<PAGE>
As filed with the Securities and Exchange Commission
on July 30, 1998
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. 15 /X/
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 18 /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:
Patrick W.D. Turley
Dechert Price & Rhoads
1775 Eye Street
Washington, DC 20006
It is proposed that this filing will become effective July 30, 1998, pursuant to
paragraph (b) of Rule 485.
-----------------------------------------------------------
-----------------------------------------------------------
<PAGE>
WEITZ SERIES FUND, INC.
Cross-Reference Sheet
Required by Rule 404(a)
PART A
N-1A Item Number Location in Prospectus
- ---------------- ----------------------
1. Cover Page. . . . . . . . . . . . . . . . Cover Page
2. Synopsis. . . . . . . . . . . . . . . . . Fund Expenses
3. Condensed Financial Information . . . . . Financial Highlights
4. General Description of Registrant . . . . Investment Management
Information; Management;
Additional Information
5. Management of the Fund. . . . . . . . . . Management; Additional
Information
5A. Management's Discussion of Fund
Performance . . . . . . . . . . . . . . . Financial Highlights
6. Capital Stock and Other Securities. . . . Cover Page; Redeeming Shares;
Dividends, Distributions and
Taxes; Additional Information
7. Purchase of Securities Being Offered. . . Purchasing Shares; Exchanging
Shares; Pricing of Shares
8. Redemption or Repurchase. . . . . . . . . Redeeming Shares; Pricing of
Shares
9. Pending Legal Proceedings . . . . . . . . Not Applicable
<PAGE>
PART B
Location in Statement of
Additional Information
------------------------
10. Cover Page. . . . . . . . . . . . . . . . Cover Page
11. Table of Contents . . . . . . . . . . . . Cover Page
12. General Information and History . . . . . General Information
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
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
--------------------------
21. Underwriters. . . . . . . . . . . . . . . Investment Advisory and Other
Services
22. Calculation of Performance Data . . . . . Calculation of Performance Data
23. Financial Statements. . . . . . . . . . . Financial Statements
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>
WEITZ SERIES FUND, INC.
----------------------------------------------------------------------------
VALUE PORTFOLIO
FIXED INCOME PORTFOLIO
GOVERNMENT MONEY MARKET PORTFOLIO
HICKORY PORTFOLIO
1125 SOUTH 103 STREET, SUITE 600, OMAHA, NEBRASKA 68124-6008
402-391-1980 800-232-4161 FAX 402-391-2125
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Value Portfolio, Fixed Income Portfolio, Government Money Market Portfolio
and Hickory Portfolio (each, a "Fund"), are series of Weitz Series Fund, Inc.
(the "Company"), a Minnesota corporation which is a no-load, open-end management
investment company. The Value, Fixed Income and Government Money Market
Portfolios are diversified investment companies. The Hickory Portfolio is a
non-diversified investment company. The investment objective of each of the
Funds is as follows:
THE VALUE AND HICKORY PORTFOLIOS seek to achieve capital appreciation
primarily through investing in equity securities and securities convertible
into equity such as rights, warrants, convertible bonds and preferred stock,
as well as bonds and other debt obligations of both corporate and government
issuers. The receipt of income is considered a secondary objective, as some
investments may yield dividends, interest or other income. Each Fund's
investment strategy is based on the concept of "value investing."
THE FIXED INCOME PORTFOLIO seeks to achieve a high level of current income
consistent with the preservation of capital primarily by investing in fixed
income securities such as U.S. Government securities, U.S. Government agency
securities, state and municipal obligations, bank obligations and corporate
debt securities.
THE GOVERNMENT MONEY MARKET PORTFOLIO seeks current income consistent with the
preservation of capital and maintenance of liquidity by investing
substantially all of its assets in debt obligations issued or guaranteed by
the U.S. Government, its agencies and instrumentalities and repurchase
agreements thereon with maturities not exceeding thirteen months. AN
INVESTMENT IN THE GOVERNMENT MONEY MARKET PORTFOLIO IS NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, AND THERE CAN BE NO ASSURANCE THAT THE
GOVERNMENT MONEY MARKET PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE NET ASSET
VALUE OF $1.00 PER SHARE.
For further information about the investment policies of each of the Funds,
see "Investment Objective & Policies."
Shares can be purchased directly without the payment of any sales charges by
contacting the Company. There are no "12b-1" fees, distribution fees or
redemption fees.
This Prospectus, which should be kept for future reference, sets forth
concisely certain information an investor should know about the Funds before
purchasing shares. More detailed information about each Fund can be found in the
Statement of Additional Information which has been filed with the Securities and
Exchange Commission and is incorporated herein by reference. The Statement of
Additional Information, dated the date of this Prospectus, is available without
charge upon request by telephoning or writing the Company at the address shown
above.
PURCHASE OF SHARES OF THE FUNDS INVOLVES CERTAIN INVESTMENT RISKS.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROSPECTUS DATED JULY 30, 1998
<PAGE>
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
Fund Expenses.................................................................... 3
Financial Highlights
Value Portfolio................................................................ 4
Fixed Income Portfolio......................................................... 6
Hickory Portfolio.............................................................. 8
Government Money Market Portfolio.............................................. 10
Investment Management Information................................................ 11
Investment Objective and Policies.............................................. 11
Investment Securities.......................................................... 13
Investment Restrictions........................................................ 18
Investment Risks............................................................... 19
Purchasing Shares................................................................ 20
Opening a Regular New Account.................................................. 20
Opening a Retirement Account................................................... 20
Purchasing Shares of a Fund.................................................... 21
Changing Your Address.......................................................... 22
Confirmations and Shareholder Reports.......................................... 22
Redeeming Shares................................................................. 23
Redemption Procedures.......................................................... 23
Redemption Payments............................................................ 23
Signature Guarantees........................................................... 24
Other Redemption Information................................................... 24
Exchanging Shares................................................................ 25
Pricing of Shares................................................................ 26
Dividends, Distributions and Taxes............................................... 27
Management....................................................................... 28
Investment Adviser............................................................. 28
Transfer Agent and Administrative Services..................................... 29
Code of Ethics................................................................. 29
Additional Information........................................................... 30
Organization and Capital Structure............................................. 30
Performance Information........................................................ 30
The Year 2000 Issue............................................................ 31
Distributor.................................................................... 31
Custodian...................................................................... 31
Auditor........................................................................ 31
Legal Counsel.................................................................. 31
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
-2-
<PAGE>
- --------------------------------------------------------------------------------
FUND EXPENSES
The purpose of the following table is to help you understand the various costs
and expenses that you, as a shareholder, will bear directly or indirectly in
connection with an investment in a Fund.
