(Rockwood Fund, Inc. graphic here)
Prospectus Dated March 1, 1999
Rockwood Fund, Inc. seeks long term capital appreciation. This objective will be
pursued through investment in common stocks. There is no assurance that the Fund
will achieve its objective.
Newspaper Listing Shares of the fund are sold at the net
asset value per share as shown daily in the mutual fund
section of newspapers nationwide under the heading
"Rockwood."
This prospectus contains information you should know about the Fund before you
invest. Please keep it for future reference.
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus.
CONTENTS
INVESTMENT OBJECTIVE AND STRATEGY............................................-2-
MAIN RISKS...................................................................-2-
PAST PERFORMANCE.............................................................-3-
FEES AND EXPENSES OF THE FUND................................................-4-
MANAGEMENT...................................................................-5-
FINANCIAL HIGHLIGHTS.........................................................-6-
PURCHASING SHARES............................................................-7-
REDEEMING SHARES.............................................................-9-
ACCOUNT AND TRANSACTION POLICIES.............................................-9-
-1-
<PAGE>
DISTRIBUTIONS AND TAXES.....................................................-10-
FOR MORE INFORMATION........................................................-12-
-2-
<PAGE>
INVESTMENT OBJECTIVE AND STRATEGY
The Fund seeks long term capital appreciation. The Fund seeks to achieve this
objective by investing primarily in equity securities. Any income which the Fund
earns is incidental to its objective of capital appreciation. The Fund will
purchase primarily common stocks, which will be selected generally for their
potential for long term capital appreciation and not dividend yield. Generally,
the Fund will invest in the stocks of companies expected to achieve
above-average growth, which may have small, medium and large capitalizations.
The Fund may, from time to time, under adverse market conditions and in a few
other instances, take temporary defensive positions that are inconsistent with
the Fund's principal investment strategies, such as investing some or all of its
assets in money market securities. When the Fund takes such temporary defensive
positions, the Fund may not achieve its investment objective.
The Fund has adopted certain investment restrictions set forth in the Statement
of Additional Information that are fundamental and may not be changed without
shareholder approval. The Fund's other investment policies, including its
investment objective, are not fundamental and may be changed by the Board of
Directors without shareholder approval.
MAIN RISKS
Market Risk. The risks associated with investing in the Fund are those related
to fluctuations in the value of the Fund's portfolio. A potential risk in
investing in stocks is that stock value will go up and down according to stock
market movements and you could lose money. However, you also have the potential
to make money. Also, investing in stocks involves a greater risk of loss of
income than bonds because stocks may not pay dividends.
Small Capitalization Risk. The Fund may invest in companies that are small or
thinly capitalized, and may have a limited operating history. A potential risk
in investing in small-cap stocks is that small-cap stocks are likely more
vulnerable than larger companies to adverse business or economic developments.
During broad market downturns, Fund value may fall further than that of funds
investing in larger companies. Full development of small-cap companies takes
time, and for this reason the Fund should be considered a long term investment
and not a vehicle for seeking short term profit.
Non-Diversification Risk. The Fund is non-diversified which means that more than
5% of the Fund's assets may be invested in the securities of one issuer. As a
result, the Fund may hold a smaller number of issuers than if it were
diversified. If this situation occurs, investing in the Fund could be more risky
than investing in a fund that holds a broader range of securities because
changes in the financial condition of a single issuer could cause greater
fluctuation in the Fund's total return.
Lending. The Fund may lend portfolio securities to borrowers for a fee.
Securities may only be lent if the Fund receives collateral equal to the market
value of the assets lent. Some risk is involved if the borrowers suffer
financial problems and are unable to return the assets lent.
-3-
<PAGE>
Illiquid Securities. The Fund may invest up to 15% of its assets in illiquid
securities. Some potential risks from investing in illiquid securities is that
illiquid securities can be more difficult to value than more widely traded
securities and the prices realized from the sales of illiquid securities may be
less than if such securities were more widely traded.
Year 2000. The Fund could be adversely effected if computer systems used by
Rockwood Advisers and the Fund's other service providers do not properly process
and calculate date-related information on and after January 1, 2000. Rockwood
Advisers is working to avoid these problems and to obtain assurances from other
service providers that they are taking similar steps. There could be a negative
impact on the Fund.
