UNITED STATES
Securities and Exchange Commission
Washington, DC. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
and
THE INVESTMENT COMPANY ACT OF 1940 X
THE INTERNET FUND, INC.
(Exact Name of Registrant as Specified in Charter)
473 Martling Ave, Tarrytown, NY 10591
(Address of Principal Executive Offices)
(914) 631 9030
or toll free (888) FUND WWW
(Registrants Telephone Number)
Leonid Polyakov 473 Martling Ave, 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
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 A: IN A PROSPECTUS
Item 1. Cover Page Cover Page
Item 2. Synopsis Fund Expenses
Item 3. Condensed Financial Information Condensed Financial Information
Item 4. General Description of Registrant The Fund
Item 5. Management of the Fund Management of the Fund
Item 6. Capital Stock and other Securities Capitalization
Item 7. Purchase of Securities being Offered Purchase of Shares - Reinvestments
Item 8. Redemption or Repurchase Redemption of Shares
Item 9. Legal Proceedings Litigation
Part B: STATEMENT OF ADDITIONAL INFORMATION
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and History The Fund
Item 13. Investment Objectives and Policies Objectives and Policies
Item 14. Management of the Registrant Officers & Directors of the Fund
Item 15. Control Persons & Principal Holders Not Applicable
of Securities
Item 16. Investment Advisory and Other Ser- Investment Adviser
vices
Item 17. Brokerage Allocation Brokerage
Item 18. Capital Stock & Other Securities Capitalization
Item 19. Purchase, Redemption & Pricing of Purchase of Shares
Securities Being Offered
Item 19. Purchase, Redemption & Pricing of Redemption of Shares
Securities Being Offered
Item 19. Purchase, Redemption & Pricing of Pricing of Shares
Securities Being Offered
Item 20. Tax Status Tax Status
Item 21. Underwriters Not Applicable
Item 22. Calculation of Yield Quotations of Not Applicable
Money Market Funds
Item 23. Financial Statements Financial Statements
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 Ave,
Tarrytown, NY 10591
(914) 631 9030
or toll free (888) FUND WWW
April 15, 1996
PROSPECTUS
The Internet Fund (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
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
4/8/96 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>
INTERNET FUND, INC.
Investment Adviser:
Kinetics Asset Management, Inc.
Distributor:
The Fund serves as its own distributor.
FUND EXPENSES . . . . . . . . . . . . . . . . 3
FINANCIAL HIGHLIGHTS. . . . . . . . . . . . . 5
INVESTMENT OBJECTIVES AND POLICIES. . . . . . 5
OTHER INVESTMENTS AND INVESTMENT PRACTICES. . 6
SPECIAL CONSIDERATIONS. . . . . . . . . . . . 7
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 . . . . . . . . . . . . .17
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
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.
<PAGE>
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 primarily 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 the
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.
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.
In order to qualify for 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.
SPECIAL CONSIDERATIONS
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 that is higher than in other industries. Changes in
governmental policies, such as telephone and cable regulations, freedom of
speech, 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 rapidobsolescence caused by progressive scientific and
technological advances.
INVESTMENTS 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. 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);
2. 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;
3. 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;
4. 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;
5. 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;
6. The Fund will not purchase or sell commodities or commodity
contracts, or invest in oil, gas or mineral exploration or development
programs 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.
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.
<PAGE>
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.
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.
<PAGE>
MANAGEMENT OF THE FUND
The Fund is an open-end diversified management investment company,
commonly called a mutual fund. Through the purchase of share 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. and co-portfolio manager. Mr. Polyakov has more than
15 years experience in a variety of professional and managerial positions in the
software industry. Mr. Peter B. Doyle is an officer of Kinetics Asset
Management, Inc., and a co-portfolio manager. Mr. Doyle has more than 10
years of investment experience as an analyst and portfolio manager.
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 Manager of Special Projects
473 Martling Ave. Interested Director Alltel Information Services
Tarrytown, NY 10591
Peter Doyle Vice President Vice President
21 Hamilton Ave. Interested Director co-portfolio manager
Weehawken, NJ 07087 Secretary Horizon Asset Management
Bankers Trust
Murry Stahl Non-interested Director Chairman
342 Madison Ave Horizon Asset Management
New York, NY 10017 Bankers Trust
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 its officers and directors that are affiliated with
the Investment Adviser except as they may benefit through payment of the
Advisory fee.