<TABLE>
<CAPTION>
VALUE FIXED GOVERNMENT HICKORY
<S> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Sales Load Imposed on Purchases None None None None
Sales Load Imposed on Reinvested Dividends None None None None
Deferred Sales Load None None None None
Redemption Fees None None None None
Exchange Fees None None None None
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS AFTER FEE
WAIVERS)
Management Fees
Investment Advisory Fee(1) 1.00% 0.50% 0.25% 1.00%
12b-1 Fees None None None None
Other Expenses
Administrative Fee(2) 0.18% 0.06% -0- 0.24%
All Other Expenses(3) 0.09% 0.19% 0.25% 0.22%
Total Fund Operating Expenses(4) 1.27% 0.75% 0.50% 1.46%
EXAMPLE:
Based on the "Total Fund Operating 1 Year $ 13 $ 8 $ 5 $ 15
Expenses" set forth above, you would pay the 3 Years 40 24 16 46
following expenses on a $1,000 investment, 5 Years 69 42 28 79
assuming: (a) a 5% annual return; and 10 Years 153 93 63 174
(b) redemption at the end of each time period.
</TABLE>
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR PERFORMANCE. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN
ABOVE. THE ASSUMED 5% ANNUAL RETURN IS NOT A PREDICTION OF, AND DOES NOT
REPRESENT, THE PROJECTED OR ACTUAL PERFORMANCE OF A FUND.
(1) Wallace R. Weitz & Company, the Funds' investment adviser (the "Adviser")
has agreed to reimburse the Funds 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 or 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.
(2) Under the Administration Agreement, during the first 11 months of the year,
the administrative fee was a monthly fee representing the costs of providing
administrative services to a Fund based upon the Administrator's reasonable
allocation of expenses, not to exceed .30% of average daily net assets for the
Value Portfolio and .25% of average daily net assets for the Fixed Income,
Government Money Market and Hickory Portfolios. Effective March 1, 1998, a new
administrative fee schedule was adopted pursuant to which the Funds pay a
monthly fee the calculation of which is based on the average daily net assets of
the Company. The administrative fee for the Fixed Income and Government Money
Market Portfolios would have been .22% and .25% respectively, absent voluntary
waivers.
(3) "All Other Expenses" for the Government Money Market Portfolio would have
been .37%, absent voluntary waivers by the Adviser.
(4) "Total Fund Operating Expenses" for the Fixed Income and Government Money
Market Portfolios would have been .91%, and 1.12%, respectively, absent
investment advisory fee, administrative fee and other expense waivers.
-3-
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
VALUE PORTFOLIO
The following 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 the years ended March 31, 1997 and
1998, has been audited by McGladrey & Pullen, LLP, independent certified public
accountants, whose report thereon, which is incorporated by reference, appears
in the Fund's Annual Report. The information for periods prior to April 1, 1996,
was audited by other certified public accountants.
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
--------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 20.988 $ 19.457 $ 15.552 $ 15.684 $ 15.526 $ 13.926 $ 12.842 $ 11.854 $ 11.772 $ 10.517
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
INCOME (LOSS) FROM INVESTMENT
OPERATIONS:
Net investment income 0.219 0.178 0.157 0.144 0.089 0.221 0.360 0.319 0.421 0.335
Net gains or losses on
securities
(realized and unrealized) 11.026 2.580 5.247 0.452 0.683 2.199 1.445 1.117 0.720 1.238
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total from investment
operations 11.245 2.758 5.404 0.596 0.772 2.420 1.805 1.436 1.141 1.573
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.313) (0.125) (0.418) -- (0.023) (0.275) (0.324) (0.380) (0.430) (0.318)
Distributions from realized
gains (2.609) (1.102) (1.081) (0.728) (0.591) (0.545) (0.397) (0.068) (0.629) --
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total distributions (2.922) (1.227) (1.499) (0.728) (0.614) (0.820) (0.721) (0.448) (1.059) (0.318)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 29.311 $ 20.988 $ 19.457 $ 15.552 $ 15.684 $ 15.526 $ 13.926 $ 12.842 $ 11.854 $ 11.772
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
TOTAL RETURN 58.8% 14.3% 35.9% 4.1% 4.9% 18.3% 14.3% 12.6% 9.6% 15.2%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
($000) $448,276 $275,597 $170,509 $118,776 $103,840 $ 67,617 $ 35,948 $ 27,503 $ 24,540 $ 16,394
Ratio of expenses to average
net assets 1.27% 1.29% 1.35% 1.42% 1.41% 1.35% 1.40% 1.49% 1.46% 1.50%
Ratio of net investment income
to average net assets 0.87% 0.93% 0.91% 1.06% 0.64% 1.66% 2.75% 2.71% 3.71% 3.30%
Portfolio turnover rate 39% 39% 40% 28% 23% 23% 35% 29% 49% 25%
</TABLE>
-4-
<PAGE>
