THE INTERNET INDEX FUND
TRACKING THE DOW JONES INTERNET INDEXSM
PROSPECTUS
SEPTEMBER 30, 2000
INVESTMENT MANAGER:
[LOGO]
INTEGRITY GLOBAL ASSET MANAGEMENT, INC.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
THE INTERNET INDEX FUND
PROSPECTUS DATED SEPTEMBER 30, 2000
TABLE OF CONTENTS
RISK/RETURN SUMMARY...........................................................2
INTRODUCTION.........................................................2
WHAT IS THE FUND'S INVESTMENT OBJECTIVE?.............................2
WHAT IS THE DOW JONES INTERNET INDEXSM?..............................2
WHAT ARE THE FUND'S PRINCIPAL INVESTMENT STRATEGIES?.................3
WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUND?....................4
WHO MAY WANT TO INVEST IN THE FUND?..................................5
WHAT IS THE FUND'S PAST PERFORMANCE?.................................5
WHAT ARE THE FUND'S FEES AND EXPENSES?...............................6
MORE INFORMATION ABOUT THE DOW JONES INTERNET INDEXSM.........................7
MORE INFORMATION ABOUT THE FUND'S INVESTMENT STRATEGIES.......................9
MANAGEMENT OF THE FUND........................................................9
PRICING OF FUND SHARES.......................................................10
MARKETING AND DISTRIBUTION...................................................13
HOW TO PURCHASE SHARES.......................................................13
HOW TO REDEEM SHARES.........................................................15
DISTRIBUTIONS AND TAXATION...................................................17
RISK/RETURN SUMMARY
INTRODUCTION
The Internet Index Fund is an index mutual fund designed to track the
Dow Jones Internet IndexSM and to provide investors with a convenient
and cost-effective way to invest in the Internet and the Internet
industry.
The Internet is a world-wide network of computers that allows users to
easily and efficiently communicate and share data. Currently, the most
popular application on the Internet is the World Wide Web, a
graphic-user-interface that allows information sharing and data
transfer through "websites." Other Internet applications include
e-mail, Intranet, extranet and electronic commerce.
The Internet industry consists of various types of companies, including
Internet access providers, software developers, hardware manufacturers,
companies that provide materials or services to access the Internet,
companies that provide content for Internet sites and companies that
specialize in providing security for transactions over the Internet.
The Internet industry also includes companies that engage in electronic
commerce and retailing through Internet websites.
WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
The investment objective of the Fund is to provide investment results,
using statistical procedures, that parallel the investment return of
the Dow Jones Internet Index.SM
WHAT IS THE DOW JONES INTERNET INDEXSM?
The Dow Jones Internet IndexSM (Symbol: DJINETSM) is a diversified
index of common stocks designed to be an overall indicator of Internet
industry stock performance, and to provide a benchmark against which to
measure Internet investments. The Index includes stocks of companies
whose primary focus is Internet related. For a company to be eligible
for the Index, it must derive at least 50% of its revenue from Internet
commerce or services.
The Index is divided into the following two market sub-sectors to
provide a balanced representation of the Internet industry in the
future:
INTERNET COMMERCE COMPANIES (E*COMMERCE): Companies that
derive the majority of their revenues from providing goods or
services through an open network.
INTERNET SERVICE COMPANIES: Companies that derive the majority
of their revenues from providing access to the Internet or
providing services to people using the Internet.
The Index is market capitalization weighted by subsector and currently
includes 40 stocks. Market capitalization weighting means that the
percentage weighting of the stocks in each subsector of the Index is
determined based on their market capitalization relative to the other
stocks in the subsector. The Index is reviewed quarterly by Dow Jones
Company, Inc. ("Dow Jones") to add or remove stocks as needed in order
to consistently cover 80% of the total market capitalization of the
companies in each Internet industry subsector.
To prevent domination by a few large companies, a ceiling weight of 10%
is applied so that no single stock will represent more than 10% of any
Index subsector, regardless of market capitalization.
The historical performance of the index and a complete listing of the
stocks that are currently included in the Index are included in this
Prospectus in the section entitled "More Information about the Dow
Jones Internet Index.sm" the fund is neither sponsored by nor
affiliated with Dow Jones.
WHAT ARE THE FUND'S PRINCIPAL INVESTMENT STRATEGIES?
The Fund's investment manager believes that the Internet is
revolutionizing the way individuals and companies around the world
obtain information and communicate, and that Internet and
Internet-related companies have substantial growth potential. Though
Internet stocks may be volatile, the manager believes that the Internet
industry as a whole could outperform the broader securities markets for
the foreseeable future.
In view of the rapid pace of development and change within the Internet
industry, it may be very difficult to forecast which companies or
industry sectors will be successful and outperform or outgrow other
companies or sectors. For these reasons, the Fund's investment manager
believes that an "indexing" investment management approach is a
particularly effective way for investors to participate in the
investment performance of the Internet industry over the long term.
An index fund seeks to match, as closely as possible, the performance
of an established securities index. An index fund does this by holding
all, or a representative sample, of the securities in the index. The
adviser to an index fund generally does not buy and sell securities
based on research and analysis in an attempt to outperform the
particular index. Instead, an index fund seeks to mirror what the
target index does, for better or worse. Index funds have operating
expenses and transaction costs, and generally keep a portion of their
assets in cash or cash equivalent investments, in order to be ready to
meet redemption requests. Therefore, while the performance for an index
fund is expected to track the target index closely, the performance of
an index fund will generally be less than that of the index itself.