PAST PERFORMANCE
The bar chart provides some indiction of the risks of investing in the Fund by
showing changes in the Fund's performance from year to year. The table compares
the Fund's average annual returns for the 1, 5 and 10 year periods with those of
the Russell 2000 Index, a small company index that is unmanaged and fully
invested in common stocks. Both the bar chart and the table assume reinvestment
of dividends and distributions. As with all mutual funds, past performance is
not necessarily an indication of future performance.
[GRAPHIC OMITTED]
Best Quarter: 24.77%
1/96-3/96
Worst Quarter: (19.47%)
7/90-9/90
-4-
<PAGE>
Average annual total return for the periods ended 12/31/98
1 Year 5 Years 10 Years
................. ................. ...............
Rockwood Fund (13.82%) 7.40% 6.10%
.........................
Russell 2000 Index (2.57%) 11.87% 12.92%
FEES AND EXPENSES OF THE FUND
As an investor, you pay certain fees and expenses in connection with the Fund,
which are described in the following tables. Shareholder fees are paid out of
your account. Annual fund operating expenses are paid out of Fund assets, so
their effect is included in the share price.
Shareholder Fees
(fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price)...................................... NONE
Maximum Deferred Sales Charge (Load)..................................... NONE
Maximum Sales Charge (Load) Imposed on Reinvested
Dividends................................................................ NONE
Redemption Fee within 30 days of purchase................................ 1.00%
Redemption Fee after 30 days of purchase................................. NONE
Exchange Fees............................................................ NONE
Annual fund operating expenses
(expenses that are deducted from fund assets)( as % of average daily net assets)
Management fees......................................................... 1.00%
Distribution and Service (12b-1) fees................................... 0.25%
Other expenses.......................................................... 8.02%
Total Annual Fund Operating Expenses.................................... 9.27%
With the waiver of management fees and reimbursement for other expenses,
Management Fees, Other Expenses and Annual Fund Operating Expenses would have
been 0%, 2.60% and 2.85%, respectively, of average net assets. Expense
reimbursement and fee waivers are expected to continue but may be terminated at
any time at the option of the Investment Manager.
-5-
<PAGE>
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds:
<TABLE>
<CAPTION>
One Three Five Ten
Year Years Years Years
<S> <C> <C> <C> <C>
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 the
fund's operating expenses remain the same. Although your
actual costs may be higher or lower, based on these
assumptions your costs would
be:......................................................... $ 907 $2,607 $4,165 $7,513
------------ ------------- ------------ ------------
</TABLE>
This example shows you what you could pay over time. It uses the same
hypothetical conditions other funds use in their prospectuses: $10,000 initial
investment, 5% total return each year and no changes in expenses. All shares are
sold at the end of each time period. This example is for comparison only. The
Fund's actual return and expenses will be different.
MANAGEMENT
Rockwood Advisers, Inc. is the investment manager of the Fund, providing
day-to-day advice regarding portfolio transactions and is located at 11 Hanover
Square, New York, New York 10005. Bassett S. Winmill, Chief Investment Officer
of the investment manager, is the Fund's portfolio manager. Mr. Winmill has
served as a portfolio manager of the Fund since February 2, 1999. He is a member
of the New York Society of Security Analysts, the Association for Investment
Management and Research and the International Society of Financial Analysts.
Generally, the Fund pays the investment manager a management fee based on the
average daily net assets of the Fund, at the annual rate of 1% on the first $200
million and declining thereafter as a percentage of average daily net assets.
Voluntary reimbursements for the year ended October 31, 1998 and for the two
months ended December 31, 1998, were $77, 131 and $15,416, respectively.
Investor Service Center, Inc. is the distributor of the Fund and services
shareholder accounts. The Fund pays the distributor a distribution or 12b-1 fee
in an amount of one-quarter of one percent per annum of the Fund's average daily
net assets as compensation for distribution and service activities.