The chart below depicts the change in the value of a $25,000 investment
for the period March 31, 1988, through March 31, 1998, for the Value Portfolio
and its predecessor, as compared with the growth of the Standard & Poor's 500
Index during the same period. The Standard & Poor's 500 Index 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 on March 31, 1988, would have been valued at $129,663 on March 31,
1998.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
VALUE
PORTFOLIO S&P 500
<S> <C> <C>
Mar-88 $25,000.18 $24,999.97
Apr-88 $25,390.96 $25,276.37
May-88 $25,537.14 $25,491.25
Jun-88 $26,114.64 $26,660.05
Jul-88 $26,205.70 $26,558.41
Aug-88 $26,057.13 $25,657.42
Sep-88 $26,716.10 $26,749.17
Oct-88 $26,852.69 $27,493.39
Nov-88 $26,447.72 $27,100.06
Dec-88 $26,855.44 $27,572.26
Jan-89 $27,883.35 $29,585.58
Feb-89 $28,030.19 $28,849.68
Mar-89 $28,810.92 $29,521.76
Apr-89 $30,316.16 $31,052.88
May-89 $31,744.13 $32,303.76
Jun-89 $31,171.94 $32,121.77
Jul-89 $32,366.52 $35,019.38
Aug-89 $32,469.41 $35,701.15
Sep-89 $32,795.66 $35,555.57
Oct-89 $32,338.91 $34,730.87
Nov-89 $32,466.90 $36,435.80
Dec-89 $32,784.06 $36,285.34
Jan-90 $31,361.33 $33,850.60
Feb-90 $31,558.49 $34,289.17
Mar-90 $31,582.46 $35,196.94
Apr-90 $31,475.02 $34,320.03
May-90 $33,088.77 $37,658.19
Jun-90 $33,067.15 $37,404.17
Jul-90 $32,496.79 $37,284.50
Aug-90 $30,823.57 $33,917.81
Sep-90 $29,863.96 $32,269.31
Oct-90 $28,509.70 $32,132.68
Nov-90 $30,218.07 $34,205.03
Dec-90 $31,067.81 $35,157.03
Jan-91 $33,017.86 $36,684.16
Feb-91 $34,743.54 $39,303.82
Mar-91 $35,571.76 $40,254.49
Apr-91 $35,830.74 $40,350.02
May-91 $36,833.29 $42,083.99
Jun-91 $35,619.68 $40,157.23
Jul-91 $36,536.14 $42,027.25
Aug-91 $37,113.79 $42,963.29
Sep-91 $37,783.08 $42,243.78
Oct-91 $38,049.68 $42,810.36
Nov-91 $37,230.43 $41,089.51
Dec-91 $39,650.63 $45,780.58
Jan-92 $39,963.14 $44,928.42
Feb-92 $40,518.06 $45,509.53
Mar-92 $40,672.85 $44,625.21
Apr-92 $40,908.10 $45,933.62
May-92 $41,255.74 $46,157.52
Jun-92 $41,420.41 $45,470.78
Jul-92 $41,899.17 $47,326.78
Aug-92 $41,097.17 $46,359.35
Sep-92 $41,566.78 $46,903.99
Oct-92 $41,066.67 $47,064.89
Nov-92 $43,713.58 $48,662.44
Dec-92 $45,053.79 $49,259.23
Jan-93 $46,271.55 $49,670.67
Feb-93 $47,340.57 $50,346.90
Mar-93 $48,109.02 $51,408.22
Apr-93 $46,645.33 $50,165.59
May-93 $47,915.36 $51,502.87
Jun-93 $48,852.16 $51,653.07
Jul-93 $49,565.77 $51,445.01
Aug-93 $52,571.09 $53,392.11
Sep-93 $52,241.01 $52,982.36
Oct-93 $53,658.79 $54,077.53
Nov-93 $52,816.29 $53,563.77
Dec-93 $54,082.37 $54,211.14
Jan-94 $54,578.01 $56,052.31
Feb-94 $52,914.08 $54,531.83
Mar-94 $50,477.74 $52,157.49
Apr-94 $50,621.10 $52,826.81
May-94 $51,894.81 $53,690.73
Jun-94 $50,912.51 $52,375.42
Jul-94 $51,672.16 $54,093.95
Aug-94 $52,824.72 $56,307.26
Sep-94 $51,354.55 $54,932.32
Oct-94 $51,672.16 $56,162.11
Nov-94 $49,534.02 $54,118.73
Dec-94 $48,761.38 $54,919.64
Jan-95 $50,177.26 $56,342.74
Feb-95 $52,214.89 $58,535.91
Mar-95 $52,552.81 $60,260.17
Apr-95 $53,658.40 $62,033.40
May-95 $56,233.07 $64,507.05
Jun-95 $58,494.51 $66,004.00
Jul-95 $61,010.66 $68,191.49
Aug-95 $63,647.28 $68,361.65
Sep-95 $64,783.16 $71,244.85
Oct-95 $64,025.91 $70,990.29
Nov-95 $66,855.29 $74,103.07
Dec-95 $67,470.83 $75,530.25
Jan-96 $70,410.88 $78,097.81
Feb-96 $71,765.29 $78,823.45
Mar-96 $71,416.59 $79,582.37
Apr-96 $72,183.73 $80,754.34
May-96 $73,732.67 $82,832.99
Jun-96 $74,466.77 $83,148.47
Jul-96 $69,794.24 $79,476.66
Aug-96 $72,811.38 $81,155.07
Sep-96 $75,358.69 $85,718.42
Oct-96 $75,593.60 $88,081.61
Nov-96 $79,073.22 $94,733.16
Dec-96 $80,082.77 $92,856.29
Jan-97 $82,902.45 $98,654.15
Feb-97 $85,212.64 $99,428.18
Mar-97 $81,626.79 $95,350.43
Apr-97 $82,355.88 $101,037.66
May-97 $90,217.50 $107,184.62
Jun-97 $93,155.22 $111,983.79
Jul-97 $98,104.05 $120,891.40
Aug-97 $97,368.58 $114,123.64
Sep-97 $103,368.68 $120,369.87
Oct-97 $105,375.64 $116,354.46
Nov-97 $105,716.36 $121,735.90
Dec-97 $111,260.45 $123,824.82
Jan-98 $113,131.67 $125,192.82
Feb-98 $117,980.05 $134,216.85
Mar-98 $129,663.04 $141,084.31
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
1-YEAR 5-YEARS 10-YEARS
----------- ------------ ------------
<S> <C> <C> <C>
VALUE PORTFOLIO 58.8% 21.9% 17.9%
Standard & Poor's 500 Index 48.0% 22.4% 18.9%
</TABLE>
The investment strategy of Wallace R. Weitz & Company, the Fund's
Investment Adviser (the "Adviser") is to buy stocks of well-managed,
understandable, good businesses that are selling at significant discounts to the
Adviser's appraisal of their enterprise values. This conservative,
value-oriented approach often leads to under-performance (relative to the
Standard & Poor's 500 Index) in very strong markets, as the Value Portfolio's
price-sensitivity leads the portfolio to sell early and to hold cash reserves
rather than pay inflated prices for stocks.
