<PAGE>
As filed with the Securities and Exchange Commission
on July 11, 1996
1933 Act Registration Number 33-24263
1940 Act Registration Number 811-5661
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933 /x/
Pre-Effective Amendment No. ____ / /
Post-Effective Amendment No. 13 /x/
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 /x/
Amendment No. 16 /x/
____________________
Weitz Series Fund, Inc.
(Exact Name of Registrant as Specified in Charter)
Suite 600
1125 South 103 Street
Omaha, NE 68124-6008
(Address of Principal Offices)
Registrant's Telephone Number, including Area Code:
402-391-1980
Wallace R. Weitz
Suite 600
1125 South 103 Street
Omaha, NE 68124-6008
(Name and Address of Agent for Service)
____________________
Copies of all communications to:
DONALD F. BURT, ESQ.
Cline, Williams, Wright, Johnson & Oldfather
1900 FirsTier Bank Building
Lincoln, NE 68508
Approximate Date of Proposed Public Offering: As soon as practicable after
the Registration Statement becomes effective.
It is proposed that this filing will become effective immediately upon
filing, pursuant to paragraph (b) of Rule 485 under the Securities Act of
1933.
The Registrant has registered an indefinite number of its shares under the
Securities Act of 1933 pursuant to Rule 24f-2 under the Investment Company
Act of 1940. The Registrant last filed a Rule 24f-2 Notice on or about May
17, 1996.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE>
WEITZ SERIES FUND, INC.
Cross-Reference Sheet
Required by Rule 404(a)
PART A
<TABLE>
<CAPTION>
N-1A Item Number Location in Prospectus
- ---------------- ----------------------
<S> <C> <C>
1. Cover Page............................... Cover Page
2. Synopsis................................. Summary
3. Condensed Financial Information.......... Financial Highlights
4. General Description of Registrant........ Risk Factors; Investment Objective and Policies; Investment
Restrictions; Securities and Other Investment Practices;
General Information
5. Management of the Fund................... The Investment Adviser; General Information
6. Capital Stock and Other Securities....... Cover Page; Redemption of Shares; Dividends, Distributions and
Taxes; General Information
7. Purchase of Securities Being Offered..... Purchases of Shares; Determination of Net Asset Value
8. Redemption or Repurchase................. Redemption of Shares; Determination of Net Asset Value
9. Pending Legal Proceedings................ Not Applicable
</TABLE>
<PAGE>
PART B
<TABLE>
<CAPTION>
Location in Statement of Additional Information
-----------------------------------------------
<S> <C> <C>
10. Cover Page............................... Cover Page
11. Table of Contents........................ Table of Contents
12. General Information and History.......... Not Applicable
13. Investment Objective and Policies........ Investment Objective, Policies and Restrictions-General;
Investment Objective, Policies and Restrictions-Value
Portfolio; Investment Objective, Policies and Restrictions-Fixed
Income Portfolio; Investment Objective, Policies and
Restrictions-Government Money Market Portfolio; Investment
Objective; Policies and Restrictions; Hickory Portfolio;
Securities and Other Investment Policies
14. Management of the Fund................... Directors and Executive Officers
15. Control Persons and Principal Holders
of Securities............................ Investment Advisory and Other Services-Control of the Adviser
and the Distributor; Capital Stock
16. Investment Advisory and Other
Services................................. Investment Advisory and Other Services
17. Brokerage Allocation and Other
Practices................................ Portfolio Transactions and Brokerage Allocations
18. Capital Stock and Other Securities....... Capital Stock
19. Purchase, Redemption and Pricing
of Securities Being Offered.............. Determination of Net Asset Value; Redemption
20. Tax Status............................... Taxation
<PAGE>
Location in Statement of Additional Information
-----------------------------------------------
<S> <C> <C>
21. Underwriters............................. Investment Advisory and Other Services
22. Calculations of Performance Data......... Calculations of Performance Data
23. Financial Statements..................... Financial Statements
</TABLE>
PART C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C to this Registration Statement.
<PAGE>
PROSPECTUS
WEITZ SERIES FUND, INC.
1125 South 103 Street, Suite 600
Omaha, Nebraska 68124-6008
402-391-1980 800-232-4161
Fax 402-391-2125
Weitz Series Fund, Inc. (the "Fund"), is a no-load open-end management
investment company issuing its shares in series, each series representing a
distinct portfolio with its own investment objectives and policies. Presently,
there are four series authorized: Value Portfolio, Fixed Income Portfolio,
Government Money Market Portfolio and Hickory Portfolio (the "Portfolios"). The
Value, Fixed Income and Government Money Market Portfolios are considered
diversified investment companies and the Hickory Portfolio is considered a
nondiversified investment company. The investment objectives of the Portfolios
are set forth on the inside of this cover page.
The net asset value of shares of the Portfolios, except the Government Money
Market Portfolio, will fluctuate and as a result may be worth more or less at
redemption than the original cost.
The Government Money Market Portfolio, unlike the Fund's other Portfolios,
will attempt to maintain a stable net asset value of $1.00 per share; however,
there can be no assurance that this will occur. The Government Money Market
Portfolio is not insured nor guaranteed by the United States Government.
This Prospectus briefly summarizes information an investor should consider
before purchasing shares and should be retained for future reference. A
Statement of Additional Information, which provides further information about
the Fund and the Portfolios, may be obtained without charge, and shareholder
inquiries may be made to Weitz Securities, Inc. at the address or telephone
number listed above. The Statement of Additional Information, dated July 11,
1996, has been filed with the Securities and Exchange Commission and is
incorporated into this Prospectus by reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is July 11, 1996
<PAGE>
INVESTMENT OBJECTIVES
VALUE PORTFOLIO: To seek capital appreciation by investing principally in
common stocks, preferred stocks and a variety of securities convertible into
equity such as rights, warrants and convertible bonds, as well as bonds and
other debt obligations of both corporate and government issues. The receipt of
income is considered a secondary objective, as some investments may yield
dividends and interest or other income. A MORE DETAILED EXPLANATION OF
INVESTMENT PRACTICES IS INCLUDED UNDER "INVESTMENT OBJECTIVE AND POLICIES --
VALUE PORTFOLIO."
FIXED INCOME PORTFOLIO: To achieve a high level of current income consistent
with the preservation of capital. To achieve this objective, the Fixed Income
Portfolio will normally invest at least 65% of the value of its total assets in
fixed income securities, including U.S. Government securities, U.S. Government
agency securities, state and municipal obligations and bank obligations,
including certificates of deposit, time deposits or bankers' acceptances of
domestic banks and corporate debt securities. The Fixed Income Portfolio will
maintain at least 85% of its total assets in securities rated BBB by Standard &
Poors Corporation ("S&P") or Baa by Moody's Investor's Service ("Moody's") or
higher, is allowed to invest up to 15% of its total assets in securities rated
below BBB or Baa and is allowed to invest in unrated securities which the
Investment Adviser determines are of comparable quality to the rated securities
in which the Fixed Income Portfolio may invest. Securities rated below BBB or
Baa are generally known as "junk bonds." See "Risk Factors -- Fixed Income
Portfolio." The Fixed Income Portfolio will normally not invest in bonds rated
below B or bonds that are currently in default. RATINGS ARE FURTHER EXPLAINED IN
APPENDIX A TO THIS PROSPECTUS. A MORE DETAILED EXPLANATION OF FIXED INCOME
SECURITIES AND INVESTMENT PRACTICES IS INCLUDED UNDER "INVESTMENT OBJECTIVE AND
POLICIES -- FIXED INCOME PORTFOLIO."
GOVERNMENT MONEY MARKET PORTFOLIO: To seek current income consistent with the
preservation of capital and maintenance of liquidity. The Government Money
Market Portfolio will invest substantially all of its assets (not less than 90%)
in debt obligations issued or guaranteed by the U.S. Government, its agencies
and instrumentalities and repurchase agreements thereon. A MORE DETAILED
EXPLANATION OF INVESTMENT PRACTICES IS INCLUDED UNDER "INVESTMENT OBJECTIVE AND
POLICIES -- GOVERNMENT MONEY MARKET PORTFOLIO."
HICKORY PORTFOLIO: To achieve capital appreciation by investing principally
in common stocks, preferred stocks and a variety of securities convertible into
equity such as rights, warrants, convertible bonds, as well as bonds and other
debt obligations of both corporate and governmental issues. The receipt of
income is considered a secondary objective, as some investments may yield
dividends and interest or other income. The Hickory Portfolio is nondiversified
and as a result may experience greater fluctuations in net asset value. A MORE
DETAILED EXPLANATION OF INVESTMENT PRACTICES IS INCLUDED UNDER "INVESTMENT
OBJECTIVE AND POLICIES -- HICKORY PORTFOLIO."
SUMMARY
PURCHASES
Shares of the Portfolios may be purchased at the next determined net asset
value per share, which for the Government Money Market Portfolio is normally
$1.00 per share, except in extraordinary circumstances. Shares are sold without
a sales load, with an initial minimum investment of at least $25,000. The
initial investment may be allocated among the Portfolios. Subsequent investments
with a minimum amount of at least $5,000 may be required, subject to certain
exceptions. Purchases may be made by check or by bank wire. See "Purchase of
Shares" and "Determination of Net Asset Value".
2
<PAGE>
REDEMPTIONS
Investors may redeem shares at their next determined net asset value per share
by so instructing Wallace R. Weitz & Company in writing at its office in Omaha,
Nebraska. Redemption proceeds normally will be paid within seven days. See
"Redemption of Shares".
INVESTMENT ADVISER
The Portfolios are managed by Wallace R. Weitz & Company (the "Investment
Adviser"). The Investment Adviser is paid a monthly fee by each Portfolio
calculated on the average daily net asset value for each Portfolio. The annual
rate for the Value and Hickory Portfolios is equal to 1% of the average daily
net asset value of the respective Portfolio and the annual rate for the Fixed
Income and Government Money Market Portfolios is equal to .5% of the average
daily net asset value of the respective Portfolio. The fee paid to the
Investment Adviser for the Value Portfolio and Hickory Portfolio is higher than
that paid by most mutual funds. From time to time, the Investment Adviser may
waive all or some of its fees and/or voluntarily assume certain expenses of the
Portfolios which has the effect of lowering the affected Portfolio's total
expense ratio and increasing yield to shareholders during the period such
amounts are waived or assumed. See "The Investment Adviser".
ADMINISTRATOR
Wallace R. Weitz & Company also acts as the Fund's Administrator and as such
acts as the transfer agent and dividend disbursing agent for the Fund and
provides virtually all customary services required for fund operations. See "The
Investment Adviser" herein and "Investment Advisory and Other Services" in the
Statement of Additional Information.
DISTRIBUTOR
Weitz Securities, Inc. (the "Distributor"), an affiliate of the Investment
Adviser, acts as distributor for the Fund and does so without compensation. See
"The Distributor".
DIVIDENDS
The Portfolios will declare and distribute income dividends and capital gains
distributions as may be required to remain regulated investment companies under
the Internal Revenue Code. All dividends and distributions are reinvested
automatically unless the shareholder elects otherwise. See "Dividends,
Distributions and Taxes".
STRUCTURE
Weitz Series Fund, Inc., is a Minnesota corporation organized in September,
1988, and is registered under the Investment Company Act of 1940 (the "1940
Act") in December 1988 as an open-end management investment company, issuing its
shares in series, each series representing a distinct portfolio with its own
investment objectives and policies. Presently, four series are authorized, but
the Board of Directors may authorize additional series without shareholder
approval.
RISK FACTORS
An investment in the Portfolios is subject to certain risks that investors
should carefully consider.
RISK FACTORS -- VALUE PORTFOLIO There can be no assurance that the Value
Portfolio will attain its investment objectives. The Value Portfolio may engage
in the purchase of foreign securities, the purchase of restricted securities,
and may write covered call options. These transactions involve special risks and
are subject to certain limitations as set forth under "Investment Objective and
Policies -- Value Portfolio" and in the Statement of Additional Information
under "Investment Objective, Policies and Restrictions -- Value Portfolio."
3
<PAGE>
RISK FACTORS -- FIXED INCOME PORTFOLIO There can be no assurance that the
Fixed Income Portfolio will attain its investment objectives. Various market
forces that are generally not predictable influence the value of fixed income
securities. There is an inverse relationship between the market value of such
securities and yield. As interest rates rise, the values of the securities fall;
conversely, as interest rates fall, the market values of such securities rise.
Therefore, the "net asset value" or share price of the Fixed Income Portfolio
can be expected to fluctuate in response to changes in interest rates. The
average dollar weighted maturity and quality of the Fixed Income Portfolio may
be adjusted to react to the changing conditions in the bond market. A shorter
average maturity is associated with a lower level of volatility in the market
value of the Fixed Income Portfolio; that is, a smaller increase or decrease in
net asset value of the Fixed Income Portfolio will be caused by changes in
interest rates. A longer average maturity may result in a greater increase or
decrease in the net asset value.
The Fixed Income Portfolio will primarily invest in fixed income securities
that are rated BBB or higher by S&P and Baa or higher by Moody's. Securities
rated BBB or Baa are regarded as having speculative characteristics. The Fixed
Income Portfolio may invest in various U.S. Government and agency securities
that have prepayment features. The actual yield of such securities is influenced
by the prepayment experience of the pool underlying them. If the high-yielding
investments in the pool are prepaid, the yield on the remaining pool will be
reduced.
The Fixed Income Portfolio may invest up to 15% of its assets in securities
rated below BBB or Baa and in unrated securities if the Investment Adviser
determines that such securities are of a quality at least equal to the rated
securities in which the Fixed Income Portfolio may invest. Fixed income
securities rated below BBB or Baa are generally known as "junk bonds" and are
speculative. The Fixed Income Portfolio will normally not invest in bonds rated
below B or in bonds that are currently in default. See Appendix A to this
Prospectus for a further explanation of ratings.
Investments by the Fixed Income Portfolio in "junk bonds", while generally
providing greater income or opportunity for gain than investments in higher
rated securities, usually entail greater risk of principal and income (including
the possibility of default or bankruptcy of the issuers of such securities), and
involve greater volatility of price (especially during periods of economic
uncertainty or change) than investments in higher rated securities. Because
yields may vary over time, no specific level of income can ever be assured. Junk
bonds generally tend to reflect economic changes ( and the outlook for economic
growth), short-term corporate industry developments and the market's perception
of their credit quality (especially during times of adverse publicity) to a
greater extent than higher rated securities ( which react primarily to
fluctuations in the general level of interest rates), although these lower rated
fixed income securities are also affected by changes in interest rates.
In the past, economic downturns or an increase in interest rates have under
certain circumstances caused a higher incidence of default by the issuers of
junk bonds and may do so in the future, especially in the case of highly
leveraged issuers. During certain periods the higher yields on the Fixed Income
Portfolio's junk bonds will primarily result from the increased risk of loss of
principal and income arising from such factors as heightened possibility of
default or bankruptcy of the issuers of such securities. Because of the nature
of a portfolio of fixed income securities, the Fixed Income Portfolio may
continue to earn the same level of interest income while the net asset value
declines as a result of a market value decline of the bonds. This could result
in an increase in the Fixed Income Portfolio's yield despite the actual loss of
principal. The prices for lower rated bonds may also be affected by legislative
and regulatory developments.
Changes in the value of the Fixed Income Portfolio's securities subsequent to
their acquisition will not affect cash income or yield to maturity of the Fixed
Income Portfolio, but will be reflected in the net asset value per
4
<PAGE>
share of the Fixed Income Portfolio. The market for lower rated bonds may be
less liquid than the market for investment grade fixed income securities.
Furthermore, the liquidity of lower rated bonds may be affected by the market's
perception of the credit quality. Therefore, the Investment Adviser's judgment
may at times play a greater role in valuing these securities than in the case of
investment grade fixed income securities, and it may be more difficult during
times of certain adverse market conditions to sell junk bonds at the fair market
value to meet redemption requests or to respond to changes in the market. While
the Investment Adviser will refer to ratings issued by established rating
agencies, it is not the practice of the Investment Adviser to rely exclusively
on ratings issued by these agencies, but rather to supplement such ratings with
the independent and ongoing review by the Investment Adviser of credit quality.
A complete description of the S&P and Moody's ratings of fixed income securities
is attached to this Prospectus as Appendix A.
To a limited extent, the Fixed Income Portfolio may also engage in hedging
strategies utilizing interest rate futures, bond index futures and options.
Hedging strategies, while attempting to limit losses and lock in gains, can
prove to be unprofitable or be ineffective because of an imperfect correlation
between the securities being hedged and the hedging device. See "Investment
Objective and Policies -- Fixed Income Portfolio" and "Securities and Other
Investment Practices".
RISK FACTORS -- GOVERNMENT MONEY MARKET PORTFOLIO There can be no assurance
that the Government Money Market Portfolio will attain its investment
objectives. The Government Money Market Portfolio attempts to maintain a
constant net asset value of $1.00 per share; however, the yield earned by the
Government Money Market Portfolio will vary with the yield of the securities in
which it invests. The Government Money Market Portfolio invests in repurchase
agreements on the securities in which it invests and as a result is subject to
certain risks associated with such investments. See "Investment Objective and
Policies -- Government Money Market Portfolio" and "Securities and Other
Investment Practices."
RISK FACTORS -- HICKORY PORTFOLIO There can be no assurance that the Hickory
Portfolio will attain its investment objectives. The Hickory Portfolio is
nondiversified which means that with respect to 50% of its assets it may
concentrate investments by investing more than 5% in the securities of any one
issuer. As a result of its nondiversified status, the Hickory Portfolio's shares
may be more susceptible to adverse changes in the value of securities of a
particular company than would be the shares of a diversified investment company.
The Hickory Portfolio may engage in the purchase of foreign securities, the
purchase of restricted securities and may write covered call options. These
transactions involve special risks and are subject to certain limitations as set
forth under "Investment Objective and Policies -- Hickory Portfolio" and in the
Statement of Additional Information under "Investment Objective, Policies and
Restrictions -- Hickory Portfolio."
5
<PAGE>
FEES, CHARGES AND FUND EXPENSES
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Sales Load Imposed on Purchases None
Sales Load Imposed on Reinvested Dividends None
Deferred Sales Load None
Redemption Fees None
Exchange Fees None
</TABLE>
The table below shows expenses incurred as a percent of assets in the fiscal
year ended March 31, 1996 (after fee waivers and expense reimbursements).
ANNUAL FUND OPERATING EXPENSES
<TABLE>
<CAPTION>
VALUE FIXED INCOME GOVERNMENT MONEY HICKORY
PORTFOLIO PORTFOLIO MARKET PORTFOLIO PORTFOLIO
------------ --------------- ----------------- ------------
<S> <C> <C> <C> <C>
Management Fees
Investment Advisory Fee (after fee waiver)1 1.00% 0.50% 0.25% 1.00%
Administrative Fee (after fee waiver)2 0.24% -0.08% 0.00% 0.14%
12b-1 Fees 0.00% 0.00% 0.00% 0.00%
Other Expenses (after fee waiver)3 0.11% 0.17% 0.25% 0.36%
--- ------ --- ---
Total Expenses (after fee waiver)4 1.35% 0.75% 0.50% 1.50%
</TABLE>
- --------------------------
1The Adviser has agreed to reimburse the Portfolios up to the amount of
advisory fees paid to the extent that total expenses for the Value and Hickory
Portfolios exceed 1.50% of average daily net assets and to the extent that total
expenses for the Fixed Income and Government Money Market Portfolios exceed
1.00% of average daily net assets. The investment advisory fees for the
Government Money Market Portfolio would have been .50%, absent voluntary
waivers. The investment advisory fee payable to the Adviser for the Value and
Hickory Portfolios is higher than that paid by most other mutual funds. See "The
Investment Adviser."
2Under the Administration Agreement, the administrative fee (i) for the Value
Portfolio is a monthly fee calculated at a maximum annual rate of .30% of
average daily assets and (ii) for the Fixed Income, Government Money Market, and
Hickory Portfolios is a monthly fee calculated at a maximum annual rate of .25%.
The maximum fee can, however, be decreased from time to time by the
Administrator and the Administrator may from time to time voluntarily waive all
or a portion of the fee. The fee for the respective Portfolios can be increased
with the approval of the Board of Directors. See "Investment Advisory and Other
Services" in the Statement of Additional Information.
3Other expenses for the Fixed Income and Government Money Market Portfolios
would have been .20% and .39%, respectively, absent voluntary waivers and
reimbursements by the Investment Adviser.
4Total operating expenses for the Fixed Income, Government Money Market and
Hickory Portfolios would have been .95%, 1.14%, and 1.61%, respectively, absent
investment advisory fee, administrative fee and other expense waivers.
6
<PAGE>
EXAMPLE:
You would pay the following expenses on a $1,000 investment, assuming: (1) a
5% annual return; and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
PORTFOLIO 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Value $ 14 $ 43 $ 74 $ 162
Fixed Income 8 24 42 93
Government Money Market 5 16 28 63
Hickory 15 47 82 179
</TABLE>
THE TABLES ARE PROVIDED TO ASSIST AN INVESTOR IN UNDERSTANDING THE DIRECT AND
INDIRECT COSTS AND EXPENSES THAT AN INVESTOR IN THE FUND WILL BEAR. THE EXAMPLE
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL
EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN.
7
<PAGE>
FINANCIAL HIGHLIGHTS
VALUE PORTFOLIO
The following financial information provides selected data for a share of the
Value Portfolio and its predecessor outstanding throughout the periods
indicated. On April 1, 1990, Weitz Value Fund, Inc. was merged into the Fund and
renamed the Value Portfolio. Information prior to that date is for a share of
the Weitz Value Fund, Inc. Information for all periods indicated was audited by
KPMG Peat Marwick LLP, independent certified public accountants, to the extent
of their reports appearing in the Annual Reports for those periods and included
in the Statement of Additional Information. All reports are available upon
request.
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
-------------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991
------------- ------------- ------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 15.552 $ 15.684 $ 15.526 $ 13.926 $ 12.842 $ 11.854
INCOME (LOSS) FROM INVESTMENT
OPERATIONS
Net Investment Income 0.157 0.144 0.089 0.221 0.360 0.319
Net Gains or Losses on Securities
(realized and unrealized) 5.247 0.452 0.683 2.199 1.445 1.117
------------- ------------- ------------- ------------ ------------ ------------
Total From Investment Operations 5.404 0.596 0.772 2.420 1.805 1.436
LESS DISTRIBUTIONS
Dividends (from net investment
income) (0.418) -- (0.023) (0.275) (0.324) (0.380)
Distributions (from capital gains) (1.081) (0.728) (0.591) (0.545) (0.397) (0.068)
------------- ------------- ------------- ------------ ------------ ------------
Total Distributions (1.499) (0.728) (0.614) (0.820) (0.721) (0.448)
------------- ------------- ------------- ------------ ------------ ------------
NET ASSET VALUE, END OF PERIOD $ 19.457 $ 15.552 $ 15.684 $ 15.526 $ 13.926 $ 12.842
------------- ------------- ------------- ------------ ------------ ------------
------------- ------------- ------------- ------------ ------------ ------------
TOTAL RETURN 35.9% 4.1% 4.9% 18.3% 14.3% 12.6%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period $170,508,856 $118,776,395 $103,839,686 $67,617,098 $35,948,398 $27,502,696
Ratio of Expenses to Average Net
Assets 1.35% 1.42% 1.41% 1.35% 1.40% 1.49%
Ratio of Net Investment Income to
Average Net Assets 0.91% 1.06% 0.64% 1.66% 2.75% 2.71%
Portfolio Turnover Rate 40% 28% 23% 23% 35% 29%
<CAPTION>
MAY 9, 1986
(INCEPTION) TO
MARCH 31,
1990 1989 1988 1987
------------ ------------ ----------- --------------
<S> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 11.772 $ 10.517 $ 10.792 $ 10.000
INCOME (LOSS) FROM INVESTMENT
OPERATIONS
Net Investment Income 0.421 0.335 0.326 0.249
Net Gains or Losses on Securities
(realized and unrealized) 0.720 1.238 (0.002) 0.543
------------ ------------ ----------- -------
Total From Investment Operations 1.141 1.573 0.324 0.792
LESS DISTRIBUTIONS
Dividends (from net investment
income) (0.430) (0.318) (0.487) --
Distributions (from capital gains) (0.629) -- (0.112) --
------------ ------------ ----------- -------
Total Distributions (1.059) (0.318) (0.599) --
------------ ------------ ----------- -------
NET ASSET VALUE, END OF PERIOD $ 11.854 $ 11.772 $ 10.517 $ 10.792
------------ ------------ ----------- -------
------------ ------------ ----------- -------
TOTAL RETURN 9.6% 15.2% 3.4% 7.9%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period $24,540,101 $16,393,851 $9,219,148 $7,448,752
Ratio of Expenses to Average Net
Assets 1.46% 1.50% 1.50% 1.50% *
Ratio of Net Investment Income to
Average Net Assets 3.71% 3.30% 3.47% 3.72% *
Portfolio Turnover Rate 49% 25% 68% 55% *
</TABLE>
*Annualized for periods of less than twelve months.
8
<PAGE>
The chart below depicts the growth of a $25,000 investment since inception of
the Value Portfolio and its predecessor May 9, 1986, through the fiscal year
ended March 31, 1996, as compared with the growth of the S&P 500 index during
the same period. The S&P 500 is an unmanaged index consisting of 500 companies.
The information assumes reinvestment of dividends and capital gains
distributions. A $25,000 investment in the Value Portfolio would have grown to
$79,658.
<TABLE>
<CAPTION>
VALUE FUND
PROSPECTUS GRAPH
VALUE PORTFOLIO S&P 500
--------------------------------- ----------------------
CUMULATIVE VALUE CUMULATIVE VALUE
ENDING RETURN $25,000 RETURN $10,000
--------- ----------- --------- ----------- ---------
<C> <S> <C> <C> <C> <C>
May-86 0.0124 $ 25,310 0.05315 $ 26,329
Jun-86 0.0186 $ 25,465 0.07098 $ 26,775
Jul-86 0.0208 $ 25,520 0.01111 $ 25,278
Aug-86 0.0249 $ 25,623 0.08609 $ 27,152
Sep-86 0.0303 $ 25,758 (0.00375) $ 24,906
Oct-86 0.0355 $ 25,888 0.05374 $ 26,343
Nov-86 0.0364 $ 25,910 0.07934 $ 26,983
1986 Dec-86 0.0345 $ 25,863 0.05174 $ 26,294
Jan-87 0.0521 $ 26,303 0.19336 $ 29,834
Feb-87 0.0667 $ 26,668 0.24046 $ 31,012
Mar-87 0.0792 $ 26,980 0.27625 $ 31,906
Apr-87 0.06768 $ 26,692 0.26491 $ 31,623
May-87 0.065508 $ 26,638 0.27582 $ 31,896
Jun-87 0.077607 $ 26,940 0.34024 $ 33,506
Jul-87 0.098495 $ 27,462 0.40813 $ 35,203
Aug-87 0.10925 $ 27,731 0.46062 $ 36,515
Sep-87 0.10956 $ 27,739 0.42859 $ 35,715
Oct-87 0.035727 $ 25,893 0.12114 $ 28,028
Nov-87 0.013908 $ 25,348 0.02891 $ 25,723
1987 Dec-87 0.028865 $ 25,722 0.10735 $ 27,684
Jan-88 0.076697 $ 26,917 0.15389 $ 28,847
Feb-88 0.103742 $ 27,594 0.20741 $ 30,185
Mar-88 0.115408 $ 27,885 0.17016 $ 29,254
Apr-88 0.132843 $ 28,321 0.18310 $ 29,578
May-88 0.139365 $ 28,484 0.19316 $ 29,829
Jun-88 0.165131 $ 29,128 0.24787 $ 31,197
Jul-88 0.169193 $ 29,230 0.24311 $ 31,078
Aug-88 0.162565 $ 29,064 0.20094 $ 30,023
Sep-88 0.191966 $ 29,799 0.25204 $ 31,301
Oct-88 0.19806 $ 29,951 0.28687 $ 32,172
Nov-88 0.179992 $ 29,500 0.26846 $ 31,712
1988 Dec-88 0.198182 $ 29,955 0.29056 $ 32,264
Jan-89 0.244044 $ 31,101 0.38480 $ 34,620
Feb-89 0.250595 $ 31,265 0.35035 $ 33,759
Mar-89 0.285428 $ 32,136 0.38181 $ 34,545
Apr-89 0.352586 $ 33,815 0.45348 $ 36,337
May-89 0.416296 $ 35,407 0.51203 $ 37,801
Jun-89 0.390767 $ 34,769 0.50351 $ 37,588
Jul-89 0.444065 $ 36,102 0.63914 $ 40,978
Aug-89 0.448655 $ 36,216 0.67105 $ 41,776
Sep-89 0.463211 $ 36,580 0.66423 $ 41,606
Oct-89 0.442833 $ 36,071 0.62563 $ 40,641
Nov-89 0.448543 $ 36,214 0.65863 $ 41,466
1989 Dec-89 0.462694 $ 36,567 0.69839 $ 42,460
Jan-90 0.399217 $ 34,980 0.58443 $ 39,611
Feb-90 0.408013 $ 35,200 0.60496 $ 40,124
Mar-90 0.409083 $ 35,227 0.64745 $ 41,186
Apr-90 0.404289 $ 35,107 0.60640 $ 40,160
May-90 0.476289 $ 36,907 0.76265 $ 44,066
Jun-90 0.475324 $ 36,883 0.75076 $ 43,769
Jul-90 0.449877 $ 36,247 0.74516 $ 43,629
Aug-90 0.375224 $ 34,381 0.58758 $ 39,689
Sep-90 0.332411 $ 33,310 0.51042 $ 37,760
Oct-90 0.271989 $ 31,800 0.50402 $ 37,601
Nov-90 0.348209 $ 33,705 0.60102 $ 40,025
1990 Dec-90 0.386121 $ 34,653 0.64558 $ 41,139
Jan-91 0.473125 $ 36,828 0.71706 $ 42,926
Feb-91 0.550118 $ 38,753 0.83968 $ 45,992
Mar-91 0.58707 $ 39,677 0.88417 $ 47,104
Apr-91 0.598624 $ 39,966 0.88865 $ 47,216
May-91 0.643354 $ 41,084 0.96981 $ 49,245
Jun-91 0.589208 $ 39,730 0.87962 $ 46,991
Jul-91 0.630096 $ 40,752 0.96715 $ 49,179
Aug-91 0.655869 $ 41,397 1.01096 $ 50,274
Sep-91 0.68573 $ 42,143 0.97729 $ 49,432
Oct-91 0.697625 $ 42,441 1.00381 $ 50,095
Nov-91 0.661073 $ 41,527 0.92326 $ 48,081
1991 Dec-91 0.769052 $ 44,226 1.14283 $ 53,571
Jan-92 0.782995 $ 44,575 1.10294 $ 52,574
Feb-92 0.807754 $ 45,194 1.13014 $ 53,254
Mar-92 0.81466 $ 45,367 1.08875 $ 52,219
Apr-92 0.825156 $ 45,629 1.14999 $ 53,750
May-92 0.840666 $ 46,017 1.16047 $ 54,012
Jun-92 0.848013 $ 46,200 1.12833 $ 53,208
Jul-92 0.869373 $ 46,734 1.21520 $ 55,380
Aug-92 0.833591 $ 45,840 1.16992 $ 54,248
Sep-92 0.854543 $ 46,364 1.19541 $ 54,885
Oct-92 0.832231 $ 45,806 1.20295 $ 55,074
Nov-92 0.950325 $ 48,758 1.27772 $ 56,943
1992 Dec-92 1.01012 $ 50,253 1.30566 $ 57,641
Jan-93 1.064451 $ 51,611 1.32491 $ 58,123
Feb-93 1.112147 $ 52,804 1.35657 $ 58,914
Mar-93 1.146432 $ 53,661 1.40624 $ 60,156
Apr-93 1.081128 $ 52,028 1.34808 $ 58,702
May-93 1.137792 $ 53,445 1.41067 $ 60,267
Jun-93 1.179588 $ 54,490 1.41770 $ 60,443
Jul-93 1.211426 $ 55,286 1.40796 $ 60,199
Aug-93 1.345512 $ 58,638 1.49910 $ 62,478
Sep-93 1.330785 $ 58,270 1.47992 $ 61,998
Oct-93 1.39404 $ 59,851 1.53118 $ 63,280
Nov-93 1.356452 $ 58,911 1.50714 $ 62,678
1993 Dec-93 1.412939 $ 60,323 1.53744 $ 63,436
Jan-94 1.435052 $ 60,876 1.62362 $ 65,590
Feb-94 1.360815 $ 59,020 1.55245 $ 63,811
Mar-94 1.252115 $ 56,303 1.44131 $ 61,033
Apr-94 1.258511 $ 56,463 1.47264 $ 61,816
May-94 1.315339 $ 57,883 1.51308 $ 62,827
Jun-94 1,271513 $ 56,788 1.45151 $ 61,288
Jul-94 1.305405 $ 57,635 1.53195 $ 63,299
Aug-94 1.356828 $ 58,921 1.63555 $ 65,889
Sep-94 1.291235 $ 57,281 1.57119 $ 64,280
Oct-94 1.305405 $ 57,635 1.62876 $ 65,719
Nov-94 1.21001 $ 55,250 1.53311 $ 63,328
1994 Dec-94 1.175538 $ 54,388 1.57060 $ 64,265
Jan-95 1.238708 $ 55,968 1.63721 $ 65,930
Feb-95 1.32962 $ 58,240 1.73986 $ 68,497
Mar-95 1.344696 $ 58,617 1,82057 $ 70,514
Apr-95 1.394023 $ 59,851 1.90357 $ 72,589
May-95 1.508895 $ 62,722 2.01935 $ 75,484
Jun-95 1.609791 $ 65,245 2.08942 $ 77,236
Jul-95 1.722051 $ 68,051 2.19181 $ 79,795
Aug-95 1.839687 $ 70,992 2.19977 $ 79,994
Sep-95 1.890366 $ 72,259 2.33473 $ 83,368
Oct-95 1.85658 $ 71,414 2.32281 $ 83,070
Nov-95 1.982816 $ 74,570 2.46851 $ 86,713
1995 Dec-95 2.010278 $ 75,257 2.53531 $ 88,383
Jan-96 2.141452 $ 78,536 2.65549 $ 91,387
Feb-96 2.20188 $ 80,047 2.68945 $ 92,236
Mar-96 2.186323 $ 79,658 2.72498 $ 93,124
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
1-YEAR 3-YEARS 5-YEARS INCEPTION
---------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
VALUE 35.9% 14.1% 15.0% 12.4%
S&P 500 32.1% 15.7% 14.6% 14.2%
</TABLE>
During the fiscal year ended March 31, 1996, the Value Portfolio had a total
return of 35.9%, compared to the 32.1% return for the S&P 500 over the same
period.