In order to track the Dow Jones Internet IndexSM as closely as
possible, the Fund seeks to invest substantially all (more than 95%) of
its total assets in the stocks that make up the Index, in roughly the
same proportions as the stocks are represented in the Index. As the
Fund receives cash from new investors, or processes redemption requests
from shareholders, the Fund will purchase or sell securities in an
effort to attempt to approximate the return of the Index. Also, the
Fund's investments are reviewed and adjusted each quarter to reflect
any quarterly adjustments in the Index, in an effort to track the Index
as closely as possible.
Because the Fund is an index fund, it generally takes a buy-and-hold
approach to investing. The Fund normally sells portfolio securities
only to respond to redemption requests or to adjust the number of its
shares to track the weighting or composition of the Index. As a result,
the Fund's portfolio turnover rate is expected to be extremely low. A
low portfolio turnover rate usually results in low transaction costs
and provides tax efficiencies for shareholders.
WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUND?
The Fund concentrates its investments in the Internet Industry and,
therefore, may involve significantly greater risks than a mutual fund
that diversifies its investments among many industries, or one that
does not invest in the Internet industry. The share price of the Fund
will go up and down and you could lose money.
Any investment in the Internet industry involves special risks because
the Internet industry is subject to rapid technological changes and
developments. Many Internet-related companies have incurred significant
losses since their inception and will continue to incur losses in the
hope of capturing market share and generating future revenues. It is
possible that some companies may never be profitable.
Companies in the industry are exposed to a high degree of risk that
their products or services may quickly become obsolete. Also,
increasing competition, rapidly changing markets, frequent mergers or
acquisitions of Internet companies and changes in strategic alliances
among various Internet businesses, all may have a significant effect on
the financial condition of companies in the Internet industry. Changes
in government policies, such as telephone and cable regulations and
antitrust enforcement and the need for regulatory approvals, can also
have a material effect on companies in the industry.
Many of the companies included in the Index have a smaller market
capitalization (less than $1 billion) and may be unseasoned companies
(those with less than a three year operating history). Investments in
smaller and unseasoned companies present greater risks than securities
of larger or more established companies. Small or unseasoned companies
may be developing or marketing new products or services for which
markets are not yet established and may never be established. They also
may lack depth or experience of management and may have difficulty
generating or obtaining funds necessary for growth and development of
their businesses. Due to these and other factors, small and unseasoned
companies may suffer significant losses, as well as realize substantial
growth. Historically, the prices of stocks of smaller companies have
been more volatile than stocks of larger companies and are, therefore,
more speculative than stocks of larger companies. You should expect
that the price of the Fund's shares will also fluctuate more than
shares of a mutual fund that invests primarily in larger stocks.
The Fund is classified as "non-diversified" under the Investment
Company Act of 1940, as amended (the "1940 Act"), which means that,
compared to other funds, it may invest a greater percentage of its
assets in a single issuer. A non-diversified fund may be more
susceptible to price volatility resulting from changes in the prices of
securities that it holds. The Fund will, however, always seek to match
the level of diversification of the Index and, in any event, intends to
meet the minimum diversification levels required to qualify as a
regulated investment company for purposes of the Internal Revenue Code.
The Fund is authorized to invest a portion of its assets in futures and
options contracts. Losses (or gains) involving these investments can be
substantial in relation to the amount of money deposited to enter into
the contract. For this reason, the Fund will not use these types of
investments as leveraged investments.
WHO MAY WANT TO INVEST IN THE FUND?
The Fund may be appropriate for investors who want to participate in
the investment performance of the Internet industry over the long term,
by following a simple, cost-efficient indexing approach.
The Fund is designed for long-term investors who want to allocate a
portion of their investments to aggressive equity investing and who
understand and are willing to accept the risk of loss associated with
investing in Internet stocks. Investors should be willing to accept the
above average price fluctuations that the Fund is expected to
experience.
The Fund is not a complete investment program.
WHAT IS THE FUND'S PAST PERFORMANCE?
Since the Fund has not had operations for a full calendar year, there
is no past performance history available at this time. The performance
of the Dow Jones Internet Index SM since its inception in 1997,
however, is set forth below under the heading "More Information about
the Dow Jones Internet Index.SM"
WHAT ARE THE FUND'S FEES AND EXPENSES?
The following table describes the fees and expenses that you may pay if
you buy and hold shares of the Fund.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge (Load) on Purchases
(as a percentage of offering price)(1) 3.00%
Maximum Deferred Sales Charge (Load)(2) None
Maximum Sales Charge (Load) on
Reinvested Dividends and Other Distributions None
Redemption Fee (as a percentage of amount redeemed,
if shares are redeemed within 90 days of purchase)(3) None
Maximum Account Fees(4) None
(1) The sales charge is waived for investments by shareholders of
record on October 1, 2000, as well as for certain other investors.
See "Sales Charges and Waivers" below.
(2) A purchase of shares of $1 million or more may be made at net asset
value without any front-end sales charge. However, if you sell the
shares within 18 months of purchase, a contingent deferred sales
charge of 1.00% will apply to the sale of such shares. See "Sales
Charges and Waivers" below.
(3) The Fund's custodian charges a $12.00 fee for outgoing wire
transfers.
(4) IRA accounts are subject to an annual trustee fee of $12.50.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
Management Fees 0.65%
Distribution and/or Service (12b-1) Fees 0.25%
Other Expenses 12.90%
Total Annual Fund Operating Expenses (before fee
waiver/ reimbursement) 13.80%
Less Manager's Fee Waiver/Reimbursement* -12.81%
Actual Total Annual Fund Operating Expenses 0.99%
* Integrity Global Asset Management, Inc. has contractually agreed
through December 31, 2001 to waive its management fees and/or make
payments to limit expenses of the Fund, if necessary, to ensure that
actual Total Annual Fund Operating Expenses do not exceed 0.99%.