During the fiscal year ended March 31, 1998, in spite of cash reserves
which averaged 20-25% of the portfolio, the Value Portfolio outperformed the S&P
500 Index. Primary contributors were cable television, cellular telephone, and
financial services stocks. Cable stocks, in particular, entered 1997 at
depressed levels, and various positive industry developments led to strong
appreciation. The Value Portfolio has been relatively concentrated in financial,
media, and communications stocks in the past several years, so Value Portfolio
performance has not been very highly correlated on a day-to-day basis to returns
on the S&P 500 Index. This concentration has generally worked in our favor, but
the reverse could be true in the future. Investors should also note that
concentration in these industries has occurred because these areas happened to
appear most attractive at the time of purchase, but the Value Portfolio might be
focused on a very different group of stocks in the future.
TOTAL RETURNS ARE BASED UPON PAST RESULTS AND ARE NOT A PREDICTION OF FUTURE
PERFORMANCE.
-5-
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FIXED INCOME PORTFOLIO
The following information provides selected data for a share of the
Fixed Income Portfolio outstanding throughout the periods indicated. Information
for the years ended March 31, 1997 and 1998, has been audited by McGladrey &
Pullen, LLP, independent certified public accountants, whose report thereon,
which is incorporated by reference, appears in the Fund's Annual Report. The
information for periods prior to April 1, 1996, was audited by other certified
public accountants.
<TABLE>
<CAPTION>
DEC. 23, 1988
YEAR ENDED MARCH 31, (INCEPTION)
---------------------------------------------------------------------------------------- TO MARCH 31,
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
-------- -------- -------- -------- -------- -------- -------- -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 10.770 $ 10.900 $ 10.608 $ 10.778 $ 11.105 $ 10.781 $ 10.644 $ 10.296 $ 10.236 $ 10.142
-------- -------- -------- -------- -------- -------- -------- -------- -------- -------------
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income 0.653 0.659 0.645 0.667 0.551 0.615 0.720 0.613 0.874 0.210
Net gains or losses on
securities (realized
and unrealized) 0.470 (0.112) 0.312 (0.224) (0.290) 0.360 0.149 0.417 0.002 (0.047)
-------- -------- -------- -------- -------- -------- -------- -------- -------- -------------
Total from investment
operations 1.123 0.547 0.957 0.443 0.261 0.975 0.869 1.030 0.876 0.163
-------- -------- -------- -------- -------- -------- -------- -------- -------- -------------
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.629) (0.677) (0.665) (0.613) (0.588) (0.651) (0.731) (0.671) (0.816) (0.069)
Distributions from
realized gains -- -- -- -- -- -- (0.001) (0.011) -- --
-------- -------- -------- -------- -------- -------- -------- -------- -------- -------------
Total distributions (0.629) (0.677) (0.665) (0.613) (0.588) (0.651) (0.732) (0.682) (0.816) (0.069)
-------- -------- -------- -------- -------- -------- -------- -------- -------- -------------
NET ASSET VALUE, END OF
PERIOD $ 11.264 $ 10.770 $ 10.900 $ 10.608 $ 10.778 $ 11.105 $ 10.781 $ 10.644 $ 10.296 $ 10.236
-------- -------- -------- -------- -------- -------- -------- -------- -------- -------------
-------- -------- -------- -------- -------- -------- -------- -------- -------- -------------
TOTAL RETURN 10.7% 5.2% 9.2% 4.4% 2.3% 9.4% 8.6% 10.4% 8.9% 1.6%++
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
($000) $ 30,334 $ 22,349 $ 16,901 $ 11,824 $ 20,560 $ 19,655 $ 11,691 $ 6,261 $ 1,419 $ 1,316
Ratio of expenses to
average net assets+ 0.75% 0.75% 0.75% 0.75% 0.75% 0.76% 0.72% 0.73% 0.62% 1.00%*
Ratio of net investment
income to average net
assets 6.18% 6.30% 6.18% 6.16% 4.94% 6.22% 7.50% 8.45% 8.22% 9.32%*
Portfolio turnover rate 21% 24% 28% 49% 12% 15% 31% 8% 30% 0%
</TABLE>
*Annualized
+Absent voluntary waivers, the expense ratio would have been 0.91%, 0.93%, 0.95%
for the years ended March 31, 1998, 1997 and 1996, respectively.
