also will increase the credit
risk to which those assets are subject.
Market risk relates to the fact that the market values of securities in
which the Fund may invest generally will be affected by changes in the
level of interest rates. An increase in interest rates will tend to reduce the
market values of such securities, whereas a decline in interest rates will
tend to increase their values. Medium- and lower-rated securities (Baa or
BBB and lower) and non-rated securities of comparable quality tend to be
subject to wilder fluctuations in yields and market values than higher-rated
securities. Medium-rated securities (those rated Baa or BBB) have
speculative characteristics while lower-rated securities are predominantly
speculative. The Fund is not required to dispose of debt securities whose
ratings are downgraded below these ratings subsequent to the Fund's
purchase of the securities. Relying in part on ratings assigned by credit
agencies in making investments will not protect the Fund from the risk that
fixed-income securities in which the Fund invests will decline in value,
since credit ratings represent evaluations of the safety of principal, and
dividend and interest payments on preferred stocks and debt securities, not
the market values of such securities, and such ratings may not be changed
on a timely basis to reflect subsequent events.
At no time will the Fund have more than 5% of its total assets invested
in any fixed-income securities that are unrated or are rated below
investment grade either at the time of purchase or as a result of a reduction
in rating after purchase.
In order to qualify for the beneficial tax treatment afforded regulated
investment companies, and to be relieved of Federal tax liabilities, the Fund
must distribute substantially all of its net income to stockholders generally
on an annual basis. Thus, the Fund may have to dispose of portfolio
securities under disadvantageous circumstances to generate cash or borrow
cash in order to satisfy the distribution requirement.
<PAGE>
The Fund does not trade in securities for short-term profits but, when
circumstances warrant, securities may be sold without regard to the length
of time they have been held.
INVESTMENT RESTRICTIONS
The Fund is subject to certain investment restrictions described here,
which may be changed only with the approval of the holders of a majority
of the Fund's outstanding shares.
1. The Fund will not act as underwriter for securities of other
issuers except insofar as the Fund may be deemed an
underwriter in selling its own portfolio securities.
2. The Fund will not make loans. The purchase of a portion of a
readily marketable issue of publicly distributed bonds,
debentures or other debt securities will not be considered the
making of a loan.
3. With respect to 75% of its total assets, the Fund will not invest
more than 5% of its assets in the securities of any one issuer
(except securities issued or guaranteed by the U.S. Government,
its agencies, and instrumentalities).
4. With respect to 75% of its total assets, the Fund will not invest
in the securities of any issuer if as a result the Fund holds more
than 10% of the outstanding securities or more than 10% of the
outstanding voting securities of such issuer.
5. The Fund will not borrow money or pledge, mortgage, or
hypothecate its assets except to facilitate redemption requests
that might otherwise require untimely disposition of portfolio
securities and then only from banks and in amounts not
exceeding the lesser of 10% of its total assets valued at cost or
5% of its total assets valued at market at the time of such
borrowing, pledge, mortgage, or hypothecation and except that
the Fund may enter into futures contracts and related options.
6. The Fund will not invest more than 10% of the value of its net
assets in illiquid securities, restricted securities, and other
securities for which market quotations are not readily available.
7. The Fund will not invest in the securities of any one industry,
except the Internet and Internet-related industries (and except
securities issued or guaranteed by the U.S. Government, its
agencies, and instrumentalities) if as a result more than 20% of
the Fund's total assets would be invested in the securities of
such industry. Except during temporary defensive periods, not
less than 80% of the Fund's total assets will be invested in the
securities of companies engaged in Internet and
Internet-related activities, and, except during temporary
defensive periods, the Fund would normally expect at least 90%
of its total assets to be so invested.
<PAGE>
8. The Fund will not purchase or sell commodities or commodity
contracts, or invest in oil, gas or mineral exploration or
development programs or real estate except that the Fund may
purchase and sell securities of companies that deal in oil, gas,
or mineral exploration or development programs or interests
therein.
9. The Fund will not issue senior securities.
If a percentage limitation is satisfied at the time of investment, a later
increase or decrease in such percentage resulting from a change in value in
the Fund's portfolio securities will not constitute a violation of such
limitation.
INVESTMENT ADVISER
Kinetics Asset Management, Inc., is a New York corporation that acts
as an Investment Adviser to the Fund. Leonid Polyakov is the president of
Kinetics Asset Management, Inc. Mr. Polyakov has more than 15 years
experience in a variety of professional and managerial positions in the
software industry. Mr. Francis J. Alexander is an officer of Kinetics Asset
Management, Inc., and a portfolio manager. Mr. Alexander has more than
20 years of investment experience as a portfolio manager.
On April 5, 1996, the Board of the Directors of the Fund approved a
management and advisory contract with the Kinetics Asset Management,
Inc. This Agreement will continue on a year-to-year basis provided that
specific approval is voted at least annually by the Board of Directors of the
Fund or by the vote of the holders of a majority of the outstanding voting
securities of the Fund, but, in either event, it must also be approved by a
majority of the directors of the Fund who are neither parties to the
agreement nor interested persons as defined in the Investment Company
Act of 1940 at a meeting called for the purpose of voting on such approval.
Under the Agreement, Kinetics Asset Management, Inc., will furnish
investment advice to the Directors of the Fund on the basis of a continuous
review of the portfolio and recommend to the Fund when and to what
extent securities should be purchased or disposed. The Agreement may be
terminated at any time, without the payment of any penalty, by the Board
of Directors or by vote of a majority of the outstanding voting securities of
the Fund. Ultimate decisions as to the investment policy and as to
individual purchases and sales of securities are made by the Fund's officers
and directors. For these services the Fund has agreed to pay to Kinetics
Asset Management, Inc., a fee of 1.25% per year on the net assets of the
Fund. All fees are computed on the average daily closing net asset value of
the Fund and are payable monthly. The fee is higher than the fee paid by
most other funds. Not withstanding, the Investment Advisor has agreed to
absorb all expenses incurred by the Fund until 15 days after the date the
Fund became operational.
<PAGE>
Pursuant to its contract with the Fund, the Investment Advisor is
required to render research, statistical, and Advisory services to the Fund;
to make specific recommendations based on the Fund's investment
requirements; and to pay the salaries of those of the Fund's employees who
may be officers or directors or employees of the Investment Advisor. Fees,
if any, of the custodian, registrar, and transfer agents shall be paid by the
Fund. The Fund pays all other expenses, including fees and expenses of
directors not affiliated with the Advisor; legal and accounting fees; interest,
taxes, and brokerage commissions, record keeping and the expense of
operating its offices. The Investment Advisor has paid the initial
organizational costs of the Fund and will reimburse the Fund for any and
all losses incurred because of purchase reneges.