-6-
<PAGE>
FINANCIAL HIGHLIGHTS
This table describes the Fund's performance for the past five years. In 1998,
the fiscal year end changed to December 31. Previously, the fiscal year end was
October 31. Certain information reflects financial results for a single Fund
share. Total return shows how much your investment in the Fund would have
increased (or decreased) during each period, assuming you had reinvested all
dividends and distributions. The figures for the periods ended 1996 through 1998
were audited by Tait, Weller & Baker, the Fund's independent accountants, whose
report, along with the Fund's financial statements, are included in the annual
report, which is available upon request. The Fund's financial statements for
periods prior to 1996 were audited by other auditors whose reports thereon
expressed unqualified opinions on those statements.
<TABLE>
<CAPTION>
Two Months Ended
December 31, Years Ended October 31,
.................... ......... .......... ........... ........... ...........
1998 1998 1997 1996 1995 1994
- --------------------------------------------- -------------------- --------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA*
Net asset value at beginning of period $15.67 $24.92 $24.24 $18.73 $16.61 $16.32
............................................. .................... ......... .......... ........... ........... ...........
Income from investment operations:
Net investment income (loss) (.04) (.25) (.59) (.56) (.31) (.22)
Net Gains or Losses on Securities (both .98 (7.20) 6.17 6.07 2.43 .51
realized and unrealized)
Total from investment operations .94 (7.45) 5.58 5.51 2.12 .29
- --------------------------------------------- -------------------- --------- ---------- ----------- ----------- -----------
Less distributions:
Distributions (from capital gains) (2.04) (1.80) (4.90) .00 .00 .00
Total distributions (2.04) (1.80) (4.90) .00 .00 .00
............................................. .................... ......... .......... ........... ........... ...........
Net asset value, end of period $14.57 $15.67 $24.92 $24.24 $18.73 $16.61
TOTAL RETURN 6.48% (31.29%) 27.55% 29.42% 12.76% 1.78%
- --------------------------------------------- -------------------- --------- ---------- ----------- ----------- -----------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000s omitted) $548 $613 $1,771 $1,200 $774 $714
Ratio of expenses to average net assets(a)(b) 2.85%** 2.09% 2.81% 2.55% 2.30% 2.00%
Ratio of net income to average net assets(c) (1.54%)** (1.38%) (2.65%) (2.23%) (1.77%) (1.38%)
Portfolio turnover rate 0% 207.02% 44.00% 42.48% 30.04% 18.26%
<FN>
* Per share net investment loss and net realized and unrealized gain
on investments have been computed including the average number of
shares outstanding. These computations had no effect on net asset
value per share.
** Annualized.
(a) Ratio prior to reimbursement by the manager was 18.84%**,9.27%,
10.47%, 4.44%, 3.00%, and 2.82%, for the two months ended December
31, 1998 and the years ended October 31, 1998, 1997, 1996, 1995, and
1994, respectively.
(b) Ratio after custodian fee credits was 1.97% for the year ended
October 31, 1998. There were no custodian fee credits for prior
years.
(c) Ratio prior to reimbursement by the manager was (17.53%)**, (8.56%),
(10.31%), (4.12%), (2.47%), and (2.20%) for the two months ended
December 31, 1998 and the years ended October 31, 1998, 1997, 1996,
1995, and 1994, respectively.
</FN>
</TABLE>
-7-
<PAGE>
PURCHASING SHARES
Your price for Fund shares is the Fund's next calculation, after the order is
placed, of net asset value (NAV) per share which is determined as of the close
of regular trading on the New York Stock Exchange (currently, 4 p.m. eastern
time) each day the exchange is open. The Fund's investments are valued based on
market value, or where market quotations are not readily available, based on
fair value as determined in good faith by the Fund's board.
Opening Your Account.
By check. Complete and sign the Account Application that accompanies this
prospectus and mail it, along with your check made payable to Rockwood Fund, to
Investor Service Center, Box 419789, Kansas City, MO 64141-6789 (see Minimum
Investments below).
By wire. Telephone Investor Service Center toll-free at 1-888-ROCKWOOD, to give
the name(s) under which the account is to be registered, tax identification
number, the name of the bank sending the wire, and to be assigned a Rockwood
Fund account number. You may then purchase shares by requesting your bank to
transmit immediately available funds ("Federal funds") by wire to: United
Missouri Bank NA, ABA #10-10-00695; for Account 98-7052-724-3; Rockwood Fund.