++Not annualized
-6-
<PAGE>
The chart below depicts the change in the value of a $25,000 investment
for the period since inception of the Fixed Income Portfolio (December 23, 1988)
through March 31, 1998, 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 Investor Service. The information assumes reinvestment
of dividends and capital gains distributions. A $25,000 investment in the Fixed
Income Portfolio on December 23, 1988, would have been valued at $49,293 on
March 31, 1998.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
FIXED INCOME LEHMAN BOND
PORTFOLIO INDEX
<S> <C> <C>
Dec-88 $25,023.53 $25,000.00
Jan-89 $25,241.93 $25,262.62
Feb-89 $25,286.60 $25,158.80
Mar-89 $25,403.24 $25,266.90
Apr-89 $25,662.22 $25,771.99
May-89 $25,953.06 $26,282.58
Jun-89 $26,281.84 $26,944.64
Jul-89 $26,554.63 $27,496.76
Aug-89 $26,598.45 $27,141.91
Sep-89 $26,742.80 $27,269.56
Oct-89 $26,949.33 $27,847.95
Nov-89 $27,191.52 $28,112.40
Dec-89 $27,300.13 $28,191.19
Jan-90 $27,461.32 $28,011.02
Feb-90 $27,576.84 $28,114.85
Mar-90 $27,660.12 $28,151.49
Apr-90 $27,658.17 $28,053.16
May-90 $28,079.71 $28,670.02
Jun-90 $28,313.59 $29,054.19
Jul-90 $28,619.82 $29,457.89
Aug-90 $28,735.78 $29,336.97
Sep-90 $28,998.07 $29,562.94
Oct-90 $29,213.72 $29,905.58
Nov-90 $29,523.19 $30,359.98
Dec-90 $29,761.90 $30,775.90
Jan-91 $30,217.92 $31,089.83
Feb-91 $30,332.65 $31,338.41
Mar-91 $30,527.67 $31,551.56
Apr-91 $30,840.82 $31,895.41
May-91 $31,019.05 $32,090.25
Jun-91 $30,981.07 $32,112.84
Jul-91 $31,300.42 $32,472.58
Aug-91 $31,806.18 $33,093.10
Sep-91 $32,109.63 $33,662.33
Oct-91 $32,342.28 $34,045.88
Nov-91 $32,686.37 $34,437.37
Dec-91 $33,140.95 $35,277.77
Jan-92 $32,990.25 $34,956.51
Feb-92 $33,073.29 $35,092.71
Mar-92 $33,156.33 $34,955.90
Apr-92 $33,439.66 $35,263.72
May-92 $33,728.34 $35,810.35
Jun-92 $34,089.19 $36,340.48
Jul-92 $34,399.75 $37,063.62
Aug-92 $34,596.49 $37,434.34
Sep-92 $35,024.86 $37,943.71
Oct-92 $34,543.13 $37,450.22
Nov-92 $34,507.75 $37,307.92
Dec-92 $34,973.05 $37,808.13
Jan-93 $35,564.26 $38,541.64
Feb-93 $36,103.21 $39,150.56
Mar-93 $36,273.06 $39,306.92
Apr-93 $36,493.02 $39,621.45
May-93 $36,453.23 $39,534.12
Jun-93 $37,053.43 $40,154.64
Jul-93 $37,161.41 $40,252.97
Aug-93 $37,706.02 $40,891.21
Sep-93 $37,853.94 $41,061.00
Oct-93 $37,927.67 $41,170.94
Nov-93 $37,635.03 $40,941.29
Dec-93 $37,791.38 $41,128.80
Jan-94 $38,201.18 $41,585.64
Feb-94 $37,681.18 $40,970.61
Mar-94 $37,116.41 $40,294.51
Apr-94 $36,910.54 $40,020.28
May-94 $36,938.42 $40,047.15
Jun-94 $36,771.14 $40,052.65
Jul-94 $37,332.20 $40,629.20
Aug-94 $37,459.43 $40,756.24
Sep-94 $36,946.96 $40,381.23
Oct-94 $36,829.95 $40,375.74
Nov-94 $36,697.07 $40,192.51
Dec-94 $36,898.48 $40,334.82
Jan-95 $37,607.08 $41,014.58
Feb-95 $38,538.49 $41,865.37
Mar-95 $38,746.69 $42,104.17
Apr-95 $39,160.89 $42,624.53
May-95 $40,371.78 $43,913.22
Jun-95 $40,691.22 $44,207.61
Jul-95 $40,597.55 $44,213.72
Aug-95 $41,061.50 $44,616.20
Sep-95 $41,344.39 $44,939.29
Oct-95 $41,769.17 $45,440.11
Nov-95 $42,266.69 $46,037.43
Dec-95 $42,716.95 $46,519.92
Jan-96 $43,031.47 $46,921.19
Feb-96 $42,503.38 $46,370.29
Mar-96 $42,324.76 $46,131.48
Apr-96 $42,052.02 $45,968.41
May-96 $42,000.76 $45,933.60
Jun-96 $42,493.59 $46,421.59
Jul-96 $42,650.01 $46,559.62
Aug-96 $42,609.97 $46,596.27
Sep-96 $43,330.61 $47,245.50
Oct-96 $44,231.09 $48,080.40
Nov-96 $44,996.36 $48,714.36
Dec-96 $44,593.86 $48,402.27
Jan-97 $44,713.74 $48,590.38
Feb-97 $44,846.01 $48,683.21
Mar-97 $44,519.46 $48,347.30
Apr-97 $45,061.91 $48,915.30
May-97 $45,413.86 $49,321.45
Jun-97 $45,933.40 $49,832.65
Jul-97 $47,020.93 $50,784.21
Aug-97 $46,681.03 $50,528.91
Sep-97 $47,352.33 $51,116.46
Oct-97 $47,937.82 $51,682.63
Nov-97 $48,058.46 $51,796.84
Dec-97 $48,448.66 $52,210.93
Jan-98 $49,061.33 $52,894.97
Feb-98 $49,039.45 $52,854.66
Mar-98 $49,293.26 $53,024.45
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
SINCE INCEPTION
1-YEAR 5-YEARS (DECEMBER 23, 1988)
----------- ------------ -------------------------
<S> <C> <C> <C>
FIXED INCOME PORTFOLIO 10.7% 6.3% 7.6%
Lehman Brothers Intermediate/Corporate Index 9.7% 6.2% 8.5%
</TABLE>
The investment strategy of the Portfolio's Adviser is to buy short- to
intermediate-term fixed income securities whose yield is attractive considering
the risks of ownership. As of March 31, 1998, approximately 40% of the Fixed
Income Portfolio was invested in U.S. government and agency bonds.