OFFICERS AND DIRECTORS OF THE FUND
Officers and directors of the Fund, together with their addresses and
principal occupations during the past five years, are:
Name and Address Position Principal Occupation Past Compensa-
Five Years tion
Leonid Polyakov President President $0
473 Martling Ave. Interested Director The Internet Fund, Inc.
Tarrytown, NY 10591 Manager of Special Projects
Alltel Information Services
Francis J. Alexander Vice President Vice President $0
270 Greenwich Ave. Interested Director Portfolio manager
Greenwich, CT 06830 Secretary The Internet Fund, Inc.
Portfolio Manager
Alexander Capital
Management, Inc.
Jeffery B. Kelvin Non-interested President $0
14 Fox Hunt Circle Director Financial Planners Assistants
Plymouth Meeting,
PA 19462
Kathleen Campbell Non-interested Councellor-at-Law $99
13 Elm Road Director
Scarsdale, NY 10583
Douglas Cohen, CPA Non-interested Certified Public Accountant $99
86 Samuel Street Director
Ponkonkoma, NY 11779
The fund does not compensate its officers and directors who are
affiliated with the Investment Adviser except as they may benefit through
payment of the Advisory fee.
CAPITALIZATION
Description of Common Stock: The authorized capitalization of the
Fund consists of 10,000,000 shares of common stock of $0.001 par value
per share. Each share has equal dividend, distribution, and liquidation
rights. There are no conversion or preemptive rights applicable to any
shares of the Fund. All shares issued are fully paid and non-accessible.
Voting Rights: Each holder of common stock has one vote for each
share held. Voting rights are non-cumulative, which means that the holders
of a majority of shares of common stock can elect all directors of the Fund
if they so choose, and the holders of the remaining shares will not be able
to elect any person as a director.
PURCHASING SHARES
Shares of the Fund are sold in a continuous offering and may be
purchased on any business day though authorized investment dealers or
directly from the Fund's Distributor. Except for the Fund itself, only the
Distributor and investment dealers that have a sales agreement with the
Distributor are authorized to sell shares of the Fund. For further
information, reference is made to the caption "Distributor" in the Fund's
Statement of Additional Information.
<PAGE>
Shares of the Fund are sold at net asset value, without a sales charge,
and will be credited to a stockholder's account at the net asset value next
computed after an order is received. The minimum initial investment is
$1,000, and the minimum investment for subsequent purchases is $100.
The Fund does not intend to issue stock certificates representing shares
purchased. The Fund's management reserves the right to reject any
purchase order if, in its opinion, it is in the Fund's best interest to do so.
An account may be opened by mailing a check or other negotiable bank
draft (payable to The Internet Fund, Inc.) for $1,000 or more together with
the completed investment application form to the Fund. Subsequent
investments in the amount of $100 or more may be mailed directly to the
Fund. All such investments are effected at the net asset value of Fund
shares next computed following receipt of payment by the Fund.
Confirmations of the opening of an account and of all subsequent
transactions in the account are forwarded by the Fund to the stockholder's
address of record.
At various times the Distributor may implement programs under which
a dealer's sales force may be eligible to win nominal awards for certain
sales efforts or recognition program conforming to criteria established by
the Distributor, or participate in sales programs sponsored by the
Distributor. In addition, the Adviser, the Administrator, and/or the
Distributor in their discretion may from time to time, pursuant to objective
criteria established by the Adviser, the Administrator, and/or the
Distributor, sponsor programs designed to reward selected dealers for
certain services or activities that are primarily intended to result in the sale
of shares of the Fund. These program will not change the price you pay for
your shares or the amount that the Fund will receive from such sale.
Payment for all orders to purchase Fund shares must be received by the
Fund's Transfer Agent within three business days after such orders are
placed.
Investing Through Authorized Dealers
If any authorized dealer receives an order of at least $1,000, the dealer
may contact the Fund directly. Orders received by dealers by the close of
trading on the New York Stock Exchange on a business day that are
transmitted to the Fund by 4:00 p.m. EST on that day will be effected at the
net asset value per share determined as of the close of trading on the New
York Stock Exchange on that day. Otherwise, the orders will be effected at
the next determined net asset value. It is the dealer's responsibility to
transmit orders so that they will be received by the Distributor before 4:00
p.m. EST.
After each investment, the stockholder and the authorized investment
dealer will receive confirmation statements of the number of shares
purchased and owned.
<PAGE>
Telephone Purchase Authorization (Investing by Phone)
Stockholders who have completed the Telephone Purchase
Authorization section of the Investment Application Form may purchase
additional shares by telephoning the Fund at (914) 631-9030, or toll-free at
(888) FUND-WWW. The minimum telephone purchase is $100 and the
maximum is the greater of $100 or three times the net asset value of shares
(for which certificates have not been issued) held by the stockholder on the
day preceding such telephone purchase for which payment has been
received. The telephone purchase will be effected at the net asset value
next computed after receipt of the call by the Fund. Payment for the
telephone purchase must be received by the Fund within three business
days after the order is placed. If payment is not received within three
business days after the order is placed, the stockholder will be liable for all
losses incurred as a result of the purchases.
RETIREMENT PLANS
Individual Retirement Account: Persons who earn compensation and are
not active participants (and who do not have a spouse who is an active
participant) in an employer maintained retirement plan may establish
Individual Retirement Accounts (IRA) using Fund shares. Annual
contributions, limited to the lesser of $2,000 or 100% of compensation, are
tax deductible from gross income to the degree permitted by the Internal
Revenue Service's regulations. This IRA deduction is also retained for
individual taxpayers and married couples with adjusted gross incomes
within certain specified limits. All individuals may make nondeductible
IRA contributions to separate accounts to the extent that they are not
eligible for a deductible contribution.
Earnings under the IRA are reinvested and are tax-deferred until
withdrawals begin. The maximum annual contribution may be increased to
$2,250 if you have a spouse who earns no compensation during the taxable
year. A separate and independent spousal IRA must be maintained.
You may begin to make non-penalty withdrawals as early as age 59
or as late as age 70. In the event of death or disability, withdrawals may
be made before age 59 without penalty.
A Disclosure Statement is required by U.S. Treasury Regulations. This
Statement describes the general provisions of the IRA and is forwarded to
all prospective IRAs. There is no fee to open and there is a $10 annual fee
charged to maintain an Internet Fund IRA. All IRAs may be revoked within
7 days of their establishment with no penalty.
REDEMPTION OF SHARES
The Fund will redeem all or any part of the shares of any shareholder
who tenders a request for redemption. In either case, proper endorsements
guaranteed either by a national bank or a member firm of the New York
Stock Exchange will be required unless the shareholder is known to
management.
<PAGE>
The redemption price is the net asset value per share next determined
after notice is received by the Fund for redemption of shares. The proceeds
received by the shareholder may be more or less than his cost of such
shares, depending upon the net asset value per share at the time of
redemption and the difference should be treated by the shareholder as a
capital gain or loss for federal income tax purposes.