Total return for the Fund in fiscal 1996 was +35.9% vs. +32.1% for the S&P
500. The Investment Adviser's investment strategy is to buy stocks of
well-managed, understandable, good businesses that are selling at significant
discounts to the Investment Adviser's appraisal of their enterprise values. This
conservative, value-oriented approach often leads to under-performance (relative
to the S&P 500) in very strong markets, as the Fund's price-sensitivity leads
the Fund to sell early and to hold cash reserves rather than pay inflated prices
for stocks.
The Fund did hold significant cash reserves (averaging 10-15%) during fiscal
1996, but several of the stocks in the Fund's portfolio rose significantly more
than the S&P 500, allowing the Fund's overall return to exceed the return of the
S&P 500. The stocks which contributed the most to the Fund's returns in 1996
were banks and other financial service companies. These companies generally
enjoyed good operating conditions in 1996, and their stock prices also benefited
from merger activity among financial institutions and the fact that most
financial stocks entered 1996 at depressed levels because of 1995's less
favorable conditions.
Total returns are based upon past results and are not a prediction of future
performance.
9
<PAGE>
FIXED INCOME PORTFOLIO
The following financial information provides selected data for a share of the
Fixed Income Portfolio outstanding throughout the periods indicated. Information
for all periods indicated was audited by KPMG Peat Marwick LLP, independent
certified public accountants, to the extent of their reports appearing in the
Annual Reports for those periods and included in the Statement of Additional
Information. All reports are available upon request.
<TABLE>
<CAPTION>
YEAR ENDED
MARCH 31,
-----------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991
-------------- ------------ ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.608 $ 10.778 $ 11.105 $ 10.781 $ 10.644 $ 10.296
INCOME (LOSS) FROM INVESTMENT
OPERATIONS
Net Investment Income 0.645 0.667 0.551 0.615 0.720 0.613
Net Gains or Losses on Securities
(realized and unrealized 0.312 (0.224) (0.290) 0.360 0.149 0.417
------- ------------ ------------ ------------ ------------ -----------
Total From Investment Operations 0.957 0.443 0.261 0.975 0.869 1.030
LESS DISTRIBUTIONS
Dividends (from net investment
income) (0.665) (0.613) (0.588) (0.651) (0.731) (0.671)
Distributions (from capital gains) -- -- -- -- (0.001) (0.011)
------- ------------ ------------ ------------ ------------ -----------
Total Distributions (0.665) (0.613) (0.588) (0.651) (0.732) (0.682)
------- ------------ ------------ ------------ ------------ -----------
$ 10.900 $ 10.608 $ 10.778 $ 11.105 $ 10.781 $ 10.644
NET ASSET VALUE, END OF PERIOD
------- ------------ ------------ ------------ ------------ -----------
------- ------------ ------------ ------------ ------------ -----------
TOTAL RETURN 9.2% 4.4% 2.3% 9.4% 8.6% 10.4%
RATIOS/SUPPLEMENTAL DATA
Net Assets,
End of Period $16,901,374 $11,823,744 $20,559,783 $19,655,058 $11,691,070 $6,260,787
Ratio of Expenses to Average Net
Assets 0.75% ** 0.75% 0.75% 0.76% 0.72% 0.73%
Ratio of Net Investment Income to
Average Net Assets 6.18% 6.16% 4.94% 6.22% 7.50% 8.45%
Portfolio Turnover Rate 28% 49% 12% 15% 31% 8%
<CAPTION>
DEC. 23, 1988
(INCEPTION) TO
1990 MARCH 31, 1989
----------- -----------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.236 $ 10.142
INCOME (LOSS) FROM INVESTMENT
OPERATIONS
Net Investment Income 0.874 0.210
Net Gains or Losses on Securities
(realized and unrealized 0.002 (0.047)
----------- -------
Total From Investment Operations 0.876 0.163
LESS DISTRIBUTIONS
Dividends (from net investment
income) (0.816) (0.069)
Distributions (from capital gains) -- --
----------- -------
Total Distributions (0.816) (0.069)
----------- -------
$ 10.296 $ 10.236
NET ASSET VALUE, END OF PERIOD
----------- -------
----------- -------
TOTAL RETURN 8.9% 1.6%
RATIOS/SUPPLEMENTAL DATA
Net Assets,
End of Period $1,418,604 $1,316,152
Ratio of Expenses to Average Net
Assets 0.62% 1.00% *
Ratio of Net Investment Income to
Average Net Assets 8.22% 9.32% *
Portfolio Turnover Rate 30% 0%
</TABLE>
*Annualized for periods of less than twelve months.
**Absent voluntary waivers, the expense ratio would have been 0.95%.
10
<PAGE>
The chart below depicts the growth of a $25,000 investment since inception of
the Fixed Income Portfolio December 23, 1988, through the fiscal year ended
March 31, 1996, as compared with the growth of the Lehman Brothers Intermediate
Government/Corporate Index during the same period. The Lehman Brothers
Intermediate Government/Corporate Index is a total return performance benchmark
consisting of government securities and publicly issued corporate debt issued
with maturities from one to ten years and rated at least BBB by Standard & Poors
or Baa by Moodys. The information assumes reinvestment of dividends and capital
gains distributions. A $25,000 investment in the Fixed Income Portfolio would
have grown to $42,333.
<TABLE>
<CAPTION>
FIXED INCOME
PROSPECTUS GRAPH
FIXED INCOME SHEARSON BOND FUND
--------------------------------- ----------------------
CUMULATIVE VALUE CUMULATIVE VALUE
ENDING RETURN $25,000 RETURN $25,000
--------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
1988 12/31/88 0.001139 $ 25,028 0.00000 $ 25,000
01/31/89 0.009876 $ 25,247 0.01050 $ 25,263
02/28/89 0.011664 $ 25,292 0.00635 $ 25,159
03/31/89 0.01633 $ 25,408 0.01068 $ 25,267
04/30/89 0.026691 $ 25,667 0.03088 $ 25,772
05/31/89 0.038327 $ 25,958 0.05130 $ 26,283
06/30/89 0.051481 $ 26,287 0.07779 $ 26,945
07/31/89 0.062395 $ 26,560 0.09987 $ 27,497
08/31/89 0.064148 $ 26,604 0.08568 $ 27,142
09/30/89 0.069923 $ 26,748 0.09078 $ 27,270
10/31/89 0.078186 $ 26,955 0.11392 $ 27,848
11/30/89 0.087876 $ 27,197 0.12450 $ 28,112
1989 12/31/89 0.092221 $ 27,306 0.12765 $ 28,191
01/31/90 0.09867 $ 27,467 0.12044 $ 28,011
02/28/90 0.103291 $ 27,582 0.12459 $ 28,115
03/31/90 0.106623 $ 27,666 0.12606 $ 28,151
04/30/90 0.106545 $ 27,664 0.12213 $ 28,053
05/31/90 0.12341 $ 28,085 0.14680 $ 28,670
06/30/90 0.132767 $ 28,319 0.16217 $ 29,054
07/31/90 0.145019 $ 28,625 0.17832 $ 29,458
08/31/90 0.149658 $ 28,741 0.17348 $ 29,337
09/30/90 0.160151 $ 29,004 0.18252 $ 29,563
10/31/90 0.168779 $ 29,219 0.19622 $ 29,906
11/30/90 0.181161 $ 29,529 0.21440 $ 30,360
1990 12/31/90 0.190711 $ 29,768 0.23104 $ 30,776
01/31/91 0.208955 $ 30,224 0.24359 $ 31,090
02/28/91 0.213545 $ 30,339 0.25354 $ 31,338
03/31/91 0.221348 $ 30,534 0.26206 $ 31,552
04/30/91 0.233876 $ 30,847 0.27582 $ 31,895
05/31/91 0.241007 $ 31,025 0.28361 $ 32,090
06/30/91 0.239487 $ 30,987 0.28451 $ 32,113
07/31/91 0.252264 $ 31,307 0.29890 $ 32,473
08/31/91 0.272498 $ 31,812 0.32372 $ 33,093
09/30/91 0.284639 $ 32,116 0.34649 $ 33,662
10/31/91 0.293946 $ 32,349 0.36184 $ 34,046
11/30/91 0.380582 $ 34,515 0.49232 $ 37,308
1991 12/31/91 0.3259 $ 33,147 0.41111 $ 35,278
01/31/92 0.31987 $ 32,997 0.39826 $ 34,957
02/29/92 0.323193 $ 33,080 0.40371 $ 35,093
03/31/92 0.326515 $ 33,163 0.39824 $ 34,956
04/30/92 0.33785 $ 33,446 0.41055 $ 35,264
05/31/92 0.3494 $ 33,735 0.43241 $ 35,810
06/30/92 0.363836 $ 34,096 0.45362 $ 36,340
07/31/92 0.376262 $ 34,407 0.48254 $ 37,064
08/31/92 0.384132 $ 34,603 0.49737 $ 37,434
09/30/92 0.401271 $ 35,032 0.51775 $ 37,944
10/31/92 0.381998 $ 34,550 0.49801 $ 37,450
11/30/92 0.380582 $ 34,515 0.49232 $ 37,308
1992 12/31/93 0.399198 $ 34,980 0.51233 $ 37,808
01/31/92 0.422851 $ 35,571 0.54167 $ 38,542
02/28/93 0.444413 $ 36,110 0.56602 $ 39,151
03/31/93 0.451209 $ 36,280 0.57228 $ 39,307
04/30/93 0.460009 $ 36,500 0.58486 $ 39,621
05/31/93 0.458417 $ 36,460 0.58136 $ 39,534
06/30/93 0.482429 $ 37,061 0.60619 $ 40,155
07/31/93 0.486749 $ 37,169 0.61012 $ 40,253
08/31/93 0.508538 $ 37,713 0.63565 $ 40,891
09/30/93 0.514456 $ 37,861 0.64244 $ 41,061
10/31/93 0.517406 $ 37,935 0.64684 $ 41,171
11/30/93 0.505698 $ 37,642 0.63765 $ 40,941
1993 12/31/93 0.511953 $ 37,799 0.64515 $ 41,129
01/31/94 0.528349 $ 38,209 0.66343 $ 41,586
02/28/94 0.507544 $ 37,689 0.63882 $ 40,971
03/31/94 0.484949 $ 37,124 0.61178 $ 40,295
04/30/94 0.476713 $ 36,918 0.60081 $ 40,020
05/31/94 0.477828 $ 36,946 0.60189 $ 40,047
06/30/94 0.471136 $ 36,778 0.60211 $ 40,053
07/31/94 0.493582 $ 37,340 0.62517 $ 40,629
08/31/94 0.498673 $ 37,467 0.63025 $ 40,756
09/30/94 0.47817 $ 36,954 0.61525 $ 40,381
10/31/94 0.473488 $ 36,837 0.61503 $ 40,376
11/30/94 0.468172 $ 36,704 0.60770 $ 40,193
1994 12/31/94 0.47623 $ 36,906 0.61339 $ 40,335
01/31/95 0.50458 $ 37,615 0.64058 $ 41,015
02/28/95 0.541844 $ 38,546 0.67461 $ 41,865
03/31/95 0.550173 $ 38,754 0.68417 $ 42,104
04/30/95 0.566744 $ 39,169 0.70498 $ 42,625
05/31/95 0.61519 $ 40,380 0.75653 $ 43,913
06/30/95 0.62797 $ 40,699 0.76830 $ 44,208
07/31/95 0.624222 $ 40,606 0.76855 $ 44,214
08/31/95 0.642784 $ 41,070 0.78465 $ 44,616
09/30/95 0.654102 $ 41,353 0.79757 $ 44,939
10/31/95 0.671096 $ 41,777 0.81760 $ 45,440
11/30/95 0.691001 $ 42,275 0.84150 $ 46,037
1995 12/31/95 0.709015 $ 42,725 0.86080 $ 46,520
01/31/96 0.721598 $ 43,040 0.87685 $ 46,921
02/29/96 0.700471 $ 42,512 0.85481 $ 46,370
03/31/96 0.693324 $ 42,333 0.84526 $ 46,131
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
1-YEAR 3-YEARS 5-YEARS INCEPTION
------ ------------ ------------ --------------
<S> <C> <C> <C> <C>
FIXED INCOME 9.2% 5.3% 6.8% 7.5%
Lehman Brothers Intermediate/Corporate Index 9.6% 5.5% 7.9% 8.8%
</TABLE>
During the fiscal year ended March 31, 1996, the Fixed Income Portfolio had a
total return of 9.2%. Over the same period, the Lehman Brothers
Intermediate/Corporate Index had a total return of 9.6%. The Investment Adviser
maintained its policy of investing in high quality bonds with relatively short
maturities. As of March 31, 1996, about half of the Fixed Income Portfolio was
invested in U.S. treasuries and government agency bonds with the balance in
corporate bonds, taxable municipal bonds, and cash equivalents. Cash reserves,
invested in U.S. Treasury Bills and a money market fund, were 6.8% as of the end
of the year. The average dollar-weighted maturity of the portfolio was 9.1
years. Taking into consideration interest income alone, the 30-day yield on the
portfolio was 6.3% at the end of fiscal year 1996.
TOTAL RETURNS ARE BASED UPON PAST RESULTS AND ARE NOT A PREDICTION OF FUTURE
PERFORMANCE.
11
<PAGE>
GOVERNMENT MONEY MARKET PORTFOLIO
The following financial information provides selected data for a share of the
Government Money Market Portfolio outstanding throughout the periods indicated.
Information for all periods was audited by KPMG Peat Marwick LLP, independent
certified public accountants, to the extent of their reports appearing in the
Annual Reports for those periods and included in the Statement of Additional
Information. All reports are available upon request.
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31, AUG 1, 1991
----------------------------------------------------- (INCEPTION) TO
1996 1995 1994 1993 MARCH 31, 1992
------------- ------------ ------------ ---------- ---------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.048 0.039 0.026 0.032 0.029
------------- ------------ ------------ ---------- -------
LESS DISTRIBUTIONS
Dividends (from net investment income) (0.048) (0.039) (0.026) (0.032) (0.029)
------------- ------------ ------------ ---------- -------
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------------- ------------ ------------ ---------- -------
------------- ------------ ------------ ---------- -------
TOTAL RETURN 5.3% 4.9% 4.5% 4.2% 2.3%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period $4,141,602 $2,668,933 $1,918,127 $555,050 $277,582
Ratio of Expenses to Average Net Assets 0.50% ** 0.50% 0.25% 0.26% 0.27% *
Ratio of Net Investment Income to Average Net
Assets 4.95% 4.18% 2.81% 3.19% 4.89% *
Portfolio Turnover Rate N/A N/A N/A N/A N/A
</TABLE>
*Annualized for periods of less than twelve months.
**Absent voluntary waivers, the expense ratio would have been 1.14%.
12
<PAGE>
HICKORY PORTFOLIO
The following information provides selected data for a share of the Hickory
Portfolio outstanding throughout the periods indicated. Information for all
periods was audited by KPMG Peat Marwick LLP, independent certified public
accountants, to the extent of their reports appearing in the Annual Reports for
those period and included in the Statement of Additional Information. All
reports are available upon request.
<TABLE>
<CAPTION>
JAN. 1, 1993
(INCEPTION)
YEAR ENDED MARCH 31, TO
---------------------------------------- MARCH 31,
1996** 1995 1994 1993
-------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.257 $ 12.227 $ 11.147 $ 10.000
INCOME (LOSS) FROM INVESTMENT OPERATIONS
Net Investment Income 0.004 (0.008) (0.290) (0.014)
Net Gains or Losses on Securities (realized and
unrealized) 4.504 (0.508) 1.420 1.161
Total From Investment Operations 4.508 (0.516) 1.130 1.147
LESS DISTRIBUTIONS
Dividends (from net investment income) (0.136) -- 0.083 --
Distributions (from capital gains) (0.065) (0.454) (0.133) --
------- ----------- ----------- -------------
(0.201) (0.454) (0.050) --
Total Distributions
------- ----------- ----------- -------------
NET ASSET VALUE, END OF PERIOD $ 15.564 $ 11.257 $ 12.227 $ 11.147
------- ----------- ----------- -------------
------- ----------- ----------- -------------
TOTAL RETURN 40.6% (4.2)% 10.1% 11.5%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period $6,658,214 $3,619,268 $2,499,365 $1,583,672
Ratio of Expenses to Average Net Assets 1.50% *** 1.50% 1.50% 1.19% *
Ratio of Net Investment Income to Average Net Assets 0.02% (0.17)% (2.92)% (0.65)% *
Portfolio Turnover Rate 28% 20% 29% 0% *
</TABLE>
*Annualized for periods of less than twelve months.
**Calculated using average daily shares.
***Absent voluntary waivers, the expense ratio would have been 1.61%.
13
<PAGE>
The chart below depicts the growth of a $25,000 investment since inception of
the Hickory Portfolio January 1, 1993, through the fiscal year ended March 31,
1996, as compared with the growth of the S&P 500 index during the same period.
The information assumes reinvestment of dividends and capital gains
distributions. A $25,000 investment in the Hickory Portfolio would have grown to
$41,337.
<TABLE>
<CAPTION>
HICKORY PROSPECTUS GRAPH
HICKORY PORTFOLIO S&P 500
--------------------------------- ----------------------
CUMULATIVE VALUE CUMULATIVE VALUE
ENDING RETURN $25,000 RETURN $25,000
--------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Ince 12/31/92 0 $ 25,000 0.00000 $ 25,000
01/31/93 0.098 $ 27,450 0.00835 $ 25,209
02/28/93 0.13 $ 28,250 0.02208 $ 25,552
3/93 03/31/93 0.1147 $ 27,868 0.04363 $ 26,091
04/30/93 .0213 $ 25,533 0.01840 $ 25,460
05/31/93 0.0701 $ 26,753 0.04555 $ 26,139
6/93 06/30/93 0.0769 $ 26,923 0.04860 $ 26,215
07/31/93 0.109 $ 27,725 0.04437 $ 26,109
08/31/93 0.195 $ 29,875 0.08390 $ 27,098
9/93 09/30/93 0.2039 $ 30,098 0.07558 $ 26,890
10/31/93 0.2822 $ 32,055 0.09782 $ 27,445
11/30/93 0.2422 $ 31,055 0.08739 $ 27,185
12/9 12/31/93 0.34062 $ 33,516 0.10053 $ 27,513
01/31/94 0.320042 $ 33,001 0.13791 $ 28,448
02/28/94 0.298359 $ 32,459 0.10704 $ 27,676
3/94 03/31/94 0.227388 $ 30,685 0.05884 $ 26,471
04/30/94 0.215688 $ 30,392 0.07243 $ 26,811
05/31/94 0.226895 $ 30,672 0.08996 $ 27,249
6/94 06/30/94 0.168085 $ 29,202 0.06326 $ 26,582
07/31/94 0.16099 $ 29,025 0.09815 $ 27,454
08/31/94 0.230185 $ 30,755 0.14308 $ 28,577
9/94 09/30/94 0.217128 $ 30,428 0.11517 $ 27,879
10/31/94 0.2015 $ 30,037 0.14013 $ 28,503
11/30/94 0.134875 $ 28,372 0.09865 $ 27,466
12/9 12/31/94 0.108864 $ 27,722 0.11491 $ 27,873
01/31/95 0.113252 $ 27,831 0.14380 $ 28,595
02/28/95 0.159224 $ 28,981 0.18832 $ 29,708
3/95 03/31/95 0.17615 $ 29,404 0.22333 $ 30,583
04/30/95 0.172985 $ 29,325 0.25933 $ 31,483
05/31/95 0.237922 $ 30,948 0.30954 $ 32,739
6/95 06/30/95 0.31904 $ 32,976 0.33993 $ 33,498
07/31/95 0.391803 $ 34,795 0.38434 $ 34,609
08/31/95 0.487516 $ 37,188 0.38779 $ 34,695
9/95 09/30/95 0.550654 $ 38,766 0.44633 $ 36,158
10/31/95 0.485189 $ 37,130 0.44116 $ 36,029
11/30/95 0.530983 $ 38,275 0.50435 $ 37,609
12/9 12/31/95 0.557545 $ 38,939 0.53332 $ 38,333
01/31/96 0.638391 $ 40,960 0.58545 $ 39,636
02/29/96 0.659214 $ 41,480 0.60018 $ 40,004
3/96 03/31/96 0.653477 $ 41,337 0.61558 $ 40,390
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
1-YEAR 3-YEARS INCEPTION
---------- ------------ -------------
<S> <C> <C> <C>
HICKORY 40.6% 14.4% 16.7%
S&P 500 32.1% 15.7% 15.9%
</TABLE>
During the fiscal year ended March 31, 1996, the Hickory Portfolio had a total
return of 40.6%, compared to a 32.1% return for the S&P 500 over the same
period. The Investment Adviser's investment strategy is to buy stocks of
well-managed, understandable, good businesses that are selling at significant
discounts to the Investment Adviser's appraisal of their enterprise values.
During the fiscal year ended March 31, 1996, the Hickory Portfolio's investments
were heavily weighted towards financial companies since the portfolio manager
was able to identify many attractive investment opportunities in this sector.
The Portfolio's financial companies were strong performers during the fiscal
year and contributed significantly to the Portfolio's outperforming the S&P 500
index for the period.
TOTAL RETURNS ARE BASED UPON PAST RESULTS AND ARE NOT A PREDICTION OF FUTURE
PERFORMANCE.
14
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
VALUE PORTFOLIO
INVESTMENT OBJECTIVE
The investment objective of the Value Portfolio is to seek capital
appreciation. The receipt of income is considered a secondary objective, as some
investments may yield dividends, interest or other income.
INVESTMENT POLICIES
Ordinarily the Value Portfolio will be principally invested in common stocks
and other securities convertible into equity, such as rights, warrants,
convertible bonds and preferred stock; however, the Fund has adopted a policy
which permits the Investment Adviser to invest a portion or all of its assets in
high quality nonconvertible preferred stock, nonconvertible debt securities and
United States Government, state and municipal and governmental agency and
instrumentality obligations, or retain funds in cash or cash equivalents when
the Investment Adviser believes that prevailing market or economic conditions
warrant a temporary defensive investment position. See "Securities and Other
Investment Practices" herein and "Investment Objective, Policies and
Restrictions -- Value Portfolio" in the Statement of Additional Information for
descriptions of the types of securities in which the Value Portfolio will invest
and a description of certain investment practices utilized by the Investment
Adviser for the Value Portfolio, including investing in covered call options,
foreign securities, warrants, convertible securities and other investment
companies.
The selection of securities for the Value Portfolio is based on a concept of
"value investing" which focuses on companies whose stocks are selling at (i) low
price to earnings ratios, (ii) low price to cash-flow ratios, (iii) low price to
book ratios, (iv) discounts to the value of the company's cash, natural resource
and other asset value (even though current earnings may be depressed), or (v)
prices below what the Investment Adviser believes to be reasonable for the
company. Little weight is given to technical stock market analysis. Federal
income tax consequences to shareholders will not be a factor in the investment
decisions.
The investment objective is fundamental to the Value Portfolio and cannot be
changed without a vote of the holders of a majority of its outstanding shares.
See "General Information" for a definition of majority. Additionally the Value
Portfolio is subject to other investment policies and restrictions imposed by
the Investment Adviser which are not considered fundamental and may be changed
without shareholder approval except as otherwise indicated under "Investment
Restrictions" herein and under "Investment Objective, Policies and Restrictions
- -- Value Portfolio" in the Statement of Additional Information. The Investment
Adviser will notify shareholders in writing at least 30 days prior to
implementing a material change.
FIXED INCOME PORTFOLIO
INVESTMENT OBJECTIVE
The investment objective of the Fixed Income Portfolio is high current income
consistent with preservation of capital.
INVESTMENT POLICIES
The Fixed Income Portfolio will maintain at least 85% of its total assets in
securities rated BBB by S&P or Baa by Moody's or higher, will allow an
investment of up to 15% of its total assets in securities rated lower than BBB
or Baa and may be invested in unrated securities if the Investment Adviser
determines such securities are of a quality at least equal to the rated
securities in which the Fixed Income Portfolio invests. Fixed income securities
rated below BBB or Baa are generally known as "junk bonds". (See "Risk Factors
- -- Fixed Income Portfolio".) The Fixed Income Portfolio will normally not invest
in bonds rated below B or bonds which are currently in default. ( Ratings are
further explained in Appendix A to this Prospectus).
15
<PAGE>
The fixed income securities in which the Fixed Income Portfolio will invest
include the following securities: (1) U.S. Government securities (bills, notes,
bonds, and other debt securities issued by the U.S. Treasury) and U.S.
Government agency securities; (2) corporate debt securities; (3) bank
obligations (certificates of deposit and bankers' acceptances); (4) commercial
paper; (5) repurchase agreements on U.S. Government and U.S. Government agency
securities; and (6) securities of registered investment companies which invest
in fixed income securities. See "Securities and Other Investment Practices"
herein and "Investment Objective, Policies and Restrictions -- Fixed Income
Portfolio" in the Statement of Additional Information for descriptions of the
types of securities in which the Fixed Income Portfolio will invest and a
description of certain investment practices utilized, including repurchase
agreements and the use of interest rate and bond index futures and options as
part of a hedging strategy for the Fixed Income Portfolio.
The Investment Adviser selects fixed income securities the yield on which is
sufficiently attractive in view of the risks of ownership. In deciding whether
the Fixed Income Portfolio should invest in particular fixed income securities,
the Investment Adviser considers such factors as the price, coupon and yield-
to-maturity, and the credit quality of the issuer. Additionally, the Investment
Adviser will review the terms of the fixed income security, including
subordination, default, sinking fund, and early redemption provisions. When the
Investment Adviser believes that prevailing abnormal market or economic
conditions warrant a temporary defensive investment position, a greater portion
of the Fixed Income Portfolio may be invested in cash or cash equivalents, such
as money market mutual fund shares, and repurchase agreements on U.S. Government
securities.
The Fixed Income Portfolio may also invest in commercial paper rated Prime 1
by Moody's or A-1 by Standard & Poor's, repurchase agreements on U.S. Government
securities and investment company securities which have similar investment
objectives, policies and restrictions as the Fixed Income Portfolio. The Fixed
Income Portfolio will also retain funds in cash or cash equivalents. The Fixed
Income Portfolio may purchase and sell interest rate futures and bond index
futures and may write, purchase and sell put and call options on the securities
it owns, on interest rate futures and bond index futures for the purposes of
hedging against changes in values of the Fixed Income Portfolio's investments.