EXAMPLE
The following Example is intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund for the time
periods indicated and then redeem all of your shares at the end of
those periods. The Example also assumes that your investment has a 5%
return each year and that you reinvest all capital gains and dividend
distributions. Finally, the Example assumes that the Fund's operating
expenses remain the same. Please note that only the first year in each
example reflects the effect of the contractual fee waiver. Although
your actual costs may be higher or lower, based on these assumptions
your costs would be:
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
$398 $2,911 $5,011 $8,870
MORE INFORMATION ABOUT THE DOW JONES INTERNET INDEXSM
The following table shows the performance of the Index since its inception in
June 1997. Please note that the performance shown is not the performance of the
Fund and is not intended to predict or suggest the return that might be
experienced by an investor in the Fund. The Fund will attempt to track the Index
as closely as possible, but the performance of the Fund will be less than the
performance of the Index because the Fund is subject to operational and
transaction costs, while the Index is not.
PERIOD TOTAL RETURN
------ ------------
1997 (last six months) 34.07%
1998 168.41%
1999 167.30%
2000 (first six months) -28.28%
The average annual total return of the Index from its date of initial
calculation (July 1, 1997) through June 30, 2000 was 90.37% per year.
The following is a list of the names (and trading symbols) of the stocks that
compromised the Index after it was last adjusted in September 2000. The Index
can change quarterly, so this listing is only a "snapshot" of the Index at one
point in time.
<TABLE>
<CAPTION>
---------------------------------------------------------- ------------------------------------------------------------------
<S> <C>
E* COMMERCE SECTOR INTERNET SERVICES SECTOR
---------------------------------------------------------- ------------------------------------------------------------------
Amazon.com, Inc. AMZN Akamai Technologies AKAM
---------------------------------------------------------- ------------------------------------------------------------------
Ameritrade Holding Corporation (Class A) AMTD America Online, Inc. AOL
---------------------------------------------------------- ------------------------------------------------------------------
CNET, Inc. CNET Ariba Inc. ARBA
---------------------------------------------------------- ------------------------------------------------------------------
E*trade Group, Inc. EGRP BEA Systems Inc. AXNT
---------------------------------------------------------- ------------------------------------------------------------------
EBay Inc. EBAY BroadVision, Inc. BVSN
---------------------------------------------------------- ------------------------------------------------------------------
eToys, Inc. ETYS Check Point Software Technologies Ltd. * CHKP
---------------------------------------------------------- ------------------------------------------------------------------
Go2Net, Inc. GNET CheckFree Holdings Corporation CKFR
---------------------------------------------------------- ------------------------------------------------------------------
WebMD Corp. HLTH CMGI Inc. CMGI
---------------------------------------------------------- ------------------------------------------------------------------
Lycos Inc. LCOS Commerce One Inc. CMGI
---------------------------------------------------------- ------------------------------------------------------------------
MP3.com, Inc. MPPP Covad Communications Group, Inc. COVD
---------------------------------------------------------- ------------------------------------------------------------------
Priceline.com Inc. PCLN Digital Island, Inc. ISLD
---------------------------------------------------------- ------------------------------------------------------------------
Ticketmaster Online Citysearch Inc. TMCS Doubleclick Inc. DCLK
---------------------------------------------------------- ------------------------------------------------------------------
VerticalNet Inc. VERT Earthlink Network, Inc. ELNK
---------------------------------------------------------- ------------------------------------------------------------------
Webvan Group Inc. WBVN Excite@Home Corp. ATHM
---------------------------------------------------------- ------------------------------------------------------------------
Yahoo! Inc. YHOO Exodus Communications, Inc. EXDS
---------------------------------------------------------- ------------------------------------------------------------------
I2 Technologies Inc. ITOO
------------------------------------------------------------------
InfoSpace.com, Inc. INSP
------------------------------------------------------------------
Inktomi Corporation INKT
------------------------------------------------------------------
Internet Capital Group ICGE
------------------------------------------------------------------
Portal Software, Inc. PRSP
------------------------------------------------------------------
PSINet Inc. PSIX
------------------------------------------------------------------
RealNetworks, Inc. RNWK
------------------------------------------------------------------
Tibco Software Inc. TIBX
------------------------------------------------------------------
VeriSign, Inc. VRSN
------------------------------------------------------------------
Vignette Corp. VIGN
------------------------------------------------------------------
</TABLE>
*This security represents the common stock of a foreign company that trades
directly on a U.S. national securities exchange.
The Index is reviewed quarterly and any changes take effect on the third Friday
of March, June, September and December.
To be eligible for the Index, a company must generate 50% or more of annual
sales/revenues from the Internet. Stocks offered through an initial public
offering must have a minimum of three months' trading history (a spin-off
requires this trading history only if its former parent's stock was trading for
less than three months). To be eligible, a stock must also have a three month
average market capitalization of at least $100 million, a three month average
closing price of at least $10, and sufficient trading activity to ensure
liquidity.
Stocks are selected for the Index based on an equal combination of market
capitalization and trading volume (three month averages for each factor). To be
added to the Index, a new stock must rank in the top two-thirds of the existing
components of the Index at the time of the quarterly review. Once a stock is
included in the Index, it may not be removed for a period of six months, unless
the company is acquired.
"Dow Jones", "Dow Jones Internet IndexSM" and "DJINETSM" are service marks of
Dow Jones Company, Inc. and have been licensed for use by the Fund's manager,
Integrity Global Asset Management, Inc. The Fund is not sponsored, endorsed,
sold or promoted by Dow Jones, and Dow Jones makes no representation regarding
the advisability of investing in the Fund.