<PAGE>
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 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.
Distributor
The Fund acts as its own custodian and transfer agent.
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.
<PAGE>
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. The 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 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 which 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 withing three business days after the order was 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 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's at (914) 631 9030 or toll free (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.
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.
Stockholders will be notified each year of the amounts and nature of
dividends and distributions, including the amount (if any) for that year which
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 a sale or exchange will be disallowed to the
extent 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 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.
<PAGE>
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 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."
The Fund reserves the right to pay any portion of a redemption request in
excess of $500,000 in readily marketable securities form 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.
<PAGE>
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.
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.
<PAGE>
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 Fidelity Capital.
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: 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:
- -------------------------------------------------------------------------------
<PAGE>
INTERNET FUND, INC.
473 Martling Ave,
Tarrytown, NY 10591
(914) 631 9030
or toll free (888) FUND WWW
April 15, 1996
STATEMENT OF ADDITIONAL INFORMATION
This Statement is not a prospectus but should be read in conjunction with the
Fund's current Prospectus dated April 8, 1996. To obtain the Prospectus, please
write the Fund or call either of the telephone numbers that are shown above.
<PAGE>
INTERNET FUND, INC.
THE FUND. . . . . . . . . . . . . . . . . . . 2
INVESTMENT OBJECTIVES AND POLICIES. . . . . . 2
OTHER INVESTMENTS AND INVESTMENT PRACTICES. . 3
INVESTMENTS RESTRICTIONS. . . . . . . . . . . 4
INVESTMENT ADVISER. . . . . . . . . . . . . . 5
OFFICERS AND DIRECTORS OF THE FUND. . . . . . 6
CAPITALIZATION. . . . . . . . . . . . . . . . 6
PURCHASING SHARES . . . . . . . . . . . . . . 7
RETIREMENT PLANS. . . . . . . . . . . . . . . 8
REDEMPTION OF SHARES. . . . . . . . . . . . . 9
BROKERAGE . . . . . . . . . . . . . . . . . . 9
TAXES . . . . . . . . . . . . . . . . . . . . 9
<PAGE>
THE FUND
INTERNET FUND, Inc. (also referred to as the "Fund" was incorporated
in New York on March 20, 1996. The Fund's registered office is in Tarrytown,
New York; mail may be addressed to 473 Martling Ave, 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 primarily 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.
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 coumputers 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.
<PAGE>
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.
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.
<PAGE>
INVESTMENTS 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. 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);
2. 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;
3. 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;
4. 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;
5. 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;
6. The Fund will not purchase or sell commodities or commodity
contracts, or invest in oil, gas, or mineral exploration or
development programs 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.
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.
<PAGE>
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. and co-portfolio manager. Mr. Polyakov has more than
15 years experience in a variety of professional and managerial positions in the
software industry. Mr. Peter B. Doyle is an officer of Kinetics Asset
Management, Inc., and a co-portfolio manager. Mr. Doyle has more than 10
years of investment experience as an analyst and 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 approval is
voted at least annually by specific approval of the Board of Directors of the
Fund or by 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.
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.
<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 Manager of Special Projects
473 Martling Ave. Interested Director Alltel Information Services
Tarrytown, NY 10591
Peter Doyle Vice President Vice President
21 Hamilton Ave. Interested Director co-portfolio manager
Weehawken, NJ 07087 Secretary Horizon Asset Management
Bankers Trust
Murry Stahl Non-interested Director Chairman
342 Madison Ave Horizon Asset Management
New York, NY 10017 Bankers Trust
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 its officers and directors that are affiliated with
the Investment Adviser except as they may benefit through payment of the
Advisory fee.
<PAGE>
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.
<PAGE>
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".
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 Internet Fund, Inc.) for $1,000 or more together with the
completed investment application form to the Fund. The 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 the order was 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 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 (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>
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 employee 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 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 IRA's. There is no fee to open and there is a $10 annual fee charged
to maintain a Internet Fund IRA. All IRA's may be revoked within 7 days of
their establishment with no penalty.
<PAGE>
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.
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.
<PAGE>
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 analyses, 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.
<PAGE>
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.
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>
Guss, Weissner & Blick
Certified Public Accountants
238 North Hihland Avenue
Ossining, NY 10562
(914) 945 0900
fax (914) 945 0908
The Independent Auditor's Report is forthcoming.