See "Investment Objective and Policies -- Fixed Income Portfolio" and
"Investment Restrictions."
The "net asset value" or share price of the Fixed Income Portfolio can be
expected to fluctuate in response to changes in interest rates. In general, when
interest rates rise, prices of fixed income securities held in the Fixed Income
Portfolio and thus the net asset value of the Fixed Income Portfolio, will
decline. Conversely, when interest rates decline, prices of fixed income
securities and the net asset value of the Fixed Income Portfolio will rise. In
general, a shorter average maturity of a portfolio is associated with a lower
level of volatility in the market value of that portfolio; that is to say, a
smaller increase or decrease in net asset value of a portfolio will be caused by
changes in interest rates.
The investment objective of the Fixed Income Portfolio is a fundamental policy
and cannot be changed without a vote of the holders of a majority of its
outstanding shares. Additionally the Fixed Income Portfolio is subject to other
investment policies and restrictions imposed by the Investment Adviser which are
not considered fundamental and may be changed without shareholder approval
except as otherwise indicated under "Investment Restrictions" herein and under
"Investment Objective, Policies and Restrictions -- Fixed Income Portfolio" in
the Statement of Additional Information. The Investment Adviser will notify
shareholders in writing at least 30 days prior to implementing a material
change.
GOVERNMENT MONEY MARKET PORTFOLIO
INVESTMENT OBJECTIVE
The investment objective of the Government Money Market Portfolio is current
income consistent with the preservation of capital and maintenance of liquidity.
16
<PAGE>
INVESTMENT POLICIES
The Government Money Market Portfolio will attempt to achieve its objective by
investing substantially all of its assets (not less than 90%) in debt
obligations issued or guaranteed by the U.S. Government, its agencies and
instrumentalities and repurchase agreements thereon with maturities not
exceeding one year. The Government Money Market Portfolio will have an aggregate
dollar weighted average maturity of 90 days or less.
The Government Money Market Portfolio may also participate in reverse
repurchase agreements on U.S. Government securities or invest in when-issued and
delayed delivery transactions involving U.S. Government securities. The
Government Money Market Portfolio may temporarily invest in shares of other
money market funds which have the same or more restrictive investment objectives
and policies as the Government Money Market Portfolio subject to the provisions
of Section 12(d)(1)(F) of the Investment Company Act of 1940. See "Securities
and Other Investment Practices" herein and "Investment Objective, Policies and
Restrictions -- Government Money Market Portfolio" in the Statement of
Additional Information for further descriptions of the types of securities in
which the Government Money Market Portfolio will invest.
The investment objective of the Government Money Market Portfolio is a
fundamental policy and cannot be changed without a vote of the holders of a
majority of its outstanding shares. Additionally, the Government Money Market
Portfolio is subject to other investment policies and restrictions imposed by
the Investment Adviser which are not considered fundamental and which may be
changed without shareholder approval except as otherwise indicated under
"Investment Restrictions" herein and under "Investment Objective, Policies and
Restrictions -- Government Money Market Portfolio" in the Statement of
Additional Information. The Investment Adviser will notify shareholders in
writing at least 30 days prior to implementing a material change.
HICKORY PORTFOLIO
INVESTMENT OBJECTIVE
The investment objective of the Hickory Portfolio is capital appreciation. The
receipt of income is considered a secondary objective, as some investments may
yield dividends, interest or other income.
INVESTMENT POLICIES
Ordinarily the Hickory Portfolio will be principally invested in common stocks
and other securities convertible into equity, such as rights, warrants,
convertible bonds and preferred stock. However, the Fund has adopted a policy
which permits the Investment Adviser to invest a portion or all of its assets in
high quality nonconvertible preferred stock, high quality nonconvertible debt
securities and high quality United States Government and governmental agency and
instrumentality obligations, or retain funds in cash or cash equivalents when
the Investment Adviser believes that prevailing market or economic conditions
warrant a temporary defensive investment position. See "Securities and Other
Investment Practices" herein and "Investment Objective, Policies and
Restrictions -- Hickory Portfolio" in the Statement of Additional Information
for descriptions of the types of securities in which the Hickory Portfolio will
invest and a description of certain other investment practices utilized by the
Investment Adviser for the Hickory Portfolio including investing in covered call
options, warrants, convertible securities and other investment companies.
The selection of securities for the Hickory Portfolio is based on a concept of
"value investing" which focuses on companies whose stocks are selling at (i) low
price to earnings ratios, (ii) low price to cash-flow ratios, (iii) low price to
book ratios, (iv) discounts to the value of the company's cash, natural resource
and other asset value (even though current earnings may be depressed), or (v)
prices below what the Investment Adviser believes to be reasonable for the
company. Little weight is given to technical stock market analysis. Federal
income tax consequences to shareholders will not be a factor in the investment
decisions.
The investment objective is fundamental to the Hickory Portfolio and cannot be
changed without a
17
<PAGE>
vote of the holders of a majority of its outstanding shares. Additionally, the
Hickory Portfolio is subject to other investment policies and restrictions
imposed by the Investment Adviser which are not considered fundamental and which
may be changed without shareholder approval except as otherwise indicated. See
"Investment Restrictions" herein and "Investment Objective, Policies and
Restrictions -- Hickory Portfolio" in the Statement of Additional Information .
The Investment Adviser will notify shareholders in writing at least 30 days
prior to implementing a material change.
INVESTMENT RESTRICTIONS
The Investment Adviser has adopted certain investment restrictions for each
Portfolio. The percentage limitations are applied at the time of purchase based
upon values determined at that time. Unless otherwise indicated, a restriction
would not apply if a percentage limitation is exceeded because of changes in the
market values only.
VALUE PORTFOLIO
FUNDAMENTAL INVESTMENT RESTRICTIONS
The Value Portfolio has adopted a fundamental investment restriction which
prohibits the Value Portfolio from purchasing the securities of any other
investment company except as provided by Section 12(d)(1)(F) of the Investment
Company Act of 1940, and in the open market where, to the best information of
the Investment Adviser, no commission, profit or sales load to a sponsor or
dealer (other than the customary broker's commission) results from such
purchase, and to the extent that such securities normally do not exceed 10% of
the total assets of the Value Portfolio. In addition the Value Portfolio may not
invest more than 25% of the value of its assets in the securities of any one
industry.
The Value Portfolio is a diversified investment company. As a result, with
respect to 75% of its total assets, the Value Portfolio is prohibited from
investing more than 5% of its assets in the securities of any one issuer (other
than U.S. Government securities), or owning more than 10% of the outstanding
voting securities of any one issuer.
The Value Portfolio is subject to certain additional fundamental investment
restrictions which are set forth in detail in the Statement of Additional
Information and which are summarized in part below under "All Portfolios --
Fundamental Investment Restrictions".
NONFUNDAMENTAL POLICIES AND RESTRICTIONS
The Value Portfolio may invest in convertible bonds and debentures, warrants
and securities of other investment companies. The Value Portfolio may purchase
securities of other investment companies subject to the limitations discussed
under "Fundamental Investment Restrictions" above and will not purchase any such
securities involving the payment of a front-end sales load or a redemption
charge. The Value Portfolio may purchase shares of investment companies
specializing in securities in which the Value Portfolio has a particular
interest or shares of closed-end investment companies which frequently trade at
a discount from their net asset value. See "Securities and other Investment
Practices" for a description of the securities in which the Value Portfolio will
invest.
FIXED INCOME PORTFOLIO
FUNDAMENTAL INVESTMENT RESTRICTIONS
The Fixed Income Portfolio has adopted certain investment restrictions,
including restrictions which prohibit the Fixed Income Portfolio from (i)
writing, purchasing or selling puts and calls and purchasing and selling puts
and calls on bond index futures, except as bona fide hedging activities as
described herein under "Securities and Other Investment Practices" and under
"Investment Objective, Policies and
18
<PAGE>
Restrictions -- Fixed Income Portfolio" in the Statement of Additional
Information; (ii) purchasing or selling commodities or commodity futures
contracts, except that the Fixed Income Portfolio may purchase and sell interest
rate futures, bond index futures and options hereon for bona fide hedging
purposes; and (iii) investing more than 25% of the value of its assets in the
securities of any one industry.
The Fixed Income Portfolio is a diversified investment company. As a result,
with respect to 75% of its total assets, the Fixed Income Portfolio is
prohibited from investing more than 5% of its assets in the securities of any
one issuer (other than U.S. Government Securities), or owning more than 10% of
the outstanding voting securities of any one issuer.
The Fixed Income Portfolio is subject to certain additional fundamental
investment restrictions which are set forth in detail in the Statement of
Additional Information and which are summarized in part below under "All
Portfolios -- Fundamental Investment Restrictions".
NONFUNDAMENTAL INVESTMENT RESTRICTIONS
The Fixed Income Portfolio may invest in repurchase agreements on U.S.
Government Securities and may use interest rate futures, index futures and
related options. See Appendix A to the Statement of Additional Information for a
general discussion of the risks associated with an investment in futures.
GOVERNMENT MONEY MARKET PORTFOLIO
FUNDAMENTAL INVESTMENT RESTRICTIONS
The Government Money Market Portfolio will comply with the provisions of Rule
2a-7 under the 1940 Act which requires the Government Money Market Portfolio to
maintain a dollar weighted average maturity of 90 days or less and also
restricts the Government Money Market Portfolio's investments to securities with
maturities of no greater than 13 months. Additionally, Rule 2a-7 requires that
the Government Money Market Portfolio invest in securities which have been rated
or, if unrated, are of comparable quality to securities which have been rated by
nationally recognized statistical rating organizations in one of the two highest
rating categories and which the Board of Directors determines to be of high
quality and which present minimal credit risks. Rule 2a-7 also restricts the
Government Money Market Portfolio from investing more than 5% of its total
assets in the securities of any one issuer other than U.S. Government
Securities. The Government Money Market Portfolio may invest in obligations
which are subject to repurchase agreements with any member bank of the Federal
Reserve System or primary dealer in U.S. Government securities. As a matter of
operating policy, the Government Money Market Portfolio will not enter into
repurchase agreements with more than seven days to maturity if it would result
in the investment of more than 10% of the value of the Government Money Market
Portfolio's assets in such repurchase agreements.
NONFUNDAMENTAL INVESTMENT RESTRICTIONS
The Government Money Market Portfolio will not, as a matter of operating
policy, subject more than 5% of its assets to investments in reverse repurchase
agreements.
HICKORY PORTFOLIO
FUNDAMENTAL INVESTMENT RESTRICTIONS
The Hickory Portfolio has adopted a fundamental investment restriction which
prohibits the Hickory Portfolio from purchasing the securities of any other
investment company except as provided by section 12(d)(1)(F) of the 1940 Act,
and in the open market where, to the best information of the Investment Adviser,
no commission, profit or sales load to a sponsor or dealer (other than the
customary broker's commission) results from such purchase, and to the extent
that such securities normally do not exceed 10% of the total assets of the
Hickory Portfolio. In addition, the Hickory Portfolio may not invest more than
25% of the value of its assets in the securities of any one industry.
The Hickory Portfolio is a non-diversified investment company. As a result,
with respect to 50% of its total assets, the Hickory Portfolio may not invest
19
<PAGE>
more than 5% of its total assets, taken at market value at the time of a
particular purchase, in securities of any single issuer (other than government
securities), nor as to the other 50% of its assets, invest more than 25% of the
value of its total assets in the securities of any single issuer. Due to its
nondiversified status, the Hickory Portfolio's shares may be more susceptible to
adverse changes in the value of securities of a particular company than would be
the shares of a diversified investment company.
The Hickory Portfolio is subject to certain additional fundamental investment
restrictions which are set forth in detail in the Statement of Additional
Information and which are summarized in part below under "All Portfolios --
Fundamental Investment Restrictions".
NONFUNDAMENTAL POLICIES AND RESTRICTIONS
The Hickory Portfolio may invest in convertible bonds and debentures, warrants
and securities of other investment companies. The Hickory Portfolio may purchase
securities of other investment companies, subject to the limitations discussed
under "Fundamental Investment Restrictions" above and will not purchase any such
securities involving the payment of a front-end sales load or a redemption
charge. The Hickory Portfolio may purchase shares of investment companies
specializing in securities in which the Hickory Portfolio has a particular
interest or shares of closed-end investment companies which frequently trade at
a discount from their net asset value. See "Securities and other Investment
Practices" for a description of the securities in which the Hickory Portfolio
will invest.
ALL PORTFOLIOS
FUNDAMENTAL INVESTMENT RESTRICTIONS
The Portfolios have adopted a number of fundamental investment restrictions
relating to their investment activities that are described in complete detail in
the Statement of Additional Information. These restrictions, in part, prohibit
the Portfolios from:
1. Underwriting the securities of other issuers,
except the Portfolios may acquire restricted securities under circumstances such
that, if the securities are sold, the Portfolios might be deemed to be an
underwriter for purposes of the Securities Act of 1933;
2. Issuing any senior securities (as defined in the
1940 Act, as amended).
3. Borrowing money except for temporary
purposes and then only from banks and in an aggregate amount not exceeding 5% of
total net assets of the respective Portfolio;
4. Investing for the purpose of exercising
control or management;
The Fundamental Investment Restrictions identified above for all of the
Portfolios are considered fundamental policies and cannot be changed without the
approval of a "majority" of the respective Portfolio's outstanding voting
securities. "Majority" means the lesser of (a) 67% or more of the outstanding
shares of the Portfolio voting at a special or annual meeting if more than 50%
of the outstanding shares of a Portfolio are represented in person or by proxy;
or (b) more than 50% of the outstanding shares. The Statement of Additional
Information includes discussion of other investment policies and restrictions,
some of which are also considered fundamental and may not be changed without
shareholder approval.
The nonfundamental policies and restrictions may be changed without
shareholder approval. However, the Investment Adviser will notify shareholders
in writing of the intention to materially modify the policies or restrictions at
least 30 days prior to making the change.
PORTFOLIO TURNOVER AND OTHER INVESTMENT POLICIES
In seeking to attain their investment objectives, the Value Portfolio, Hickory
Portfolio and Fixed Income Portfolio will normally purchase securities with a
view to holding them rather than selling them to achieve short-term trading
profits. However, each Portfolio reserves the right to sell any security without
regard to the length of time it has been held if economic, industry, or
securities market conditions warrant such action. The estimated annual portfolio
turnover rate
20
<PAGE>
for the Value Portfolio is normally less than 100%. For the periods ended March
31, 1995 and March 31, 1996, the portfolio turnover rates for the Value
Portfolio were approximately 28% and 40%, respectively. The estimated annual
portfolio turnover rate for the Fixed Income Portfolio is normally less than
100% and for the periods ended March 31, 1995 and March 31, 1996, the turnover
rates were 49% and 28%, respectively. The estimated annual turnover rate for the
Hickory Portfolio is normally less than 100% and for the periods ended March 31,
1995 and March 31, 1996, the portfolio turnover rates were 20% and 28%
respectively. The calculation of portfolio turnover excludes all securities for
which the maturity or expiration date at the time of the acquisition is one year
or less; consequently, portfolio turnover is not a consideration for the
Government Money Market Portfolio. The portfolio turnover rate will not be a
limiting factor when the Investment Adviser deems portfolio changes appropriate.
The higher a Portfolio's turnover rate, the higher will be its expenditures for
brokerage commissions and related transaction costs.
While the Portfolios each intend to comply with the requirements of Subchapter
M of the Internal Revenue Code (see "Dividends, Distributions and Taxes"), the
Portfolios may invest without regard for shareholder tax considerations.
In connection with the qualification or registration of their shares for sale
under the state securities laws of certain states, the Portfolios may from time
to time agree to additional investment restrictions for purposes of compliance
with the securities laws of those states where the Portfolios intend to sell or
offer for sale their shares. To the extent that such additional investment
restrictions would materially alter a Portfolio's investment objective, such
additional restrictions may require shareholder approval prior to
implementation. Any additional restrictions that would have a bearing on the
Portfolio's operations will be reflected in supplements to this Prospectus.
The value of the shares of the Value Portfolio, Fixed Income Portfolio and
Hickory Portfolio will fluctuate daily as the net asset values of their
portfolios change. The Portfolios cannot assure the elimination of investment
and market risks or the attainment of their objectives.
SECURITIES AND OTHER INVESTMENT PRACTICES
The Portfolios invest in a variety of securities which have special features
and engage in certain investment practices in seeking to achieve their
respective investment objectives. Provided below is a brief description of such
securities and investment practices. See the Statement of Additional Information
for a more detailed discussion.
CONVERTIBLE BONDS AND DEBENTURES are corporate debt instruments, frequently
unsecured and subordinated to senior corporate debt, which may be converted into
common stock at a specified price. Such securities may trade at a premium over
their face amount when the price of the underlying common stock exceeds the
conversion price, but otherwise will not normally trade at prices reflecting
current interest rate trends.
COVERED CALL OPTIONS are contracts sold on a national exchange or in the
over-the-counter options market which allow the purchaser to buy the underlying
security at a specified price (the "strike price") prior to a certain date.
"Covered" options are those in which the option seller (the "writer") owns the
underlying securities. The Value Portfolio and the Hickory Portfolio may write
covered call options to generate premium income which is considered by the
Investment Adviser to be an acceptable investment result. Writing covered call
options may increase the income of the Value Portfolio or Hickory Portfolio, as
the case may be, since the respective portfolio receives a payment (the
"premium") for writing the option. To the extent that the Value Portfolio or the
Hickory Portfolio writes covered call options, the respective portfolio will
forego any opportunity for appreciation in the underlying securities above the
strike price during the term of the option. The underlying securities will be
subject to certain deposit procedures and therefore unavailable for sale during
the term of the option or until the respective portfolio buys back the option to
close out the transaction. The absence of a liquid secondary market in such
securities could result from numerous circumstances, including insufficient
trading interest and exchange restrictions and limitations.
21
<PAGE>
U.S. GOVERNMENT SECURITIES are securities issued or guaranteed by the U.S.
Government and may include Treasury Bills, Notes, and Bonds which are direct
obligations of the U.S. Government and its agencies and instrumentalities.
Obligations issued or guaranteed by U.S. Government agencies or
instrumentalities include, for example, those obligations of Federal
Intermediate Credit Banks, Federal Home Loan Banks, the Federal National
Mortgage Association and the Farmers Home Administration. Such securities will
include those supported by the full faith and credit of the U.S. Treasury or the
right of the agency or instrumentality to borrow from the Treasury, as well as
those supported only by the credit of the issuing agency or instrumentality.
Some U.S. Government agency securities such as those issued by the Government
National Mortgage Association ("GNMA") are mortgage-related securities which
represent an undivided ownership interest in a pool of mortgage loans. The
actual yield of such securities is influenced by the prepayment experience of
the mortgage pool underlying them. In periods of declining interest rates, the
rate of prepayment of mortgages underlying the securities tends to increase and
in periods of rising interest rates the rate of prepayment tends to decrease. If
the higher-yielding mortgages from the pool are prepaid, the yield on the
remaining pool will be reduced and it will be necessary for the Fixed Income
Portfolio to reinvest such prepayment, presumably at a lower interest rate. As
with any mortgage-backed securities, if such mortgage-related securities are
purchased at a premium, in the event of prepayment such premium would be lost.
Most mortgage-related securities are pass-through securities, which means that
they provide investors with payments consisting of both interest and principal
as the mortgages in the underlying mortgage pool are paid off. The following
types of mortgage-related securities, which represent the majority of the
mortgage-related securities currently available, are issued by
government-sponsored organizations formed to increase the availability of
mortgage credit.
Ginnie Maes, securities issued by GNMA, are interests in pools of mortgage
loans insured by the Federal Housing Administration. GNMA is a U.S. Government
corporation with the Department of Housing and Urban Development. Ginnie Maes
are backed by the full faith and credit of the United States Government, which
means that the U.S. Government guarantees that interest and principal will be
paid when due.
Fannie Maes and Freddie Macs are pass-through securities issued by the Federal
National Mortgage Association (FNMA) and the Federal Home Loan Mortgage
Corporation (FHLMC), respectively. FNMA and FHLMC, which guarantee payment of
interest and principal on Fannie Maes and Freddie Macs, are federally chartered
corporations supervised by the U.S. Government and act as governmental
instrumentalities under authority granted by Congress. Fannie Maes and Freddie
Macs are not backed by the full faith and credit of the United States
Government; however, their close relationship with the U.S. Government makes
them high-quality securities with minimal credit risk.
Mortgage-related securities, when they are issued, have stated maturities of
up to forty years, depending on the length of the mortgages underlying the
securities. In practice, unscheduled or early payments of principal and interest
on the underlying mortgages will make the effective maturity of the security
shorter than this. A security based on a pool of forty-year mortgages may have
an average life as short as two years. The maturity of such mortgage-related
securities will be deemed to be the expected effective maturity of the
securities for purposes of maintaining compliance with the Fixed Income
Portfolio's stated policies. The relationship between mortgage prepayments and
interest rates will give some high-yielding mortgage-related securities less
potential for growth in value than conventional bonds with comparable
maturities.
CORPORATE DEBT SECURITIES acquired by the Value Portfolio, the Hickory
Portfolio and the Fixed Income Portfolio, including convertible bonds and
debentures, will generally be of investment grade or better (rated BBB or better
by S&P, and Baa or better by Moody's). Securities rated BBB/Baa are considered
"investment grade" by the financial community, but are described by S&P and
Moody's as "medium grade obligations" which have "speculative characteristics."
The Fixed Income Portfolio may also invest up to 15% of its total assets in
securities rated lower than "BBB/Baa",
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generally known as "junk bonds". In addition, the Fixed Income Portfolio may
invest in unrated securities if the Investment Adviser determines such
securities are of a quality comparable to the rated securities in which the
Fixed Income Portfolio will invest. Changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity to make principal
and interest payments than is the case with higher grade debt securities. See
"Risk Factors -- Fixed Income Portfolio". To the extent that such securities are
downgraded after acquisition, the Investment Adviser will evaluate the risk of
continuing to hold the securities or will prudently dispose of them. See
Appendix A to this Prospectus for a description of ratings.
BANK OBLIGATIONS include negotiable certificates of deposit and bankers'
acceptances which evidence the obligation of the banking institution to repay
funds deposited with it for a specified period of time at a stated interest
rate. Such obligations will be purchased from banks which have capital, surplus
and undivided profits, as of the date of their most recently published financial
statements, in excess of $100,000,000 and obligations of other banks and savings
and loan associations if such obligations are insured by the Federal Deposit
Insurance Corporation ("FDIC"). Certificates of deposit generally have penalties
for early withdrawal, but can be sold to third parties subject to the same risks
as other fixed income securities. For a discussion of certain of such risks see
"Risk Factors -- Fixed Income Portfolio."
COMMERCIAL PAPER consists of short-term unsecured promissory notes. The Value,
Fixed Income and Hickory Portfolios will purchase only commercial paper rated
Prime 1 by Moody's or A-1 by S&P, or if not rated, commercial paper issued or
guaranteed as to payment of principal and interest by companies which at the
date of investment have an outstanding debt issue rated AA or better by S&P or
Aa or better by Moody's. See Appendix A to this Prospectus for a description of
ratings.
FOREIGN SECURITIES purchased by the Value Portfolio, Hickory Portfolio or
Fixed Income Portfolio must be listed on a principal foreign securities exchange
or over-the-counter market, or be represented by American Depository Receipts
and listed on a domestic securities exchange or traded in the United States
over-the-counter market. The respective portfolio may occasionally convert U.S.
dollars into foreign currency, but only to effect securities transactions on a
foreign securities exchange and not to hold such currency as an investment. The
respective portfolio will not invest in forward foreign currency contracts.
While the respective portfolios have no present intention to invest any
significant portion of their respective assets in foreign securities, the
portfolios reserve the right to invest not more than 25% of the value of their
respective total assets (at time of purchase, giving effect thereto) in the
securities of foreign issuers and obligors.
Investors should recognize that investments in foreign companies involve
certain risks that are not typically associated with investing in domestic
companies. An investment may be affected by changes in currency rates and in
exchange control regulations. Foreign companies are not generally subject to
uniform accounting, auditing and financial reporting standards comparable to
those applicable to domestic companies, and there may be less publicly available
information about a foreign company than about a domestic company. Some foreign
stock markets may have substantially less trading activity than the American
securities markets, and securities of some foreign companies may be less liquid
than securities of comparable domestic companies. Also, commissions on
transactions in foreign securities may be higher than similar transactions on
domestic stock markets and foreign governments may impose taxes on securities
transactions or ownership. There is generally less governmental regulation of
stock exchanges, brokers, and listed and unlisted companies in foreign countries
than in the United States. In addition, individual foreign economies may differ
favorably or unfavorably from the United States' economy in such respects as
growth of gross national product, rate of inflation, capital reinvestment,
resource self-sufficiency and balance of payments position.
REPURCHASE AGREEMENTS involve the purchase of U.S. Government securities and a
simultaneous agreement with the seller to "repurchase" the securities at a
specified price and time, thereby determining the yield during the purchaser's
holding period. This results in a fixed rate of return insulated from market
fluctuations during such period. Repurchase agreements usually are for short
periods,
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such as one week. If a repurchase agreement is construed to be a collateralized
loan, the underlying securities will not be considered to be owned by the
respective Portfolio but only constitute collateral for the seller's obligation
to pay the repurchase price and, in the event of a default by the seller, the
respective Portfolio may suffer time delays and incur costs or losses in
connection with the disposition of the collateral. A repurchase agreement may
involve certain risks not associated with a direct purchase of U.S. Government
securities. For example, the bank or broker selling the repurchase agreement may
default on its obligations to deliver additional securities or to maintain the
value of collateral underlying the repurchase agreement or it may fail to
repurchase the underlying securities at a time when the value has declined. A
Portfolio may incur a loss as a result of such default if the liquidation of the
collateral results in proceeds less than the repurchase price. In an effort to
minimize such risks, the Portfolios will only enter into repurchase agreements
with member banks of the Federal Reserve with assets, surplus and undivided
profits of $100,000,000 or more or recognized regional or national securities
dealers.
REVERSE REPURCHASE AGREEMENTS. The Government Money Market Portfolio may
participate in reverse repurchase agreements in which the Portfolio temporarily
transfers possession of a portfolio security to another party, such as a bank or
broker dealer, in return for cash, and agrees to buy the security back at a
future date and price. The Government Money Market Portfolio can invest the cash
it receives or use it to meet redemption requests. If the Government Money
Market Portfolio reinvests the cash at a rate higher than the cost of the
agreement, it may earn additional income. At the same time, the Government Money
Market Portfolio is exposed to greater potential fluctuations in the value of
its assets when engaging in reverse repurchase agreements. During the time that
a reverse repurchase agreement is outstanding, the Government Money Market
Portfolio will maintain cash and liquid securities in a segregated account at
its custodian bank with a value of at least equal to its obligations under the
agreement.
INVESTMENT COMPANY SECURITIES consist only of the shares of other open or
closed end investment companies registered under the 1940 Act. Investing in the
shares of other registered investment companies involves the risk that such
other registered investment companies will not achieve their objectives or will
achieve a yield or return that is lower than that of the particular Portfolio.
Investing in the shares of other registered investment companies indirectly
results in the investor paying not only the advisory fee and related fees
charged by the investing Portfolio, but also the advisory and related fees
charged to the other investment companies. The Portfolios will only invest in
investment company securities which have similar investment objectives and
policies as the particular Portfolio and then, only to the extent allowed by the
fundamental investment restrictions for the particular Portfolio.
HEDGING PRACTICES, INTEREST RATE FUTURES, BOND INDEX FUTURES AND OPTIONS
THEREON
The Fixed Income Portfolio may also purchase and sell interest rate futures
and bond index futures and may write, purchase, and sell put and call options
listed on national securities exchanges on the securities it owns, on interest
rate futures and bond index futures for the purposes of hedging against changes
in values of the Fixed Income Portfolio's investments. The Fixed Income
Portfolio will not utilize any hedging strategies using interest rate futures
and bond index futures or options thereon which will cause the then aggregate
value of all such investments to exceed 10% of the value of the Fixed Income
Portfolio's total assets at the time of investment after giving effect thereto.
Different uses of futures and options have different risk and return
characteristics. Generally speaking, selling futures contracts, purchasing put
options and writing call options are strategies designed to protect against
falling security prices, and can limit potential gains if prices rise.
Purchasing futures contracts, purchasing call options and writing put options
are strategies for which the returns tend to rise and fall together with
securities prices, and can cause losses if prices fall. If securities prices
remain unchanged over time, option writing strategies tend to be profitable,
while option buying strategies tend to decline in value. In addition, due to the
risk of an imperfect correlation between securities in the Fixed Income
Portfolio that are the subject of a hedging transaction and the contract used as
a hedging device, it is possible that the hedge will not be fully effective in
that, for example, losses on the Fixed Income Portfolio's securities may be in
excess of gains on the futures contract or losses on
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<PAGE>
the futures contract may be in excess of gains on the Fixed Income Portfolio's
securities that were the subject of the hedge. In futures contracts based on
indexes, the risk of imperfect correlation increases as the composition of the
Fixed Income Portfolio's assets vary from the composition of the index. In an
effort to compensate for the imperfect correlation of movements in the price of
the securities being hedged and movements in the price of futures contracts, the
Fixed Income Portfolio may buy or sell futures contracts in a greater or lesser
dollar amount than the dollar amount of the securities being hedged if the
historical volatility of the futures contract has been lesser or greater than
that of the securities. Such "over hedging" or "under hedging" may adversely
affect the Fixed Income Portfolio's net investment results if market movements
are not as anticipated when the hedge is established. See Appendix A to the
Statement of Additional Information for a further description of interest rate
futures, bond index futures, options and the risks thereof.
The Investment Adviser will choose among futures and options strategies based
on its judgment of how best to meet the Fixed Income Portfolio's goals. In
selecting futures and options strategies for the Fixed Income Portfolio, the
Investment Adviser will assess such factors as current and anticipated interest
rates, relative liquidity and price levels in the options and futures markets
compared to the securities markets, and the Fixed Income Portfolio's cash flow
and cash management needs. If the Investment Adviser judges these factors
incorrectly, or if price changes in the Fixed Income Portfolio's futures or
options positions are not well correlated with its other investments, use of
futures contracts and options may lower the Fixed Income Portfolio's return. The
Fixed Income Portfolio could also be exposed to risks if it could not close out
its futures or options positions because of an illiquid secondary market.