Payment by the Fund will ordinarily be made within three business days
after tender. The Fund may suspend the right of redemption or postpone the
date of payment if: The New York Stock Exchange is closed for other than
customary weekend or holiday closings, or when trading on the New York
Stock Exchange is restricted as determined by the Securities and Exchange
Commission or when the Securities and Exchange Commission has
determined that an emergency exists, making disposal of fund securities or
the valuation of net assets not reasonably practicable. The Fund intends to
make payments in cash; however, the Fund reserves the right to make
payments in kind.
BROKERAGE
The Fund requires all brokers to effect transactions in portfolio
securities in such a manner as to get prompt execution of the orders at the
most favorable price.
The Fund selects brokers who, in addition to meeting primary
requirements of execution and price, may furnish statistical or other factual
information and services, which, in the opinion of the management, are
helpful or necessary to the Fund's normal operations. Information or
services may include economic studies, industry studies, statistical analysis,
corporate reports, or other forms of assistance to the Fund or its Adviser.
No effort is made to determine the value of these services or the amount
they might have reduced expenses of the Adviser.
Other than set forth above, the Fund has no fixed policy, formula,
method, or criteria that it uses in allocating brokerage business to brokers
furnishing these materials and services. The Board of Directors evaluates
and reviews the reasonableness of brokerage commissions paid
semiannually.
TAXES
Under provisions of Sub-Chapter M of the Internal Revenue Code of
1986 as amended, the Fund, by paying out substantially all of its investment
income and realized capital gains, has been and intends to continue to be
relieved of federal income tax on the amounts distributed to shareholders.
In order to qualify as a "regulated investment company" under Sub-Chapter
M, at least 90% of the Fund's income must be derived from dividends,
interest and gains from securities transactions, no more than 30% of the
Fund's profits may be derived from sales of securities held less than three
months, and no more than 50% of the Fund's assets may be in security
holdings that exceed 5% of the total assets of the Fund at the time of
purchase.
<PAGE>
Distribution of any net long-term capital gains realized by the Fund will
be taxable to the shareholder as long-term capital gains, regardless of the
length of time Fund shares have been held by the investor. All income
realized by the Fund, including short-term capital gains, will be taxable to
the shareholder as ordinary income. Dividends from net income will be
made annually or more frequently at the discretion of the Fund's Board of
Directors. Dividends received shortly after purchase of shares by an
investor will have the effect of reducing the per share net asset value of his
shares by the amount of such dividends or distributions and, although in
effect a return of capital, are subject to federal income taxes.
The Fund is required by federal law to withhold 31% of reportable
payments (which may include dividends, capital gains, distributions, and
redemptions) paid to shareholders who have not complied with IRS
regulations. In order to avoid this withholding requirement, you must certify
on a W-9 tax form supplied by the Fund that your Social Security or
Taxpayer Identification Number provided is correct and that you are not
currently subject to back-up withholding, or that you are exempt from back-
up withholding.
<PAGE>
FORM N-1A
PART C - OTHER INFORMATION
Contents Page #
1. Financial Statements & Exhibits ............................. 1
2. Control Persons ..................................................1
3. Number of Shareholders .......................................... 1
4. Indemnification ..................................................1
5. Activities of Investment Advisor ............................. 1
6. Principal Underwriters ...........................................1
7. Location of Accounts & Records ............................. 1
8. Management Services ..............................................1
9. Distribution Expenses ............................................1
10. Undertakings .....................................................1
11. Auditor's Consent ................................................2
12. Signatures .......................................................3
<PAGE>
1.
Item 24: a. Financial Statements
The Internet Fund, Inc.
(A Development Stage Company)
Statement of Assets and Liabilities
July 15,1996
Assets
Cash $100,000
Liabilities
Liabilities $ -
Net Assets
Net assets (equivalent to $5.00 per share $100,000
based on 20,000 shares outstanding,
10,000,000 authorized, $.001 par value)
Composition of net assets:
Shares of common stock $20
Paid in capital $99,980
NET ASSETS, JULY 15, 1996 $100,000
See notes to financial statement.
Lilling & Company
Certified Public Accountants
SIGNATURES
<PAGE>
Independent Auditors' Report
To the Shareholders and Board of Directors of The Internet Fund, Inc.
We have audited the accompanying statement of assets and liabilities of
The Internet Fund, Inc. (a development stage company) as of July 15, 1996.
This financial statement is the responsibility of the fund's management. Our
responsibility is to express an opinion on this financial statement based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform audit to obtain
reasonable assurance whether the financial statements 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 accounts owned as of July 15, 1996 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the financial position of The Internet Fund, Inc. as
of July, 15, 1996, in conformity with generally accepted accounting
principles.
Lilling & Company
Certified Public Accountants
SIGNATURES
July 22, 1996
<PAGE>
The Internet Fund, Inc.
(A Development Stage Company)
Notes to Financial Statements
July 15, 1996
Note 1. Organization and Significant Accounting Policies
Organization.
The Internet Fund, Inc. (The "Fund") currently has an application
pending for registration under the Investment Company Act of 1940, as
amended, as an open-end management investment company. As of July 15,
1996, the Fund is a development stage company as operations have not
commenced. The financial statement has been prepared in conformity with
generally accepted accounting standards. Significant accounting policies of
the Fund are as follows:
Security valuations
The Fund values securities for which exchange quotations are readily
available at the last recorded sales price, or if the security is not traded on
an exchange, at the closing bid price. Short term investments are valued at
cost, approximating market value.
Income taxes
The Fund's policy is to comply with the requirements of the Internal
Revenue Code that are applicable to regulated investment companies and
to distribute all of its taxable income to its shareholders. There, no
provision for income taxes will be required.
Note 2. Capital Shares Transactions
Transactions in capital stock as of July 15, 1996 are as follows:
Capital Stock Paid in Capital Total
Shares issued
(20,000) $20 $99,980 $100,000
Note 3. Fees and Other Related Party Transactions
The Fund has an investment advisory agreement with Kinetics Asset
Management, Inc. (Kinetics), whereby Kinetics will receive management
and administration fees. Mr. Leonid Polyakov, the president of the Fund,
is also the president of Kinetics.
<PAGE>
b. Exhibits
(3.I) Articles of Incorporation
(3.ii) By-Laws
(10.I) Investment Advisory Contract
(10.ii) Reimbursement Agreements with Officers and/or Directors
(99.1) Opinion of Counsel concerning Fund Securities
All exhibits are incorporated by reference to pre-effective
amendment no. 2
of the Securities Act of 1933 except exhibit (10.ii) which is attached.
2. Item 25: Control Persons - Not applicable
3. Item 26: Number of Shareholders - There is one shareholder of the
Internet Fund, Inc., as of this filing.