Dow Jones does not: sponsor, endorse, sell or promote the Fund; recommend that
any person invest in the Fund or any other securities; have any responsibility
or liability for or make any decisions about the purchase or redemption prices,
or fees of the Fund; have any responsibility or liability for the
administration, management or marketing of the Fund; consider the needs of the
Fund or Fund Shareholders in determining, composing or calculating the Index or
have any obligation to do so.
Dow Jones will not have any liability in connection with the Fund. Specifically,
Dow Jones does not make any warranty, express or implied, and Dow Jones
disclaims any warranty about: the results to be obtained by the Fund, Fund
shareholders or any other person in connection with the use of the Index and the
data included in the Index, the accuracy or completeness of the Index and its
data or the merchantability and fitness for a particular purpose or use of the
Index and its data. Dow Jones will have no liability for any errors, omissions
or interruptions in the Index or its data or for any information prepared by the
Fund that is derived from the Index. Under no circumstance will Dow Jones be
liable for any lost profits or indirect, punitive, special or consequential
damages or losses, even if Dow Jones knows that they might occur. The licensing
agreement between the Fund's manager and Dow Jones is solely for their benefit
and not for the benefit of the owners of the Fund or any other third parties.
MORE INFORMATION ABOUT THE FUND'S INVESTMENT STRATEGIES
As an alternative to holding all of the stocks in the Index at all times, the
Fund may select stocks to be purchased or sold using "statistical sampling"
techniques intended to be an effective means of substantially duplicating the
performance of the Index. Based on data derived from such techniques, as well as
on information about the issuer and its stock (such as size, projected earnings,
financial strength and debt), the investment manager will make judgments to
actively select which component stocks from the Index are purchased. The idea is
to select stocks that, together with the remaining stocks in the Fund's
portfolio, will most closely track the performance of the Index. The Fund will
use statistical sampling techniques when the Fund's net cash flow would make it
impractical or costly to attempt to track the Index by purchasing or selling
stocks in the exact quantities needed to cause the Fund's portfolio to exactly
match the weighting and composition of the Index.
In addition to investing directly in the stocks that make up the Index, the Fund
may enter into futures or options contracts, for the purpose of simulating full
investment in the stocks that make up the index and causing the same effect as
if the Fund held these stocks. These types of investments are used to quickly
and efficiently cause Fund assets to be invested pending actual purchases of
stocks in the Index and/or to keep cash on hand to meet redemption requests or
other needs. They are also used to reduce transaction costs and are used when
the Fund's investment manager determines that these investments are favorably
priced when compared to direct purchases of securities.
The Fund will limit its futures transactions to the extent that, immediately
after any transaction, no more than 5% of the Fund's assets are applied towards
the deposits required on futures contracts, and the value of all futures
contracts in which the Fund acquires an interest cannot exceed 20% of the Fund's
total assets.
In order to increase the Fund's income, the Fund may lend its portfolio
securities to qualified securities dealers or other institutional investors. The
lending of securities is a common practice in the securities industry.
The investment objective and policies of the Fund are not fundamental and
therefore may be changed by the Board of Trustees without shareholder approval.
However, shareholders would be notified prior to any material change
MANAGEMENT OF THE FUND
IGAM Group Funds was organized as a Delaware business trust on July 16, 1999 and
is operated under the supervision of a Board of Trustees. The Fund is the first
mutual fund within the IGAM Group Funds family.
INVESTMENT MANAGER. The Fund's investment manager is Integrity Global Asset
Management, Inc. ("IGAM"). IGAM is a federally registered investment advisory
firm founded in April 1997, that previously provided asset management services
for individuals and institutional clients. The firm no longer manages client
assets outside of the Fund. IGAM's principal office is located at South
Kingstown Office Park, Suite A5, 24 Salt Pond Road, Wakefield, Rhode Island
02879.
Eugene Y.W. Lee, Ph.D., CFA, is the President and founder of IGAM and the Chief
Portfolio Manager for the Fund. He is also the President, Treasurer and
Secretary of IGAM Group Funds, and serves on its Board of Trustees. Dr. Lee is a
Chartered Financial Analyst and received his Master of Arts degree in
Mathematics from the University of Texas at Austin in 1986 followed by his
doctoral degree in Finance in 1986. He joined the faculty of the University of
Rhode Island in 1992 and is currently an Associate Professor of Finance. Dr. Lee
previously was Assistant Professor of Finance at University of Missouri -
Columbia from 1986 to 1992.
IGAM has entered into an Investment Management Agreement with IGAM Group Funds
under which IGAM is responsible for managing the purchase and sale of securities
held by the Fund. IGAM also tracks the composition and weighting of the stocks
in the index, and rebalances the Fund's portfolio of investments in an effort to
track the performance of the index as closely as possible. This process also
involves the use of statistical sampling techniques by which IGAM actively
selects component stocks for purchase or sale to most effectively and
efficiently track the Index. IGAM is also responsible for selecting brokers,
dealers and/or trading systems to execute securities transactions for the Fund.
IGAM also provides business management and administrative services for the Fund
not provided by others, which includes the coordination and management of the
Fund's business activities and its relationship with service providers and
professionals, as well as the provision of office space, personnel and materials
necessary to act as investment and business manager.