The Fixed Income Portfolio's purchase or sale of interest rate futures and the
writing, purchase and sale of put and call options on the securities it owns and
on interest rate futures and bond index futures involves strategies which may
require the Fixed Income Portfolio to segregate cash and/or liquid securities in
an account with its Custodian to cover its obligations under the contracts to
ensure that the contracts are not leveraged. The value of the assets held in the
segregated account will be maintained at an amount equal to all outstanding
futures or options contracts, less the amount deposited as initial margin. When
the Fixed Income Portfolio has sold futures contracts or options to hedge
securities it owns, it will not sell the securities being hedged while the
futures contracts are outstanding, unless it substitutes other similar
securities for the securities sold.
WHEN ISSUED OR FORWARD COMMITMENT transactions occur when securities are
purchased or sold by a Portfolio with payment and delivery taking place in the
future to secure what is considered an advantageous yield and price to the
Portfolio at the time of entering into the transaction. The Portfolio will
maintain a segregated account with its custodian of cash or liquid U.S.
Government obligations in an aggregate amount equal to the amount of its
commitments in connection with such purchase transactions.
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THE INVESTMENT ADVISER
The Investment Adviser to each of the Portfolios is Wallace R. Weitz &
Company, 1125 South 103 Street, Suite 600, Omaha, Nebraska 68124-6008. The
Investment Adviser also serves as the Fund's Transfer Agent, Dividend Disbursing
Agent and Administrator. The Investment Adviser furnishes the Portfolios with
continuous investment advice and is responsible for overall management of the
Fund's business affairs subject to supervision of the Fund's Board of Directors.
The Fund has agreed to pay the Investment Adviser a monthly fee equal to an
annual rate of 1% of the average daily net assets for the Value and Hickory
Portfolios and .5% of the average daily net assets for the Fixed Income and
Government Money Market Portfolios. The Advisory fee paid with respect to the
Value Portfolio and the Hickory Portfolio is higher than most other investment
companies.
Each Portfolio pays all expenses directly attributable to it. Those expenses
such as fees of directors and other fees that are not directly attributable to a
Portfolio are allocated among the Portfolios based upon the total assets of the
Portfolios. The Adviser reimburses Value and Hickory Portfolios or pays directly
for a portion of certain operating expenses to the extent of the advisory fee
paid by these Portfolios, if the total of such expenses exceeds 1.5% of the
annual average net assets. The Adviser also reimburses the Fixed Income
Portfolio and Government Money Market Portfolio or pays directly for a portion
of certain operating expenses to the extent of the advisory fees paid by these
Portfolios, if the total of such expenses exceeds 1% of the annual average net
assets. See "Investment Advisory and Other Services -- The Investment Advisory
Agreements" in the Statement of Additional Information for more information
relating to the reimbursement provisions.
For the period ended March 31, 1996, the Value Portfolio, Fixed Income
Portfolio, Government Money Market Portfolio and the Hickory Portfolio incurred
"Total Operating Expenses" based on average annual daily assets of 1.35%, .75%,
.50% and 1.50% respectively. For the same period, the Investment Adviser waived
.25% of its investment advisory fees for the Government Money Market Portfolio.
In addition, in connection with the Investment Adviser's services as
administrator to the Fund for the various Portfolios, the Investment Adviser
waived all of its fees with respect to the Government Money Market Portfolio and
certain of its fees with respect to the Fixed Income Portfolio and Hickory
Portfolio. Finally, for the period ended March 31, 1996, the Investment Adviser
reimbursed the Fixed Income Portfolio and the Government Money Market Portfolio
for certain of its expenses. "Total Operating Expenses" absent the fee waivers
and expense reimbursements for the Portfolios would have been .95% for the Fixed
Income Portfolio, 1.14% for the Government Money Market Portfolio and 1.61% for
the Hickory Portfolio. The Value Portfolio was not subject to any fee waiver or
expense reimbursement arrangements for the same period. From time to time, the
Investment Adviser may waive all or some of its fees and/or voluntarily assume
certain expenses of one or all of the Portfolios. See "Investment Advisory and
Other Services -- The Investment Advisory Agreements" in the Statement of
Additional Information.
Wallace R. Weitz is portfolio manager for the Value Portfolio and has managed
the Portfolio since its inception in 1986. He is a Chartered Financial Analyst
and has been in the securities business since 1970, including employment as an
account executive and securities analyst with G.A. Saxton & Co., Inc. from 1970
to 1973 and thereafter with Chiles, Heider & Co., Inc. until May, 1983. Mr.
Weitz formed the investment advisory firm Wallace R. Weitz & Company in 1983
which has managed several equity-oriented private investment partnerships, as
well as a private income partnership and individual accounts. Wallace R. Weitz
owns all outstanding shares of the Investment Adviser, which is a Nebraska
corporation formed in March, 1983.
Mr. Weitz and Thomas D. Carney are portfolio managers for the Fixed Income and
the Government Money Market Portfolios. Mr. Carney, who was previously a
municipal securities analyst with Smith Barney, joined the Investment Adviser as
a fixed income analyst and securities trader in February, 1995 and became a
portfolio manager for the Fixed Income and Government Money Market Portfolios in
January, 1996. Mr. Weitz has managed the Fixed Income Portfolio since its
inception in 1988 and the Government Money Market Portfolio since its inception
in 1991.
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Richard F. Lawson, a Vice President of the Investment Adviser and a Chartered
Financial Analyst, is the portfolio manager for the Hickory Portfolio. He is a
graduate of Harvard Business School and has previously been associated with
Temple, Barker & Sloane, Inc., a management consulting firm. Mr. Lawson has been
an analyst with the Investment Adviser since March 1, 1991 and a vice president
since December, 1992.
PURCHASE OF SHARES
GENERAL
Shares of the Portfolios are offered by the Distributor on a continuous basis
at net asset value without a sales load or other charge. Portfolio shares may be
purchased at their net asset value next computed (see "Determination of Net
Asset Value") after receipt of an order subject to a minimum initial investment
requirement of $25,000. The initial investment may be allocated among the
Portfolios. Subsequent minimum investments in the Portfolios of at least $5,000
may be required, subject to certain exceptions.
The Fund reserves the right, in its sole discretion, to reject any order, to
waive initial and subsequent investment minimums for new accounts including such
accounts opened by or for family members of existing shareholders and to modify
investment minimums generally from time to time. All purchase orders are subject
to acceptance by authorized officers of the Fund in Omaha, Nebraska and are not
binding until so accepted.
Shares of a Portfolio may be purchased only in those states in which the
respective Portfolio is qualified for sale.
To obtain a Purchase Application, for assistance in completing the
application, or for additional information, call or write Weitz Securities, Inc.
at the Fund's telephone number or address shown on the cover page of this
Prospectus.
PAYMENT BY CHECK Investors may purchase shares by completing the Purchase
Application included with this Prospectus, specifically indicating their
investment in Value Portfolio, Fixed Income Portfolio, Government Money Market
Portfolio, Hickory Portfolio or combination thereof and submitting it with a
check payable to:
WEITZ SERIES FUND, INC.
1125 South 103 Street, Suite 600
Omaha, Nebraska 68124-6008
For subsequent purchases, the account name and account number should be
included with any purchase order to properly identify the investor's account.
PAYMENT BY BANK WIRE Payment for shares may also be made by bank wire. For
initial purchases, a purchase application must be completed and mailed to the
Fund. To pay by bank wire the investor must:
1. Telephone the Fund (402) 391-1980 or (800)
232-4161 and furnish the name, the account number and the telephone number of
the investor as well as the amount being wired and the name of the wiring bank.
2. Instruct the bank to wire the specific amount
of immediately available funds to the Custodian. The Fund will not be
responsible for the consequences of delays in the bank or Federal Reserve wire
system. The investor's bank must furnish the full name of the investor's account
and the account number. The wire should be addressed as follows:
Norwest Bank Nebraska, N.A.
1919 Douglas Street
Omaha, Nebraska 68102
ABA #104000058
Capital Management & Trust Department
#1150-001-521
For Credit To:Weitz Series Fund, Inc.
Value Portfolio #25301300
Fixed Income #25304100
Govt Money Mkt #25305200
Hickory Portfolio #25307000
For The Account Of: Account Registration Name
BANKS MAY IMPOSE A CHARGE FOR THE WIRE TRANSFER OF FUNDS.
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<PAGE>
AUTOMATIC INVESTMENT SERVICE Shareholders may choose to participate in
automatic investment service provided through the automated clearing system. By
selecting this option on the Purchase Application, providing the bank name,
address and appropriate account numbers (a voided check is required), a draft
will be drawn on your bank account at regular intervals (on the 1st or the 15th
day of the month or if such day is not a business day, the next following
business day) to purchase shares of the respective Portfolio at net asset value
on the date of the draft. The Fund will send a confirmation for each
transaction. A debit will also appear on your bank statement. To add, change or
cancel this service, please send a request in writing to the Fund.
RETIREMENT ACCOUNTS
INDIVIDUAL RETIREMENT ACCOUNTS ("IRAS") Certain individuals may be eligible to
establish IRAs if they meet requirements of the Internal Revenue Code. A form of
individual retirement account is available from the Fund for investment in
shares by qualified investors. This form may be used for annual contributions as
well as for qualified rollover contributions of distributions received from
certain employer-sponsored pension and profit-sharing plans and from other IRAs.
A required disclosure statement describing relevant tax and other information
will be provided with the appropriate forms and instructions.
DEFINED CONTRIBUTION PLANS A self-employed individual may purchase shares
through a properly drafted self-employment retirement plan (customarily referred
to as a Keogh or HR-10 plan) covering the self-employed individual and eligible
employees. The Fund may also be used as an investment vehicle for tax-deferred
retirement plans such as Money Purchase Pension Plans, Profit Sharing Plans and
401(k) Plans. The Fund does not have forms of such plans available for adoption.
Tax treatment of contributions and withdrawals from retirement plans, such as
those listed, may be substantially affected by changes in Federal tax
legislation. Premature withdrawals from a retirement plan may result in adverse
tax consequences. Consultation with a tax adviser regarding the tax consequences
of retirement plans is recommended.
Retirement programs involve commitments covering future years. Therefore, it
is important that the investment objective of the Portfolio be consistent with
the participant's retirement objectives. The minimum investment requirements for
the purchase of shares may be waived for purchases by retirement plans. An
investor should contact the Fund for further information concerning retirement
plan investments.
REDEMPTION OF SHARES/EXCHANGE PRIVILEGES
EXCHANGE PRIVILEGES
It is possible to exchange shares of one Portfolio for shares of another at
the current net asset value. No sales commission or other charges are paid for
the exchange. However, an exchange involves the redemption of shares from one
portfolio and the purchase of shares of another portfolio. As a result, any gain
or loss on the redemption is reportable on the shareholder's federal tax return.
The investor must also comply with the established redemption procedures.
Current account restrictions or limitations may also affect the exchange
transaction. See the information below under "Redemption of Shares" relating to
redemption procedures.
The exchange privilege is offered as a convenience to shareholders and is not
intended to be a means of speculating on short-term movements in securities
prices by frequent transactions in Portfolio shares. Thus, the Fund reserves the
right at any time and with sixty days' prior notice to suspend, limit, modify,
or terminate exchange privileges in order to prevent transactions considered to
be disadvantageous to existing shareholders. The exchange privilege is available
only in states where shares of the respective portfolio are registered for sale.
The ability to initiate exchanges by telephone is automatically established on
your account unless you request in writing that exchanges by telephone on your
account not be permitted. When exchanging shares by
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<PAGE>
telephone, please have ready the name of the Portfolio, your account number, the
account registration and the dollar amount of shares to be exchanged. Exchanges
will only be made between accounts with identical registrations. Additional
information may be requested by the Fund in order to verify the identity of the
requesting shareholder. The Fund will employ reasonable procedures to confirm
that exchange instructions communicated by telephone are genuine. THE FUND WILL
NOT BE RESPONSIBLE FOR THE AUTHENTICITY OF TRANSACTION INSTRUCTIONS RECEIVED BY
TELEPHONE, PROVIDED THAT REASONABLE SECURITY PROCEDURES HAVE BEEN FOLLOWED.
REDEMPTION OF SHARES
The Company will redeem all or any portion of a stockholder's shares of the
Fund when requested in accordance with the procedures set forth below. There is
no charge for the redemption of shares.
All redemption requests should be made in writing to the Company at its office
in Omaha, Nebraska. A completed Purchase Application must have been received by
the Fund before subsequent instructions to redeem shares will be accepted. The
Company's address and fax number are shown on the cover page of this Prospectus.
Shareholders may sell all or any portion of their shares on any business day
that a net asset value for the Fund is calculated. Such shares will be redeemed
by the Fund at the next such calculation after such redemption request is
received and accepted by the Fund. See "Determination of Net Asset Value."
A shareholder may request redemption of shares at any time by delivering
written instructions to the Company at the address set forth on the front cover
of this Prospectus. The redemption request should:
(1) identify the Fund, the account number and
the account registration, specify the number or dollar amount of shares to be
redeemed and be signed by all registered owners exactly as the account is
registered. If the shareholder is a corporate shareholder, the request must be
signed by an authorized corporate officer, indicating the capacity in which such
officer is signing; and
(2) include any other supporting documents
requested by the Fund and as may be required by applicable law, in the case of
estates, trusts, guardianships, custodianships, and corporations (any questions
concerning documents needed may be directed to the Company's telephone number
shown on the cover page of this Prospectus).
The Fund reserves the right to require signature guarantees on all
redemptions. Signature guarantees will be required in the following
circumstances:
(1) redemption request payable to anyone other
than the shareholder(s) of record;
(2) redemption request to be mailed to an
address other than the address of record;
(3) redemption request payable to a bank
account other than the bank account of record; and
(4) instructions to establish or change wire
instructions.
A signature guarantee must be obtained from an institution participating in the
Securities Transfer Agent Medallion Program. Such institutions typically include
commercial banks that are FDIC members, trust companies, firms that are members
of a domestic stock exchange, and foreign branches of the above. A notary public
is not an acceptable guarantor.
REDEMPTION PAYMENTS
Payment of requested redemptions may be made in the following manner:
(1) by check;
(2) by wire transfer in accordance with wire
transfer instructions provided in writing to the Fund and accompanied by a
signature guarantee. The Fund reserves the right to charge the shareholder for
the cost of the wire transfer and the shareholder's bank may in addition impose
an incoming wire charge.
ACCOUNT ADDRESS CHANGES
A shareholder may change the address on an account by sending a written
request signed by all
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<PAGE>
registered owners of the account. The written request should include the
effective date of the change, the account number(s), the name(s) on the account
and both the old and new addresses. When the Company receives notification of a
change of address, a confirmation will be mailed to the former address and the
new address as a security precaution. Redemptions are not allowed if a written
request to change the address has been received within 24 hours of the
redemption request.
OTHER REDEMPTION INFORMATION
Payment for shares redeemed will be made as soon as possible after the date of
receipt of the request for redemption, but in no case later than seven days
thereafter, provided the shareholder has complied with all the requirements
described above.
The Fund reserves the right to automatically redeem any account balance in
cases where:
(1) the account balance falls below $500; or
(2) the shareholder has failed to provide the
Fund a tax identification number.
Shareholders will be notified in writing 60 days prior to the automatic
redemption of their account. Such automatic redemptions will reduce unnecessary
administrative expenses and, therefore, should benefit the majority of
shareholders.
Redemption payments normally will be made wholly in cash. However, if the
Board of Directors believes that economic conditions exist which would make such
a practice detrimental to the best interests of the Fund, redemption may be
accomplished through distribution of portfolio securities of the Fund valued at
the same price employed in calculating its net asset value.
However, the Fund may only redeem its shares through distribution of portfolio
securities if and to the extent that redemptions by the same shareholder during
any 90-day period exceed the lesser of (i) $250,000, or (ii) one percent of the
net assets of the Fund at the beginning of the period. Shareholders whose shares
are redeemed in kind may be subject to brokerage commissions or other
transaction charges upon the resale of the distributed securities.
Although payment of the redemption proceeds ordinarily will be made within
seven days after a redemption request in good order is received, payment to
investors redeeming shares which were recently purchased by check will not be
made until the Fund can verify that the payment of the purchase has been
collected, which may take up to 15 days. Such redemption delays may be avoided
by submitting a certified or cashier's check or by using the bank wire system.
The Fund may suspend redemption privileges or postpone the date of payment:
(1) During any period that trading on the New
York Stock Exchange is restricted as determined by the Securities and Exchange
Commission ("SEC") other than normal holiday and weekend closing;
(2) During any period when an emergency
exists, as defined by the rules of the SEC, as a result of which it is not
reasonably practicable for the Fund to dispose of securities owned by it or
fairly to determine the value of its assets; and
(3) For such other periods as the SEC may
permit.
DETERMINATION OF NET ASSET VALUE
A Portfolio's net asset value per share will be determined once each day as of
the close of trading on the New York Stock Exchange (currently 3:00 p.m., Omaha
time) on days on which the New York Stock Exchange is open for business,
provided that the net asset value need not be determined on days when no shares
are tendered for redemption and no order for shares is received. Currently the
New York Stock Exchange and the Fund are closed for business on the following
holidays (or on the nearest Monday or Friday if the holiday falls on a weekend):
New Year's Day, Presidents' Day, Good Friday, Memorial Day,
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<PAGE>
Independence Day, Labor Day, Thanksgiving and Christmas. In addition, investors
will not be able to purchase or redeem shares on Martin Luther King, Jr. Day,
Columbus Day or Veterans' Day because Norwest Bank Nebraska, N.A., the Fund's
custodian, is closed on such days. The Fund's offices will, however, be open on
such days to accept orders for next day purchases and redemptions and to respond
to any questions investors may have.
Net asset value will be computed by dividing the market value of the
Portfolio's assets (including dividends and interest received or accrued), less
all liabilities (including expenses payable or accrued), by the number of
outstanding shares of the Portfolio.
For purposes of calculating the net asset value of shares of the Value, Fixed
Income and Hickory Portfolios, securities traded on a national or regional
securities exchange are valued at the last sale price if the security is traded
on the valuation date. Securities not listed on an exchange or securities in
which there were no reported transactions will be valued at the mean between the
last current closing bid and ask prices. Any securities or other assets for
which reliable recent market quotations are not readily available will be valued
at fair value as determined in good faith by or under the direction of the Board
of Directors or a committee of the Board.
The Government Money Market Portfolio will value its assets pursuant to the
amortized cost method of valuation as permitted by Rule 2a-7 under the 1940 Act.
Under this method of valuation, a security is initially valued at cost on the
date of purchase and, thereafter, any discount or premium is amortized on a
straight-line basis to maturity, regardless of the extent of fluctuating
interest rates or the market value of the security. Utilization of the amortized
cost method of valuation under Rule 2a-7 results in the stabilization of the
Portfolio's net asset value at $1.00 per share. The procedures adopted by the
Board of Directors pursuant to Rule 2a-7 to stabilize the net asset value at
$1.00 per share are described in more detail in the Statement of Additional
Information.
With the approval of the Fund's Board of Directors, the Fund may utilize a
pricing service, bank or broker-dealer experienced in valuing securities to
perform any of the valuation determinations for the Portfolios.
YIELD AND PERFORMANCE COMPARISONS
Advertisements and other sales literature for the Portfolios may refer to
"total return." Total return is the percentage change between the net asset
value of a Portfolio share at the beginning of a period and the net asset value
of such share at the end of the period, with dividends and capital gains
distributions treated as reinvested. The Value and Hickory Portfolios may use
comparative performance information from time to time from such indices as
compiled by Dow Jones & Co., Standard & Poor's, Lipper Analytical Services,
Inc., Morningstar, the National Association of Securities Dealers and Value
Line. These indices could include, but are not limited to, the Dow Jones
Industrial Average, the S&P 500, the Lipper Growth and Income Fund Index and the
NASDAQ and Value Line Composites, or any other major recognized index. This
information is referenced for comparative purposes only. The Fixed Income
Portfolio's comparative performance information may include data from Lipper
Analytical Services, Inc., and indices of bond prices and yields prepared by
Lehman Brothers and Salomon Brothers Inc.
The Fixed Income Portfolio may also provide information on its yield for a
recent thirty day period. Yield is calculated by dividing the net investment
income per share for the period by the maximum offering price per share on the
last day of the period and annualizing the result. For purposes of computing
yield, realized and unrealized capital gains and losses are not included.
The Government Money Market Portfolio may report its current yield for a
recent seven day period. The yield of a money market fund refers to the net
investment income generated by a hypothetical investment in the Portfolio over a
specific seven-day period. This net investment income is then annualized, which
means that the net investment income generated during the seven-day period is
assumed to be generated each week over an annual period and is shown as a
percentage of the investment.
31
<PAGE>
Performance data of the Portfolios represents past performance and is not
necessarily representative of future performance. Additionally, investment
return and principal value of an investment in the Value, Fixed Income and
Hickory Portfolios will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost, unlike shares of the
Government Money Market Portfolio, which are stabilized at $1.00 per share,
except in extraordinary circumstances. Performance information may not provide a
basis for comparison with other investments or other mutual funds using a
different method of calculating performance.
DIVIDENDS, DISTRIBUTIONS AND TAXES
It is the intention of the Fund to distribute any net investment income and
any net realized capital gains to shareholders at such times as may be required
to maintain its status as a regulated investment company under the Internal
Revenue Code of 1986 as amended (the "Code"). The Fixed Income Portfolio intends
to declare dividends and distribute its net income on a quarterly basis. The
Government Money Market Portfolio declares dividends of its net income each
business day immediately before 3:00 p.m., Omaha, Nebraska time. Dividends of
the Government Money Market Portfolio are accrued and credited to shareholders'
accounts each business day and are reinvested in additional shares of the
Government Money Market Portfolio or distributed in cash within five days of the
first business day of the following month.
Dividends of each of the Portfolios will automatically be reinvested when paid
unless the Fund has been directed by the shareholder in writing to pay the
dividend in cash. Shareholders may elect to receive dividends in cash by
checking the appropriate box on the Purchase Application when initially
investing or may change the instructions by submitting an amended form. Cash
payment of dividends, if requested, will be mailed within five days of the date
such dividends are paid for the Value, Fixed Income and Hickory Portfolios and
within five days of the first business day of the following month for the
Government Money Market Portfolio. The taxable status of income dividends and/or
net capital gains distribution is not affected by whether they are reinvested in
additional shares or paid in cash.
The Fund intends to qualify each of the Portfolios as a "regulated investment
company," as defined in the Code, by distributing substantially all of their
taxable income, including any realized capital gains, and thus, the Portfolios
will not incur any Federal income taxes. The Code requires that all regulated
investment companies pay a nondeductible 4% excise tax to the extent the
regulated investment company does not distribute 98% of its ordinary income,
determined on a calendar year basis, and 98% of its capital gains, determined,
in general, on an October 31 year end. The required distributions are based only
on the taxable income of a regulated investment company.
Shareholders subject to Federal income taxation will receive taxable dividend
income or capital gains, as the case may be, from distributions whether paid in
cash or received in the form of additional shares. Because income may be derived
from interest as well as dividends, not all of the dividends may qualify for
dividend exclusions or deductions, if any, authorized under the Code. Promptly
after the end of each calendar year, each shareholder will receive a statement
of the Federal income tax status of all dividends and distributions paid during
the year.
The Fund is subject to the backup withholding provisions of the Code and is
required to withhold income tax from dividends paid to shareholders at the
current rate if a shareholder fails to furnish the Fund with a taxpayer
identification number or under certain other circumstances. Accordingly,
shareholders are urged to complete and return Form W-9 when requested to do so
by the Fund.
This discussion is only a summary and relates solely to Federal tax matters.
Dividends may also be subject to state and local taxation. Shareholders are
encouraged to consult with their personal tax advisers. See also "Taxation" in
the Statement of Additional Information.
32
<PAGE>
THE DISTRIBUTOR
The Fund is distributed by Weitz Securities, Inc., an affiliate of the Fund's
Investment Adviser. Shares are sold at the net asset value per share, without a
sales load. The Distributor will bear any sales or promotional costs incurred in
connection with the sale of the Fund's shares.
The Fund has entered into an Underwriting Agreement (the "Underwriting
Agreement") with Weitz Securities, Inc., which will continue in effect as long
as it is approved annually by a majority of those directors who are not parties
to the Underwriting Agreement or "interested persons" of such parties and by
either the Board of Directors of the Fund or a majority of the outstanding
voting securities of a Portfolio ("majority" is defined under "General
Information"). The Underwriting Agreement may be terminated by either party
without penalty on 60 days' written notice and will automatically terminate in
the event of its assignment.
33
<PAGE>
GENERAL INFORMATION
ORGANIZATION AND CAPITAL STRUCTURE
The Fund is authorized to issue a total of 100,000,000 shares of common stock
in series with a par value of $.001 per share. Eighty million of these shares
have been authorized by the Board of Directors to be issued in four series,
designated Value Portfolio, Fixed Income Portfolio, Hickory Portfolio and
Government Money Market Portfolio. The Value Portfolio and the Government Money
Market Portfolios each are authorized to issue 30 million shares while the
Hickory Portfolio and the Fixed Income Portfolio each are authorized to issue 10
million shares.
All shares, when issued, will be fully paid and nonassessable and will be
redeemable and freely transferable. All shares have equal voting rights. They
can be issued as full or fractional shares. A fractional share has pro rata the
same kind of rights and privileges as a full share. The shares possess no
preemptive or conversion rights.
Each share of a Fund has one vote (with proportionate voting for fractional
shares) irrespective of the relative net asset value of the shares. On some
issues, such as the election of directors, all shares of the Fund vote together
as one series. Cumulative voting is not authorized. This means that the holders
of more than 50 percent of the shares voting for the election of directors can
elect 100 percent of the directors if they choose to do so, and, in such event,
the holders of the remaining shares will be unable to elect any directors.
"Majority" for the purposes of an affirmative vote means the lesser of (a) 67%
of the Portfolio's outstanding shares entitled to vote at the meeting of
shareholders at which more than 50% of the outstanding shares of the Portfolio
are represented in person or by proxy or (b) more than 50% of the Portfolio's
outstanding shares.
On an issue affecting only a particular Portfolio, the shares of the affected
Portfolio vote as a separate series. An example of such an issue would be a
fundamental investment restriction pertaining to only one Portfolio. In voting
on the Management and Investment Advisory Agreement (the "Agreement"), approval
of the Agreement by the shareholders of a particular Portfolio would make the
Agreement effective as to the Portfolio whether or not it had been approved by
the shareholders of the other Portfolios.
The Board of Directors of the Fund is responsible for managing the business
and affairs of the Fund. The Board of Directors currently consists of five
members and exercises all of the rights and responsibilities required by, or
made available under, Minnesota corporate law. Pursuant to the Investment
Advisory Agreement, the Investment Adviser provides each of the Portfolios with
continuous investment advice and is responsible for the overall management of
the Fund's business affairs, subject to supervision of the Fund's Board of
Directors. See " The Investment Adviser".
SHAREHOLDER MEETINGS
It is possible that the Fund will not hold annual or periodically scheduled
regular meetings of shareholders. Minnesota corporation law requires only that
the Board of Directors convene shareholder meetings when it deems appropriate.
In addition, Minnesota law provides that if a regular meeting of shareholders
has not been held during the immediately preceding 15 months, a shareholder or
shareholders holding 3 percent or more of the voting shares of the Fund may
demand a regular meeting of shareholders by written notice given to the chief
executive officer or chief financial officer of the Fund. Within 30 days after
receipt of the demand, the Board of Directors shall call a regular meeting of
the shareholders, the meeting to be held no later than 90 days after receipt of
the demand, all at the expense of the Fund.
In addition, the Investment Company Act of 1940 requires a shareholder vote
for all amendments to fundamental investment policies and restrictions and for
all investment advisory contracts and amendments thereto. Pursuant to the
Articles of Incorporation, the shareholders also have the right to remove the
Directors upon two-thirds vote of the outstanding shares and may call a meeting
to remove a director upon the application of 10% or more of the
34
<PAGE>
outstanding shares. The Fund is obligated to facilitate shareholder
communications in such cases if certain conditions are met. See "Capital Stock"
in the Statement of Additional Information.
PORTFOLIO EXPENSES
The assets received by the Fund for the issue or sale of shares of a Portfolio
and all income, earnings, profits, and proceeds thereof, subject only to the
rights of creditors, are allocated to the respective Portfolio, and constitute
the underlying assets of that Portfolio. The underlying assets of each Portfolio
are required to be segregated on the books of account, and are to be charged
with the expenses in respect to each Portfolio and with a share of the general
expenses of the Fund. Any general expenses of the Fund not readily identifiable
as belonging to a particular Portfolio shall be allocated among the Portfolios
based upon the total assets of the Portfolios at the time such expenses are
incurred. The Fund and any Portfolio pays all of its own operating expenses,
other than those expressly assumed by the Investment Adviser, including
custodian charges, transfer agent, dividend disbursing agent charges and other
expenses related to administration and registration. The Investment Adviser has
agreed to reimburse the Value and Hickory Portfolios up to the amount of
advisory fee paid for total expenses exceeding 1.5% of the annual average net
asset value and the Fixed Income and Government Money Market Portfolios up to
the amount of advisory fee paid to the extent that their expenses exceed 1% of
annual average net asset value. From time to time, the Investment Adviser may
waive all or some of its fees and/or voluntarily assume certain expenses of one
or all of the Portfolios which has the effect of lowering the affected
Portfolio's overall expense ratio and increasing yield to shareholders during
the period such amounts are waived or assumed. See "Investment Advisory and
Other Services -- The Investment Advisory Agreements" in the Statement of
Additional Information.
REPORTS TO SHAREHOLDERS
The Fund will issue semiannual reports which will include a list of securities
owned by each Portfolio and financial statements which, in the case of the
annual report, will be examined and reported upon by the Fund's independent
auditors. It is the Fund's practice to send a single copy of any such report to
a shareholder with multiple accounts (single, retirement, joint, etc.) if such
accounts have the same tax identification number and the same address. A
shareholder may request that additional copies of such report be sent by
notifying the Fund.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND PAYING AGENT
Norwest Bank Nebraska, N.A., Omaha, Nebraska, acts as Custodian for the
Portfolios' cash and investments. The Investment Adviser acts as transfer agent
and dividend paying agent and provides the Fund with certain accounting and
shareholder accounting services.
LEGAL OPINIONS
The legality of the shares offered hereby will be passed upon, and the opinion
with respect to all tax matters will be rendered by Messrs. Cline, Williams,
Wright, Johnson & Oldfather, 1900 FirsTier Bank Building, Lincoln, Nebraska
68508.