4. Item 27: Indemnification - Insofar as indemnification for liability
arising under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant, the registrant has been
advised that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer, or controlling person of
the registrant in the successful defense of any action, suit, or proceeding)
is asserted by such director, officer, or controlling person in connection
with the securities being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
5. Item 28: Activities of Investment Advisor - Kinetics Asset
Management's activity at the present time is performance on its Investment
Advisory Contracts currently effective with the Internet Fund, Inc.
6. Item 29: Principal Underwriter - The Fund acts as its own
underwriter.
7. Item 30: Location of Accounts & Records - All fund records are held
at corporate headquarters: 473 Martling Avenue, Tarrytown, NY 10591.
8. Item 31: Management Services - Not applicable
9. Distribution Expenses - The fund currently bears no distribution
expenses.
10. Item 32: Undertakings - The fund will file a post-effective
amendment, within four to six months from the effective date of the Fund's
Registration Statement under the Securities Act of 1933. The Fund will call
a meeting of shareholders, if requested to do so by holders of at least 10 per
cent of the Fund's outstanding shares, for the purpose of voting upon
question of removal of a trustee or trustees and to assist in communications
with other shareholders as required by the Investment Company Act of
1940.
<PAGE>
Lilling & Company
Certified Public Accountants
Ten Cutter Mill Road
Great Neck, NY 11021
CONSENT OF INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS
We consent to the inclusion by reference in Pre-Effective Amendment No. 2
to the Registration Statement on Form N-1A of The Internet Fund,
Inc. of our report dated July 23, 1996, on our examination of the Financial
Statements of such Company. We also consent to the reference to our firm
in such Pre-Effective Amendment.
Lilling & Company
(Signature)
July 22, 1996
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Internet Fund, Inc., certifies that
it meets all of the requirements for effectiveness of this Registration
Statement and has duly caused this amendment to the Registration
Statement to be signed on its behalf by the undersigned, hereunto duly
authorized, in the City of Tarrytown, on the 8th day of April, 1996.
<PAGE>
THE INTERNET FUND, INC.
Leonid Polyakov,
President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
Name Title Signatures Date
Leonid Polyakov President
Francis J. Alexander Vice President
Jeffery B. Kelvin Non-interested
Director
Kathleen Campbell Non-interested
Director
Douglas Cohen, CPA Non-interested
Director
EXHIBIT - 3 i
Filed with the Department of State on March 12, 1996
New York State
Department of State
Division of Corporations and State Records
Albany, NY 12231
Certificate of Incorporation
Of
The Internet Fund, Inc.
Under Section 402 of the Business Corporation Law
First: The name of the corporation is: Internet Fund, Inc.
Second: This corporation is formed to engage in any lawful act or activity
for which a corporation may be organized under the Business Corporation Law,
provided that it is not formed to engage in any act or activity requiring
the consent or approval of any state official, department, board, agency or
other body.
Third: The county within this state, in which the office of the corporation
is to be located is: Westchester
Fourth: The total number of shares which the corporation shall have authority
to issue and a statement of the par value of each share or a statement that
the shares are without par value are: 10,000,000 authorized with a par value
of $0.001
Fifth: The secretary of state is designated as agent of the corporation upon
whom process against the corporation may be served. The post office address
to which the secretary of state shall mail a copy of any process accepted
on behalf of the corporation is:
473 Martling Avenue
Tarrytown, NY 10591
Sixth: (optional) The name and steet address in this state of the registered
agent upon whom process against the corporation may be served is:
Seventh: (optional - if this provision is used, a specific date must be state
which is not before, nor more than 90 days after the date of filing) The date
corporate existence shall begin, if other than the date of filing, is:
IN WITNESS WHEREOF, this certificate has been subscribed this 8th day of March
1996, by the undersigned, who affirms that the statements made herein are true
under the penalties of perjury.
Leonid Polyakov
_______________
Signature
473 Martling Avenue
Tarrytown, NY 10591
EXHIBIT 3 ii
THE INTERNET FUND, INC. BY-LAWS
ARTICLE I - OFFICES
Section I. The principal office of the Corporation shall be in the City of
Tarrytown, County of Westchester, State of New York. The Corporation
shall also have offices at such other places as the Board of Directors may
from time to time determine and the business of the Corporation may
require.
ARTICLE II - STOCKHOLDERS AND STOCK CERTIFICATES
Section 1. The Fund shall not issue stock certificates but use the book
entry system for its shareholders.
Section 2. Shares of the capital stock of the Corporation shall be
transferable only on the books of the Corporation by the person in whose
name such shares are registered, or by his duly authorized transfer agent.
In case of transfers by executors, administrators, guardians, or other legal
representatives, duly authenticated evidence of their authority shall be
produced, and may be required to be deposited and remain with the
corporation or its duly authorized transfer agent. No transfer shall be made
unless and until the certificate issued to the transferor shall be delivered to
the Corporation, or its duly authorized transfer agent, properly endorsed.
Section 3. The Corporation shall be entitled to treat the holder of record
of any share or shares of its capital stock as the owner thereof, and
accordingly, shall not be bound to recognize any equitable or other claim
to or interest in such share or shares on the part of any other person,
whether or not the Corporation shall have express or other notice thereof,
except as otherwise provided by the laws of the State of New York.
ARTICLE III - MEETING OF STOCKHOLDERS
Section 1. The annual meeting of the stockholders of the Corporation for
the election of directors and for the transaction of general business shall be
held at the principal office of the Corporation, or at such other place within
or without the State of New York as the Board of Directors may from time
to time prescribe, on the third Tuesday in August at 8:00 PM in each year,
unless that day shall be duly designated as a legal holiday, in which event
the annual meeting of the stockholders shall be held on the first day
following that is not a legal holiday. The place of the annual meeting of the
stockholders of the Corporation shall not be changed within sixty days next
before the day on which such meeting is to be held. A notice of any change
in the place of the annual meeting shall be given to each stockholder twenty
days before the election is held.
<PAGE>
Section 2. Special meetings of the stockholders may be called at any
time by the President, and shall be called at any time by the President, or
by the Secretary, upon the written request of a majority of the members of
the Board of Directors, or upon the written request of the holders of a
majority of the shares of the capital stock of the Corporation issued and
outstanding and entitled to vote at such meeting. Upon receipt of a written
request from any person or persons entitled to call a special meeting, which
shall state the object of the meeting, it shall be the duty of the President,
or, in his absence, the Secretary, to call such meeting to be held not less than
ten days nor more than sixty days after the receipt of such request. Special
meetings of the stockholders shall be held at the principal office of the
Corporation, or at such other place within or without the State of New York
as the Board of Directors may from time to time direct, or at such place
within or without the State of New York as shall be specified in the notice
of such meeting.
Section 3. Notice of the time and place of the annual or any special
meeting of the stockholders shall be given to each stockholder entitled to
notice of such meeting at least ten days prior to the date of such meeting.
In the case of special meetings of the stockholders, the notice shall specify
the object or objects of such meeting, and no business shall be transacted
at such meeting other than that mentioned in the call.