Your account number and name(s) must be specified in the wire as they are to
appear on the account registration. You should then enter your account number on
your completed Account Application and promptly forward it to Investor Service
Center, Box 419789, Kansas City, MO 64141-6789. This service is not available on
days when the Federal Reserve wire system is closed (see Minimum Investments
below).
Minimum Investments
Initial Subsequent
Regular account $1,000 $100
Uniform Gifts/Transfers to
Minors Act custody accounts $1,000 $100
Traditional IRA $1,000 $100
Roth IRA $1,000 $100
SEP-IRA $1,000 $100
SIMPLE IRA $1,000 $100
Rollover IRA $1,000 $100
403(b) plan $1,000 $100
Education IRA $500 N/A
Automatic Investment Program $100 $100
- ------------------------------------ ----------------------- -----------------
Checks must be payable to Rockwood Fund in U.S. dollars. Third party checks
cannot be accepted. You may be charged a fee for any check that does not clear.
-8-
<PAGE>
IRAs and retirement accounts. For more information about the IRAs and retirement
accounts listed above, please call Investor Service Center toll-free at
1-888-ROCKWOOD.
Automatic Investment Program. With the Automatic Investment Program, you can
establish a convenient and affordable long term investment program through one
or more of the plans explained below. Each plan is designed to facilitate an
automatic monthly investment of $100 or more into your Fund account.
Bank Transfer Plan For making automatic investments
from a designated bank account.
................................................................................
Salary Investing Plan For making automatic investments
through a payroll deduction.
................................................................................
Government Direct Deposit Plan For making automatic investments
from your federal employment,
Social Security or other regular
federal government check.
The Fund reserves the right to redeem any account if participation in the
program ends and the account's value is less than $1000.
For more information, or to request the necessary authorization form, please
call Investor Service Center toll-free at 1-888-ROCKWOOD. You may modify or
terminate the Bank Transfer Plan at any time by written notice received 10 days
prior to the scheduled investment date. To modify or terminate the Salary
Investing Plan or Government Direct Deposit Plan, you should contact your
employer or the appropriate U.S. Government agency, respectively.
Adding to Your Account.
By check. Complete a Rockwood FastDeposit form and mail it, along with your
check, made payable to Rockwood Fund, to Investor Service Center, Box 419789,
Kansas City, MO 64141-6789 (see Minimum Investments above). If you do not use
that form, include a letter indicating the account number to which the
subsequent investment is to be credited, and the name of the registered owner.
By Electronic Funds Transfer (EFT). Telephone Investor Service Center toll-free
at 1-888- ROCKWOOD. The bank you designate on your Account Application or
Authorization Form will be contacted to arrange for the EFT, which is done
through the Automated Clearing House system, to your Fund account. Requests
received by 4 p.m., eastern time, will ordinarily be credited to your Fund
account within two business days. Your designated bank must be an Automated
Clearing House member and any subsequent changes in bank account information
must be submitted in writing with a voided check (see Minimum Investments
above).
By wire. Subsequent investments by wire may be made at any time without having
to call Investor Service Center by simply following the same wiring procedures
above (see Minimum Investments above).
-9-
<PAGE>
REDEEMING SHARES
Generally, you may redeem by any of the methods explained below. Requests for
redemption should include the following information:
o name of the registered owner(s) of the account
o account number
o Fund name
o amount you want to sell
o recipient's name and address or wire information
In some instances, a signature guarantee may be required.
By mail. Write to Investor Service Center, Box 419789, Kansas City, MO
64141-6789, and request the specific amount to be redeemed. The request must be
signed by the registered owner(s).
By telephone. Telephone Investor Service Center toll-free at 1-888-ROCKWOOD, to
expedite redemption of Fund shares.
By EFT. Telephone Investor Service Center toll-free at 1-888-ROCKWOOD and
request the specific amount to be redeemed through EFT. You may redeem as little
as $250 worth of shares by requesting EFT service. EFT proceeds are ordinarily
available in your bank account within two business days.
By wire. Telephone Investor Service Center toll-free at 1-888-ROCKWOOD and
request the specific amount to be redeemed by wire.