For its services, IGAM receives annual fees from the Fund equal to 0.65% of the
Fund's average daily net assets. IGAM has, however, contractually agreed through
December 31, 2001 to waive all or a portion of the advisory fee, and to pay Fund
expenses to the extent necessary to limit the Fund's total annual operating
expenses to 0.99%. After that date, IGAM may determine to continue to control
Fund operating expenses under a contractual or voluntary arrangement, or it may
end the arrangement. When the Fund's assets grow to a point where fee waivers
are no longer necessary, IGAM may seek to recoup amounts waived or expenses
payments that it made. IGAM shall only be entitled to recoup such amounts for a
period of three years from the date the amount was waived or paid.
FUND ADMINISTRATOR, ACCOUNTING AND TRANSFER AGENT. Firstar Mutual Fund Services,
LLC, 615 East Michigan Street, 3rd Floor, Milwaukee, Wisconsin 53202 ("Firstar")
serves as the Fund's administrator, accounting agent and transfer agent.
PRICING OF FUND SHARES
The shares of the Fund are priced at the net asset value per share ("NAV"),
which is determined by the Fund as of the close of regular trading (generally
4:00 p.m. eastern time) on each day that the New York Stock Exchange is open for
unrestricted trading. Purchase and redemption requests are priced at the next
NAV calculated after receipt and acceptance of a completed purchase or
redemption request. The NAV is determined by dividing the value of the Fund's
securities, cash and other assets, minus all expenses and liabilities, by the
number of shares outstanding (assets - liabilities)/no. of shares = NAV. The
expenses and fees of the Fund, which are accrued daily, are reflected in the
calculation of the NAV.
The Fund's portfolio securities are valued each day at their market value, which
usually means the last quoted sale price on the security's principal exchange
that day. If market quotations are not readily available, securities will be
valued at their fair market value as determined in good faith, or under
procedures approved by, the Board of Trustees. The Fund may use independent
pricing services to assist in calculating NAV.
SALES CHARGES AND WAIVERS. The offering price for shares of the Fund is its NAV
plus any applicable front-end sales charge. The sales charge is as follows:
As a % of Amount Dealer Commission as
As a % of Invested Percentage of Offering
Your Investment Offering Price Price
Less than $50,000 3.00% 3.09% 2.50%
$ 50,000 - $ 99,999 2.50% 2.56% 2.00%
$100,000 - $249,999 2.00% 2.04% 1.50%
$250,000 - $499,999 1.50% 1.52% 1.00%
$500,000 - $999,999 1.00% 1.01% 0.50%
$ 1 million or more* None None None
* Investments of $1 million or more may be made with no front-end sales charge.
However, such investments are subject to a contingent deferred sales charge
(CDSC) of 1.0% on any shares sold within 18 months of purchase. For purpose of
this CDSC, all purchases made during a calendar month are counted as having been
made on the first day of that month. The CDSC is based on the lesser of the
original purchase cost or the current market value of the shares being sold ,
and is not charged on shares you acquired by reinvesting your dividends and
distributions. To keep your CDSC as low as possible, each time you place a
request to sell shares we will first sell any shares in your account that are
not subject to a CDSC.
The Fund's distributor may pay up to the entire amount of the sales charge to
particular broker-dealers. On purchases over $1 million, the distributor may pay
dealers of record commissions in an amount of up to 1.0% of the first $4
million, plus 0.50% of the next $6 million, plus 0.25% of share purchases over
$10 million. This commission schedule is also effective for sales of shares made
to investors which qualify under any of the last category listed under "Waivers
for Certain Investors."
REDUCING YOUR SALES CHARGES. There are several ways you can combine multiple
purchases of shares of the Fund to take advantage of the breakpoints in the
sales charge schedule. The following ways can be combined in any manner.
|X| ACCUMULATION PRIVILEGE - lets you add the value of any shares of the
Fund you or members of your family already own to the amount of your
next investment for purposes of calculating the sales charge.
Participants in retirement plans receive breakpoints at the plan level.
You must notify your broker, and your broker must notify the Fund, that
you are eligible for this privilege each time you make a purchase.
|X| LETTER OF INTENTION - lets you purchase shares of the Fund over a
13-month period and receive the same sales charge as if all shares
had been purchased at once.
CDSC WAIVERS. As long as the transfer agent is notified at the time you sell,
the CDSC will generally be waived in the following cases:
|X| to make Systematic Withdrawal Plan payments that are limited annually
to no more than 12% of the value of the account at the time the plan
is initiated;
|X| because of shareholder death or disability;
|X| because of the death or disability of the grantor of a living trust;
|X| under reorganization, liquidation, merger or acquisition transactions
involving other investment companies; and
|X| for retirement plans under the following circumstances;
1. to return excess contributions,
2. hardship withdrawals as defined in the plan,
3. under a Qualified Domestic Relations Order as defined in
the Internal Revenue Code,
4. to meet minimum distribution requirements under the
Internal Revenue Code,
5. to make "substantially equal payments" as described in
Section 72(t) of the Internal Revenue Code, and
6. after separation from service.
REINSTATEMENT PRIVILEGE. If you sell shares of the Fund, you may reinvest some
or all of the proceeds within 180 days without a sales charge, as long as the
transfer agent is notified before you invest. If you paid a CDSC when you sold
your shares, you will be credited with the amount of the CDSC. All accounts
involved must have the same registration.