AUDITORS
The Fund's auditors are KPMG Peat Marwick LLP, independent certified public
accountants.
35
<PAGE>
APPENDIX A
RATINGS OF CORPORATE OBLIGATIONS AND COMMERCIAL PAPER
RATINGS OF CORPORATE OBLIGATIONS
MOODY'S INVESTORS SERVICE, INC.
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba: Bonds rated Ba are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
B: Bonds rated B generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of other terms of
the contract over any long period of time may be small.
Caa: Bonds rated Caa are of poor standing. Such bonds may be in default or
there may be present elements of danger with respect to principal and interest.
Ca: Bonds rated Ca represent obligations which are speculative in a high
degree. Such bonds are often in default or have other marked shortcomings.
Those securities in the A and Baa groups which Moody's believes possess the
strongest investment attributes are designated by the symbols A-1 and Baa-1.
Other A and Baa securities comprise the balance of their respective groups.
These rankings (1) designate the securities which offer the maximum in security
within their quality groups, (2) designate securities which can be bought for
possible upgrading in quality, and (3) additionally afford the investor an
opportunity to gauge more precisely the relative attractiveness of offerings in
the marketplace.
STANDARD & POOR'S CORPORATION
AAA: Bonds rated AAA have the highest rating assigned by Standard & Poor's to
a debt obligation. Capacity to pay interest and repay principal is extremely
strong.
AA: Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in a small degree.
A: Bonds rated A have a strong capacity to pay interest and repay principal,
although they are
A-1
<PAGE>
somewhat more susceptible to the adverse effects of changes in circumstances and
economic conditions than bonds in higher rated categories.
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Although they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than for bonds in higher rated categories. Bonds rated
BBB are regarded as having speculation characteristics.
BB--B--CCC--CC: Bonds rated BB, B, CCC, and CC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB indicates
the lowest degree of speculation among such bonds and CC the highest degree of
speculation. Although such bonds will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
COMMERCIAL PAPER RATINGS
STANDARD & POOR'S CORPORATION
Commercial paper ratings are graded into four categories, ranging from "A" for
the highest quality obligations to "D" for the lowest. Issues assigned the A
rating are regarded as having the greatest capacity for timely payment. Issues
in this category are further refined with the designation 1, 2 and 3 to indicate
the relative degree of safety. The "A-l" designation indicates that the degree
of safety regarding timely payment is very strong. Those issues determined to
possess overwhelming safety characteristics will be denoted with a plus sign
designation.
MOODY'S INVESTORS SERVICE, INC.
Moody's commercial paper ratings are opinions of the ability of the issuers to
repay punctually promissory obligations not having an original maturity in
excess of nine months. Moody's makes no representation that such obligations are
exempt from registration under the Securities Act of 1933, nor does it represent
that any specific note is a valid obligation of a rated issuer or issued in
conformity with any applicable law. Moody's employs the following three
designations, all judged to be investment grade, to indicate the relative
repayment capacity of rated issuers:
Prime-1 Superior capacity for repayment
Prime-2 Strong capacity for repayment
Prime-3 Acceptable capacity for repayment
A-2
<PAGE>
----------------------------------------------
WEITZ SERIES FUND, INC.
TABLE OF CONTENTS
<TABLE>
<S> <C>
Investment Objectives.................... 2
Summary.................................. 2
Risk Factors............................. 3
Fees, Charges and Fund Expenses.......... 6
Financial Highlights -- Value
Portfolio............................ 8
Financial Highlights -- Fixed Income
Portfolio............................ 10
Financial Highlights -- Government Money
Market Portfolio..................... 12
Financial Highlights -- Hickory
Portfolio............................ 13
Investment Objective and Policies --
Value Portfolio...................... 15
Investment Objective and Policies --
Fixed Income Portfolio............... 15
Investment Objective and Policies --
Government Money Market Portfolio.... 16
Investment Objective and Policies --
Hickory Portfolio.................... 17
Investment Restrictions.................. 18
Securities and Other Investment
Practices............................ 21
The Investment Adviser................... 26
Purchase of Shares....................... 27
Redemption of Shares/Exchange
Privileges........................... 28
Determination of Net Asset Value......... 30
Yield and Performance Comparisons........ 31
Dividends, Distributions and Taxes....... 32
The Distributor.......................... 33
General Information...................... 34
Appendix A -- Ratings of Corporate
Obligations and Commercial Paper..... A-1
</TABLE>
No salesperson, or other person, has been authorized to give any information or
to make any representations, other than those contained in this Prospectus, in
connection with the offer contained in this Prospectus, and, if given or made,
such other information or representations must not be relied upon as having been
authorized by the Fund or by the Distributor. This Prospectus does not
constitute an offering by the Distributor in any state in which such offering
may not lawfully be made.
WEITZ SERIES FUND, INC.
ONE PACIFIC PLACE, SUITE 600
1125 SOUTH 103 STREET
OMAHA, NEBRASKA 68124-6008
PROSPECTUS
VALUE PORTFOLIO
FIXED INCOME PORTFOLIO
GOVERNMENT MONEY
MARKET PORTFOLIO
HICKORY PORTFOLIO
Dated July 11, 1996
INVESTMENT ADVISER
WALLACE R. WEITZ & COMPANY
DISTRIBUTOR
WEITZ SECURITIES, INC.
CUSTODIAN
NORWEST BANK NEBRASKA, N.A.
1919 Douglas Street
Omaha, Nebraska 68102
TRANSFER AGENT AND
DIVIDEND PAYING AGENT
WALLACE R. WEITZ & COMPANY
<PAGE>
Weitz Series Fund, Inc.
STATEMENT OF ADDITIONAL INFORMATION
July 11, 1996
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
Investment Objective, Policies and Restrictions-
General........................................................... 1
Investment Objective, Policies and Restrictions-
Value Portfolio................................................... 2
Investment Objective, Policies and Restrictions-
Fixed Income Portfolio............................................ 6
Investment Objective, Policies and Restrictions-
Government Money Market Portfolio................................. 9
Investment Objective, Policies and Restrictions-
Hickory Portfolio ................................................ 10
Purchase of Shares.................................................... 14
Directors and Executive Officers...................................... 15
Investment Advisory and Other Services................................ 17
Portfolio Transactions and Brokerage Allocations...................... 19
Capital Stock......................................................... 21
Determination of Net Asset Value...................................... 24
Redemption............................................................ 25
Taxation.............................................................. 25
Calculation of Performance Data....................................... 26
Financial Statements.................................................. 28
Appendix A - Interest Rate Futures Contracts, Bond
Index Futures, and Related Options................................ A-1
</TABLE>
This Statement of Additional Information is not a prospectus. This Statement
of Additional Information relates to the Prospectus of the Value Portfolio,
Fixed Income Portfolio, Government Money Market Portfolio and Hickory
Portfolio dated July 11, 1996, and should be read in conjunction therewith.
Copies of the Prospectus may be obtained from the Fund at 1125 South 103
Street, Suite 600, Omaha, Nebraska, 68124-6008.
<PAGE>
The shares of Weitz Series Fund, Inc. (the "Fund") are offered in series
with each series designated as and representing a separate portfolio of
investments with its own investment objectives, policies and restrictions
(such series referred to herein as a "Portfolio" or, collectively, as the
"Portfolios"). At the present time, only four series are authorized and are
designated Value Portfolio, Fixed Income Portfolio, Government Money Market
Portfolio and Hickory Portfolio. The investment objective and policies of
each Portfolio are set forth below and in the Prospectus.
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS-GENERAL
GENERAL The Value Portfolio, Fixed Income Portfolio and Government Money
Market Portfolio are diversified investment management companies as defined
under the Investment Company Act of 1940 ("1940 Act") and the Hickory
Portfolio is a nondiversified investment management company as defined under
the 1940 Act. All Portfolios are diversified investment management companies
as determined in Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). See "Investment Objective, Policies and Restrictions"
for each Portfolio below and see "Taxation".
Unless otherwise indicated, the investment restrictions as set forth
separately below for the Value Portfolio, Fixed Income Portfolio, Government
Money Market Portfolio and Hickory Portfolio are considered fundamental
policies and cannot be changed without the vote of the holders of a majority
of the respective Portfolio's outstanding shares. "Majority," as used herein
and in the Prospectus, means the lesser of (a) 67% of the Portfolio's
outstanding shares voting at a meeting of shareholders at which more than 50%
of the outstanding shares are represented in person or by proxy or (b) a
majority of the respective Portfolio's outstanding shares.
PORTFOLIO TURNOVER The portfolio turnover rate for the Value Portfolio,
Fixed Income Portfolio and Hickory Portfolio is the ratio of the lesser of
annual purchases or sales of securities for the respective Portfolio to the
average monthly value of such securities, excluding all securities for which
the maturity or expiration date at the time of the acquisition is one year or
less. Because the Government Money Market Portfolio invests solely in short
term securities, portfolio turnover is not relevant. A 100% portfolio
turnover rate would occur, for example, if the lesser of the value of
purchases or sales of securities for a particular year were equal to the
average monthly value of the securities owned during such year. The portfolio
turnover for the Value Portfolio for the periods ending March 31, 1996 and
March 31, 1995 was 40% and 28% respectively. The portfolio turnover for the
Fixed Income Portfolio for the periods ending March 31, 1996 and March 31,
1995 was 28% and 49% respectively. The portfolio turnover for the Hickory
Portfolio for the periods ending March 31, 1996 and March 31, 1995, was 28%
and 20% respectively. The Value Portfolio, Fixed Income Portfolio and
Hickory Portfolio are not expected to have a portfolio turnover rate in
excess of 100%. The turnover rate will not be a limiting factor when
management deems portfolio changes appropriate. The higher a portfolio's
turnover rate, the higher will be its expenditures for brokerage commissions
and related transaction costs.
<PAGE>
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS-VALUE PORTFOLIO
GENERAL Ordinarily, the Value Portfolio will be principally invested in
common stocks and other securities convertible to equity, such as rights,
warrants, convertible bonds and preferred stock. The Fund has, however,
adopted a policy which permits the Investment Adviser to invest a portion or
all of its assets in high quality nonconvertible preferred stock, high
quality nonconvertible debt securities and high quality United States
Government, state and municipal and governmental agency and instrumentality
obligations, or retain funds in cash or cash equivalents, such as money
market mutual fund shares when the Investment Adviser believes that
prevailing market or economic conditions warrant a temporary defensive
investment position. Securities issued or guaranteed by the United States
Government may include, for example, Treasury Bills, Bonds and Notes which
are direct obligations of the United States Government. Obligations issued
or guaranteed by United States Government agencies or instrumentalities may
include, for example, those of Federal Intermediate Credit Banks, Federal
Home Loan Banks, Federal National Mortgage Association and Farmers Home
Administration. Such securities will include, for example, those supported
by the full faith and credit of the United States Treasury or the right of
the agency or instrumentality to borrow from the Treasury as well as those
supported only by the credit of the issuing agency or instrumentality. State
and municipal obligations, which are typically tax exempt, may include both
general obligation and revenue obligations, issued for a variety of public
purposes such as highways, schools, sewer and water facilities, as well as
industrial revenue bonds issued by public bodies to finance private
commercial and industrial facilities.
INDUSTRY CONCENTRATION Although the Value Portfolio will not concentrate
its investments in any one industry, it reserves the right to invest up to
25% of the value of its assets (at the time of purchase and after giving
effect thereto) in the securities of companies principally engaged in a
particular industry.
CONVERTIBLE SECURITIES In addition to common and preferred stocks, the
Value Portfolio may invest in other securities having equity features because
they are convertible into, or represent the right to purchase, common stock.
Convertible bonds and debentures are corporate debt instruments, frequently
unsecured and subordinated to senior corporate debt, which may be converted
into common stock at a specified price. Such securities may trade at a
premium over their face amount when the price of the underlying common stock
exceeds the conversion price, but otherwise will normally trade at prices
reflecting current interest rate trends. Convertible corporate debt
securities purchased by the Value Portfolio will primarily be of investment
grade (e.g., Moody's Investors Service rating Aaa, Aa, A or Baa; Standard &
Poor's Corporation rating AAA, AA, A or BBB), as evidenced by ratings of
established rating agencies or similar criteria.
WARRANTS AND RIGHTS Warrants and rights are options to purchase common
stock at a specified price for a specified period of time. Their trading
price will normally reflect the relationship between the option price and the
current market price of the underlying common stock. If not sold or
exercised before their expiration date they become valueless. The Value
Portfolio's investments in warrants, which are valued at market, may not
exceed 5% of the value of the Value Portfolio's net assets, provided that no
more than 2% of the value of the Value Portfolio's net assets
-2-
<PAGE>
may be invested in warrants which are not listed on the New York or American
Stock Exchanges and further provided that warrants acquired in units or
attached to securities are deemed to be without value for purposes of this
limitation.
INVESTMENT COMPANY SHARES The Value Portfolio may purchase securities of
other investment companies, subject to the limitations discussed hereunder.
The Value Portfolio does not intend to purchase any such securities involving
the payment of a front-end sales load, but may purchase shares of investment
companies specializing in securities in which the Value Portfolio has a
particular interest or shares of closed-end investment companies which
frequently trade at a discount from their net asset value.
FOREIGN SECURITIES The Value Portfolio may purchase foreign securities
that are listed on a principal foreign securities exchange or
over-the-counter market, or which are represented by American Depository
Receipts and are listed on a domestic securities exchange or traded in the
United States over-the-counter market. The Value Portfolio may occasionally
convert U.S. dollars into foreign currency, but only to effect securities
transactions on a foreign securities exchange and not to hold such currency
as an investment. The Value Portfolio will not invest in forward foreign
currency contracts. While the Value Portfolio has no present intention to
invest any significant portion of its assets in foreign securities, it
reserves the right to invest not more than 25% of the value of its total
assets (at time of purchase, giving effect thereto) in the securities of
foreign issuers and obligors.
Investors should recognize that investments in foreign companies involve
certain considerations that are not typically associated with investing in
domestic companies. An investment may be affected by changes in currency
rates and in exchange control regulations. Foreign companies are not
generally subject to uniform accounting, auditing and financial reporting
standards comparable to those applicable to domestic companies, and there may
be less publicly available information about a foreign company than about a
domestic company. Some foreign stock markets may have substantially less
trading activity than the American securities markets, and securities of some
foreign companies may be less liquid than securities of comparable domestic
companies. Also, commissions on transactions in foreign securities may be
higher than similar transactions on domestic stock markets and foreign
governments may impose taxes on securities transactions or ownership. There
is generally less governmental regulation of stock exchanges, brokers, and
listed and unlisted companies in foreign countries than in the United States.
In addition, individual foreign economies may differ favorably or unfavorably
from the United States' economy in such respects as growth of gross national
product, rate of inflation, capital reinvestment, resource self-sufficiency
and balance of payments position.
RESTRICTED/ILLIQUID SECURITIES The Value Portfolio may invest in
securities acquired in a privately negotiated transaction directly from the
issuer or a holder of the issuer's securities and which, therefore, could not
ordinarily be sold by the Fund except in another private placement or
pursuant to an effective registration statement under the Securities Act of
1933 or an available exemption from such registration requirements. The Value
Portfolio will not invest in any such restricted or illiquid securities which
will cause the then aggregate value of all such securities to
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exceed 10% of the value of the Value Portfolio's net assets (at the time of
investment, giving effect thereto). Restricted and illiquid securities will
be valued in such manner as the Board of Directors in good faith deems
appropriate to reflect their fair value. See "Determination of Net Asset
Value" in the Prospectus. The purchase price, subsequent valuation and
resale price of restricted securities normally reflect a discount from the
price at which such securities trade when they are not restricted, since the
restriction makes them less marketable. The amount of the discount from the
prevailing market price will vary depending upon the type of security, the
character of the issuer, the party who will bear the expenses of registering
the restricted securities, and prevailing supply and demand conditions.
COVERED CALL OPTIONS The Value Portfolio may write covered call options
to generate premium income which is considered by the Investment Adviser to
be an acceptable investment result. Covered call options are contracts sold
on a national exchange or in the over-the-counter options market which allow
the purchaser to buy the underlying security at a specified price (the
"strike price") prior to a certain date, normally within 270 days. "Covered"
options are those in which the option seller (the "writer") owns the
underlying securities. Writing covered call options may increase the Value
Portfolio's income since it receives a payment (the "premium") for writing
the option. To the extent that it writes covered call options, the Value
Portfolio will forego any opportunity for appreciation in the underlying
securities above the strike price during the term of the option, as the
underlying securities will be subject to certain deposit procedures and,
therefore, unavailable for sale. The Value Portfolio may attempt to protect
itself against a decline in the price of the underlying security or may
attempt to benefit from an anticipated increase in such price, by "closing
out" the covered call, that is, purchasing an identical call in the open
market. However, there is no assurance that such calls will always be
available for purchase in the secondary market at a price which will produce
the desired result. The absence of a liquid secondary market in such
securities could result from numerous circumstances, such as insufficient
trading interest, restrictions imposed by exchanges as to options trading
generally or suspensions affecting particular securities, inadequacy of
exchange or clearing corporation facilities or decisions by exchanges to
discontinue or limit operations trading.
FUNDAMENTAL INVESTMENT RESTRICTIONS The Value Portfolio may not:
1. Underwrite the securities of other issuers, except the Value
Portfolio may acquire restricted securities under circumstances such that, if
the securities are sold, the Fund might be deemed to be an underwriter for
purposes of the Securities Act of 1933.
2. Purchase or sell real estate or interests in real estate, but the
Value Portfolio may purchase marketable securities of companies holding real
estate or interests in real estate.
3. Invest more than 5% of the value of its total assets in the
securities of any issuers which, with their predecessors, have a record of
less than three years' continuous operation. (Securities of such issuers
will not be deemed to fall within this limitation if they are guaranteed by
an entity in continuous operation for more than three years. The value of
all securities issued or
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guaranteed by such guarantor and owned by the Value Portfolio shall not
exceed 10% of the value of the total assets of the Value Portfolio.)
4. Purchase or sell commodities or commodity futures contracts.
5. Issue any senior securities (as defined in the Investment Company
Act of 1940, as amended) other than that as set forth below in restriction
number 6, except to the extent that the Portfolio is permitted to use options.
6. Make loans to other persons except by the purchase of a portion of
an issue of publicly distributed bonds, debentures or other debt securities;
provided that the Value Portfolio may purchase privately sold bonds,
debentures or other debt securities immediately convertible into equity
securities, subject to the 10% restriction applicable to the purchase of not
readily marketable securities.
7. Borrow money except for temporary or emergency purposes and then
only from banks and in an aggregate amount not exceeding 5% of the value of
the Value Portfolio's net assets at the time any borrowing is made.
8. Purchase securities on margin, but the Value Portfolio may obtain
such short-term credits as may be necessary for the clearance of purchases
and sales of securities.
9. Make short sales of securities or sell puts, calls, straddles,
spreads or combinations thereof, except that the Value Portfolio may write
covered call options as described under "Investment Objective, Policies and
Restrictions--Value Portfolio."
10. Participate on a joint or joint and several basis in any securities
trading account.
11. Purchase the securities of any other investment companies, except as
provided by Section 12(d)(1)(F) of the Investment Company Act of 1940, in the
open market where to the best information of the Investment Adviser no
commission, profit, or sales load to a sponsor or dealer (other than the
customary broker's commission) results from such a purchase and where
immediately after such purchase or acquisition (i) not more than 3% of the
total outstanding stock of such issuer is owned by the Portfolio and all
affiliated persons of the Portfolio, (ii) no issuer of a security acquired by
the Portfolio pursuant to this restriction is obligated to redeem such
security in an amount exceeding 1% of the issuer's total outstanding
securities during any period of less than 30 days, and (iii) the purchase of
such securities does not exceed 10% of the total assets of the Portfolio.
12. Invest in companies for the purpose of exercising management or
control.
13. As to 75% of its total assets, invest more than 5% of its total
assets, taken at market value at the time of a particular purchase, in
securities of any one issuer (other than in government
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securities), nor own more than 10% at the time of, and giving effect to, a
particular purchase of the outstanding voting securities of any one issuer.
14. Adopt any investment objective otherwise than as described under
"Investment Objective and Policies" in the Prospectus.
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS-
FIXED INCOME PORTFOLIO
REPURCHASE AGREEMENTS The Fixed Income Portfolio may invest in
repurchase agreements on U.S. Government Securities. The Fund's Custodian
will hold the securities underlying any repurchase agreement or such
securities will be part of the Federal Reserve Book Entry System. The market
value of the collateral underlying the repurchase agreement will be
determined on each business day. If at any time the market value of the
collateral falls below the repurchase price of the repurchase agreement
(including any accrued interest), the Fixed Income Portfolio will promptly
provide additional collateral so that the total collateral is an amount at
least equal to the repurchase price plus accrued interest.
INTEREST RATE FUTURES, BOND INDEX FUTURES, AND RELATED OPTIONS THEREON The
Fixed Income Portfolio may utilize interest rate futures and index futures
and related options. See Appendix A hereto for a general discussion of
Interest Rate Futures, Bond Index Futures and Related Options and the risks
thereof.
FUNDAMENTAL INVESTMENT RESTRICTIONS-FIXED INCOME PORTFOLIO Unless otherwise
specified below, the Fixed Income Portfolio will not:
1. Invest 25% or more of the value of its total assets in the
securities of issuers conducting their principal business activities in any
one industry. This restriction does not apply to securities of the U.S.
Government or its agencies and instrumentalities and repurchase agreements
relating thereto. The various types of utilities companies, such as gas,
electric, telephone, telegraph, satellite and microwave communications
companies, are considered as separate industries.
2. Invest more than 5% of the value of its total assets in the
securities of any issuers which, with their predecessors, have a record of
less than three years' continuous operation. (Securities of such issuers will
not be deemed to fall within this limitation if they are guaranteed by an
entity in continuous operation for more than three years. The value of all
securities issued or guaranteed by such guarantor and owned by the Fixed
Income Portfolio shall not exceed 10% of the value of the total assets of the
Fixed Income Portfolio.)
3. Issue any senior securities (as defined in the Investment Company
Act of 1940, as amended), other than as set forth in restriction number 4
below and except to the extent that using options and futures contracts may
be deemed to constitute issuing a senior security.
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4. Borrow money except from banks for temporary or emergency purposes
and then only in an amount not exceeding 5% of the value of the Fixed Income
Portfolio's net assets at the time any borrowing is made.
5. Mortgage, pledge or hypothecate its assets except in an amount not
exceeding 10% of the value of its total assets to secure temporary or
emergency borrowing. For purposes of this policy, collateral arrangements
for margin deposits on futures contracts or with respect to the writing of
options are not deemed to be a pledge of assets.
6. Make short sales of securities or maintain a short position; except
that the Fixed Income Portfolio may make short sales against the box or
maintain short positions if at all times when a short position is open the
Fixed Income Portfolio owns an equal amount of identical securities equal in
amount to the securities sold short; and no more than 10% of the Fixed Income
Portfolio's net assets (taken at current value) will be held as collateral
for such short sales at any one time. (A short position in a futures contract
is not considered a short sale for this purpose.)
7. Purchase any securities on margin except to obtain such short-term
credits as may be necessary for the clearance of transactions and except that
the Fixed Income Portfolio may make margin deposits in connection with
futures contracts.
8. Write, purchase or sell puts, calls and purchase and sell puts and
calls or bond index futures except as bona fide hedging activities as
described in the Prospectus under "Investment Objective, Policies and
Restrictions" and Appendix A hereto.
9. Invest for the purpose of exercising control or management.
10. Purchase or sell commodities or commodity futures contracts, except
that the Fixed Income Portfolio may purchase and sell interest rate futures,
bond index futures and options thereon for bona fide hedging purposes.
11. Purchase or sell real estate or real estate mortgage loans, except
that the Fixed Income Portfolio may invest in securities secured by real
estate or interests therein or issued by companies that invest in real estate
or interests therein.
12. Purchase or sell oil, gas or other mineral leases, rights or royalty
contracts, except that the Fixed Income Portfolio may purchase or sell
securities of companies investing in the foregoing.
13. Participate on a joint or a joint and several basis in any
securities trading account (as prohibited by Section 12(a)2 of the Investment
Company Act of 1940) except to the extent that the staff of the Securities
and Exchange Commission may in the future grant exemptive relief therefrom.
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<PAGE>
14. Act as an underwriter of securities of other issuers, except the
Fixed Income Portfolio may acquire restricted securities under circumstances
such that, if the securities are sold, the Fund might be deemed an
underwriter for purposes of the Securities Act of 1933.
15. Invest more than 10% of the Fixed Income Portfolio's net assets in
(i) restricted securities and other illiquid assets, such as securities with
no readily available market quotation, (ii) securities of other investment
companies purchased pursuant to Section 12(d)(1)(F) to the extent that such
securities of any one issuer would exceed 1% of such issuer's total
outstanding securities, or (iii) repurchase agreements with maturities of
more than seven days.
16. Invest more than 5% of its total assets in foreign securities.
17. Purchase the securities of other investment companies, except as
provided by Section 12(d)(1)(F) of the Investment Company Act of 1940, in the
open market where to the best information of the Investment Adviser no
commission, profit, or sales load to a sponsor or dealer (other than the
customary broker's commission) results from such a purchase where immediately
after such purchase or acquisition (i) not more than 3% of the total
outstanding stock of such issuer is owned by the Portfolio and all affiliated
persons of the Fixed Income Portfolio, (ii) no issuer of a security acquired
by the Portfolio pursuant to this restriction is obligated to redeem such
security in an amount exceeding 1% of the issuer's total outstanding
securities during any period of less than 30 days, and (iii) the purchase of
such securities does not exceed 10% of the total assets of the Portfolio.
18. As to 75% of its total assets, invest more than 5% of its total
assets, taken at market value at the time of a particular purchase, in
securities of any one issuer (excluding U.S. government securities), nor own
more than 10% at the time of, and giving effect to, a particular purchase of
the outstanding voting securities of any one issuer.
19. Make loans to other persons except that the Fixed Income Portfolio
may purchase fixed income securities and enter into repurchase agreements on
U.S. Government securities as described in the Prospectus.
20. Invest more than 15% of its total assets in (i) securities rated
below BBB by Standard & Poor's or Baa by Moody's, or (ii) unrated securities
which have been determined by the Investment Adviser to be of a quality at
least equal to the rated securities in which the Fixed Income Portfolio is
permitted to invest.
While the Fixed Income Portfolio is permitted to make short sales in
compliance with Investment Restriction No. 6 and invest in illiquid
securities in compliance with Investment Restriction No. 15, the Investment
Adviser does not intend to engage in such transactions at this time and will
not do so in the future unless the Prospectus is amended to disclose such
practices.
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<PAGE>
Any investment restriction or limitation referred to above or in the
Prospectus, except the borrowing policy, which involves a maximum percentage
of securities or assets, shall not be considered to be violated unless an
excess over the percentage occurs immediately after an acquisition of
securities or utilization of assets and results therefrom.
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS
GOVERNMENT MONEY MARKET PORTFOLIO
INVESTMENT POLICIES The Government Money Market Portfolio will invest
substantially all of its assets (not less than 90%) in debt obligations with
maturities of one year or less issued or guaranteed by the U.S. Government
and its agencies and instrumentalities and repurchase agreements thereon.
The Government Money Market Portfolio may purchase such securities on a when
issued or forward commitment basis and will maintain a segregated account
with the custodian of cash or liquid U.S. Government obligations in an
aggregate amount equal to the amount of its commitment in connection with
such purchases.
FUNDAMENTAL INVESTMENT RESTRICTIONS The Government Money Market
Portfolio may not:
1. Purchase securities except in compliance with Rule 2a-7 under the
Investment Company Act of 1940.
2. Purchase any securities except debt obligations issued or guaranteed
by the U.S. Government, its agencies and instrumentalities, repurchase and
reverse repurchase agreements thereon or the securities of other registered
management investment companies which are sold without a sales charge and
which are "Money Market Funds" complying with Rule 2a-7 of the Investment
Company Act of 1940 and which have investment objectives and policies
comparable to those of the Government Money Market Portfolio;
3. Underwrite the securities of other issuers;
4. Purchase or sell real estate or investments in real estate;
5. Purchase or sell commodities or commodities futures contracts;
6. Issue any senior securities (as defined in the Investment Company
Act of 1940) other than that as set forth below in restriction number 7.
7. Borrow money (including reverse repurchase agreements) except for
temporary or emergency purposes and then only from banks and in an aggregate
amount not exceeding 5% of the value of the Government Money Market
Portfolio's net assets at the time any borrowing is made;
8. Purchase securities on margin, except to obtain short term credits
as may be necessary for the clearance of purchases and sales of securities;
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<PAGE>
9. Make loans to other persons, except by the purchase of a portion of
an issue of publicly distributed bonds or other debt instruments and engaging
in reverse repurchase agreements;
10. Make short sales of securities or sell puts, calls, straddles,
spreads or combinations thereof;
11. Purchase the securities of other investment companies, except as
provided by Section 12(d)(1)(F) of the Investment Company Act of 1940, in the
open market where to the best information of the Investment Adviser no
commission, profit, or sales load to a sponsor or dealer (other than the
customary broker's commission) results from such a purchase and where
immediately after such purchase or acquisition (i) not more than 3% of the
total outstanding stock of such issuer is owned by the Portfolio and all
affiliated persons of the Portfolio, (ii) no issuer of a security acquired by
the Portfolio pursuant to this restriction is obligated to redeem such
security in an amount exceeding 1% of the issuer's total outstanding
securities during any period of less than 30 days, and (iii) the purchase of
such securities does not exceed 10% of the total assets of the Portfolio;
12. Purchase or sell oil, gas or other mineral leases, rights or royalty
contracts;
13. Pledge, mortgage or hypothecate its assets, except as is necessary
to secure borrowings permitted by restriction number 7 above, so long as such
pledge of securities does not exceed 25% of the value of the Government Money
Market Portfolio's assets;
14. Invest in securities for the purpose of exercising control;
15. Purchase any security other than obligations of the U.S. Government,
its agencies or instrumentalities, if as a result more than 5% of the value
of the Government Money Market Portfolio total assets would then be invested
in securities of any single issuer.
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS-HICKORY PORTFOLIO
GENERAL Ordinarily, the Hickory Portfolio will be principally invested
in common stocks and other securities convertible to equity, such as rights,
warrants, convertible bonds and preferred stock. The Fund has, however,
adopted a policy which permits the Investment Adviser to invest a portion or
all of its assets in high quality nonconvertible preferred stock, high
quality nonconvertible debt securities and high quality United States
Government and governmental agency and instrumentality obligations, or funds
may be retained in cash or cash equivalents, such as money market mutual fund
shares when the Investment Adviser believes that prevailing market or
economic conditions warrant a temporary defensive investment position.
