<PAGE>
Supplement dated November 16, 1998
to the Prospectus dated October 1, 1998
of ISI Strategy Fund Shares
The Prospectus dated October 1, 1998 of ISI Strategy Fund Shares is hereby
amended and supplemented by the following:
As of November 16, 1998, the ISI Strategy Fund Shares will be available under
the following Special Offer. The sections entitled "FEES AND EXPENSES OF THE
FUND," "THE FUND'S NET ASSET VALUE," "HOW TO REDEEM SHARES" and "SALES CHARGES"
are modified to reflect the terms of the Special Offer. The Offer is in effect
until March 16, 1999 or such time as the sales under this Special Offer reach
$50 million, whichever occurs first (the "Special Offering Period").
FEES AND EXPENSES OF THE FUND -- Shareholder Fees
The section entitled "FEES AND EXPENSES OF THE FUND -- Shareholder Fees" on
page 2 of the Prospectus is replaced by the following:
Shareholder Fees (fees paid directly from your investment):
<TABLE>
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) 1.00%(1)
Maximum Deferred Sales Charge (Load) Imposed on Purchases ........................... 1.00%(1)
Maximum Sales Charge (Load) Imposed on Reinvested Dividends ......................... None
</TABLE>
- ------------
(1) You will not pay an initial sales charge on purchases of $500,000 or more,
but you may be required to pay a 1.00% contingent deferred sales charge on
purchases of up to $3 million if you redeem your shares within 24 months of
purchase. See the section entitled "SALES CHARGES -- Redemption Price"
below.
FEES AND EXPENSES OF THE FUND -- Example
The figures appearing under the section entitled "FEES AND EXPENSES OF THE FUND
- -- Example" on page 3 of the Prospectus are replaced with the following:
1 year 3 years 5 years 10 years
$ 428 $796 $1,293 $2,659
You would pay the following expenses if you did not redeem your shares:
1 year 3 years 5 years 10 years
$ 326 $796 $1,293 $2,659
THE FUND'S NET ASSET VALUE
The second paragraph of the section entitled "THE FUND'S NET ASSET VALUE" on
page 4 of the Prospectus is replaced by the following:
The price you pay or receive is based on the Fund's net asset value per share.
When you buy Shares, the price you pay may be increased by a sales charge. When
you redeem Shares, the price you receive may be reduced by a sales charge. Read
the sections on sales charges for details on how and when these charges may or
may not be imposed.
SALES CHARGES -- Purchase Price
The following replaces the table on page 5 of the Prospectus under "SALES
CHARGES -- Purchase Price":
Initial Sales Charge (as % of)
----------------------------------
Offering Net Amount
Amount of Purchase Price Invested
- ---------------------------- ---------------- ----------------
Less than $ 500,000 1.00%(1,2) 1.01%(1,2)
$500,000 -- $2,999,999 None(2) None(2)
$3,000,000 and over None None
- ------------
(1) The initial sales charge does not apply to purchases by persons who are
eligible for "Purchases at Net Asset Value" as described on page 6 of the
Prospectus.
(2) You may be required to pay a 1.00% contingent deferred sales charge if you
redeem your shares within 24 months of purchase. See the section entitled
"SALES CHARGES -- Redemption Price" below.
<PAGE>
The Rights of Accumulation and Letter of Intent features described on page 6 of
the Prospectus will not apply to Shares purchased during the Special Offering
Period.
SALES CHARGES -- Redemption Price
The following section replaces the section entitled "SALES CHARGES --
Redemption Price" on page 6 of the Prospectus:
Redemption Price
The amount of any sales charge deducted from your redemption price will be
determined according to the following schedule:
Years Sales Charge (as a % of the
Since Purchase dollar amount subject to charge)
- -------------- ---------------------------------
First .............. 1.00%(1)
Second ............. 1.00%(1)
Thereafter ......... None
- ------------
(1) The contingent deferred sales charge does not apply to purchases of $3
million or more of Shares or to exchanges on which the difference in
front-end sales charges has been paid or where Shares being exchanged have
been held for 24 months or more.