WAIVERS FOR CERTAIN INVESTORS. Shares may be offered without front-end sales
charges to the following individuals and institutions:
|X| Selling brokers and their employees and/or sales representatives,
|X| Any bank, trust company, charitable organization, or other institution
acting on behalf of a fiduciary client,
|X| Registered investment advisors, fee-based financial planners, wrap
accounts or other investment programs not receiving a portion of
the Fund's sales charges but in which a fee is paid to an investment
professional,
|X| Pension, profit sharing or other qualified retirement plans including
employer-sponsored 401(k) and 403(b) plans,
|X| Any individual with an investment account or advisory relationship with
IGAM or the Distributor,
|X| The Fund's shareholders of record as of October 1, 2000,
|X| Present or former officers, directors, and employees (or their
families) of the Fund, IGAM or the Distributor,
|X| One or more members of a group (including spouses and dependent
children) of at least 100 persons engaged, or previously engaged,
in a common business, profession, civic or charitable endeavor or
other activity (CDSC applies if redeemed within 18 months).
MARKETING AND DISTRIBUTION
T.O. Richardson Securities, Inc. (the "Distributor") is the principal
underwriter and national distributor for the Fund's shares.. The Distributor is
a broker-dealer firm, registered with the SEC and in all 50 states. The
Distributor is a member in good standing with the National Association of
Securities Dealers, Inc.
SHAREHOLDER SERVICING AND DISTRIBUTION PLAN. Under a plan adopted by the Fund's
Board of Trustees pursuant to Rule 12b-1 under the 1940 Act (the "Plan"), the
Fund is authorized to pay the Distributor, the manager or others, shareholder
servicing and/or distribution fees at an annual rate not to exceed 0.25% of the
average daily net assets of the Fund. Such fees will be used to reimburse
persons who provide, or make payments for, administration, shareholder servicing
and distribution assistance for the Fund, including paying for the preparation
of advertising and sales literature and the printing and distribution of such
materials to prospective investors. Because these fees are paid out of the
Fund's assets on an on-going basis, over time these fees will increase the cost
of your investment and may cost you more than paying other types of sales
charges.
Certain broker-dealers, investment advisers, agents and other third parties are
authorized to accept orders on the Fund's behalf. These third parties may charge
transaction fees in connection with Fund transactions. These fees would be in
addition to any amounts paid by the Fund under the Plan.
HOW TO PURCHASE SHARES
GENERAL INFORMATION. You may purchase shares of the Fund at their net asset
value plus the applicable front-end sales charge. For an application or other
information, please call (800) 234-0849 or visit the Fund's web-site at
www.internetindexfund.net.
IRAs and Retirement
REGULAR ACCOUNT ACCOUNTS
MINIMUM INITIAL PURCHASES $1,000 $250
MINIMUM ADDITIONAL PURCHASES $50 $50
The Fund reserves the right to vary or waive the initial and additional
investment minimum requirements at any time. PURCHASES BY MAIL. You may purchase
shares by sending a completed and signed application, together with a check or
money order payable to the Internet Index Fund to:
REGULAR MAIL: OVERNIGHT OR EXPRESS MAIL:
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The Internet Index Fund The Internet Index Fund
c/o Firstar Mutual Fund Services, LLC c/o Firstar Mutual Fund Services, LLC
P.O. Box 701 615 East Michigan Street, 3rd Floor
Milwaukee, WI 53201-0701 Milwaukee, WI 53202
TRANSACTIONS USING THE INTERNET. You may obtain a prospectus, an account
application and other information regarding the Fund using the Internet by
visiting www.internetindexfund.net. If you elect the online transactions option
on the account application form (or fill out a separate online transaction
request form) you may also use the Internet to purchase (or redeem) shares,
check your account balance or check your transaction history.
PAYMENTS BY WIRE. You may also purchase shares of the Fund by wiring federal
funds from your bank. Your bank may charge you a fee for this service. If money
is to be wired, you must call the Fund at (800) 234-0849 to set up your account
and obtain an account number. You should be prepared to provide the information
on the Fund's application form to the telephone representative. Then, you should
provide your bank with the following information for purposes of wiring your
investment.
Firstar Mutual Fund Services, LLC
ABA # 042000013
Attn: IGAM Group - The Internet Index Fund
D.D.A. # 112-952-137
Account Name ____________________________________
(Write in account registration name)
For the Account # _______________________________
(Write in account # assigned by the Fund)
When making initial purchases by wire, you must send a signed application to the
Fund by regular or overnight mail at the addresses shown above in order to
complete your initial wire purchase. Wire orders will be accepted only on a day
on which the Fund is open for business. A wire purchase will not be considered
made until the wired money is received and the purchase is accepted by the Fund.
Any delays that may occur in wiring money, including delays that may occur in
processing by the banks, are not the responsibility of the Fund or its agents.
There is presently no fee for the receipt of wired funds, but the right to
charge shareholders for this service is reserved by the Fund.
PURCHASING THROUGH PROCESSING ORGANIZATIONS. You may also purchase shares of the
Fund through a "Processing Organization," which is a broker-dealer, bank or
other financial institution that purchases shares for its customers. When you
purchase shares this way, the Processing Organization may be listed as the
shareholder of record of the shares. Such shares may be transferred into your
name following procedures established by the Processing Organization and the
Fund. The minimum initial and subsequent investment amount for purchases through
a Processing Organization generally will be set by the Processing Organization.
Processing Organizations may also impose other charges and restrictions in
addition to or different from those applicable to investors who remain the
shareholder of record of their shares. Certain Processing Organizations may
receive payments from the Fund under its Distribution and Shareholder Servicing
Plan or payments from the Fund's investment manager.