Section 4. The Board of Directors may close the stock transfer books of
the corporation for a period not exceeding sixty days preceding the date of
any meeting of stockholders, or the date for payment of any dividends, or
the date for the allotment of rights, or the date when any change or
conversion or exchange of capital stock shall go into effect, or for a period
of not exceeding sixty days in connection with the obtaining of the consent
of stockholders for any purpose; provided, however, that in lieu of closing
the stock transfer books as aforesaid, the Board of Directors may fix in
advance a date, not exceeding sixty days preceding the date of any meeting
of stockholders, or the date for the payment of any dividend, or the date for
the allotment of rights of the date when any change or conversion or
exchange of capital stock shall go into effect, or a date in connection with
obtaining such consent, as a record date for the determination of the
stockholders entitled to notice of, and to vote at, such meeting and any
adjournment thereof, or to receive payment of such dividend, or to receive
such allotment of rights, or to exercise such rights, or to give such consent,
as the case may be, notwithstanding any transfer of any stock on the books
of the Corporation after any such record date as aforesaid.
Section 5. At least ten days before every election of directors of the
Corporation, the Secretary shall prepare and file in the office where the
election is to be held a complete list of the stockholders entitled to vote at
the ensuing election, arranged in alphabetical order, with the residence of
each stockholder and the number of voting shares held by him, and such list
shall at all times during the usual hours for business and during the whole
time of said election, be open to the examination of any stockholder.
<PAGE>
Section 6. At all meetings of the stockholders, a quorum shall consist of
the persons representing a majority of the outstanding shares of the capital
stock of the Corporation entitled to vote at such meeting. In the absence of
a quorum no business shall be transacted except that the stockholders
present in person or by proxy and entitled to vote at such meeting shall have
the power to adjourn the meeting from time to time without notice other
than announcement at the meeting until a quorum shall be present. At any
such adjourned meeting at which a quorum shall be present, any business
may be transacted that might have been transacted at the meeting on the
date specified in the original notice. If a quorum is present at any meeting
the holders of the majority of the shares of the Corporation issued and
outstanding and entitled to vote at the meeting who shall be present in
person or by proxy at the meeting shall have the power to act upon all
matters properly before the meeting, and shall also have power to adjourn
the meeting to any specific time or times, and no notice of any such
adjourned meeting need be given to stockholders absent or otherwise.
Section 7. At all meetings of the stockholders the following order of
business shall be substantially observed, as far as it is consistent with the
purpose of the meeting:
Election of Directors
Ratification of Election of Auditors
New Business
Section 8. At any meeting of the stockholders of the Corporation every
stockholder having the right to vote shall be entitled, in person or by proxy
appointed by an instrument in writing subscribed by such stockholder and
bearing a date not more than three years prior to said meeting unless such
instrument provides for a longer period, to one vote for each share of stock
having voting power registered in his name on the books of the corporation.
ARTICLE IV - DIRECTORS
Section 1. The Board of Directors shall consist of not less than three nor
more than twelve members, who may be any persons, whether or not they
hold any shares of the capital stock of the corporation.
Section 2. The directors shall be elected annually by the stockholders of
the Corporation at their annual meeting, and shall hold office for the term
of one year and until their successors shall be duly elected and shall qualify.
Section 3. The Board of Directors shall have the control and
management of the business of the Corporation, and in addition to the
powers and authority by these by-laws expressly conferred upon them, may,
subject to the provisions of the laws of the State of New York and of the
Certificate of Incorporation, exercise all such powers of the Corporation
and do all such acts and things as are not required by law or by the
Certificate of Incorporation to be exercised or done by the stockholders.
Section 4. If the office of any director becomes or is vacant by reason
of death, resignation, removal, disqualification, or otherwise, the remaining
directors may by vote of a majority of said directors choose a successor or
successors who shall hold office for the unexpired term; provided that
vacancies on the Board of Directors may be so filled only if, after the filling
of the same, at least two-thirds of the directors then holding office would
be directors elected to such office by the stockholders at a meeting or
meetings called for the purpose. In the event that at any time less than a
majority of the directors were so elected, a meeting of the Board will be
called as promptly as possible and in any event within sixty days for the
purpose of electing directors to fill any vacancy that has not been filled by
the directors in office. Any other vacancies in the Board of Directors not
filled by the directors may also be filled for an unexpired term by the
stockholders at a meeting called for that purpose.
<PAGE>
Section 5. The Board of Directors shall have the power to appoint, and,
at its discretion, to remove or suspend, any officer, officers, managers,
superintendents, subordinates, assistants, clerks, agents, and employees,
permanently or temporarily, as the Board may think fit, and to determine
their duties and to fix, and from time to time change, their salaries or
emoluments, ant to require security in such instances and in such amounts
as it may deem proper. No contract of employment for services to be
rendered to the Corporation shall be of longer duration than two weeks,
unless such contract of employment shall be in writing, signed by the
officers of the Corporation and approved by the Board of Directors.
Section 6. In case of the absence of an officer of the Corporation, or for
any other reason that may seem sufficient to the Board of Directors, the
Board may delegate its powers and duties for the time being to any other
officer of the Corporation or to any director.
Section 7. The Board of Directors may, by resolution or resolutions
passed by a majority of the whole Board, designate one or more
committees, each committee to consist of two or more of the directors of the
Corporation, which to the extent provided in such resolution or resolutions,
shall have and may exercise the powers of the Board of Directors in the
management of the business and affairs of the Corporation, and may have
power to authorize the seal of the Corporation to be affixed to all papers
that may require it. The committee or committees shall have such name or
names as may be determined from time to time by resolution adopted by the
Board of Directors. Any such committee shall keep regular minutes of its
proceedings, and shall report the same to the Board when required.
Section 8. The Board of Directors may hold their meetings and keep the
books of the Corporation, except the original or duplicate stock ledger,
outside of the State of New York at such place or places as they may from
time to time determine.
Section 9. The Board of Directors shall the have power to fix, and from
time to time to change, the compensation, if any, of the directors of the
corporation.
Section 10. The Board of Directors shall present at each annual meeting
of the shareholders, and, when called for by vote of the stockholders, at any
special meeting of the stockholders, a full and clear statement of the
business and condition of the Corporation.
<PAGE>
ARTICLE V - DIRECTORS MEETINGS
Section 1. Regular meetings of the Board of Directors shall be held
without notice at such times and places as may be free from time to time
prescribed by the Board.
Section 2. Special meetings of the Board of Directors may be called at
any time by the President, and shall be called by the President upon the
written request of a majority of the members of the Board of Directors.
Unless notice is waived by all the members of the Board of Directors,
notice of any special meeting shall be sent to each director at least twenty-
four hours prior to the date of such meeting, and such notice shall state the
time, place, and object or objects of such special meeting.