Mortgage-backed securities and corporate bonds represented approximately 20% and
25% of the Portfolio, respectively, as of March 31, 1998. The balance of the
Fixed Income Portfolio was invested in taxable municipal bonds, preferred stock,
and cash equivalents. Cash reserves, invested in U.S. government agency discount
notes and a money market fund, were approximately 10% as of March 31, 1998. The
average dollar-weighted maturity of the Portfolio was 7.2 years. Taking into
consideration interest and dividend income alone, the 30-day yield on the
Portfolio was 5.7% at the end of fiscal year 1998.
TOTAL RETURNS ARE BASED UPON PAST RESULTS AND ARE NOT A PREDICTION OF FUTURE
PERFORMANCE.
-7-
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
HICKORY PORTFOLIO
The following information provides selected data for a share of the
Hickory Portfolio outstanding throughout the periods indicated. Information for
the years ended March 31, 1997 and 1998, has been audited by McGladrey & Pullen,
LLP, independent certified public accountants, whose report thereon, which is
incorporated by reference, appears in the Fund's Annual Report. The information
for periods prior to April 1, 1996, was audited by other certified public
accountants.
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
--------------------------------------------------------------
1998 1997 1996++ 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 18.899 $ 15.564 $ 11.257 $ 12.227 $ 11.147
---------- ---------- ---------- ---------- ----------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.007) 0.045 0.004 (0.008) (0.290)
Net gains or losses on securities (realized and unrealized) 12.503 4.329 4.504 (0.508) 1.420
---------- ---------- ---------- ---------- ----------
Total from investment operations 12.496 4.374 4.508 (0.516) 1.130
---------- ---------- ---------- ---------- ----------
LESS DISTRIBUTIONS:
Dividends from net investment income (0.073) (0.002) (0.136) -- 0.083
Distributions from realized gains (1.908) (1.037) (0.065) (0.454) (0.133)
---------- ---------- ---------- ---------- ----------
Total distributions (1.981) (1.039) (0.201) (0.454) (0.050)
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $ 29.414 $ 18.899 $ 15.564 $ 11.257 $ 12.227
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
TOTAL RETURN 71.8% 28.2% 40.6% (4.2%) 10.1%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period ($000) $ 44,328 $ 12,221 $ 6,658 $ 3,619 $ 2,499
Ratio of expenses to average net assets 1.46% 1.50%+ 1.50%+ 1.50% 1.50%
Ratio of net investment income (loss) to average net assets (0.13%) 0.33% 0.02% (0.17%) (2.92%)
Portfolio turnover rate 29% 28% 28% 20% 29%
</TABLE>
+ Absent voluntary waivers, the expense ratio would have been 1.56% for
the year ended March 31, 1997, and 1.61% for the year ended March 31,
1996.
++ Calculated using average daily shares.
-8-
<PAGE>
The chart below depicts the change in the value of a $25,000 investment
for the period since inception of the Hickory Portfolio (April 1, 1993) through
March 31, 1998, as compared with the growth of the Standard & Poor's 500 Index
during the same period. The Standard & Poor's Index is an unmanaged index
consisting of 500 companies. The information assumes reinvestment of dividends
and capital gains distributions. A $25,000 investment in the Hickory Portfolio
on April 1, 1993, would have been valued at $81,664 on March 31, 1998.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
HICKORY PORTFOLIO S&P 500
<S> <C> <C>
4/93 $25,000.00 $25,000.00
4/93 $22,905.27 $24,395.70
5/93 $23,999.73 $25,046.03
6/93 $24,152.24 $25,119.07
7/93 $24,872.16 $25,017.89
8/93 $26,800.93 $25,964.77
9/93 $27,000.54 $25,765.51
10/93 $28,756.62 $26,298.09
11/93 $27,859.51 $26,048.25
12/93 $30,066.84 $26,363.07
1/94 $29,605.31 $27,258.44
2/94 $29,119.02 $26,519.02
3/94 $27,527.31 $25,384.37
4/94 $27,264.92 $25,689.87
5/94 $27,516.26 $28,109.99
6/94 $26,197.29 $25,470.35
7/94 $26,038.18 $26,306.08
8/94 $27,590.05 $27,382.42
9/94 $27,297.20 $26,713.78
10/94 $26,946.70 $27,311.83
11/94 $25,452.48 $26,318.13
12/94 $24,869.11 $26,707.61
1/95 $24,967.52 $27,399.67
2/95 $25,998.56 $28,486.22
3/95 $26,378.17 $29,304.74
4/95 $26,307.19 $30,167.06
5/95 $27,763.56 $31,370.01
6/95 $29,582.84 $32,097.98
7/95 $31,214.74 $33,161.76
8/95 $33,361.34 $33,244.51
9/95 $34,777.39 $34,646.62
10/95 $33,309.16 $34,522.83
11/95 $34,336.21 $36,036.58
12/95 $34,931.93 $36,730.62
1/96 $36,745.12 $37,979.24
2/96 $37,212.12 $38,332.12
3/96 $37,083.46 $38,701.19
4/96 $37,912.61 $39,271.12
5/96 $39,878.30 $40,281.98
6/96 $40,845.65 $40,435.39
7/96 $37,536.16 $38,649.78
8/96 $40,116.58 $39,466.00
9/96 $42,189.46 $41,685.17
10/96 $42,856.60 $42,834.40
11/96 $44,915.20 $46,069.07
12/96 $47,281.36 $45,156.34
1/97 $48,986.51 $47,975.86
2/97 $50,153.45 $48,352.27
3/97 $47,530.34 $46,369.25
4/97 $47,615.18 $49,134.97
5/97 $54,305.69 $52,124.26
6/97 $55,236.70 $54,458.11
7/97 $57,394.84 $58,789.91
8/97 $58,096.44 $55,498.73
9/97 $62,047.25 $58,536.29
10/97 $62,876.90 $56,583.58
11/97 $62,140.62 $59,200.60
12/97 $65,802.61 $60,216.45
1/98 $67,762.72 $60,881.71
2/98 $71,394.21 $65,270.13
3/98 $81,663.98 $68,609.80
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
SINCE INCEPTION
1-YEAR 3-YEARS (APRIL 1, 1993)
----------- ------------ -------------------
<S> <C> <C> <C>
HICKORY PORTFOLIO 71.8% 45.7% 26.7%
Standard & Poor's 500 Index 48.0% 32.8% 22.4%
</TABLE>
The investment strategy of the Portfolio's Adviser is to buy stocks of
well-managed, understandable, good businesses that are selling at significant
discounts to the Adviser's appraisal of their enterprise values. During the
fiscal year ended March 31, 1998, the Hickory Portfolio's investments were
heavily weighted towards financial, cable and cellular companies since the
portfolio manager was able to identify many attractive investment opportunities
in those sectors. The Portfolio's financial, cable and cellular 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.