Determination of Sales Charge. The sales charge applicable to your redemption
is calculated in a manner that results in the lowest possible rate:
1) No sales charge will be applied to Shares you own as a result of reinvesting
dividends or distributions.
2) If you have purchased Shares at various times during a Special Offering
Period, the sales charge will be applied first to Shares you have owned for
the longest period of time.
3) The sales charge is applied to the lesser of the cost of the shares or their
current market value.
Waiver of Sales Charge. The contingent deferred sales charge does not apply to
purchases by persons who are eligible for "Purchases at Net Asset Value" as
described on page 6 of the Prospectus. You may also redeem Shares without
paying a sales charge under any of the following circumstances:
1) If your redemption represents the minimum required distribution from an
individual retirement account or other retirement plan.
2) If your redemption represents a distribution from a Systematic Withdrawal
Plan. This waiver applies only if the annual withdrawals under your Plan
are 12% or less of your share balance.
3) If Shares are being redeemed in your account following your death or a
determination that you are disabled. This waiver applies only under the
following conditions:
(i) The account is registered in your name either individually, as joint
tenant with rights of survivorship, as a participant in community
property, or as a minor child under the Uniform Gifts or Uniform
Transfers to Minors Acts.
(ii) Either you or your representative notifies your securities dealer,
servicing agent or the Transfer Agent that such circumstances exist.
THE FUND RESERVES THE RIGHT
TO TERMINATE THIS SPECIAL OFFER AT ANY TIME.
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE.
<PAGE>
FOR USE DURING SPECIAL OFFERING PERIOD
ISI STRATEGY FUND SHARES
NEW ACCOUNT APPLICATION
- --------------------------------------------------------------------------------
Make check payable to "ISI Strategy Fund Shares" and mail with this Application
to:
ISI Mutual Funds
P.O. Box 419426
Kansas City, MO 64141-6426
For assistance in completing this form, please call the Transfer Agent at (800)
882-8585.
To open an IRA account, call ISI at (800) 955-7175 to request an application.
Your Account Registration (Please Print)
<TABLE>
<S> <C>
------------------------------------------
Existing Account No., if any
|-----------------------------------------| |-----------------------------------------|
| Individual or Joint Tenant | | Gifts to Minors |
|-----------------------------------------| |-----------------------------------------|
- ------------------------------------------ ------------------------------------------
First Name Initial Last Name Custodian's Name (only one allowed by law)
- ------------------------------------------ ------------------------------------------
Social Security Number Minor's Name (only one)
- ------------------------------------------ ------------------------------------------
Joint Tenant Initial Last Name Social Security Number of Minor
- ------------------------------------------ under the ------------ Uniform Gifts to Minors Act
Social Security Number State of Residence
|------------------------------------------| |-----------------------------------------|
| Corporations, Trusts, Partnerships, etc. | | Mailing Address |
|------------------------------------------| |-----------------------------------------|
- ------------------------------------------ ------------------------------------------
Name of Corporation, Trust or Partnership Street
- ------------------------------------------ ------------------------------------------
Tax ID Number City State Zip
( )
- ------------------------------------------ ------------------------------------------
Name of Trustees (If to be included in Daytime Phone
the Registration)
</TABLE>
<PAGE>
Distribution Options
Please check appropriate boxes. There is no sales charge for reinvested
dividends. If none of the options are selected, all distributions will be
reinvested.
Income Dividends Capital Gains
[ ] Reinvested in additional shares [ ] Reinvested in additional
shares
[ ] Paid in Cash
[ ] Paid in Cash
Call (800) 882-8585 for information about reinvesting your dividends in other
funds in the ISI Family of Funds.
Automatic Investing Plan (Optional)
[ ] I authorize you as Agent for the Automatic Investing Plan to automatically
invest $___________ for me, on a monthly or quarterly basis, on or about the
20th of each month or if quarterly, the 20th of January, April, July and
October, and to draw a bank draft in payment of the investment against my
checking account. (Bank drafts may be drawn on commercial banks only.)