Securities issued or guaranteed by the United States Government may include,
for example, Treasury Bills, Bonds and Notes which are direct obligations of
the United States Government. Obligations issued or guaranteed by United
States Government agencies or instrumentalities may include, for example,
those of Federal Intermediate Credit Banks, Federal Home Loan Banks, Federal
National Mortgage Association and Farmers Home Administration. Such
securities will include, for example, those supported by the full faith and
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<PAGE>
credit of the United States Treasury or the right of the agency or
instrumentality to borrow from the Treasury as well as those supported only
by the credit of the issuing agency or instrumentality. State and municipal
obligations, which are typically tax exempt, may include both general
obligation and revenue obligations, issued for a variety of public purposes
such as highways, schools, sewer and water facilities, as well as industrial
revenue bonds issued by public bodies to finance private commercial and
industrial facilities.
INDUSTRY CONCENTRATION Although the Hickory Portfolio will not
concentrate its investments in any one industry, it reserves the right to
invest up to 25% of the value of its assets (at the time of purchase and
after giving effect thereto) in the securities of companies principally
engaged in a particular industry.
CONVERTIBLE SECURITIES In addition to common and preferred stocks, the
Hickory Portfolio may invest in other securities having equity features
because they are convertible into, or represent the right to purchase, common
stock. Convertible bonds and debentures are corporate debt instruments,
frequently unsecured and subordinated to senior corporate debt, which may be
converted into common stock at a specified price. Such securities may trade
at a premium over their face amount when the price of the underlying common
stock exceeds the conversion price, but otherwise will normally trade at
prices reflecting current interest rate trends. Convertible corporate debt
securities purchased by the Hickory Portfolio will primarily be of investment
grade (e.g., Moody's Investors Service rating Aaa, Aa, A or Baa; Standard &
Poor's Corporation rating AAA, AA, A or BBB), as evidenced by ratings of
established rating agencies or similar criteria.
WARRANTS AND RIGHTS Warrants and rights are options to purchase common
stock at a specified price for a specified period of time. Their trading
price will normally reflect the relationship between the option price and the
current market price of the underlying common stock. If not sold or
exercised before their expiration date they become valueless. The Hickory
Portfolio's investments in warrants, which are valued at market, may not
exceed 5% of the value of the Hickory Portfolio's net assets, provided that
no more than 2% of the value of the Hickory Portfolio's net assets may be
invested in warrants which are not listed on the New York or American Stock
Exchanges and further provided that warrants acquired in units or attached to
securities are deemed to be without value for purposes of this limitation.
INVESTMENT COMPANY SHARES The Hickory Portfolio may purchase securities
of other investment companies, subject to the limitations discussed
hereunder. The Hickory Portfolio does not intend to purchase any such
securities involving the payment of a front-end sales load, but may purchase
shares of investment companies specializing in securities in which the
Hickory Portfolio has a particular interest or shares of closed-end
investment companies which frequently trade at a discount from their net
asset value.
FOREIGN SECURITIES The Hickory Portfolio may purchase foreign securities
that are listed on a principal foreign securities exchange or
over-the-counter market, or which are represented by American Depository
Receipts and are listed on a domestic securities exchange or traded in the
United States over-the-counter market. The Hickory Portfolio may
occasionally convert U.S. dollars
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into foreign currency, but only to effect securities transactions on a
foreign securities exchange and not to hold such currency as an investment.
The Hickory Portfolio will not invest in forward foreign currency contracts.
While the Hickory Portfolio has no present intention to invest any
significant portion of its assets in foreign securities, it reserves the
right to invest not more than 25% of the value of its total assets (at time
of purchase, giving effect thereto) in the securities of foreign issuers and
obligors.
Investors should recognize that investments in foreign companies involve
certain considerations that are not typically associated with investing in
domestic companies. An investment may be affected by changes in currency
rates and in exchange control regulations. Foreign companies are not
generally subject to uniform accounting, auditing and financial reporting
standards comparable to those applicable to domestic companies, and there may
be less publicly available information about a foreign company than about a
domestic company. Some foreign stock markets may have substantially less
trading activity than the American securities markets, and securities of some
foreign companies may be less liquid than securities of comparable domestic
companies. Also, commissions on transactions in foreign securities may be
higher than similar transactions on domestic stock markets and foreign
governments may impose taxes on securities transactions or ownership. There
is generally less governmental regulation of stock exchanges, brokers, and
listed and unlisted companies in foreign countries than in the United States.
In addition, individual foreign economies may differ favorably or
unfavorably from the United States' economy in such respects as growth of
gross national product, rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position.
RESTRICTED/ILLIQUID SECURITIES The Hickory Portfolio may invest in
securities acquired in a privately negotiated transaction directly from the
issuer or a holder of the issuer's securities and which, therefore, could not
ordinarily be sold by the Fund except in another private placement or
pursuant to an effective registration statement under the Securities Act of
1933 or an available exemption from such registration requirements. The
Hickory Portfolio will not invest in any such restricted securities which
will cause the then aggregate value of all such securities to exceed 10% of
the value of the Hickory Portfolio's net assets (at the time of investment,
giving effect thereto). Restricted securities will be valued in such manner
as the Board of Directors in good faith deems appropriate to reflect their
fair value. See "Determination of Net Asset Value" in the Prospectus. The
purchase price, subsequent valuation and resale price of restricted
securities normally reflect a discount from the price at which such
securities trade when they are not restricted, since the restriction makes
them less marketable. The amount of the discount from the prevailing market
price will vary depending upon the type of security, the character of the
issuer, the party who will bear the expenses of registering the restricted
securities, and prevailing supply and demand conditions.
COVERED CALL OPTIONS The Hickory Portfolio may write covered call
options to generate premium income which, as previously discussed, is
considered by the Investment Adviser to be an acceptable investment result.
Covered call options are contracts sold on a national exchange or in the
over-the-counter options market which allow the purchaser to buy the
underlying security at a specified price (the "strike price") prior to a
certain date, normally within 270 days. "Covered"
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options are those in which the option seller (the "writer") owns the
underlying securities. Writing covered call options may increase the Hickory
Portfolio's income since it receives a payment (the "premium") for writing
the option. To the extent that it writes covered call options, the Hickory
Portfolio will forego any opportunity for appreciation in the underlying
securities above the strike price during the term of the option, as the
underlying securities will be subject to certain deposit procedures and,
therefore, unavailable for sale. The Hickory Portfolio may attempt to
protect itself against a decline in the price of the underlying security or
may attempt to benefit from an anticipated increase in such price, by
"closing out" the covered call, that is, purchasing an identical call in the
open market. However, there is no assurance that such calls will always be
available for purchase in the secondary market at a price which will produce
the desired result. The absence of a liquid secondary market in such
securities could result from numerous circumstances, such as insufficient
trading interest, restrictions imposed by exchanges as to options trading
generally or suspensions affecting particular securities, inadequacy of
exchange or clearing corporation facilities or decisions by exchanges to
discontinue or limit operations trading.
FUNDAMENTAL INVESTMENT RESTRICTIONS The Hickory Portfolio may not:
1. Underwrite the securities of other issuers, except the Hickory
Portfolio may acquire restricted securities under circumstances such that,
if the securities are sold, the Fund might be deemed to be an underwriter for
purposes of the Securities Act of 1933.
2. Purchase or sell real estate or interests in real estate, but the
Hickory Portfolio may purchase marketable securities of companies holding
real estate or interests in real estate.
3. Purchase or sell commodities or commodity futures contracts.
4. Issue any senior securities (as defined in the Investment Company
Act of 1940, as amended) other than that as set forth below in restriction
number 6.
5. Make loans to other persons except by the purchase of a portion of
an issue of publicly distributed bonds, debentures or other debt securities;
provided that the Hickory Portfolio may purchase privately sold bonds,
debentures or other debt securities immediately convertible into equity
securities, subject to the 10% restriction applicable to the purchase of
restricted or illiquid securities.
6. Borrow money except for temporary or emergency purposes and then
only from banks and in an aggregate amount not exceeding 5% of the value of
the Hickory Portfolio's total assets at the time any borrowing is made.
7. Purchase securities on margin, but the Hickory Portfolio may obtain
such short-term credits as may be necessary for the clearance of purchases
and sales of securities.
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8. Make short sales of securities or sell puts, calls, straddles,
spreads or combinations thereof, except that the Hickory Portfolio may write
covered call options as described under "Investment Policies."
9. Participate on a joint or joint and several basis in any securities
trading account.
10. Purchase the securities of any other investment companies, except as
provided by Section 12(d)(1)(F) of the Investment Company Act of 1940, in the
open market where to the best information of the Investment Adviser no
commission, profit, or sales load to a sponsor or dealer (other than the
customary broker's commission) results from such a purchase and where
immediately after such purchase or acquisition (i) not more than 3% of the
total outstanding stock of such issuer is owned by the Portfolio and all
affiliated persons of the Hickory Portfolio, (ii) no issuer of a security
acquired by the Portfolio pursuant to this restriction is obligated to redeem
such security in an amount exceeding 1% of the issuer's total outstanding
securities during any period of less than 30 days, and (iii) the purchase of
such securities does not exceed 10% of the total assets of the Portfolio.
11. Invest in companies for the purpose of exercising management or
control.
12. As to 50% of its total assets, invest more than 5% of its total
assets, taken at market value at the time of a particular purchase, in
securities of any one issuer (other than in government securities), nor at
the time of, and giving effect to, a particular purchase, own more than 10%
of the outstanding voting securities of any one issuer.
13. Adopt any investment objective otherwise than as described under
"Investment Objective and Policies" in the Prospectus.
PURCHASE OF SHARES
See "Purchase of Shares" in the Prospectus for basic information on how
to purchase shares of the Portfolios.
An order to purchase shares is accepted when the Distributor receives a
Purchase Application and a check or notification of a wire transfer of funds
in payment of the applicable purchase price. An investor will become a
shareholder when the net asset value applicable to the order is next
determined. Net asset value of a Portfolio's shares is determined once each
day at the close of the New York Stock Exchange (3:00 p.m. Omaha time). If
the completed order is received before 3:00 p.m. Omaha time, an order will be
effective the same day and the investor will become a shareholder of record
that day. If the order is received after 3:00 p.m. Omaha time the investor
will become a shareholder of record at the net asset value determined the
following business day.
When an investor purchases shares of the Portfolios, a shareholder's
investment account is opened in his/her name on the books of the Fund. No
certificates for shares are issued. A continuing permanent record of each
shareholder's investment account is maintained by the Fund.
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<PAGE>
After every transaction shareholders will receive a statement showing the
details of the transaction and the number of shares held in the shareholder's
investment account. Dividends and capital gains distributions will be
invested in additional shares of the Portfolios, unless otherwise indicated
on the Purchase Application.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
officers and directors of the Fund:
Wallace R. Weitz* President, Wallace R. Weitz & Company, a
President, Treasurer registered investment adviser, since
and Director July 1983; President, Weitz Securities,
Inc., a registered broker-dealer, since
its inception in January 1986; President,
Treasurer and Director, Weitz Value Fund,
Inc., a registered investment company,
January 1986 until March 1990; President,
Treasurer and Director, Weitz Partners,
Inc., a registered investment company,
since July, 1993; previously employed
as account executive and financial
analyst for Chiles, Heider & Co., Inc.
(1973-1983) and G. A. Saxton & Co., Inc.
(1970-1973); Chartered Financial Analyst
and 1970 graduate of Carleton College
with degree in economics.
John W. Hancock Partner, Hancock & Dana (certified
Director public accountants) since its inception
in 1985; Vice President, Wallace R.
Weitz & Company, July 1988-December 1988;
Director, Weitz Value Fund, Inc.,
January 1986 until March 1990; Director,
Weitz Partners, Inc. since July 1993;
Senior Tax Manager, Peat, Marwick,
Mitchell & Co. (Omaha, Nebraska) from
1978 to 1985.
Carroll E. Fredrickson Certified Public Accountant and business
Director consultant, 1980 to present; Director,
Weitz Value Fund, Inc., July 1988 until
March 1990; Director, Weitz Partners,
Inc. since July, 1993; Managing Partner,
Peat, Marwick, Mitchell & Co., Omaha,
Nebraska until 1980.
Thomas R. Pansing, Jr.* Partner, Gaines, Mullen, Pansing & Hogan,
Director attorneys, since 1973; Director, Weitz
Value Fund, Inc., January 1986 until
March 1990; Director, Weitz Partners,
Inc. since July, 1993.
Richard D. Holland Prior to his retirement in 1984, Mr.
Holland was Vice Chairman, Rollheiser,
Holland & Kahler (1979-1984)
(advertising) and President of Holland,
Dreves & Reilly (1954-1979)
(advertising); Director, Weitz Partners,
Inc. since June, 1995.
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<PAGE>
Mary K. Beerling Vice President, Wallace R. Weitz &
Vice President and Company since July 1994; Vice
Secretary President, Weitz Securities, Inc.,
since July 1994; Vice President and
Secretary, Weitz Partners Inc., July
1994; Partner, Kutak Rock, attorneys,
from 1989 to 1994.
Linda L. Lawson Vice President, Wallace R. Weitz &
Vice President Company since June, 1992; Vice
President, Weitz Partners, Inc. since
July, 1993; Manager, Marketing Financial
Management, Mutual of Omaha, Omaha, NE,
1988-1992; Assistant Treasurer, Farm
Credit Banks, Omaha, NE, 1983-1988. Ms.
Lawson is the sister of Richard F.
Lawson.
Richard F. Lawson Vice President, Wallace R. Weitz &
Vice President and Company since December 1992 and a
Assistant Secretary financial analyst since January 1991;
Portfolio Manager, Weitz Series Fund,
Inc., since 1992; Vice President and
Assistant Secretary, Weitz Partners,
Inc. since July 1993; Vice President
and Director, Weitz Securities, Inc.
Since March, 1995; Associate, Temple,
Barker & Sloane, Inc., Massachusetts,
July, 1984-September, 1989; Chartered
Financial Analyst; MBA, Harvard Business
School, 1984. Mr. Lawson is the brother
of Linda L. Lawson.
*Mr. Weitz and Mr. Pansing are "interested persons" (as that term is
defined in the Investment Company Act of 1940) of the Fund and the Investment
Adviser. The mailing address of all officers and directors of the Fund is
1125 South 103 Street, Suite 600, Omaha, Nebraska 68124-6008.
COMPENSATION TABLE The table below sets forth certain information with
respect to compensation of all directors of the company for the fiscal year
ended March 31, 1996. Under the Advisory Agreement remuneration of officers
is paid by the Investment Adviser.
<TABLE>
<CAPTION>
COMPENSATION TABLE
Total compensation
Aggregate from Fund and
Name of compensation from Weitz Partners Fund, Inc.
Person, Position the Fund paid to directors
---------------- ------------------ -------------------------
<S> <C> <C>
Carroll E. Fredrickson, Director 1,800 2,900
John W. Hancock, Director 1,600 2,400
Richard D. Holland, Director 1,300 2,100
Thomas R. Pansing, Jr., Director 1,700 2,600
Wallace R. Weitz, Director (1) N/A N/A
</TABLE>
(1) As a director who is also an officer of the Investment Adviser, Mr.
Weitz received no compensation for his service as a director.
-16-
<PAGE>
MANAGEMENT OF THE INVESTMENT ADVISER Mr. Weitz is president, treasurer,
a director and sole shareholder of the Investment Adviser. He intends to
devote substantially all his time to the business of the Investment Adviser.
INVESTMENT ADVISORY AND OTHER SERVICES
GENERAL The investment adviser and administrator for the Portfolios is
Wallace R. Weitz & Company (the "Adviser" or "Investment Adviser"). The
Adviser acts as such pursuant to a written agreement which will be
periodically approved by the directors or the shareholders of the Fund. Weitz
Securities, Inc. acts as the Fund's distributor ("Distributor"). The address
for the Adviser and Distributor is 1125 South 103 Street, Suite 600, Omaha,
Nebraska, 68124-6008.
CONTROL OF THE ADVISER AND THE DISTRIBUTOR The Adviser and Distributor
are wholly owned by Wallace R. Weitz.
THE INVESTMENT ADVISORY AGREEMENTS Wallace R. Weitz & Co. acts as the
Adviser to the Fund and the Portfolios under individual Management and
Investment Advisory Agreements ("Advisory Agreements"). The Advisory
Agreement with respect to the Fixed Income Portfolio was last approved by the
Board of Directors on January 30, 1996, and was approved by the shareholders
of the Fixed Income Portfolio at the meeting of shareholders on July 19,
1989. The Advisory Agreement with respect to the Value Portfolio was last
approved by the Board of Directors on January 30, 1996, and approved by the
sole shareholder Weitz Value Fund, Inc. pursuant to authority granted by the
shareholders of Weitz Value Fund, Inc. on March 30, 1990, in connection with
the merger of Weitz Value Fund, Inc. into the Fund. The Advisory Agreement
for the Government Money Market Portfolio was last approved by the Board of
Directors on January 30, 1996, and was approved by its shareholders on June
17, 1992. The Investment Advisory Agreement for the Hickory Portfolio was
last approved by the Board of Directors on January 30, 1996.
The Advisory Agreements terminate automatically in the event of
assignment. In addition, the Advisory Agreements are terminable at any time,
without penalty, by the Board of Directors of the Fund or by vote of a
majority of each Portfolios' outstanding voting securities on not more than
60 days' written notice to the Investment Adviser, or by the Investment
Adviser, or not more than on 60 days' written notice to the Fund. Unless
sooner terminated, the Advisory Agreements shall continue in effect for more
than two years after their execution only so long as such continuance is
specifically approved at least annually by either the Board of Directors or
by a vote of a majority of the outstanding voting securities of the
Portfolio, provided that in either event such continuance is also approved by
a vote of a majority of the directors who are not parties to such agreement,
or interested persons of such parties, cast in person at a meeting called for
the purpose of voting on such approval.
Pursuant to the Advisory Agreements, the Fund agrees to pay to the
Investment Adviser a monthly advisory fee equal to .5% on an annual basis of
the Fixed Income Portfolio's and the Government Money Market Portfolio's
average daily net assets and 1% of the Value Portfolio's and Hickory
Portfolio's average daily net assets. The total amount of advisory fees paid
to the
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<PAGE>
Investment Adviser for the fiscal years ended March 31, 1996, 1995 and 1994
was $1,429,179, $1,118,554 and $924,408 respectively for the Value Portfolio,
$50,292, $31,185 and $0 respectively for the Hickory Portfolio, and $71,277,
$88,597 and $100,479 respectively for the Fixed Income Portfolio. The
Government Money Market Portfolio paid advisory fees of $8,819 and $5,161
during fiscal years ending March 31, 1996 and 1995 respectively.
Under the Advisory Agreements, the Investment Adviser is responsible for
selecting the Portfolios' securities. The Investment Adviser will also
provide certain management and certain other personnel to the Fund. The
Distributor, Weitz Securities, Inc., in its capacity of principal
underwriter, will bear any sales or promotional costs incurred in connection
with the sale of the Fund's shares.
The Fund will pay all expenses of operations not specifically assumed by
the Investment Adviser. These will include, with limitation: custodian,
administrative, transfer agent and shareholder recordkeeping charges; charges
for the services of legal counsel and independent public accountants;
compensation of directors other than those directors who are also officers of
the Investment Adviser and expenses incurred by them in connection with their
services to the Fund; expenses of printing and distributing to shareholders
notices, proxy solicitation material, prospectuses and reports; brokers'
commissions; taxes; interest, payment of premiums for certain insurance
carried by the Fund; and expenses of complying with federal, state and other
laws. Such expenses will be charged to the Portfolio for which such items
were incurred, but if such items are not directly related to a Portfolio,
they will be allocated among the Portfolios based upon the relative net
assets of the Portfolios.
The Advisory Agreements provide that neither the Investment Adviser nor
any of its officers or directors, agents or employees will have any liability
to the Fund or its shareholders for any error of judgment, mistake of law or
any loss arising out of any investments, or for any other act or omission in
the performance of its duties as Investment Adviser under the Advisory
Agreement, except for liability resulting from willful misfeasance, bad faith
or gross negligence on the part of the Investment Adviser in the performance
of its duties or from reckless disregard by the Investment Adviser of its
obligations under the Advisory Agreement. The Investment Adviser has
contractually retained all rights to the use of the name "Weitz" by the Fund.
In the event the Fund entered into an agreement with another investment
adviser the Fund could be required to change its corporate name.
The laws of certain states require that if a mutual fund's expenses
(including advisory fees but excluding interest, taxes, brokerage commissions
and extraordinary expenses) exceed certain percentages of average net assets,
the fund must be reimbursed for such excess expenses. The Fund believes that
its fee structure with respect to each Portfolio will satisfy applicable
state requirements. The Adviser has voluntarily agreed to reimburse the
Value Portfolio and the Hickory Portfolio, to the extent of the advisory fee
paid, to the extent that expenses, excluding interest, taxes and brokerage
commissions, exceed 1.50% annually of its average daily net assets and has
agreed to reimburse the Fixed Income Portfolio and the Government Money
Market Portfolio to the extent of the
-18-
<PAGE>
advisory fee paid, for their expenses, excluding interest, taxes and
brokerage commissions, which exceed 1% annually of their respective average
daily net assets.
THE ADMINISTRATOR The Adviser has also been engaged as the Fund's
Administrator under an Administration Agreement. Under this Agreement the
Value Portfolio pays a monthly fee calculated at a maximum annual rate of
.30% of average daily net assets for customary services related to fund
accounting, record keeping, compliance, registration, transfer agent and
dividend disbursing. The Fixed Income, Government Money Market, and Hickory
Portfolios pay a monthly administrative fee calculated at a maximum annual
rate of .25% of average daily net assets. The maximum fee for each Portfolio
may be decreased from time to time and all or a portion of the fee may be
waived from time to time. The fee cannot, however, be increased without the
approval of the Board of Directors of the Fund. The average administrative
fees for the fiscal year ended March 31, 1996 after fee waivers were .24% for
the Value Portfolio, .08% for the Fixed Income Portfolio, 0.0% for the
Government Money Market Portfolio, and .14% for the Hickory Portfolio.
THE DISTRIBUTOR The Distributor offers shares of the Portfolios on a
continuous basis without compensation from the Fund.
OTHER SERVICES The Fund's custodian is Norwest Bank, N.A., Omaha,
Nebraska. The Fund's accountant is KPMG Peat Marwick LLP, Omaha, Nebraska.
PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATIONS
The Investment Adviser furnishes advice and recommendations with respect
to the Portfolios' investment decisions and determines the broker to be used
in each specific transaction. Principal market makers will be used for the
execution of transactions of unlisted securities unless it has been
determined that better price and execution are available elsewhere.
The Investment Adviser attempts to obtain from brokers the most favorable
price and execution available. In determining the most favorable price and
execution all factors relevant to the Fund's best interest are considered,
including, for example, price, the size of the transaction, the nature of the
market for the security, the amount of commission, the timing of the
transaction taking into account market prices and trends, the reputation,
experience and financial stability of the broker-dealer involved and the
quality of service rendered by the broker-dealer in other transactions.
Subject to these considerations, the Investment Adviser may place orders for
the purchase or sale of Portfolio securities with brokers or dealers who have
provided research, statistical or other financial information and services.
Because of such factors, most of which are subject to the best judgment
of the Investment Adviser, the Investment Adviser may pay a broker which
provides brokerage and research services to the Fund an amount of commission
for effecting a securities transaction in excess of the amount of commission
another broker-dealer would have charged for effecting that transaction,
provided that the Investment Adviser has determined in good faith that such
amount of commission was reasonable in relation to the value of the brokerage
and research services provided by the broker
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<PAGE>
effecting the transactions, viewed in terms of either that particular
transaction or the ability to execute possibly difficult transactions in the
future. Such research services furnished by brokers through whom the
Investment Adviser effects securities transactions are used by the Investment
Adviser in servicing all of its accounts and are not used exclusively with
respect to transactions for the Fund.
Brokerage and research services, as provided in Section 28(e)(3) of the
Securities Exchange Act of 1934, include advice as to the value of
securities, the advisability of investing in, purchasing or selling
securities, the availability of securities or purchasers or sellers of
securities; furnishing analyses and reports concerning issuers, industries,
securities, economic factors and trends, Portfolio strategy and performance
of accounts; and effecting securities transactions and performing functions
incidental thereto (such as clearance and settlement).
During the fiscal years ended March 31, 1996, 1995 and 1994, the Fund
paid the following brokerage commissions for securities transactions in the
Portfolios:
Fiscal Years Ended March 31,
Portfolios 1996 1995 1994
- ---------- ---- ---- ----
Value 452,206 $264,700 $199,522
Fixed Income 9,647 4,500 5,655
Government Money Market -0- -0- -0-
Hickory 29,572 16,137 13,476
The percent of total commissions paid by each Portfolio during the fiscal
year ended March 31, 1996 to firms that provided research service to the
Investment Adviser was 88.8% for the Value Portfolio, 29.4% for the Fixed
Income Portfolio, 0% for the Government Money Market Portfolio and 92.9% for
the Hickory Portfolio.
As of March 31, 1996, Fixed Income Portfolio owned $1,009,169 aggregate
amount of the securities of Merrill, Lynch & Co. and $503,930 aggregate
amount of the securities of Norwest Corp., regular broker-dealers of the Fund
within the meaning of Rule 10b-1 of the Investment Company Act of 1940.
OPTION TRADING LIMITS The writing by the Fund of options on securities
is subject to limitations established by each of the registered securities
exchanges on which such options are traded. Such limitations govern the
maximum number of options in each class which may be written by a single
investor or group of investors acting in concert, regardless of whether the
options are written on the same or different securities exchanges or are held
or written in one or more accounts or through one or more brokers. Thus, the
number of options which one Portfolio may write may be affected by options
written by the other Portfolios, if any, and by other investment advisory
clients of the Adviser. An exchange may order the liquidations of positions
found to be in excess of these limits, and it may impose certain other
sanctions. The Adviser believes it is unlikely that the level of option
trading by the Fund will exceed applicable limitations.
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<PAGE>
CAPITAL STOCK
On June 30, 1996, the Fund had 12,087,228, 1,527,530, 5,110,338 and 434,906
shares outstanding designated Value Portfolio, Fixed Income Portfolio,
Government Money Market Fund and Hickory Portfolio respectively. As of such
date the following directors, officers and other persons owning 5% or more of
the shares of the Portfolios, owned the number and percentages of shares of
the Portfolios indicated.
VALUE PORTFOLIO
No persons owned of record or were known to own beneficially 5% or more of
the shares of the Value Portfolio.
The Officers and Directors of the Fund owned 363,822 shares or 3% of the
Value Portfolio's outstanding shares.
FIXED INCOME PORTFOLIO
Name and Address Shares/Nature of Ownership %
- ---------------- -------------------------- ---
Harold W. Anderson** 80,659 5.3%
5711 South 86 Circle Record
Omaha, NE 68127
William and Kathryn Melcher** 104,167 6.8%
14260 North Silkwind Way Record
Tucson, Arizona 85737
The Officers and Directors of the Fund owned 96,243 shares or 6.3% of the
outstanding shares of the Fixed Income Portfolio.
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<PAGE>
GOVERNMENT MONEY MARKET
Name and Address Shares/Nature of Ownership %
- ---------------- -------------------------- ---
Eye Physicians of Omaha Pension Plan** 370,677 7.3%
Jeffery Hottman, MD, Trustee Record
4353 Dodge Street
Omaha, NE 68131
Kathleen Cameron Morton, IRA** 312,954 6.1%
220 South Collier #1404 Record
Old Marco Island, Florida
33937
Robert D. Mullin Revocable Trust** 325,843 6.4%
Robert D. Mullin, Trustee Record
9718 Nottingham Drive
Omaha, NE 68114
Sports Medicine Center P.C. 401K** 334,576 6.5%
2255 South 132 Street Record
Omaha, NE 68144
The Officers and Directors of the Fund owned 100,430 shares or 2% of the
Government Money Market Portfolio's outstanding shares.
-22-
<PAGE>
HICKORY PORTFOLIO
Name and Address Shares/Nature of Ownership %
- ---------------- -------------------------- ---
Richard L. Brennan, MD, Rollover IRA** 26,104 6.0%
9924 Devonshire Record
Omaha, NE 68114
Lynnette W. Lawson** 26,586 6.1%
606 South 94th Avenue Record
Omaha, NE 68114
Richard F. Lawson* 39,297 9.0%
606 South 94th Avenue Record
Omaha, NE 68114
The Scoular Company 401(K)** 50,054 11.5%
Thrift Savings Plan Record
Norwest Bank, Trustee
PO Box 3959
Omaha, NE 68103
Wallace R. Weitz* 50,999 11.7%
1610 South 91st Street Record
Omaha, NE 68124
The Officers and Directors of the Fund owned 164,069 or 37.7% of the Hickory
Portfolio's outstanding shares.
____________________
*Director and/or Officer
**5% Shareholder
The Articles of Incorporation provide that the shareholders have the
right to remove directors upon the vote of two-thirds of the outstanding
shares at a meeting called for such purpose. The Board of Directors must
promptly call a meeting for the removal of a director if recordholders of not
less than 10% of the outstanding shares request in writing that such a
meeting be held. The Fund is obligated to facilitate shareholder
communications by providing shareholder lists and related information only if
10 or more shareholders, who have been shareholders for at least six months
before application and who own, in the aggregate, shares having a net asset
value of at least $25,000 or at least 1% of the outstanding shares, whichever
is less, apply to the Board of Directors in writing, stating they wish to
communicate with other shareholders with a view to obtaining signatures to
request a meeting. Such application must be accompanied by the form of
communication proposed. The Prospectus contains additional information
regarding the characteristics of the Fund's capital stocks.
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<PAGE>
DETERMINATION OF NET ASSET VALUE
The method for determining the public offering price of the Value
Portfolio, Fixed Income Portfolio, Government Money Market Portfolio or
Hickory Portfolio shares is described in the Prospectus in the text under the
captions "Purchase of Shares" and "Determination of Net Asset Value." The net
asset value of the Fund's shares is determined each day that the New York
Stock Exchange is open, provided that the net asset value need not be
determined on days when no shares are tendered for redemption and no order
for shares is received. Currently the New York Stock Exchange and the Fund
are closed for business on the following holidays (or on the nearest Monday
or Friday if the holiday falls on a weekend): New Year's Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas. In addition, investors will not be able to purchase or redeem
shares on Martin Luther King, Jr. Day, Columbus Day or Veteran's Day because
Norwest Bank Nebraska, N.A., the Fund's custodian, is closed on such days.