-9-
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
GOVERNMENT MONEY MARKET PORTFOLIO
The following information provides selected data for a share of the
Government Money Market Portfolio outstanding throughout the periods indicated.
Information for the years ended March 31, 1997 and 1998, has been audited by
McGladrey & Pullen, LLP, independent certified public accountants, whose report
thereon, which is incorporated by reference, appears in the Fund's Annual
Report. The information for periods prior to April 1, 1996, was audited by other
certified public accountants.
<TABLE>
<CAPTION>
AUGUST 1,
1991
(INCEPTION)
YEAR ENDED MARCH 31, TO
--------------------------------------------------------------- MARCH 31,
1998 1997 1996 1995 1994 1993 1992
-------- -------- -------- -------- -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $ 1.000
-------- -------- -------- -------- -------- -------- -------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.049 0.047 0.051 0.042 0.028 0.031 0.031
-------- -------- -------- -------- -------- -------- -------------
LESS DISTRIBUTIONS:
Dividends from net investment income (0.049) (0.047) (0.051) (0.042) (0.028) (0.031) (0.031)
-------- -------- -------- -------- -------- -------- -------------
NET ASSET VALUE, END OF PERIOD $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $ 1.000
-------- -------- -------- -------- -------- -------- -------------
-------- -------- -------- -------- -------- -------- -------------
TOTAL RETURN 5.1% 4.8% 5.2% 4.2% 2.9% 3.2% 4.7%*
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period ($000) $8,330 $5,820 $4,142 $2,669 $1,918 $555 $ 278
Ratio of expenses to average net assets+ 0.50% 0.50% 0.50% 0.50% 0.25% 0.26% 0.27%*
Ratio of net investment income to
average net assets 4.95% 4.71% 4.95% 4.18% 2.81% 3.05% 4.65%*
</TABLE>
* Annualized
+ Absent voluntary waivers, the expense ratio would have been 1.12%, 1.15%
and 1.14% for the years ended March 31, 1998, 1997 and 1996, respectively.
-10-
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT INFORMATION
INVESTMENT OBJECTIVE & POLICIES
VALUE PORTFOLIO AND HICKORY PORTFOLIO
The investment objective of the Value Portfolio and 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. The
respective Funds seek to achieve their objective through investment in equity
securities (stocks). Each Fund's investment strategy (which is called "value
investing") is to (1) identify attractive businesses that we can understand and
which have honest, competent management, (2) determine the price that an
informed, rational buyer would pay for 100% of that business, and then (3) buy
shares in the business if they are available at a significant discount to this
"business value" or "private market value." The valuation process may focus on
asset values, earning power, the intangible value of a company's "franchise," or
a combination of these variables, depending on the type of business and other
factors. Purchasing shares at a discount to value is intended to provide what
Benjamin Graham called a "margin of safety." The margin of safety does not
eliminate risk, but it is intended to reduce the likelihood of permanent loss of
capital. Under-valued securities are, by definition, out of favor with
investors, and there is no way to predict when the securities may return to
favor. THUS, SHAREHOLDERS SHOULD INVEST IN THE RESPECTIVE FUNDS ONLY IF THEY
INTEND TO BE PATIENT, LONG-TERM INVESTORS.
The Value Portfolio and Hickory Portfolio will be invested primarily in
common stocks and securities which are convertible into common stocks, such as
convertible bonds, preferred stocks, and warrants. The Adviser does not intend
to attempt to "time" the market, i.e. to sell a major portion of its equity
investments in anticipation of a general decline in stock prices, but it may
invest a portion (or all) of its assets in high quality United States
Government, Government Agency, or other high quality, short-term securities and
cash equivalents for temporary defensive purposes. Federal income tax
consequences to shareholders of the Funds will not be a factor in investment
decisions.
This investment strategy is generally characterized by relatively long
holding periods for stock positions and relatively low portfolio turnover. The
total portfolio turnover rate of each Fund is shown in the Financial Highlights
table for the respective Fund in this Prospectus.
-11-
<PAGE>
FIXED INCOME PORTFOLIO
The investment objective of the Fixed Income Portfolio is high current
income consistent with preservation of capital. Under normal market conditions,
the Fixed Income Portfolio will invest at least 65% of the value of its total
assets in fixed income securities. The fixed income securities in which the Fund
may invest include: (1) U.S. Government Securities (bills, notes, bonds, and
other debt securities issued by the U.S. Treasury); (2) U.S. Government Agency
Securities; (3) corporate debt securities; (4) bank obligations (certificates of
deposit and bankers' acceptances); (5) commercial paper; (6) repurchase
agreements on U.S. Government and U.S. Government agency securities; and (7)
securities of registered investment companies which invest in fixed income
securities.
The Adviser selects fixed income securities the yield on which is
sufficiently attractive in view of the risks of ownership. In deciding whether
the Fund should invest in particular fixed income securities, the Adviser
considers a number of factors such as the price, coupon and yield-to-maturity,
as well as the credit quality of the issuer. Additionally, the Adviser reviews
the terms of the fixed income security, including subordination, default,
sinking fund, and early redemption provisions. When the Adviser believes that
prevailing abnormal market or economic conditions warrant a temporary defensive
investment position, a greater portion of the Fund's portfolio may be retained
in cash or cash equivalents, such as money market fund shares, and repurchase
agreements on U.S. Government securities.