TAX SHELTERED RETIREMENT PLANS. Shares of the Fund may be used as investments in
retirement plans such as: individual retirement plans (IRAs); simplified
employee pensions (SEPs); 401(k) plans; qualified corporate pension and profit
sharing plans (for employees); tax deferred investment plans (for employees of
public school systems and certain types of charitable organizations); and other
qualified retirement plans. You should contact the Fund for the procedure to
open an IRA or SEP plan, as well as more specific information regarding these
retirement plan options. Consultation with an attorney or tax advisor regarding
these plans is advisable. Custodial fees and other processing fees for an IRA
will be paid by the shareholder by redemption of sufficient shares of the Fund
from the IRA unless the fees are paid directly to the IRA custodian. You can
obtain information about IRA fees by calling the Fund at (800) 234-0849.
AUTOMATIC INVESTMENT PLAN. The Automatic Investment Plan permits you to purchase
shares of the Fund (minimum initial and subsequent investments of $50 per
transaction) at regular intervals. Provided your bank or other financial
institution allows automatic withdrawals, you may purchase shares by
transferring funds from the account you designate. At your option, the account
designated will be debited in the specific amount, and shares will be purchased
once a month, on the twentieth day. Only an account maintained at a domestic
financial institution which is an Automated Clearing House member may be so
designated. If you desire to participate in the Automatic Investment Plan, you
should call the Fund at (800) 234-0849 to obtain the appropriate forms. The
Automatic Investment Plan does not assure a profit and does not protect against
loss in declining markets. The Fund may modify or terminate the Automatic
Investment Plan at any time or charge a service fee. No such fee is currently
contemplated.
ADDITIONAL INFORMATION. The Fund reserves the right to limit or reject any
purchase request if, in its opinion, it is in the best interests of the Fund to
do so. Federal regulations require that investors provide a certified Taxpayer
Identification Number upon opening or reopening an account.
Dividends begin to accrue after you become a shareholder. The Fund does not
issue share certificates. All shares are held in non-certificate form registered
on the books of the Fund's transfer agent. If your check or wire does not clear,
a service fee of $25 will be deducted from your account and you will be
responsible for any loss incurred. If you are already a shareholder, the Fund
can redeem shares from any identically registered account in the Fund as
reimbursement for any loss incurred. You may be prohibited or restricted from
making future purchases in the Fund.
HOW TO REDEEM SHARES
GENERAL. You may request redemption of your Fund shares at any time. When a
request is received in proper form, the Fund will redeem the shares at the next
determined NAV.
The Fund will normally send you your redemption proceeds on the next business
day (and no later than seven calendar days) after receipt of a redemption
request in proper form. However, if you purchase Fund shares by check and
subsequently submit a redemption request, the redemption proceeds will not be
transmitted until your check has cleared, which may take up to 15 days. If you
have any questions about redemptions or need further information, please call
(800) 234-0849 or visit the Fund's website at www.internetindexfund.net.
REDEMPTIONS BY MAIL. Redemption requests by mail must include your signed letter
of instruction (including Fund name, account number(s), account names(s),
address and the dollar amount or number of shares you wish to redeem) and should
be addressed as follows:
REGULAR MAIL: OVERNIGHT OR EXPRESS MAIL:
------------- --------------------------
The Internet Index Fund The Internet Index Fund
c/o Firstar Mutual Fund Services, LLC c/o Firstar Mutual Fund Services, LLC
P.O. Box 701 615 East Michigan Street, 3rd Floor
Milwaukee, WI 53201-0701 Milwaukee, WI 53202
REDEMPTIONS BY TELEPHONE. If you elect the telephone redemption option on the
shareholder application form, you may make a telephone redemption request by
calling (800) 234-0849. The Fund or its agents may act on telephone instructions
from any person representing himself or herself to be a shareholder and
reasonably believed by the Fund or its agents to be genuine. The Fund and its
agents will employ reasonable procedures, such as requiring a form of personal
identification, to confirm that instructions are genuine and, if such procedures
are followed, neither the Fund nor its agents will be liable for following
telephone instructions reasonably believed to be genuine. IRA account holders
can not redeem by telephone.
During times of drastic economic or market conditions, you may experience
difficulty in contacting the Fund by telephone to request a redemption of Fund
shares. In such cases, you should consider using the other redemption procedures
described herein. Use of these other redemption procedures may result in the
redemption request being processed at a later time than it would have been if
telephone redemption had been used. During the delay, the Fund's net asset value
may fluctuate.
TRANSACTIONS USING THE INTERNET. You may obtain a prospectus, an account
application and other information regarding the Fund using the Internet by
visiting www.internetindexfund.net. If you elect the online transactions option
on the account application form (or fill out a separate online transaction
request form) you may also use the Internet to redeem (or purchase) shares,
check your account, balance or check your transaction history.
ADDITIONAL INFORMATION ABOUT REDEMPTIONS. You may have redemption proceeds wired
to your brokerage account or a bank account that you designate. A transaction
fee of $12.00 will be charged for payments by wire. Questions about this option
or redemption requirements generally should be directed to the Fund at (800)
234-0849.
A signature guarantee is required for requests to redeem a large amount of
shares ($25,000 or more), if your address of record has been changed within the
past 30 days, or if you ask for proceeds to be sent to a different address. A
signature guarantee is used to help protect you and the Fund from fraud. You can
obtain a signature guarantee from most banks or securities dealers, BUT NOT FROM
A NOTARY PUBLIC. Please call the Fund to learn if a signature guarantee is
needed or to make sure that it is completed appropriately in order to avoid
processing delays.
If your account falls below $1,000 ($250 for qualified retirement accounts) for
other than market reasons, the Fund may request that you increase your balance.
If the account is still below the minimum after 60 days, the Fund may
automatically close your account and send you the proceeds. The Fund also
reserves the right to make a "redemption-in-kind" if the amount you are
redeeming is large enough to affect Fund operations or otherwise disrupt the
Fund. When the Fund redeems-in-kind, it pays the shareholder in portfolio
securities rather than cash, and the shareholder may experience additional
expenses such as brokerage commissions in order to sell the securities.