Minimum Initial Investment: $250
Subsequent Investments (check one): [ ] Monthly ($100 minimum)
[ ] Quarterly ($250 minimum)
|-----------------------------|
|Please attach a voided check.|
|-----------------------------|
<TABLE>
<S> <C>
- ---------------------------------------------- ---------------------------------------------
Bank Name Depositor's Signature Date
- ---------------------------------------------- ---------------------------------------------
Existing ISI Strategy Fund Account No., if any Depositor's Signature Date
(if joint acct., both must sign)
</TABLE>
<PAGE>
Systematic Withdrawal Plan (Optional)
[ ] Beginning the month of _________________ , 19__ , please send me checks
on a monthly or quarterly basis, as indicated below, in the amount of
$_________________ , from shares that I own, payable to the account
registration address as previously shown. (Participation requires minimum
account value of $10,000.)
Frequency (check one): / / Monthly / / Quarterly (January, April, July and
October)
Telephone Transactions
I understand that I will automatically have telephone redemption privileges
(for amounts up to $50,000) unless I mark the box below.
No, I/We do not want: / / Telephone redemption privileges
Redemptions effected by telephone will be mailed to the address of record. If
you would prefer redemptions mailed to a pre-designated bank account, please
provide the following information:
Bank: ------------------------ Bank Account No.: -----------------------
Address: ------------------------ Bank Account Name: -----------------------
------------------------
Signature and Taxpayer Certification
- --------------------------------------------------------------------------------
The Fund may be required to withhold and remit to the U.S. Treasury 31% of any
taxable dividends, capital gains distributions and redemption proceeds paid to
any individual or certain other non-corporate shareholders who fail to provide
the information and/or certifications required below. This backup withholding is
not an additional tax, and any amounts withheld may be credited against your
ultimate U.S. tax liability.
By signing this Application, I hereby certify under penalties of perjury that
the information on this Application is complete and correct and that as required
by federal law: (Please check applicable boxes)
[ ] U.S. Citizen/Taxpayer:
[ ] I certify that (1) the number shown above on this form is the correct
Social Security Number or Tax ID Number and (2) I am not subject to any
backup withholding either because (a) I am exempt from backup withholding,
or (b) I have not been notified by the Internal Revenue Service ("IRS")
that I am subject to backup withholding as a result of a failure to report
all interest or dividends, or (c) the IRS has notified me that I am no
longer subject to backup withholding.
[ ] If no Tax ID Number or Social Security Number has been provided above,
I have applied, or intend to apply, to the IRS or the Social Security
Administration for a Tax ID Number or a Social Security Number, and I
understand that if I do not provide either number to the Transfer Agent
within 60 days of the date of this Application or if I fail to furnish my
correct Social Security Number or Tax ID Number, I may be subject to a
penalty and a 31% backup withholding on distributions and redemption
proceeds. (Please provide either number on IRS Form W-9. You may request
such form by calling the Transfer Agent at 800-882-8585.)
[ ] Non-U.S. Citizen/Taxpayer:
Indicated country of residence for tax purposes: __________________________
Under penalties of perjury, I certify that I am not a U.S. citizen or
resident and I am an exempt foreign person as defined by the Internal
Revenue Service.
- --------------------------------------------------------------------------------
I acknowledge that I am of legal age in the state of my residence. I have
received a copy of the Fund's prospectus dated October 1, 1998.
- --------------------------------------------------------------------------------
The Internal Revenue Service does not require your consent to any
provision of this document other than the certifications required to avoid
backup withholding.
- --------------------------------------------------------------------------------
<TABLE>
- -------------------------------------- -----------------------------------------------------------
<S> <C> <C> <C>
Signature Date Signature (if a joint account, both must sign) Date
- -----------------------------------------------------------------------------------------------------
</TABLE>
For Dealer Use Only
Dealer's Name: ____________________________ Dealer Code:______________________
Dealer's Address:__________________________ Branch Code:______________________
Representative: ___________________________ Rep. No.: ______________________