Section 3. Three member of the Board of Directors shall constitute a
quorum for the transaction of business at any meeting. The act of a majority
of the directors present at any meeting where there is a quorum shall be the
act of the Board of Directors, except as may be otherwise specifically
provided by statue or by the Certificate of Incorporation or by these by-
laws.
Section 4. The order of business at meetings of the Board of Directors
shall be described from time to time by the Board.
ARTICLE VI - OFFICERS AND AGENTS
Section 1. At the first meeting of the Board of Directors after the
election of directors in each year, the Board shall elect a President, a
Secretary and a Treasurer, and may elect or appoint one or more Vice
Presidents, Assistant Secretaries, Assistant Treasurers, and such other
officers and agents as the Board may deem necessary and as the business
of the Corporation may require.
Section 2. The President and the Chairman of the Board shall be elected
from the membership of the Board of Directors, but other officers need not
be members of the Board of Directors. Any two or more offices may be
held by the same person. All officers of the Corporation shall serve for one
year and until their successors shall have been duly elected and shall have
qualified; provided, however, that any officer may be removed at any time,
either with or without cause, by action of the Board of Directors.
Section 3. The salaries of all officers and agents of the Corporation shall
be fixed by the Board of Directors.
<PAGE>
ARTICLE VII - DUTIES OF OFFICERS
PRESIDENT
Section 1. The President shall be the Chief Executive Officer and head
of the Corporation, and in the recess of the Board of Directors shall have
the general control and management of its business and affairs, subject,
however, to the regulations of the Board of Directors. He shall preside at
all meetings of the stockholders and shall be a member ex-officio of all
standing committees.
Section 2. The President shall call all special or other meetings of the
stockholders and Board of Directors. In case the President shall at any time
neglect or refuse to call a special meeting of the stockholders when
requested so to do by a majority of the directors, or by the stockholder
representing a majority of the stock of the Corporation, as is elsewhere in
these by-laws provided, then and in such case, such special meeting shall
be called by the Secretary, or in the event of his neglect or refusal to call
such meeting, may be called by a majority of the directors or by the
stockholders representing a majority of the stock of the Corporation, who
desire such special meeting, as the case may be, upon notice as
hereinbefore provided. In case the President shall at any time neglect or
refuse to call a special meeting of the Board of Directors when requested
to do so by a majority of the Directors, as is elsewhere in these by-laws
provided, then and in such case, such special meeting may be called by the
majority of the directors desiring such special meeting, upon notice as
hereinbefore provided.
VICE PRESIDENTS
Section 3. In case of the absence of the President, the Vice President,
or, if there be more than one Vice President, then the Vice Presidents,
according to their seniority, shall preside at the meetings of the stockholders
of the Corporation. In the event of the absence, resignation, disability or
death of the President, such Vice President shall exercise all the powers
and perform all the duties of the President until the return of the President
or until such disability shall have been removed or until a new President
shall have been elected.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 4. The Secretary shall attend all meetings of the stockholders
and shall record all the proceedings thereof in a book to be kept for that
purpose and he shall record all the proceedings thereof in a book to be kept
for that purpose and he shall be the custodian of the corporate seal of the
Corporation.
In the absence of the Secretary, an Assistant Secretary or any other
person appointed or elected by the Board of Directors, as is elsewhere in
these by-laws provided, may exercise the rights and perform the duties of
the Secretary.
Section 5. The Assistant Secretary, or, if there be more than one
Assistant Secretary, then the Assistant Secretaries in the order of their
seniority shall, in the absence or disability of the Secretary, perform the
duties and exercise the powers of the Secretary. Any Assistant Secretary
elected by the Board shall also perform such other duties and exercise such
other powers as the Board of Directors shall from time to time prescribe.
<PAGE>
THE TREASURER AND ASSISTANT TREASURERS
Section 6. The Treasurer shall keep full and correct accounts of the
receipts and expenditures of the Corporation in books belonging to the
Corporation, and shall deposit all moneys and valuable effects in the name
and to the credit of the Corporation and in such depositories as may be
designated by the Board of Directors, and shall, if the Board shall so direct,
give bond with sufficient security and in such amount as may be required
by the Board of Directors for the faithful performance of his duties. He
shall disburse funds of the Corporation as may be ordered by the Board of
Directors, taking proper vouchers for such disbursements, and shall render
to the President and Board of Directors at the regular meetings of the
Board, or whenever they may require it, an account of all his transactions
as the chief fiscal officer of the corporation, and of the financial condition
of the Corporation.
Section 7. The Assistant Treasurer, or if there be more than one
Assistant Treasurer, then the Assistant Treasurers in the order of their
seniority, shall, in the absence or disability of the Treasurer, perform the
duties and exercise the powers of the Treasurer. Any Assistant Treasurer
elected by the Board shall also perform such duties and exercise such
powers as the Board of Directors shall from time to time prescribe.
ARTICLE VIII - CHECKS, DRAFTS, NOTES, ETC.
Section 1. All checks drawn on the account(s) of the Corporation shall
bear the signature of such person or persons as the Board of Directors may
from time to time direct.
Section 2. All notes and other similar obligations and acceptances of
drafts by the Corporation shall be signed by such person or persons as the
Board of Directors may from time to time direct.
Section 3. Any officer of the Corporation or any other employee, as the
Board of Directors may from time to time direct, shall have full power to
endorse for deposit all checks and all negotiable paper drawn payable to his
or their order or to the order of the Corporation.
ARTICLE IX - CORPORATE SEAL
Section 1. The corporate seal of the Corporation shall have inscribed
thereon the name of the Corporation, the year of its organization, and the
words Corporate Seal, New York. Such seal may be used by causing it or
a facsimile thereof to be impressed or affixed or reproduced.
<PAGE>
ARTICLE X - DIVIDENDS
Section 1. Dividends upon the shares of the capital stock of the
Corporation may, subject to the provisions of the Certificate of
Incorporation, if any, be declared by the Board of Directors at any regular
or special meeting, pursuant to law. Dividends may be paid in cash, in
property, or in shares of the capital stock of the Corporation.
Section 2. Before payment of any dividend there may be set aside out
of any funds of the Corporation available for dividends such sum or sums
as the Board of Directors may, from time to time, in their absolute
discretion, think proper as a reserve fund to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
Corporation, or for such other purpose as the Board of Directors shall deem
to be for the best interests of the Corporation, and the Board of Directors
may abolish any such reserve in the manner in which it was created.
ARTICLE XI - FISCAL YEAR
Section 1. The fiscal year of the Corporation shall begin on January 1
of each year, and end on December 31 of each year.