The Fund's offices will, however, be open on such days to accept orders for
next day purchases and redemptions and to respond to any questions investors
may have.
The Securities and Exchange Commission adopted Rule 2a-7 under the
Investment Company Act of 1940 which permits the Fund to compute the
Government Money Market Portfolio's net asset value per share using the
amortized cost method of valuing portfolio securities with remaining
maturities of more than 60 days. As a condition for using the amortized cost
method of valuation, the Board of Directors must establish procedures to
stabilize the Fund's net asset value at $1.00 per share. These procedures
include a review by the Board of Directors as to the extent of any deviation
of net asset value based on available market quotations from the Fund's $1.00
amortized cost value per share. If such deviation exceeds $.005, the Board
of Directors will consider what action, if any, should be initiated to
reasonably eliminate or reduce material dilution or other unfair results to
shareholders. Such action may include redemption of shares in kind, selling
portfolio securities prior to maturity, withholding dividends or utilizing a
net asset value per share as determined by using available market quotations.
In addition, the Fund must maintain a dollar-weighted average portfolio
maturity appropriate to its investment objective, but in any event, not
longer than 90 days, must limit portfolio investments to those instruments
which the Board of Directors determines present minimal credit risks, and
must observe certain other reporting and recordkeeping procedures.
Under the amortized cost method of valuation, a security is initially
valued at cost on the date of purchase and, thereafter, any discount or
premium is amortized on a straight-line basis to maturity, regardless of the
effect of fluctuating interest rates or the market value of the security.
Accordingly, U.S. Government obligations held by the Fund will be valued at
their amortized cost, which normally will be their face amount. Other assets
and securities are valued at a fair value determined, in good faith, by the
Board of Directors.
The amortized cost method of valuation may result in some dilution of a
shareholder's interest in the Portfolio insofar as general market increases
and decreases of interest rates usually have an inverse effect on the value
of debt instruments. However, the significance of the effect of such general
market increases and decreases in interest rates directly corresponds to the
maturity of
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<PAGE>
the debt instruments, that is, the change in the market value of the
underlying debt instruments and the corresponding change in the premium or
discount of such instruments is greater when maturities are larger and less
when maturities are shorter.
The portfolio securities of the Value Portfolio, Fixed Income Portfolio
and Hickory Portfolio fluctuate in value, and hence, the net asset value per
share of these Portfolios also fluctuates. On March 31, 1996, the net asset
value per share for the Value Portfolio was calculated as follows:
Net Assets ($170,508,856) = Net Asset Value per
--------------------------------
Shares Outstanding (8,763,259) Share ($19.457)
On March 31, 1996, the net asset value per share for the Fixed Income
Portfolio was calculated as follows:
Net Assets ($16,901,374) = Net Asset Value per
--------------------------------
Shares Outstanding (1,550,550) Share ($10.900)
On March 31, 1996, the net asset value per share for the Hickory Portfolio
was calculated as follows:
Net Assets ($6,658,214) = Net Asset Value per
--------------------------------
Shares Outstanding (427,806) Share ($15.564)
REDEMPTION
Redemption of shares, or payment, may be suspended at times (a) when the
New York Stock Exchange is closed for other than customary weekend or holiday
closings, (b) when trading on said exchange is restricted, (c) when an
emergency exists, as a result of which disposal by the Portfolios of
securities owned by them is not reasonably practicable, or it is not
reasonably practicable for the Portfolios fairly to determine the value of
their net assets, or (d) during any other period when the Securities and
Exchange Commission, by order, so permits, provided that applicable rules and
regulations of the Securities and Exchange Commission shall govern as to
whether the conditions prescribed in (b) or (c) exist.
TAXATION
The Fund intends to qualify each of its Portfolios as a "regulated
investment company" under Subchapter M of the Internal Revenue Code of 1986,
as amended, so as to be relieved of federal income tax on its capital gains
and net investment income distributed to shareholders. To qualify as a
regulated investment company, a Portfolio must, among other things, receive
at least 90% of its gross income each year from dividends, interest, gains
from the sale or other disposition of securities and certain other types of
income including, with certain exceptions, income from options and futures
contracts. However, gains from the sale or other disposition of stock or
securities held for less than three months must constitute less than 30% of
each Portfolio's gross income. This restriction may limit the extent to
which a Portfolio may effect sales of securities held for less than
-25-
<PAGE>
three months or transactions in futures contracts and options even when the
Adviser otherwise would deem such transaction to be in the best interest of a
Portfolio. The Code also requires a regulated investment company to
diversify its holdings. This means that a Portfolio must have at least 50%
of its total assets in cash and cash items and other securities and as to the
securities held, the entire amount of the securities of any one issuer owned
by a Portfolio may not exceed 5% of the value of 50% of the Portfolio's
assets. Additionally, a Portfolio may not invest more than 25% of its total
assets in the securities of any one issuer. This diversification test is in
contrast to the diversification test under the 1940 Act which restricts a
Portfolio's investment in any one issuer to 5% as to 75% of the Portfolio's
assets. The Value Portfolio, Fixed Income Portfolio and Government Money
Market Portfolio are diversified under both the 1940 Act and the Code, while
the Hickory Portfolio is nondiversified under the 1940 Act, but is
diversified under the Code. The Internal Revenue Service has not made its
position clear regarding the treatment of futures contracts and options for
purposes of the diversification test, and the extent to which a Portfolio
could buy or sell futures contracts and options may be limited by this
requirement.
The Code requires that all regulated investment companies pay a
nondeductible 4% excise tax to the extent the regulated investment company
does not distribute 98% of its ordinary income, determined on a calendar year
basis, and 98% of its capital gains, determined, in general, on an October 31
year end. The required distributions are based only on the taxable income of
a regulated investment company.
Ordinarily, distributions and redemption proceeds earned by a Portfolio
shareholder are not subject to withholding of federal income tax. However, if
a shareholder fails to furnish a tax identification number or social security
number, or certify under penalties of perjury that such number is correct,
the Fund may be required to withhold federal income tax at the current rate
("backup withholding") from all dividend, capital gain and/or redemption
payments to such shareholder. Dividends and capital gain distributions may
also be subject to backup withholding if a shareholder fails to certify under
penalties of perjury that such shareholder is not subject to backup
withholding due to the under-reporting of certain income. These
certifications are contained in the purchase application enclosed with the
Prospectus.
CALCULATION OF PERFORMANCE DATA
From time to time the Fixed Income Portfolio may quote yield in
advertisements or in reports and other communications to shareholders. For
this purpose, yield is calculated by dividing the Fixed Income Portfolio's
net investment income per share for the base period which is 30 days or one
month, by the Fixed Income Portfolio's maximum offering purchase price on the
last day of the period and annualizing the result. The Fixed Income
Portfolio's net investment income changes in response to fluctuations in
interest rates and in the expenses of the Portfolio. Consequently, any given
quotation should not be considered as representative of what the Fixed Income
Portfolio's yield may be for any specified period in the future.
Yield information may be useful in reviewing the Fixed Income Portfolio's
performance and for providing a basis for comparison with other investment
alternatives. However, the Fixed Income
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<PAGE>
Portfolio's yield will fluctuate, unlike other investments which pay a fixed
yield for a stated period of time. Current yield should be considered
together with fluctuations in the Fixed Income Portfolio's net asset value
over the period for which yield has been calculated, which, when combined,
will indicate the Fixed Income Portfolio's total return to shareholders for
that period. Other investment companies may calculate yields on a different
basis. In addition, investors should give consideration to the quality and
maturity of the Fixed Income Portfolio securities of the respective
investment companies when comparing investment alternatives.
Investors should recognize that in periods of declining interest rates
the Fixed Income Portfolio's yield will tend to be somewhat higher than
prevailing market rates, and in periods of rising interest rates the Fixed
Income Portfolio's yield will tend to be somewhat lower. Also, when interest
rates are falling, the inflow of net new money to the Fixed Income Portfolio
from the continuous sale of its shares will likely be invested in instruments
producing lower yields than the balance of the Fixed Income Portfolio's
holdings, thereby reducing the current yield of the Fixed Income Portfolio.
In periods of rising interest rates, the opposite can be expected to occur.
The Fixed Income Portfolio's yield based on the 30-day or one-month period
ended March 31, 1996 was 6.3%.
The Fixed Income Portfolio may also quote the indices of bond prices and
yields prepared by Lehman Brothers and Salomon Brothers Inc., leading
broker-dealer firms. These indices are not managed for any investment goal.
Their composition may, however, be changed from time to time.
The Fixed Income Portfolio may quote the yield or total return of Ginnie
Maes, Fannie Maes, Freddie Macs, corporate bonds and Treasury bonds and
notes, either as compared to each other or as compared to the Fixed Income
Portfolio's performance. In considering such yields or total returns,
investors should recognize that the performance of securities in which the
Fixed Income Portfolio may invest does not reflect the Fixed Income
Portfolio's performance, and does not take into account either the effects of
portfolio management or of management fees or other expenses; and that the
issuers of such securities guarantee that interest will be paid when due and
that principal will be fully repaid if the securities are held to maturity,
while there are no such guarantees with respect to shares of the Fixed Income
Portfolio. Investors should also be aware that the mortgages underlying
mortgage-related securities may be prepaid at any time. Prepayment is
particularly likely in the event of an interest rate decline, as the holders
of the underlying mortgages seek to pay off high-rate mortgages or
renegotiate them at potentially lower current rates. Because the underlying
mortgages are more likely to be prepaid at their par value when interest
rates decline, the value of certain high-yielding mortgage-related securities
may have less potential for capital appreciation than conventional debt
securities (such as U.S. Treasury bonds and notes) in such markets. At the
same time, such mortgage-related securities have a similar potential for
capital depreciation when interest rates rise.
The Value Portfolio and Hickory Portfolio may use comparative performance
information from time to time from such indices as compiled by Dow Jones &
Co., Standard & Poor's, Lipper Analytical Services, Inc., Morningstar, the
National Association of Securities Dealers and Value Line. These indices
could include, but are not limited to, the Dow Jones Industrial Average, the
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S&P 500, the Lipper Growth and Income Fund Index and the NASDAQ and Value
Line Composites, or any other major recognized index. This information is
referenced for comparative purposes only.
In connection with the quotations of yield in advertisements described
above or otherwise, the Portfolios will also provide average annual total
returns from the date of inception for one, five and ten-year periods if
applicable. Total return is a calculation which equates an initial amount
invested to the ending redeemable value at a specified time. It assumes the
reinvestment of all dividends and capital gains distributions. Average annual
total return will be the average of the total returns for each year in the
period. The Portfolios will also provide a total return figure for the most
recent calendar quarter prior to the publication of the advertisement. The
average annual total return for the Value Portfolio for the one and five year
periods ended March 31, 1996, and for the period since inception, May 9, 1986
through March 31, 1996, was 35.9%, 15% and 12.4%, respectively. The total
return for the Value Portfolio includes the performance of Weitz Value Fund,
Inc., the predecessor to the Value Portfolio. The average annual total
return for the Fixed Income Portfolio for the one and five year periods ended
March 31, 1996 and the period since inception, December 23, 1988 to March 31,
1996 was 9.2%, 6.8% and 7.5% respectively. The average annual total return
for the Hickory Portfolio for the one year period ended March 31, 1996 and
the period since inception, January 1, 1993 through March 31, 1996 was 40.6%
and 16.7%, respectively.
The Fund may also advertise the yield of the Government Money Market
Portfolio. Yield for money market funds is determined by computing the net
change, exclusive of capital changes in the value of a hypothetical
preexisting account at the beginning and ending of a seven day period having
a balance of one share at the beginning of the period, subtracting a
hypothetical charge reflecting expenses and dividing the difference by the
value of the account at the beginning of the period to obtain the base period
return and then multiplying the base period return by 365/7 and rounding the
result to the nearest one hundredth of one cent. The Government Money Market
Portfolio's yield and effective yield for the 7-day period ended March 31,
1996, was 4.5% and 4.6%, respectively.
FINANCIAL STATEMENTS
The audited statements and notes thereto included in the Fund's Annual
Report for the Value Portfolio, Fixed Income Portfolio, Government Money
Market Portfolio and the Hickory Portfolio dated March 31, 1996 and filed
with the Securities and Exchange Commission May 10, 1996 are incorporated
herein by reference. An additional copy of such Annual Report may be
obtained without charge by directing a request for such report to the Fund at
its address or phone number shown on the cover page of this Statement of
Additional Information.
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APPENDIX A
INTEREST RATE FUTURES CONTRACTS, BOND INDEX FUTURES
AND RELATED OPTIONS
FUTURES - IN GENERAL Although most futures contracts by their terms call
for actual delivery or acceptance of commodities or securities, in most cases
the contracts are closed out before the settlement date without the making or
taking of delivery. Closing out a short position is effected by purchasing a
futures contract for the same aggregate amount of the specific type of
financial instrument or commodity and the same delivery month. If the price
of the initial sale of the futures contract exceeds the price of the
offsetting purchase, the seller is paid the difference and realizes a gain.
Conversely, if the price of the offsetting purchase exceeds the price of the
initial sale, the trader realizes a loss. Similarly, the closing out of a
long position is effected by the purchaser entering into a futures contract
sale. If the offsetting sale price exceeds the purchase price, the purchaser
realizes a gain, and if the purchase price exceeds the offsetting sale price,
he realizes a loss.
The purchase or sale of a futures contract differs from the purchase or
sale of a security in that no price or premium is paid or received. Instead,
an amount of cash or securities acceptable to the Adviser and the relevant
contract market, which varies but is generally about 5% of the contract
amount, must be deposited with the custodian in the name of the broker. This
amount is known as "initial margin," and represents a "good faith" deposit
assuring the performance of both the purchaser and the seller under the
futures contract. Subsequent payments to and from the broker, known as
"variation margin," are required to be made on a daily basis as the price of
the futures contract fluctuates, making the long or short positions in the
futures contract more or less valuable, a process known as "marking to the
market." Prior to the settlement date of the futures contract, the position
may be closed out by taking an opposite position which will operate to
terminate the position in the futures contract. A final determination of
variation margin is then made, additional cash is required to be paid to or
released by the broker, and the purchaser realizes a loss or gain. In
addition, a commission is paid on each completed purchase and sale
transaction.
INTEREST RATE FUTURES CONTRACTS The Fixed Income Portfolio may purchase
and sell interest rate futures contracts and options thereon. An interest
rate futures contract creates an obligation on the part of the seller (the
"short") to deliver, and an offsetting obligation on the part of the
purchaser (the "long") to accept delivery of, the type of financial
instrument called for in the contract in a specified delivery month for a
stated price. A majority of transactions in interest rate futures contracts,
however, do not result in the actual delivery of the underlying instrument,
but are settled through liquidation, i.e., by entering into an offsetting
transaction. The interest rate futures contracts to be traded by the Fixed
Income Portfolio are traded only on commodity exchanges--known as "contract
markets"--approved for such trading by the Commodity Futures Trading
Commission ("CFTC") and must be executed through a futures commission
merchant or brokerage firm which is a member of the relevant contract market.
These contract markets, through their clearing corporations, guarantee that
the contracts will be performed. Presently, futures contracts are based on
such debt securities as long-term U. S. Treasury Bonds, Treasury Notes,
Government National
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Mortgage Association modified pass-through mortgage-backed securities,
three-month U.S. Treasury Bills and bank certificates of deposit.
The purpose of the acquisition or sale of an interest rate futures
contract by the Fixed Income Portfolio as the holder of fixed income
securities, is to hedge against fluctuations in rates on such securities
without actually buying or selling fixed income securities. For example, if
interest rates are expected to increase, the Fixed Income Portfolio might
sell interest rate futures contracts. Such a sale would have much the same
effect as selling some of the fixed income securities held by the Fixed
Income Portfolio. If interest rates increase as anticipated by the Adviser,
the value of certain fixed income securities in the Fixed Income Portfolio
would decline, but the value of the Fixed Income Portfolio's interest rate
futures contracts would increase at approximately the same rate, thereby
keeping the net asset value of the Fixed Income Portfolio from declining as
much as it otherwise would have. Of course, since the value of the
securities held by the Fixed Income Portfolio will far exceed the value of
the interest rate futures contracts sold by the Fixed Income Portfolio, an
increase in the value of the futures contracts could only mitigate--but not
totally offset--the decline in the value of the Fixed Income Portfolio.
Similarly, when it is expected that interest rates may decline, interest
rate futures contracts could be purchased to hedge against the Fixed Income
Portfolio's anticipated purchases of fixed income securities, at higher
prices. Since the rate of fluctuation in the value of interest rate futures
contracts should be similar to that of the fixed income securities, the Fixed
Income Portfolio could take advantage of the anticipated rise in the value of
bonds without actually buying them until the market had stabilized. At that
time, the interest rate futures contracts could be liquidated and the Fixed
Income Portfolio's cash could then be used to buy bonds on the cash market.
The Fixed Income Portfolio could accomplish similar results by selling bonds
with longer maturities and investing in bonds with shorter maturities when
interest rates are expected to increase or by buying bonds with longer
maturities and selling bonds with shorter maturities when interest rates are
expected to decline. However, in circumstances when the market for bonds may
not be as liquid as that for futures contracts, the ability to invest in such
contracts could enable the Fixed Income Portfolio to react more quickly to
anticipated changes in market conditions or interest rates.
OPTIONS ON INTEREST RATE FUTURES CONTRACTS An interest rate futures
contract provides for the future sale by one party and the purchase by the
other party of a certain amount of a specific financial instrument (debt
security) at a specified price, date, time and place. An option on an
interest rate futures contract, as contrasted with the direct investment in
such a contract, gives the purchaser the right, in return for the premium
paid, to assume a position in an interest rate futures contract at a
specified exercise price at any time prior to the expiration date of the
option. Options on interest rate futures contracts are similar to options on
securities, which give the purchaser the right, in return for the premium
paid, to purchase securities. A call option gives the purchaser of such
option the right to buy, and obliges its writer to sell, a specified
underlying futures contract at a specified exercise price at any time prior
to the expiration date of the Option. A purchaser of a put option has the
right to sell, and the writer has the obligation to buy, such contract at the
exercise price during the option period. Upon exercise of an option, the
delivery of the futures position by the writer of the option to the holder of
the option will be accompanied by delivery of the accumulated balance in the
writer's future margin account, which represents the amount by which the
market price of the futures contract exceeds, in the case of a call, or is
less than, in the case of
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a put, the exercise price of the option on the futures contract. If an
option is exercised on the last trading day prior to the expiration date of
the option, the settlement will be made entirely in cash equal to the
difference between the exercise price of the option and the closing price of
the interest rate futures contract on the expiration date. The potential
loss related to the purchase of an option on interest rate futures contracts
is limited to the premium paid for the option (plus transaction costs).
Because the value of the option is fixed at the point of sale, there are no
daily cash payments to reflect changes in the value of the underlying
contract; however, the value of the option does change daily and that change
would be reflected in the net asset value of the Fixed Income Portfolio.
The Fixed Income Portfolio will purchase put and call options on interest
rate futures contracts which are traded on a United States exchange or board
of trade as a hedge against changes in interest rates, and will enter into
closing transactions with respect to such options to terminate existing
positions. The Fixed Income Portfolio will purchase put options on interest
rate futures contracts securities if the Adviser anticipates a rise in
interest rates. The purchase of put options on interest rate futures
contracts is analogous to the purchase of put options on debt securities so
as to hedge a portfolio of debt securities against the risk of rising
interest rates. Because of the inverse relationship between the trends in
interest rates and values of debt securities, a rise in interest rates would
result in a decline in the value of debt securities held in the Fixed Income
Portfolio. Because the value of an interest rate futures contract moves
inversely in relation to changes in interest rates, as is the case with debt
securities, a put option on such a contract becomes more valuable as interest
rates rise. By purchasing put options on interest rate futures contracts at
a time when the Adviser expects interest rates to rise, the Fixed Income
Portfolio will seek to realize a profit to offset the loss in value of its
portfolio securities, without the need to sell such securities.
The Fixed Income Portfolio will purchase call options on interest rate
futures contracts if the Adviser anticipates a decline in interest rates.
The purchase of a call option on an interest rate futures contract represents
a means of obtaining temporary exposure to market appreciation at limited
risk. It is analogous to the purchase of a call option on an individual debt
security, which can be used as a substitute for a position in the debt
security itself. Depending upon the pricing of the option compared to either
the futures contract upon which it is based or to the price of the underlying
debt securities, it may or may not be less risky than ownership of the
futures contract or underlying debt. The Fixed Income Portfolio will
purchase a call option on an interest rate futures contract to hedge against
a market advance when the Fixed Income Portfolio is holding cash. The Fixed
Income Portfolio can take advantage of the anticipated rise in the value of
long-term securities without actually buying them until the market has
stabilized. At that time, the options can be liquidated and the Fixed Income
Portfolio's cash can be used to buy long-term securities.
The Fixed Income Portfolio could also write options on an interest rate
futures contract. The writer of an option on an interest rate futures
contract assumes the opposite position from the purchaser of the option. The
writer of a call option, for example, receives the premium paid by the
purchaser of the call, and in return assumes the responsibility to enter into
a seller's position in the underlying futures contract at any time the call
is exercised. Because the writer of an option assumes the obligation to
purchase or sell the underlying futures contract at a fixed price at any
time, regardless of market fluctuations, writing options involves more risk
than purchasing options. To alleviate this risk in part, the Fixed Income
Portfolio would cover any option it wrote, either by owning a position whose
price changes would offset the Fixed Income Portfolio's obligation under
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the option (for example, by purchasing the underlying futures contract if the
Fixed Income Portfolio had written a call option) or by segregating assets
sufficient to cover its obligations under options it had written. In
addition, the Fixed Income Portfolio would be required to make futures margin
payments with respect to options written on futures contracts. An option on
an interest rate futures contract written by the Fixed Income Portfolio could
be terminated by exercise, or the Fixed Income Portfolio could seek to close
out the option on a futures exchange by purchasing an identical option at the
current market price. Writing an option would provide the Fixed Income
Portfolio with income in the form of the option premium. In addition,
writing a call option would provide a partial hedge against declines in the
value of securities the Fixed Income Portfolio owned (but would also limit
potential capital appreciation in the securities), and writing a put option
would provide a partial hedge against an increase in the value of securities
the Fixed Income Portfolio intended to purchase (but also would expose the
Fixed Income Portfolio to the risk of a market decline).
The Fixed Income Portfolio will sell put and call options on interest
rate futures contracts only as a substitute for the purchase of a futures
contract for the purpose of hedging and as part of closing sale transactions
to terminate its options positions. There is no guarantee that such closing
transactions can be effected.
There are several risks relating to options on interest rate futures
contracts. The holder of an option on a futures contract may terminate the
position by selling or purchasing an offsetting option of the same series.
There is no guarantee that such closing transactions can be effected. The
ability to establish and close out positions on such options will be subject
to the existence of a liquid secondary market. In addition, the Fixed Income
Portfolio's purchase of put or call options will be based upon predictions as
to anticipated interest rate trends by the Adviser, which could prove to be
inaccurate. Even if the expectations of the Adviser are correct, there may
be an imperfect correlation between the change in the value of the options
and of the Fixed Income Portfolio's securities.
BOND INDEX FUTURES CONTRACTS Bond index futures contracts are commodity
contracts listed on commodity exchanges. A bond index assigns relative
values to bonds included in the index and the index fluctuates with the value
and interest rate of the bonds so included. A futures contract is a legal
agreement between a buyer or seller and the clearing house of a futures
exchange in which the parties agree to make a cash settlement on a specified
future date in an amount determined by the bond index on the last trading day
of the contract. The amount is a specified dollar amount (usually $100 or
$500) times the difference between the index value on the last trading day
and the value on the day the contract was struck.
The Fixed Income Portfolio intend to use bond index futures contracts and
related options for hedging and not for speculation. Hedging permits the
Fixed Income Portfolio to gain rapid exposure to or protect itself from
changes in the market. For example, the Fixed Income Portfolio may find
itself with a high cash position at the beginning of a market rally.
Conventional procedures of purchasing a number of individual issues entail
the lapse of time and the possibility of missing a significant market
movement. By using bond index futures, the Fixed Income Portfolio can obtain
immediate exposure to the market and benefit from the beginning stages of a
rally. The buying program can then proceed, and once it is completed (or as
it proceeds), the contracts can be closed. Conversely, in the early stages of
a market decline, market exposure can be promptly offset by
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entering into bond index futures contracts to sell units of an index and
individual bonds can be sold over a longer period under cover of the
resulting short contract position.
The Fixed Income Portfolio may enter into contracts with respect to any
bond index or sub-index. To hedge the Fixed Income Portfolio successfully,
however, the Fixed Income Portfolio must enter into contracts with respect to
indexes or sub-indexes whose movements will have a significant correlation
with movements in the prices of the Fixed Income Portfolio's securities.
OPTIONS ON BOND INDEX FUTURES Bond indices are calculated based on the
prices of securities traded on national securities exchanges. An option on a
bond index is similar to an option on a futures contract except all
settlements are in cash. A portfolio exercising a put, for example, would
receive the difference between the exercise price and the current index
level. Such options would be used in a manner identical to the use of
options on futures contracts.
As with options on bonds, the holder of an option on a bond index may
terminate a position by selling an option covering the same contract or index
and having the same exercise price and expiration date. Trading in options
on bond indexes began only recently. The ability to establish and close out
positions on such options will be subject to the development and maintenance
of a liquid secondary market. It is not certain that this market will
develop. The Fixed Income Portfolio will not purchase options unless and
until the market for such options has developed sufficiently so that the
risks in connection with options are not greater than the risks in connection
with bond index futures contracts transactions themselves. Compared to using
futures contracts, purchasing options involves less risk to a portfolio
because the maximum amount at risk is the premium paid for the options (plus
transaction costs). There may be circumstances, however, when using an
option would result in a greater loss to a portfolio than using a futures
contract, such as when there is no movement in the level of the bond index.
REGULATORY MATTERS The Commodity Futures Trading Commission (the
"CFTC"), a federal agency, regulates trading activity on the exchanges
pursuant to the Commodity Exchange Act, as amended. The CFTC requires the
registration of "commodity pool operators," defined as any person engaged in
a business which is of the nature of an investment trust, syndicate or a
similar form of enterprise, and who, in connection therewith, solicits,
accepts, or receives from others portfolios, securities, or property for the
purpose of trading in any commodity for future delivery on or subject to the
rules of any contract market. The CFTC has recently adopted Rule 4.5, which
provides an exclusion from the definition of commodity pool operator for any
registered investment company which (i) will use commodity futures or
commodity option contracts solely for bona fide hedging purposes (provided,
however, that in the alternative, with respect to each long position in a
commodity future or commodity option contract, an investment company may meet
certain other tests set forth in Rule 4.5); (ii) will not enter into
commodity futures and commodity options contracts for which the aggregate
initial margin and premiums exceed 5% of its assets; (iii) will not be
marketed to the public as a commodity pool or as a vehicle for investing in
commodity interests; (iv) will disclose to its investors the purposes of and
limitations on its commodity interest trading; and (v) will submit to special
calls of the CFTC for information.
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PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements contained in Part A: Financial Highlights
(1) Incorporated by reference in Part B:
A. Weitz Series Fund, Inc.-Fixed Income Portfolio
(i) Accountants' Report dated April 17, 1996
Statements of Assets and Liabilities
Statement of Operations
Statements of Changes in Net Assets
Notes to Financial Statements
B. Weitz Series Fund, Inc.-Value Portfolio
(i) Accountants' Report dated April 17, 1996
Statements of Assets and Liabilities
Statement of Operations
Statements of Changes in Net Assets
Notes to Financial Statements
C. Weitz Series Fund, Inc.-Government Money Market Portfolio
(i) Accountants' Report dated April 17, 1996
Statements of Assets and Liabilities
Statement of Operations
Statements of Changes in Net Assets
<PAGE>
Notes to Financial Statements
D. Weitz Series Fund, Inc.-Hickory Portfolio
(i) Accountants' Report dated April 17, 1996
Statements of Assets and Liabilities
Statement of Operations
Statements of Changes in Net Assets
Notes to Financial Statements
(3) Included in Part C:
Consent of KPMG Peat Marwick
(b) Exhibits
Exhibit No. Description
*1. Articles of Incorporation
**1.(a) Articles of Amendment to Articles of Incorporation
*2. Bylaws
*******5.(a) Management and Investment Advisory Agreement-Fixed Income
Portfolio
*******5.(b) Management and Investment Advisory Agreement-Value
Portfolio
*******5.(c) Management and Investment Advisory Agreement-Government
Money Market Portfolio
*******5.(d) Management and Investment Advisory Agreement-Hickory
Portfolio
******6. Underwriting Agreement
*8. Custodian Agreement
9.(a) Administration Agreement
***9.(b) Agreement and Plan of Merger between Weitz Value Fund,
Inc. and Weitz Series Fund, Inc.
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**10.(a) Opinion and Consent of Messrs. Cline, Williams, Wright,
Johnson & Oldfather (with respect to the Fixed Income
Portfolio)
***10.(b) Opinion and Consent of Messrs. Cline, Williams, Wright,
Johnson & Oldfather (with respect to Value Portfolio)
***10.(c) Opinion and Consent with respect to Tax Matters arising out
of the Agreement and Plan of Merger
****10.(d) Opinion and Consent of Messrs. Cline, Williams, Wright,
Johnson & Oldfather (with respect to the Government Money
Market Portfolio)
*****10.(e) Opinion and Consent of Messrs. Cline, Williams, Wright,
Johnson & Oldfather (with respect to the Hickory Portfolio)
*13.(a) Subscription Agreement of Wallace R. Weitz
*****13.(b) Subscription Agreements for initial capitalization of the
Hickory Portfolio
*******14. Prototype Individual Retirement Account
16. Schedule of Computation for Performance Quotations
* Incorporated by reference to Fund's Registration Statement on Form
N-IA filed September 21, 1988.
** Incorporated by reference to Fund's Pre-Effective Amendment No. 1 on
Form N-IA filed October 24, 1988.
*** Incorporated by reference to Fund's Post-Effective Amendment No. 2
filed January 29, 1990.
**** Incorporated by reference to Fund's Post-Effective Amendment No. 4
filed May 29, 1991.
***** Incorporated by reference to Fund's Post-Effective Amendment No. 7
filed January 29, 1993.
****** Incorporated by reference to Fund's Post-Effective Amendment No. 11
filed July 26, 1995
*******Incorporated by reference to Fund's Post-Effective Amendment No. 12
filed April 19, 1996
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Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None.