SYSTEMATIC WITHDRAWAL PLAN. If you own shares with a value of $10,000 or more,
you may participate in the Systematic Withdrawal Plan. The Systematic Withdrawal
Plan allows you to make automatic withdrawals of $100 or more from your account
at regular intervals. Amounts will be transferred from your Fund account to the
bank account you choose at the interval you select on the New Account
Application form. If you expect to purchase additional shares, it may not be to
your advantage to participate in the Systematic Withdrawal Plan because of the
possible adverse tax consequences of making purchases and redemptions during the
same or similar time periods.
If you are an IRA shareholder, you must indicate on your redemption request
whether or not to withhold federal income tax. Requests that do not indicate a
preference will be subject to withholding. IRA shareholders may not redeem
shares by telephone or Internet. Redemption requests must be in writing.
DISTRIBUTIONS AND TAXATION
The Fund distributes substantially all of the net investment income and net
capital gains that it realizes in the sale of securities. These income and gains
distributions are generally paid once each year, on or before December 31.
Distributions are automatically reinvested in additional shares of the Fund,
unless you elect to have the distributions paid to you in cash. There are no
sales charges or transaction fees for reinvested distributions and all shares
will be purchased at NAV.
In general, Fund distributions are taxable to you as either ordinary income or
capital gain. This is true whether you reinvest your distributions in additional
Fund shares or receive them in cash. Capital gain dividends paid by the Fund are
taxable to you as long-term capital gain no matter how long you have owned your
shares.
By law, the Fund must withhold 31% of your taxable distributions and redemption
proceeds if you do not provide your correct certified social security or
taxpayer identification number and certify that you are not subject to backup
withholding, or if the IRS instructs the Fund to do so.
Every January, you will receive a statement that shows the tax status of
distributions you received for the previous year. Distributions declared in
December but paid in January are taxable as if they were paid in December.
When you sell your shares of the Fund, you may have a capital gain or loss.
Fund distributions and gain from the sale or exchange of your shares generally
will be subject to state and local taxes. Non-U.S. investors may be subject to
U.S. withholding and estate tax. You should consult your tax advisor about the
federal, state, local or foreign tax consequences of your investment in the
Fund.
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Fund's
financial performance for the past fiscal year. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned or lost on an investment
in the Fund (assuming reinvestment of all dividends and distributions). This
information has been audited by Arthur Andersen LLP, whose report, along with
the Fund's financial statements, are included in the annual report, which is
available upon request.
November 4, 1999(1)
to
PER SHARE DATA: June 30, 2000
NET ASSET VALUE, BEGINNING OF PERIOD
Income from investment operations: $10.00
------
Net investment income 0.12
Net realized and unrealized gains on investments 1.17
----
Total income from investment operations 1.29
----
Net asset value, end of period $11.29
TOTAL RETURN 12.90%(2)
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SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period $3,189,188
Ratios of expenses to average net
assets:
Before expense reimbursement 13.60%(3)
After expense reimbursement 1.40%(3)
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement (13.53)%(3)
After expense reimbursement (1.33)%(3)
Portfolio turnover rate 46.88%(2)
(1) Commencement of Operations
(2) Not annualized
(3) Annualized
BOARD OF TRUSTEES
Edward M. Mazze, Ph.D., Chairman
Eugene Y.W. Lee, Ph.D., CFA, President
Andrew C. Laviano, J.D.
Harris N. Rosen
Bruce Whyte
INVESTMENT MANAGER
INTEGRITY GLOBAL ASSET MANAGEMENT, INC.
Wakefield, Rhode Island
LEGAL COUNSEL
STRADLEY, RONON, STEVENS & YOUNG, LLP
Philadelphia, Pennsylvania
INDEPENDENT AUDITORS
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin
TRANSFER AGENT, FUND ACCOUNTING AGENT
AND FUND ADMINISTRATOR
FIRSTAR MUTUAL FUND SERVICES, LLC
Milwaukee, Wisconsin
CUSTODIAN
FIRSTAR BANK, N.A.
Cincinnati, Ohio
The Statement of Additional Information (SAI) for the Fund contains more
information about the Fund's policies and management and is incorporated by
reference into this prospectus. The Fund's annual and semi-annual reports to
shareholders contain additional information about the Fund's investments and a
discussion of the market conditions that significantly affected the Fund and the
Index during each fiscal year. You may obtain free copies of these documents and
additional information about the Fund by:
Telephone: 1-800-234-0849
Internet: WWW.INTERNETINDEXFUND.NET
Mail:REGULAR MAIL: OVERNIGHT OR EXPRESS MAIL:
------------- --------------------------
Internet Index Fund Internet Index Fund
c/o Firstar Mutual Fund Services, LLC c/o Firstar Mutual Fund Services, LLC
P.O. Box 701 615 East Michigan Street, 3rd Floor
Milwaukee, WI 53201-0701 Milwaukee, WI 53202
You may review and obtain copies of the SAI and other information about the Fund
by visiting the Securities and Exchange Commission's Public Reference Room in
Washington, DC. Please call 1-202-942-8090 for information relating to the
operation of the Public Reference Room. Reports and other information about the
Fund are available on the EDGAR database on the SEC's Internet site at
http://www.sec.gov. Copies of the information may also be obtained for a fee by
writing the Public Reference Section, Securities and Exchange Commission,
Washington, DC 20549-0102 or by sending an electronic request to the SEC at the
following e-mail address: [email protected].
1940 Act File No. 811-9493