Systematic Withdrawal Plan. If your shares have a value of at least $20,000 you
may elect automatic withdrawals from your Fund account, subject to a minimum
withdrawal of $100. All dividends and distributions are reinvested in the Fund.
ACCOUNT AND TRANSACTION POLICIES
Order execution. Orders to buy and sell shares are executed at the next NAV
calculated after the order has been accepted. Orders received on Fund business
days by 4 p.m., eastern time, will be redeemed from your account that day.
Orders received after 4 p.m., eastern time, will be redeemed from your account
on the next Fund business day.
Redemption fee. The Fund is designed as a long term investment, and short term
trading is discouraged. Accordingly, if shares of the Fund held for 30 days or
less are redeemed or exchanged, the Fund will deduct a redemption fee equal to
one percent of the NAV of shares redeemed or exchanged.
Redemption payment. Payment for shares redeemed will ordinarily be made within
seven days after receipt of the redemption request in proper form.
-10-
<PAGE>
Accounts with below-minimum balances. If your account balance falls below $500
as a result of selling shares and not because of market action, the Fund
reserves the right, upon 45 days' notice, to close your account or request that
you buy more shares.
Telephone privileges. The Fund accepts telephone orders from all shareholders
and guards against fraud by following reasonable precautions such as requiring
personal identification before carrying out shareholder requests. You could be
responsible for any loss caused by an order which later proves to be fraudulent.
Assignment. Fund shares may be transferred to another owner. Instructions are
available from Investor Service Center by calling toll-free at 1-888-ROCKWOOD.
DISTRIBUTIONS AND TAXES
Distributions. The Fund pays its shareholders dividends from its net investment
income, and distributes any net capital gains that it has realized. Each of
these distributions is paid out once a year. Your distributions will be
reinvested in the Fund unless you instruct the Fund otherwise by calling
Investor Service Center toll-free at 1-888-ROCKWOOD.
Taxes. Generally, you will be taxed when you sell shares, exchange shares and
receive distributions (whether reinvested or taken in cash). Typically, your tax
treatment will be as follows:
Transaction Tax treatment
- ----------- ---------------
Income dividends........................................ Ordinary income
Short-term capital gains distributions.................. Ordinary income
Long-term capital gains distributions................... Capital gains
Sales or exchanges of shares held for
more than one year................................. Capital gains or losses
Sales or exchanges of shares held for
one year or less................................... Gains are treated as
ordinary income; losses
are subject to special
rules
Because long-term capital gains distributions are taxable as capital gains
regardless of how long you have owned your shares, you may want to avoid making
a substantial investment when the Fund is about to declare a long-term capital
gains distribution.
Each January, the Fund issues tax information on its distributions for the
previous year.
Any investor for whom the Fund does not have a valid taxpayer identification
number will be subject to backup withholding for taxes.
-11-
<PAGE>
The tax considerations described in this section do not apply to tax-deferred
accounts or other non-taxable entities.
Because everyone's tax situation is unique, please consult your tax professional
about your investment.
-12-
<PAGE>
FOR MORE INFORMATION about Rockwood Fund, Inc.
For investors who want more information on the Fund, the following documents are
available free upon request:
Annual/Semi-Annual Reports. Contains performance data, lists portfolio holdings
and contains a letter from the Fund's manager discussing recent market
conditions, economic trends and Fund strategies that significantly affected the
Fund's performance during the last fiscal year.
Statement of Additional Information (SAI). Provides a fuller technical and legal
description of the Fund's policies, investment restrictions, and business
structure. A current SAI is on file with the Securities and Exchange Commission
(SEC) and is incorporated by reference (is legally considered part of this
prospectus).
To Obtain Information
By telephone
Call 1-888-ROCKWOOD
By mail write to:
Rockwood Fund, Inc.
11 Hanover Square
New York, NY 10005
By e-mail write to:
[email protected]
On the Internet Fund documents
can be viewed online or downloaded from:
SEC http://www.sec.gov
Rockwood http://www.mutualfunds.net
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (phone 1-800-SEC-0330) or by sending your request and a
duplicating fee to the SEC's Public Reference Section, Washington, DC
20549-6009. The Fund's Investment Company Act file number is 811-04534.
-13-