ARTICLE XII - NOTICES
Section 1. Whenever under the provisions of these by-laws notice is
required to be given to any director or stockholder, it shall not be construed
to mean personal notice, and such notice may be given in writing, by mail,
by depositing the same in the post office or letter box, in a postpaid sealed
wrapper, addressed to such director or stockholder at such address as shall
appear on the books of the Corporation, or, if the address of such director
or stockholder does not appear on the books of the Corporation, to such
director or stockholder at the General Post Office in the City of Tarrytown,
New York and such notice shall be deemed to be given at the time it shall
be so deposited in the post office or letter box. In the case of directors, such
notice may also be given by telephone, telegraph, or cable.
Section 2. Any notice required to be given under these by-laws may be
waived in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein.
Section 3. Each director and officer (and his heirs, executors, and
administrators) shall be indemnified by the Corporation against reasonable
costs and expenses incurred by him in connection with any action, suit, or
proceeding to which he may be made a party by reason of his being or
having been a director or officer of the Corporation, except in relation to
any action, suits, or proceedings in which he has been adjudged liable
because of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office. In the absence
of any adjudication that expressly finds that the director or officer is so
liable or which expressly absolves him of liability for willful misfeasance,
bad faith, gross negligence, or reckless disregard of the duties involved in
the conduct of his office, or in the event of a settlement, each director and
officer (and his heirs, executors, and administrators) shall be indemnified
by the Corporation against payments made, including a reasonable costs
determination by a written opinion of independent counsel.
Amounts paid in settlement shall not exceed costs, fees and expenses
that would have been reasonably incurred if the action, suit, or proceeding
had been litigated to a conclusion. Such a determination by independent
counsel, and the payments of amounts by the Corporation on the basis
thereof shall not prevent a stockholder from challenging such
indemnification by appropriate legal proceedings on the grounds that the
person indemnified was liable to the Corporation or its security holders by
reason of the conduct as used herein. The foregoing provisions shall be
exclusive of any other rights of indemnification to which the officers and
directors might otherwise be entitled.
<PAGE>
ARTICLE XIII - AMENDMENTS
Section 1. These by-laws may be amended, altered, repealed or added
to at the annual meeting of the stockholders of the Corporation or of the
Board of Directors, or at any special meeting of the stockholders or of the
Board of Directors called for that purpose, by the affirmative vote of the
holders of a majority of the shares of capital stock of the Corporation then
issued and outstanding and entitled to vote, or by a majority of the whole
Board of Directors, as the case may be.
ARTICLE XIV - INVESTMENT RESTRICTIONS
The by-laws of the Fund provide the following fundamental investment
restrictions; the Fund may not, except by approval of a majority of the
holders of voting securities present at a duly called meeting, if the holders
of more than 50% of the outstanding voting securities are present or
represented by proxy, or (b) of more than 50% of the holders of outstanding
voting securities, whichever is less:
(a) Act as underwriter for securities of other issuers.
(b) Borrow money or purchase securities on margin, but may obtain
such short term credit as may be necessary for clearance of purchases and
sales of securities for temporary or emergency purposes in an amount not
exceeding 5% of the value of its total assets.
(c) Sell securities short.
(d) Invest in securities of other investment companies except as part of
a merger, consolidation, or purchase of assets approved by the Fund's
shareholders or by purchases with no more than 10% of the Fund's assets
in the open market involving only customary broker's commissions.
(e) Invest more than 25% of its assets at the time of purchase in any one
industry, with the exception of the Internet, and Internet-related companies.
<PAGE>
(f) Make investments in commodities, commodity contracts or real
estate although the Fund may purchase and sell securities of companies that
deal in real estate or interests therein.
(g) Make loans. The purchase of a portion of a readily marketable issue
of publicly distributed bonds, debentures, or other debt securities will not
be considered the making of a loan.
(h) Acquire more than 10% of the securities of any class of another
issue, treating all preferred securities of an issuer as a single class and all
debt securities as a single class, or acquire more than 10% of the voting
securities of another issuer.
(I) Invest in companies for the purpose of acquiring control.
(j) The fund may not purchase or retain securities of any issuer if those
officers and directors of the Fund or its Investment Adviser owning
individually more than 1/2 of 1% of any class of security collectively own
more than 5% of such class of securities of such issuer.
(k) Pledge, mortgage, or hypothecate any of its assets.
(l) Invest in securities that may be subject to registration under the
Securities Act of 1933 prior to sale to the public or that are not at the time
of purchase readily saleable.
(m) Issue senior securities.
Exhibit 10(i) Management Contract
KINETICS ASSET MANAGEMENT, INC.
473 Martling Avenue
Tarrytown, New York 10591
April 5, 1996
THE INTERNET FUND, Inc.
473 Martling Avenue
Tarrytown, NY 10591
Dear Sirs/Madam:
This shall confirm that you (the "Client") are retaining Kinetics Asset
Management, Inc. (the "Manager") as investment manager to manage and
supervise your investment account, consisting of the funds and securities
identified for management from time to time (the "Account"), on the terms
set forth herein.
1.General Authorization. The Client hereby authorizes the
Manager to direct and manage the investment and reinvestment of all assets
in the Account, the proceeds thereof and any additions thereto, on a fully
discretionary basis. Such discretionary authority shall include, without
limitation, the right to purchase, sell, exchange, and engage in other
transactions with respect to all assets in the Account, to vote securities held
in the Account, and to take all other investment action with respect to the
Account as the Manager deems appropriate in its sole discretion. The
Manager shall advise the Client from time to time as to transactions in the
Account, in such manner as the Manager deems appropriate, but shall be
under no obligation to provide the Client with prior notice of any particular
transaction or other action taken hereunder.
2.Management Fee. The management fee of the Manager for its
services under this Agreement shall be determined and payable as provided
on Schedule A hereto.
3.Reports, Etc. The Manager will provide the Client with
statements (not less frequently than quarterly) setting forth valuation and
portfolio information of the Account. The Client agrees that all investment
advice and recommendations of the Manager regarding the Account are
confidential.
4.Custody. U.S. Clearing Corporation, and/or such other banks or
broker-dealers as the Manager and the Client shall mutually agree upon,
shall act as custodian(s) for the Account (collectively, the "Custodian").
The Client agrees to execute such custody agreements and other
agreements or instruments as may be reasonably required by the Custodian
from time to time with respect to the Account. The Custodian shall be
authorized and directed to charge the Account from time to time for the
amount of the management fee then due to the Manager. The Manager
shall furnish the Custodian and the Client with fee invoices setting forth the
calculation of the management fee then due and chargeable by the
Custodian. The Manager shall have no duties or obligations with respect to
custody of the securities and funds in the Account.
<PAGE>
5.Brokerage. The Manager shall have the right to utilize as
brokers or dealers with respect to all transactions for the Account such
brokerage firms as shall be determined by the Manager in its discretion.
The Manager shall have the right to negotiate brokerage commissions on
behalf of the Client with respect to any and all such transactions and in
determining appropriate commission rates may take into account brokerage
and research services provided by such firms, as permitted by applicable
law. The Client agrees to execute such account agreements and other
agreements or instruments as may reasonably be required by any brokerage
firm as the Manager may request with respect to the Account. All
brokerage commissions, stock transfer fees, and other similar expenses
incurred by the Account shall be payable out of the assets of the Account.