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. a. Financial Statements - the statements are forthcoming
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 post-effective amendment
no. 25 of the Securities Act of 1933 except exhibit (10.ii) which is attached.
2. Control Persons - Not applicable
3. Number of Shareholders - Not applicable
4. Indemnification - Insofar as indemnification for liability arising under
the Securities Act of 1933 may be permitted to directors, officers &
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, unenforce
able. 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 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. Activities of Investment Advisor - Kinetics Asset Managementst's
activity at the present time is performance on its Investment Advisory Contracts
currently effective with the Internet Fund, Inc.
6. Principal Underwriter - The Fund acts as its own underwriter.
7. Location of Accounts & Records - All fund records are held at corporate
headquarters - 473 Martling Ave, Tarrytown, NY 10591.
8. Not applicable
9. Distribution Expenses - The fund currently bears no distribution
expenses.
10.Not applicable
<PAGE>
11.
Guss, Weissner & Blick
Certified Public Accountants
238 North Hihland Avenue
Ossining, NY 10562
(914) 945 0900
fax (914) 945 0908
CONSENT OF INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS
We consent to the inclusion by reference in Post-Effective Amendment
No. 35 to the Registration Statement on Form N-1A of Internet Fund, Inc. of our
report on our examination of the Financial
Statements of suchCompany. We also consent to the reference to our firm in
such Post-Effective Amendment.
Guss, Weissner & Blick
(Signature)
April 8, 1996
SIGNATURES
<PAGE>
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, thereunto duly authorized,
in the City of Tarrytown, on the 8th day of April, 1996.
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 Signature Date
Leonid Polyakov President
Interested Director
Peter Doyle Vice President
Interested Director
Secretary
Murry Stahl Non-interested Director
Kathleen Campbell Non-interested Director
Douglas Cohen, C.P.A. 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
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
INTERNET FUND, INC. BY-LAWS
ARTICLE I - OFFICES
Section 1. 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 cerificates but use 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
any share or shares of its capital stock as the owner thereof, & 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
which is not a 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.
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.
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 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 which 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 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 Elections of Auditors
New Business
Section 8. At any meeting of the stockholders of the Corporation every stock
holder 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 promptly as possible and in any event within
sixty days for the purpose of electing directors to fill any vacancy which 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.
Section 5. The Board of Directors shall have power to appoint, and at its
discretion to remove or suspend, any officer, officers, managers,
superintendents,subordinates, assistants, clerks, agents & employees,
permanently or temporarily, as the Board may think fit, and to determine
their duties and to fix, from time to time change, their salaries or
emoluments, & 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 which may seem sufficient to the Board of Directors, the Board may
delegate his 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, be 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 which may require it.
Such 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 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.
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.
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 exofficio 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 maybe, 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.
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 shall bear the signature of such person or persons as the
Board of Directors may from time totime 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 or otherwise.
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 which
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 reasonable costs determination by a written opinion of
independent counsel.
Amounts paid in settlement shall not exceed costs, fees and expenses which 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.
ARTICLE XIII - AMENDEMENTS
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 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 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 Funds
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 Interenet, and Internet-related companies.
(f) Make investments in commodities, commodity contracts or real estate
although the Fund may purchase and sell securities of companies which
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 which may be subject to registration under the
Securities Act of 1933 prior to sale to the public or which are not at the
time of purchase readily saleable.
(m) Issue senior securities.
<PAGE>
- 9 -
Exhibit - 10 i
Management Contract
KINETICS ASSET MANAGEMENT, INC.
473 Martling Avenue
Tarrytown, New York 10591
April 5, 1996
INTERNET FUND
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. Fidelity Investments ("Fidelity"), 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.
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 which 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 which 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.
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 agreement dated
____________________, 199__ (the "Management Agreement), between
Kinetics Asset Management, Inc. (the "Manager") and Internet Fund, Inc.
___________________ (the "Client").
The management fee of the Manager under the Management
Agreement (the "Management Fee") shall be determined as follows:
INTERNET FUND FEE SCHEDULE
1.25% on all assets under management.
Kinetics Asset Management, Inc. will absorb the expenses of INTERNET FUND, Inc.
prior to, and 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.
<PAGE>
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
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 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
Securties 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.