Item 26. NUMBER OF HOLDERS OF SECURITIES
Title of Class Number of Record Holders
-------------- ------------------------
Fixed Income Portfolio 268 as of June 30, 1996
Value Portfolio 2,237 as of June 30, 1996
Government Money Market Portfolio 78 as of June 30, 1996
Hickory Portfolio 164 as of June 30, 1996
Item 27. INDEMNIFICATION
Section 302A.521 of the Minnesota Business Corporation Act requires
indemnification of officers and directors of the Registrant under
circumstances set forth therein. Reference is made to Article 8.d. of the
Articles of Incorporation, Article XIII of the Bylaws of Registrant (Exhibit
2 hereto) and to Section 10 of the Underwriting Agreement (Exhibit 6 hereto)
for additional indemnification provisions.
The general effect of such provisions is to require indemnification of
persons who are made or threatened to be made a party to a proceeding by
reason of the former or present official capacity of the person with the
corporation against judgments, penalties, fines and reasonable expenses
including attorneys' fees incurred by said person if: (1) the person has not
been indemnified by another organization for the same judgments, penalties,
fines and expenses for the same acts or omissions; (2) the person acted in
good faith; (3) the person received no improper personal benefit; (4) in the
case of a criminal proceeding, the person had no reasonable cause to believe
the conduct was unlawful; and (5) in the case of directors and officers and
employees of the corporation, such persons reasonably believed that the
conduct was in the best interests of the corporation, or in the case of
directors, officers, or employees serving at the request of the corporation
for another organization, such person reasonably believed that the conduct
was not opposed to the best interests of the corporation. A corporation is
permitted to maintain insurance on behalf of any officer, director, employee
or agent of the corporation, or any person serving as such at the request of
the corporation, against any liability of such person.
Nevertheless, Article 8.d. of the Articles of Incorporation prohibits
any indemnification which would be in violation of Section 17(h) of the
Investment Company Act of 1940, as now enacted or hereafter amended and
Article XIII of the Fund's Bylaws prohibit any indemnification inconsistent
with the guidelines set forth in Investment Company Act Releases No. 7221
(June 9, 1972) and No. 11330 (September 2, 1980). Such Releases prohibit
indemnification in cases involving willful misfeasance, bad faith, gross
negligence and reckless disregard of duty and establish procedures for the
determination of entitlement to indemnification and expense advances.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing
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provisions or otherwise, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification by the
Registrant is against public policy as expressed in the Act and, therefore,
may be unenforceable. In the event that a claim for such indemnification
(except insofar as it provides for the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person in the
successful defense of any action, suit or proceeding) is asserted against the
Registrant by such director, officer or controlling person and the Securities
and Exchange Commission is still of the same opinion, the Registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question of whether or not such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication
of such issue.
Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Principal Occupations
Positions with (Present and for
Name Adviser Past Two Years)
---- -------------- ---------------------
Wallace R. Weitz President, See caption
Treasurer "Directors and
and Director Executive
Officers" in the
Statement of
Additional
Information
forming a part of
this Registration
Statement
Mary K. Beerling Vice President See caption
"Directors and
Executive
Officers" in the
Statement of
Additional
Information
forming a part of
this Registration
Statement
Linda L. Lawson Vice President See caption
"Directors and
Executive
Officers" in the
Statement of
Additional
Information
forming a part of
this Registration
Statement
Richard F. Lawson Vice President See caption
"Directors and
Executive
Officers" in the
Statement of
Additional
Information
forming a part of
the Registration
Statement
Barbara Weitz Secretary and Faculty Member,
Director University of
Nebraska at Omaha
since 1986
Item 29. PRINCIPAL UNDERWRITERS
(a) The Distributer is also the principal underwriter and distributer of
Weitz Partners, Inc., a registered investment management company
also advised by Wallace R. Weitz and Company.
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(b)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
------------------ --------------------- ---------------------
Wallace R. Weitz President, Treasurer President, Treasurer,
Suite 600 and Director and Director
1125 South 103 Street
Omaha, NE 68124-6008
Mary K. Beerling Vice President Vice President
Suite 600 and Secretary and Secretary
1125 South 103 Street
Omaha, NE 68124-6008
Richard F. Lawson Vice President Vice President
Suite 600 and Director
1125 South 103 Street
Omaha, NE 68124-6008
(c) Not applicable.
Item 30. LOCATION OF ACCOUNTS AND RECORDS
All required accounts, books and records will be maintained by Wallace R.
Weitz and Company, Suite 600, 1125 South 103 Street, Omaha, Nebraska
68124-6008.
Item 31. MANAGEMENT SERVICES
Not applicable.
Item 32. UNDERTAKINGS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned Registrant hereby undertakes to file
with the Securities and Exchange Commission such supplementary and periodic
information, documents and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
S-6
<PAGE>
KPMG Peat Marwick LLP
Two Central Park Plaza
Suite 1501
Omaha, NE 68102
ACCOUNTANT'S CONSENT
The Board of Directors
Weitz Series Fund, Inc.:
We consent to the use of our report incorporated herein by reference and to
the reference to our firm under the headings "General Information-Auditors"
in the Prospectus and the Statement of Additional Information.
/s/ KPMG PEAT MARWICK LLP
Omaha, Nebraska
July 11, 1996
S-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, and the
Investment Company Act of 1940, the Registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Omaha, State of Nebraska, on the
11th day of July, 1996. By execution hereof, the undersigned hereby
certifies that this Post-Effective Amendment meets all the requirements for
effectiveness under Rule 485(b) of the Securities Act of 1933.
WEITZ SERIES FUND, INC.
By: /s/ Wallace R. Weitz
----------------------------
Wallace R. Weitz, President
Pursuant to the requirements of the Securities Act of 1933, the Registration
Statement has been signed below by the following persons in the capacities
indicated on July 11th, 1996:
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
President, Principal Executive Officer,
/s/ Wallace R. Weitz Principal Financial and Accounting Officer
- ---------------------------- and Director
Wallace R. Weitz
/s/ Director
- ----------------------------
John W. Hancock
/s/ Director
- ----------------------------
Thomas R. Pansing, Jr. /s/ Wallace R. Weitz
--------------------
Wallace R. Weitz
Attorney-in-fact
/s/ Director
- ----------------------------
Carroll E. Fredrickson
/s/ Director
- ----------------------------
Richard D. Holland
</TABLE>
S-8
<PAGE>
Exhibits
to
Weitz Series Fund, Inc.
Post-Effective Amendment No. 13
To
Form N-1A
as filed on July 11, 1996
<PAGE>
Exhibits
Exhibit No. Description
- ------------ -----------
9(a) Administration Agreement
16 Schedule of Computation of Performance Quotations
<PAGE>
Exhibit 9(a)
Administration Agreement
Weitz Series Fund, Inc.
<PAGE>
ADMINISTRATION AGREEMENT
AGREEMENT made as of the 1 day of JULY , 1993, by and between
Weitz Series Fund, Inc., a Minnesota corporation, having its principal office
and place of business at Omaha, Nebraska (the "Fund"), and Wallace R. Weitz &
Company, a Nebraska corporation, having its principal office and place of
business at Omaha, Nebraska (the "Administrator"),
WHEREAS, the Fund desires to engage the Administrator to provide transfer
agent, dividend disbursing agent and fund accounting and related administrator
services.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
Section 1. TERMS OF APPOINTMENT.
1.01 Subject to the conditions set forth in this Agreement, the Fund hereby
employs and appoints Administrator as the Fund's Administrator, Transfer Agent
and Dividend Disbursing Agent.
1.02 Administrator hereby accepts such employment and appointment and
agrees that on and after the effective date of its appointment it will act as
the Fund's Administrator, Transfer Agent and Dividend Disbursing Agent.
Administrator agrees that it will also act as agent in connection with any
periodic investment plan, periodic withdrawal program or other accumulation,
open-account or similar plans provided to the Fund's shareholders and set out in
the Fund's prospectus.
1.03 Administrator agrees to provide the necessary facilities, equipment
and personnel to perform its duties and obligations hereunder in accordance with
industry practice.
1.04 Administrator agrees that it will perform all of the usual and
ordinary services as Transfer Administrator and Dividend Disbursing
Administrator and as agent for the various shareholder accounts including but
not limited to: Issuing, transferring and cancelling stock
<PAGE>
certificates, maintaining all shareholder accounts, preparing annual
shareholder meeting lists, mailing proxies, receiving and tabulating proxies,
mailing shareholder reports and prospectuses, withholding taxes on
non-resident alien accounts, disbursing income dividends and capital gains
distributions, preparing and filing U.S. Treasury Department Form 1099 for
all shareholders, preparing and mailing confirmation forms to shareholders
for all purchases and liquidations of Fund shares and other confirmable
transactions in shareholders' accounts, recording reinvestment of dividends
and distributions in Fund shares, causing liquidation of shares and causing
disbursements to be made to withdrawal plan holders.
1.05 Administrator agrees that it will furnish the Fund with office
facilities, including such space, furniture, equipment and supplies as well as
personnel sufficient to carry out the necessary administrative, clerical and
bookkeeping functions of the Fund. In connection therewith, the Administrator
shall maintain all records required to be maintained for the Fund under the
Investment Company Act of 1940. Additionally, the Administrator shall provide
the following services to the Fund:
i. Daily pricing;
ii. Computation of daily net asset value and reporting to Fund management,
and others as requested;
iii. Prepare daily cash availability reports for Portfolio managers;
iv. Post daily all fund activity and prepare all applicable daily reports;
v. Accrue expenses daily;
vi. Calculate daily reconciliations of cash, receivables, payable accounts
and shares outstanding;
-2-
<PAGE>
vii. Compute daily dividend rate for appropriate funds;
viii. Compute yields pursuant to S.E.C. formulas;
ix. Provide monthly analysis and reconciliation of all general ledger
accounts;
x. Generate and maintain monthly broker ledgers, commission ledgers and
net trade reports;
xi. Verify accuracy and propriety of bills and invoices, maintain expenses
files and coordinate payment of bills and invoices in a timely manner;
xii. Prepare report on expense limitations as needed;
xiii. Maintain and verify Portfolio trade tickets with broker
confirmation;
xiv. Determine income availability for monthly, quarterly and/or annual
dividend/distributions;
xv. Maintain historical record of all Fund net asset values and
dividend/distributions;
xvi. Coordinate audit examination of outside auditors, including
preparation of audit work paper package if required; and
xvii. Produce documents and respond to inquiries during S.E.C. audits.
Section 2. FEES AND EXPENSES.
2.01 For the services to be rendered by Administrator pursuant to paragraph
1.04 and 1.05, the Fund agrees to pay Administrator a monthly fee calculated at
the annual rate of the Fund's average daily net assets set forth on Appendix A,
attached hereto and incorporated by reference herein. Such fee may be decreased
from time to time with the agreement of the Administrator and the President of
the Fund and increased only upon the approval of the Board of Directors of the
Fund.
-3-
<PAGE>
2.02 The Fund also agrees promptly to reimburse Administrator for all
reasonable out-of-pocket expenses or advances incurred by Administrator in
connection with the performance of services under this Agreement including, but
not limited to, expenditures for counsel fees, postage, envelopes, checks,
drafts, continuous forms, reports and statements, telephone, telegraph,
stationery, supplies, costs of outside mailing firms, record storage costs and
media for storage of records (e.g. microfilm, computer tapes or disks). In
addition, any other expenses incurred by Administrator at the request or with
the consent of the Fund will be promptly reimbursed by the Fund.
Section 3. REPRESENTATIONS AND WARRANTIES OF ADMINISTRATOR. Administrator
represents and warrants to the Fund that:
3.01 It is a corporation duly organized and existing and in good standing
under the laws of the State of Nebraska:
3.02 It is empowered under applicable laws and by its Articles of
Incorporation and By-laws to enter into and perform the services contemplated in
this Agreement:
3.03 All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement; and
3.04 It has and will continue to have and maintain the necessary
facilities, equipment and personnel to perform its duties and obligations under
this Agreement.
Section 4. REPRESENTATIONS AND WARRANTIES OF THE FUND. The Fund
represents and warrants to Administrator that:
4.01 It is a corporation duly organized and existing and in good standing
under the laws of the State of Minnesota;
-4-
<PAGE>
4.02 It is, or prior to the public offering of its shares, will become an
open-end, diversified management investment company registered under the
Investment Company Act of 1940;
4.03 A registration statement under the Securities Act of 1933 is
currently, or prior to the public offering of its shares, will become effective
and will remain effective, and appropriate state securities laws filings have
been or will be made and will continue to be made, with respect to all shares of
the Fund being offered for sale;
4.04 The Fund is empowered under applicable laws and regulations and by its
charter and By-laws to enter into and perform this Agreement; and all requisite
corporate proceedings have been taken to authorize it to enter into and perform
under this Agreement.
Section 5. INDEMNIFICATION.
5.01 Administrator shall not be responsible and the Fund shall indemnify
and hold Administrator harmless from and against any and all losses, damages,
costs, charges, counsel fees, payments, expenses and liability which may be
asserted against Administrator or for which it may be held to be liable, arising
out of or in any way attributable to:
(a) All actions of Administrator required to be taken by
Administrator pursuant to this Agreement provided that Administrator has
acted in good faith and with due diligence.
(b) The Fund's refusal or failure to comply with the terms of this
Agreement, or which arise out of the Fund's negligence or willful
misconduct or which arise out of the breach of any representation or
warranty of the Fund hereunder.
(c) The reliance on, or the carrying out of, any instructions or
requests of the Fund.
-5-
<PAGE>
(d) Defaults by dealers with respect to payment for share orders
previously entered.
(e) The reliance on, or the carrying out of, any instructions or
requests of the Fund.
(f) The offer or sale of the Fund's shares in violation of any
requirement under federal securities laws or regulations or the securities
laws or regulations of any state or in violation of any stop order or other
determination or ruling by any federal agency or state with respect to the
offer or sale of such shares in such state (unless such violation results
from Administrator's failure to comply with written instructions of the
Fund or of any officer of the Fund that no offers or sales be made in or to
residents of such state).
5.02 Administrator shall indemnify and hold the Fund harmless from and
against any and all losses, damages, costs, charges, counsel fees, payments,
expenses and liability arising out of Administrator's willful failure to comply
with the terms of this Agreement or which arise out of Administrator's gross
negligence or willful misconduct.
5.03 At any time Administrator may apply to any officer of the Fund for
instructions, and may consult with legal counsel for the Fund or its own legal
counsel, at the expense of the Fund, with respect to any matter arising in
connection with the services to be performed by Administrator under this
Agreement and Administrator shall not be liable and shall be indemnified by the
Fund for any action taken or omitted by it in good faith in reliance upon such
instructions or upon the opinion of such counsel. Administrator shall be
protected and indemnified in acting upon any paper or document believed by it to
be genuine and to have been signed by the proper person or persons and shall not
be held to have notice of any change of authority of any person, until receipt
of written
-6-
<PAGE>
notice thereof from the Fund. Administrator shall also be protected
and indemnified in recognizing stock certificates which Administrator reasonably
believes to bear the proper manual or facsimile signatures of the officers of
the Fund, and the proper counter-signature of any former transfer agent or
registrar, or of a co-transfer agent or co-registrar.
5.04 In the event either party is unable to perform its obligations under
the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage, or other causes reasonably beyond its control,
such party shall not be liable for damages to the other for any damages
resulting from such failure to perform or otherwise from such causes.
5.05 In no event and under no circumstances shall either party to this
Agreement be liable to the other party for consequential damages under any
provision of this Agreement or for any act or failure to act hereunder.
Section 6. COVENANTS OF ADMINISTRATOR AND THE FUND.
6.01 The Fund shall promptly furnish to Administrator the following:
(a) A certified copy of the resolution of the Board of Directors of
the Fund authorizing the appointment of Administrator and the execution and
delivery of this Agreement.
(b) Certified copy of the Articles of Incorporation and By-laws of
the Fund and all amendments thereto.
(c) Specimens of stock certificates, if any, in the form approved by
the Fund's Board of Directors with a certificate of the Secretary of the
Fund as to such approval.
6.02 Administrator hereby agrees to establish and maintain facilities
and procedures reasonably acceptable to the Fund for safekeeping of stock
certificates, check forms, and facsimile
-7-
<PAGE>
signature imprinting devices, if any; and for the preparation or use, and for
keeping account of such certificates, forms and devices.
6.03 To the extent required by Section 31 of the Investment Company Act
of 1940 and Rules thereunder, Administrator agrees that all records
maintained by Administrator relating to the services to be performed by
Administrator under this Agreement are the property of the Fund and will be
preserved and will be surrendered promptly to the Fund on request.
6.04 Administrator and the Fund agree that all books, records, information
and data pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation of and the carrying out of this Agreement
shall remain confidential, and shall not be voluntarily disclosed to any other
person.
Section 7. TERMINATION OF AGREEMENT.
7.01 This Agreement may be terminated by either party by 90 days written
notice.
Section 8. MISCELLANEOUS.
8.01 Neither this agreement nor any rights or obligations hereunder may be
assigned by either party without the written consent of the other.
8.02 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective successors and assigns.
8.03 This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof, whether oral or written, and this Agreement may not be modified except
by written instrument executed by both parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by and through their duly authorized officers, as of the day and year
first above written.
-8-
<PAGE>
WEITZ SERIES FUND, INC.
ATTEST: By /s/ WALLACE R. WEITZ
--------------------------------
/s/ ELLIE E. MILLER
- ----------------------------
Secretary
WALLACE R. WEITZ & COMPANY
By /s/ WALLACE R. WEITZ
---------------------------------
ATTEST:
/s/ ELLIE E. MILLER
- ----------------------------
Secretary
-9-
<PAGE>
APPENDIX A
FEES
Beginning April 1, 1994, and until revised by mutual agreement or termination
of the Agreement, the fee for services rendered by Administrator shall be
calculated based upon the average daily net asset value of each Portfolio of
the Fund at an annual rate of:
Value Portfolio .30% of average daily net asset value
Fixed Income Portfolio .25% of average daily net asset value
Government Money Market
Portfolio .25% of average daily net asset value
Hickory Portfolio .25% of average daily net asset value
Fees shall be billed monthly by Administrator and shall be paid monthly by
Fund within fifteen (15) days of the end of each month.
-10-
<PAGE>
Exhibit 16
Schedule of Computations of Performance Quotations
<PAGE>
EXHIBIT 16
SCHEDULE OF COMPUTATIONS OF PERFORMANCE
VALUE PORTFOLIO
The Total Return Information shown on page 28 of the Statement of Additional
Information for the Value Portfolio was calculated as follows:
TOTAL RETURN:
P(1 + T)n = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of a period, at the end
of the period
The computation of average annual return assumes dividends and
distributions are reinvested at net asset value (as stated in the prospectus) on
the reinvestment dates during the period.
The ending redeemable value assumes a complete redemption at the end of the
period.
Total return for the year ending March 31, 1996:
P = $1,000 (initial value)
n = 1 (1 year)
ERV = $1,359.00 (ending redeemable value)
Solve for T:
$1,000(1 + T)1 = $1,359.00
T = .3590 or 35.90%
Total return for the five years ended March 31, 1996:
P = $1,000 (initial value)
n = 5 (5 years)
ERV = $2,006.12 (ending redeemable value)
Solve for T:
$1,000(1 + T)5 = $2,006.12
T = .1494 or 14.94%
Total return from Inception, May 9, 1986, to March 31, 1996:
P = $1,000 (initial value)
<PAGE>
n = 9.89 years
ERV = $3,183.05 (ending redeemable value)
Solve for T:
$1,000(1 + T)9.89 = $3,183.05
T = .1242 or 12.42%
<PAGE>
EXHIBIT 16
SCHEDULE OF COMPUTATIONS OF PERFORMANCE
FIXED INCOME PORTFOLIO
The Total Return Information shown on page 28 of the Statement of
Additional Information for the Fixed Income Portfolio was calculated as follows:
TOTAL RETURN:
P(1 + T)n = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of a period, at the end
of the period
The computation of average annual return assumes dividends and
distributions are reinvested at net asset value (as stated in the prospectus) on
the reinvestment dates during the period.
The ending redeemable value assumes a complete redemption at the end of the
period.
Total return for the year ending March 31, 1996:
P = $1,000 (initial value)
n = 1 (1 year)
ERV = $1,092.40 (ending redeemable value)
Solve for T:
$1,000(1 + T)1 = $1,092.40
T = .0924 or 9.24%
Total return for the five years ended March 31, 1996:
P = $1,000 (initial value)
n = 5 (5 years)
ERV = $1,385.59 (ending redeemable value)
Solve for T:
$1,000(1 + T)5 = $1,385.59
T = .0674 or 6.74%
<PAGE>
Total return from Inception, December 23, 1988, to March 31, 1996:
P = $1,000 (initial value)
n = 7.27 years
ERV = $1,692.91 (ending redeemable value)
Solve for T:
$1,000(1 + T)7.27 = $1,692.91
T = .0751 or 7.51%
YIELD:
P(Y x n/365 + 1) = ERV
Where: P = a hypothetical initial payment of $1,000
Y = yield
n = number of days
ERV = ending redeemable value of $1,000
The computation of yield assumes dividends are reinvested at net asset
value (as stated in the prospectus) on the reinvestment dates during the period.
The ending redeemable value assumes a complete redemption at the end of the
period.
30-day yield for the period ended March 31, 1996:
P = $1,000 (initial value)
n = 30 days
ERV = $1,005.18 (ending redeemable value)
Solve for Y:
$1,000(Y x 30/365 + 1) = $1,005.18
Y = .0630 or 6.30%
<PAGE>
GOVERNMENT MONEY MARKET PORTFOLIO
The yield information shown on page 28 of the Statement of Additional
Information was calculated as follows:
YIELDS:
7-day 7-day effective
----------------------- ---------------------
P(Y x 7/365 + 1) = ERV P(E + 1)7/365 = ERV
Where: P = a hypothetical initial payment of $1,000
Y = yield
E = effective yield
n = number of days
ERV = ending redeemable value of $1,000
The computation of yield and effective yield assumes dividends are
reinvested at net asset value (as stated in the prospectus) on the reinvestment
dates during the period.
The ending redeemable value assumes a complete redemption at the end of the
period.
7-day yield for the period ended March 31, 1996:
P = $1,000 (initial value)
n = 7 days
ERV = $1,000.87 (ending redeemable value)
Solve for Y:
$1,000(Y x 7/365 + 1) = $1,000.87
Y = .0452 or 4.52%
7-day effective yield for the period ended March 31, 1996:
P = $1,000 (initial value)
n = 7 days
ERV = $1,000.87 (ending redeemable value)
Solve for E:
$1,000(E + 1)7/365 = $1,000.87
E = .0462 or 4.62%
<PAGE>
HICKORY PORTFOLIO
The Total Return Information shown on page 28 of the Statement of Additional
Information for the Hickory Portfolio was calculated as follows:
TOTAL RETURN:
P(1 + T)n = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of a period, at the end
of the period
The computation of average annual return assumes dividends and
distributions are reinvested at net asset value (as stated in the prospectus) on
the reinvestment dates during the period.
The ending redeemable value assumes a complete redemption at the end of the
period.
Total return for the year ending March 31, 1996:
P = $1,000 (initial value)
n = 1 (1 year)
ERV = $1,405.80 (ending redeemable value)
Solve for T:
$1,000(1 + T)1 = $1,405.80
T = .4058 or 40.58%
Total return from Inception, January 1, 1993, to March 31, 1996:
P = $1,000 (initial value)
n = 3.25 years
ERV = $1,654.19 (ending redeemable value)
Solve for T:
$1,000(1 + T)3.25 = $1,654.19
T = .1655 or 16.75%
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS INCLUDED IN THE COMPANY'S ANNUAL REPORT AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000840203
<NAME> WEITZ SERIES FUND INC.
<SERIES>
<NUMBER> 1
<NAME> WEITZ VALUE PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> MAR-31-1996
<INVESTMENTS-AT-COST> 180,858,294
<INVESTMENTS-AT-VALUE> 215,692,178
<RECEIVABLES> 908,402
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 216,600,580
<PAYABLE-FOR-SECURITIES> 45,901,483
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 190,241
<TOTAL-LIABILITIES> 46,091,724
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 128,425,877
<SHARES-COMMON-STOCK> 8,763,259
<SHARES-COMMON-PRIOR> 7,637,181
<ACCUMULATED-NII-CURRENT> 307,639
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6,941,456
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 34,833,884
<NET-ASSETS> 170,508,856
<DIVIDEND-INCOME> 1,924,867
<INTEREST-INCOME> 1,313,379
<OTHER-INCOME> 0
<EXPENSES-NET> (1,938,114)
<NET-INVESTMENT-INCOME> 1,300,132
<REALIZED-GAINS-CURRENT> 15,297,344
<APPREC-INCREASE-CURRENT> 25,480,942
<NET-CHANGE-FROM-OPS> 42,078,418
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3,147,890)
<DISTRIBUTIONS-OF-GAINS> (8,264,279)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,986,630
<NUMBER-OF-SHARES-REDEEMED> (1,491,710)
<SHARES-REINVESTED> 631,158
<NET-CHANGE-IN-ASSETS> 51,732,461
<ACCUMULATED-NII-PRIOR> 3,000,469
<ACCUMULATED-GAINS-PRIOR> (936,660)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,429,179
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,938,114
<AVERAGE-NET-ASSETS> 142,516,725
<PER-SHARE-NAV-BEGIN> 15,552
<PER-SHARE-NII> 0.157
<PER-SHARE-GAIN-APPREC> 5.247
<PER-SHARE-DIVIDEND> (0.418)
<PER-SHARE-DISTRIBUTIONS> (1.081)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 19.457
<EXPENSE-RATIO> 1.35
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS INCLUDED IN THE COMPANY'S ANNUAL REPORT AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000840203
<NAME> WEITZ SERIES FUND INC.
<SERIES>
<NUMBER> 2
<NAME> WEITZ FIXED INCOME PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> MAR-31-1996
<INVESTMENTS-AT-COST> 16,698,166
<INVESTMENTS-AT-VALUE> 16,664,959
<RECEIVABLES> 248,747
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 16,913,706
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 12,332
<TOTAL-LIABILITIES> 12,332
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 17,131,088
<SHARES-COMMON-STOCK> 1,550,550
<SHARES-COMMON-PRIOR> 1,114,571
<ACCUMULATED-NII-CURRENT> 248,700
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (445,207)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (33,207)
<NET-ASSETS> 16,901,374
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 990,079
<OTHER-INCOME> 0
<EXPENSES-NET> (106,915)
<NET-INVESTMENT-INCOME> 883,164
<REALIZED-GAINS-CURRENT> 20,379
<APPREC-INCREASE-CURRENT> 229,011
<NET-CHANGE-FROM-OPS> 1,132,554
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (835,268)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 770,638
<NUMBER-OF-SHARES-REDEEMED> (406,925)
<SHARES-REINVESTED> 72,266
<NET-CHANGE-IN-ASSETS> 5,077,630
<ACCUMULATED-NII-PRIOR> 200,805
<ACCUMULATED-GAINS-PRIOR> (465,586)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 71,277
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 135,126
<AVERAGE-NET-ASSETS> 14,279,852
<PER-SHARE-NAV-BEGIN> 10,608
<PER-SHARE-NII> 0.645
<PER-SHARE-GAIN-APPREC> 0.312
<PER-SHARE-DIVIDEND> (0.665)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10,900
<EXPENSE-RATIO> 0.75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS INCLUDED IN THE COMPANY'S ANNUAL REPORT AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000840203
<NAME> WEITZ SERIES FUND INC.
<SERIES>
<NUMBER> 3
<NAME> WEITZ GOVERNMENT MONEY MARKET PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> MAR-31-1996
<INVESTMENTS-AT-COST> 4,157,124
<INVESTMENTS-AT-VALUE> 4,157,124
<RECEIVABLES> 288
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4,157,412
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 15,810
<TOTAL-LIABILITIES> 15,810
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,141,602
<SHARES-COMMON-STOCK> 4,141,602
<SHARES-COMMON-PRIOR> 2,668,934
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 4,141,602
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 197,243
<OTHER-INCOME> 0
<EXPENSES-NET> (17,638)
<NET-INVESTMENT-INCOME> 179,605
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 179,605
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (179,605)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11,203,040
<NUMBER-OF-SHARES-REDEEMED> (9,905,860)
<SHARES-REINVESTED> 175,488
<NET-CHANGE-IN-ASSETS> 1,472,668
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 17,638
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 40,276
<AVERAGE-NET-ASSETS> 3,556,841
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.048
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (0.048)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS INCLUDED IN THE COMPANY'S ANNUAL REPORT AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000840203
<NAME> WEITZ SERIES FUND INC.
<SERIES>
<NUMBER> 4
<NAME> WEITZ HICKORY PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> MAR-31-1996
<INVESTMENTS-AT-COST> 5,562,594
<INVESTMENTS-AT-VALUE> 6,699,391
<RECEIVABLES> 23,647
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6,723,038
<PAYABLE-FOR-SECURITIES> 57,150
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 7,674
<TOTAL-LIABILITIES> 64,824
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5,069,340
<SHARES-COMMON-STOCK> 427,806
<SHARES-COMMON-PRIOR> 321,514
<ACCUMULATED-NII-CURRENT> 1,255
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 450,822
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,136,797
<NET-ASSETS> 6,658,214
<DIVIDEND-INCOME> 67,722
<INTEREST-INCOME> 8,971
<OTHER-INCOME> 0
<EXPENSES-NET> (75,438)
<NET-INVESTMENT-INCOME> 1,255
<REALIZED-GAINS-CURRENT> 543,395
<APPREC-INCREASE-CURRENT> 1,047,935
<NET-CHANGE-FROM-OPS> 1,592,585
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (44,007)
<DISTRIBUTIONS-OF-GAINS> (23,785)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 129,659
<NUMBER-OF-SHARES-REDEEMED> (28,893)
<SHARES-REINVESTED> 5,526
<NET-CHANGE-IN-ASSETS> 3,038,946
<ACCUMULATED-NII-PRIOR> 69,347
<ACCUMULATED-GAINS-PRIOR> (96,160)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 50,292
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 81,090
<AVERAGE-NET-ASSETS> 5,020,835
<PER-SHARE-NAV-BEGIN> 11.257
<PER-SHARE-NII> 0.004
<PER-SHARE-GAIN-APPREC> 4.504
<PER-SHARE-DIVIDEND> (0.136)
<PER-SHARE-DISTRIBUTIONS> (0.065)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.564
<EXPENSE-RATIO> 1.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