6.Obligations, Etc. of Manager. The Manager shall not be liable
for any act or omission in connection with this Agreement except in the
case of its own gross negligence or will- ful misconduct; provided,
however, that nothing herein shall in any way constitute a waiver or
limitation of any rights which the Client may have under applicable federal
or state securities laws. The Manager shall not be liable for complying with
any directive or instruction of the Client. The Manager shall not be liable
for any act or omission of any custodian, broker, or other third party with
respect to the Account, so long as the same is retained in good faith by the
Manager. Except for matters as to which the Manager shall be liable under
this paragraph, the Client shall indemnify the Manager against all claims,
losses or liabilities that it may incur in connection with the exercise of its
powers and obligations under this Agreement.
7.Authorizations. In acting hereunder, the Manager shall be
entitled to rely upon the contents of any notice, direction or other
communication, written or oral, delivered on behalf of the Client by the
Client directly or from any individual that the Manager reasonably believes
is entitled to act on behalf of the Client.
8.Withdrawals. The Client shall have the right to withdraw funds
or securities from the Account, subject to normal settlement and clearance
practices and the requirements of the Custodian.
9.Termination. This Agreement may be terminated by the
Manager or the Client at any time, immediately upon written notice to the
other party; provided, however, that any such termination by the Client
shall not be effective with respect to any transactions for the Account until
the personnel of the Manager responsible for such transactions receives
actual notice of such termination. Upon termination, the funds or securities
remaining in the Account after settlement of pending transactions and
payment of all accrued fees and expenses, including the management fee,
shall be remitted by the Manager in such manner as the Client shall direct.
<PAGE>
10.General. This Agreement (together with Schedule A hereto,
which shall constitute a part hereof) constitutes the entire agreement
between the parties with respect to the subject matter hereof. This
Agreement shall be binding upon the respective heirs, representatives,
successors, and assigns of the Client and the Manager; provided, however,
that the Manager may not assign this Agreement without the prior written
consent of the Client. If any provision of this Agreement or the application
thereof shall be held invalid or unenforceable, the same shall not affect the
validity or enforceability or application of the remaining provisions of this
Agreement. This Agreement may not be waived or modified orally but
only by a writing signed by the party or parties to be bound thereby and
shall be governed by the laws of the State of New York.
11.Corporate Authorization. The undersigned officer or
representative, by his or her signature hereto, hereby represents his or her
authority to bind the Client to this Agreement, and that this Agreement has
been duly authorized by and constitutes a valid and binding obligation of
the Client. The Client agrees to furnish copies of corporate resolutions or
other appropriate evidence of authorization as the Manager may reasonably
request.
12. Form ADV Part II. By signing this agreement, I
acknowledge that I have received the current Form ADV Part II for
Kinetics Asset Management, Inc., and that I have the right to terminate this
contract without penalty at any time after signing this contract.
If the foregoing correctly states our understanding, kindly sign and
return to us the enclosed copy of this letter, whereupon it shall be the valid
and binding agreement between us as of the date hereof.
KINETICS ASSET
MANAGEMENT, INC.
By:___________________________________
Title:__________________________________
ACCEPTED AND AGREED:
By:_____________________________[L.S.]
By:_____________________________[L.S.]
Title:_____________________________
Title:____________________________
Date:____________Date:____________
By:______________________________[L.S.]
Title:_____________________________
Date:
<PAGE>
SCHEDULE A
MANAGEMENT FEE
This constitutes Schedule A to, and part of, the letter of agreement
dated ____________________, 199__ (the "Management Agreement),
between Kinetics Asset Management, Inc. (the "Manager"), and
___________________ (the "Client").
The management fee of the Manager under the Management
Agreement (the "Management Fee") shall be determined as follows:
THE INTERNET FUND FEE SCHEDULE
1.25% on all assets under management.
Kinetics Asset Management, Inc., will absorb the expenses of the
Internet Fund, Inc., prior to, and up until 15 days past, the fund's
effective date.
The Management Fee shall be due and payable in monthly
installments (i.e., 1/12 of the above applicable percentages) in arrears,
based upon the market value of the assets in the Account at the close of
each business day of the preceding month. The Management Fee for any
portion of less than a month shall be prorated appropriately. In
determining market value of assets, the Manager may utilize such means
of valuation as it deems appropriate under the circumstances.
Invoices for each installment of the Management Fee, summarizing
the calculation thereof, shall be sent to the Client and the Custodian on or
before the tenth day of each month. As provided in the Management
Agreement, the Manager shall have the right to receive payment on
account of the Management Fee, when so invoiced, directly from the
Custodian, who has been authorized to charge the Account for such
purpose.
Exhibit - 10 (ii)
Reimbursement Agreements
The Fund reimburses officers and directors not affiliated with the
Investment Adviser to compensate for travel expenses associated with
performance of their duties.
The Fund does not now, and has no plans to compensate officers and
directors who are affiliated with the Investment Advisor, except indirectly
through payment of the management fee.
Exhibit - 99.1
Lewis Mitchell Klee
Attorneys at Law
50 Broad St., Suite 437
New York, NY 10004
The Internet Fund, Inc.
Gentlemen:
I have been asked to provide this opinion in connection with the
registration under the Securities Act of 1933 ("Securities Act") of
1,500,000 shares of the Common Capital Stock (par value $0.001 per
share) of The Internet Fund, Inc. ("Fund").
I have examined the Articles of Incorporation of the Fund; the By-Laws
of the Fund; various pertinent corporate proceedings; and such other items
considered to be material to determine the legality of the authorized but
unissued shares of the Fund's common stock.
Based upon the foregoing, it is my opinion that upon effectiveness of
the Securities Act Registration Statement of the Fund, filed pursuant to the
provisions of Section 24(e) of the Investment Company Act of 1940, to
register 1,500,000 shares of the Fund's common stock ($0.001 per share par
value) and during such time as such Registration Statement continues to be
in effect, the Fund will be authorized to solicit, and cause to be solicited
share purchase orders and to issue its shares for a cash consideration, as
described in the Fund's proposed Prospectus and Statement of Additional
Information, which shares so issued will be validly issued, fully paid and
non-assessable.
I offer no opinion with respect to the offer and sales of the Fund's
securities under the security laws of the several states, the District of
Columbia, any territory of the United States or any foreign country.
I consent to the inclusion of this opinion as an exhibit to the Securities
Act Registration Statement of the Fund and to the reference in the Fund's
Prospectus and/or Statement of Additional Information to the fact that this
opinion concerning the legality of the issue on behalf of the Fund, as issuer,
has been rendered by me.
Very Truly Yours;
__________________
Lewis Mitchell Klee, Esq.
