The

(WWWFX) - Get Report

Internet fund's cupboard is bare.

The wildly popular mutual fund has temporarily shut its doors to investors because it has run out of shares to sell "due to a prospectus limitation," according to a recording callers get when dialing the fund's 800 information line.

The fund's advisers will ask shareholders March 29 to approve an increase, to 50 million from 10 million, in the number of shares the fund can issue, according to a filing with the

Securities and Exchange Commission

. The fund's managers say they hope to reopen the fund March 30.

Internet fund board members unanimously recommend approval of the measure, according to the proxy statement. If the vote to expand share-issuing authority fails, the firm will have no shares available for purchase by new and existing shareholders. A lack of shares also would hamper the process of reinvesting shareholder dividends, according to the SEC filing.

The once-tiny Internet fund captured the attention of investors with its chart-topping 1998 return of 196%. The fund has grown from less than $200,000 in assets at the beginning of 1998 to more than $200 million last month. This torrent of cash has not curbed the fund's success: It's up 76.7% through Monday, putting it ahead of all other funds, according to

Lipper

.

The decision to authorize the issue of just 10 million shares, made during the filing of incorporation documents, is the latest growing pain to afflict the fund's advisers, who have been playing catch-up ever since the fund caught fire.

Born in 1996 in the Long Island, N.Y., suburb of Babylon, the fund was conceived by a couple of

young commuters with no experience in running mutual funds. The first investors were mostly friends and family. But after the fund burned up the charts in 1998, its phenomenal growth caught the founders by surprise as they scampered to meet investor demand from a tiny office in the residential suburb. The group finally hired an outside firm to handle its bustling back office this year.

At the same time, Ryan Jacob, the fund's portfolio manager since 1997, found he had to quit his day job writing for

IPO Value Monitor

, a newsletter, to focus full time on picking stocks.

The rules governing an increase in authorized shares differ from state to state, according to Gene Golhke, associate director in the SEC's Office of Compliance, Inspections and Examinations. Some states require a shareholder vote, others merely a resolution by the fund's board.

"I vaguely remember hearing of this happening once in the 25 years I've been here," says Gohlke. "I think funds usually start out authorizing a lot of shares."

The good news for Internet fund shareholders is that the increase will not dilute the value of the shares they now hold. "New shares in a mutual fund are sold at the current net asset value, so new money comes in at the current value of existing shares," says Gohlke.