Under normal market conditions, the Fund will invest at least 65% of the
value of its total assets in fixed income securities. The Fund may invest up to
15% of its total assets in securities rated below BBB by Standard & Poors
Corporation ("Standard & Poors") or Baa by Moodys Investor's Service ("Moodys")
or in unrated securities which the Adviser determines are of comparable quality
to the rated securities in which the Fund may invest. Fixed income securities
rated below BBB or Baa are generally known as "junk bonds." The Fund will
normally not invest in fixed income securities which are rated below B or are
currently in default.
The total portfolio turnover rate of the Fixed Income Portfolio is shown in
the Financial Highlights table for the Fixed Income Portfolio in this
Prospectus.
GOVERNMENT MONEY MARKET PORTFOLIO
The investment objective of the Government Money Market Portfolio is current
income consistent with the preservation of capital and maintenance of liquidity.
The Fund invests substantially all of its assets in debt obligations issued or
guaranteed by the U.S. Government, its agencies and instrumentalities and
repurchase agreements thereon with maturities not exceeding thirteen months. The
Fund may also participate in reverse repurchase agreements on U.S. Government
securities and invest in when-issued and delayed delivery transactions involving
U.S. Government securities. The Fund may also invest in shares of other money
market funds subject to the requirements of the Investment Company Act of 1940.
The Fund limits its average portfolio maturity to ninety days or less and buys
only securities with remaining maturities of thirteen months or less.
-12-
<PAGE>
INVESTMENT SECURITIES
The Funds 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 certain
investment practices and types of securities in which the Funds may invest. 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 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
Adviser to be an acceptable investment result. Writing covered call options may
increase the income of the respective Fund since it receives a payment (the
"premium") for writing the option. To the extent that it writes covered call
options, the respective Fund 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 Fund
buys back the option to close out the transaction.
U.S. GOVERNMENT SECURITIES are securities issued or guaranteed by the U.S.
Government and may include U.S. Treasury bills, notes and bonds which are direct
obligations of the U.S. Government and obligations of its agencies and
instrumentalities. Obligations issued or guaranteed by the U.S. Government
agencies and instrumentalities include, for example, obligations of Federal
Intermediate Credit Banks, Federal Home Loan Banks, the Federal National
Mortgage Association (FNMA), the Federal Home Loan Mortgage Corporation (FHLMC),
the Government National Mortgage Association (GNMA) and the Farmers Home
Administration. Certain U.S. Government agency securities, such as those issued
by GNMA, FNMA and FHLMC, are mortgage-related securities which represent an
undivided ownership interest in a pool of mortgage loans. Ginnie Maes,
securities issued by GNMA, are interests in pools of mortgage loans insured by
the Federal Housing Administration. Ginnie Maes are backed by the full faith and
credit of the United States Government. Fannie Maes and Freddie Macs are
securities issued by FNMA and FHLMC, respectively. FNMA and FHLMC, which
guarantee payment of principal and interest on Fannie Maes and Freddie Macs, are
federally chartered corporations 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.
-13-
<PAGE>
Most mortgage-related securities are pass-through securities, which means
that they provide investors with payments consisting of both principal and
interest as the mortgages in the underlying mortgage pool are paid off. The
actual yield of such securities is influenced by the prepayment experience of
the mortgage pool underlying the securities. In periods of declining interest
rates, prepayments of the underlying mortgages tend to increase. 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 Fund to reinvest such
prepayment, presumably at a lower interest rate. Although, depending on the
length of the mortgages in the pool, mortgage-related securities may have a
stated maturity of up to forty years, prepayments on the underlying mortgages
will make the effective maturity of the securities shorter. A security based on
a pool of forty-year mortgages may have an average life as short as two years.
The maturity of mortgage-related securities will be deemed to be the expected
effective maturity of the securities.
CORPORATE DEBT SECURITIES acquired by the Value Portfolio, the Hickory
Portfolio and the Fixed Income Portfolio, including convertible bonds and
debentures, will normally be of investment grade or better (rated BBB or better
by Standard & Poors and Baa or better by Moody's). Securities rated BBB/Baa are
considered "investment grade" by the financial community, but are described by
Standard & Poors and Moody's as "medium grade obligations" which have
"speculative characteristics." 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. 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.
The Fixed Income Portfolio may also invest up to 15% of its total assets in
securities rated lower than "BBB/Baa," generally known as "junk bonds" or in
unrated securities if the Adviser determines such securities are of a quality
comparable to the rated securities in which it invests. The Fixed Income
Portfolio will normally not invest in fixed income securities which are rated
below B or are currently in default.
Investments by the Fixed Income Portfolio in "junk bonds" may 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 as well as 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. Prices for such securities may also be
affected from time to time by legislative and regulatory developments. The
market for lower rated bonds may, in addition, be less liquid than the market
for investment grade fixed income securities and the liquidity of lower rated
bonds may be affected by the market's perception of the credit quality.
See Appendix B to the Statement of Additional Information for a description
of ratings.
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<PAGE>
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. 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.
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 Standard & Poors, or if not rated, 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 Standard
& Poors or Aa or better by Moody's. See Appendix B to the Statement of
Additional Information 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
which are listed on a domestic securities exchange or traded in the United
States over-the-counter market. The respective Fund 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 Fund will not invest in forward foreign currency contracts. While
the respective Fund does not intend 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 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 economy of the United States in such respects
as growth of gross national product, rate of inflation, capital reinvestment,
resource self-sufficiency and balance of payments position.
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<PAGE>
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, 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 Fund 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 Fund may suffer 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
Fund 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 Funds 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 involve the temporary transfer of a security
in the portfolio of the Government Money Market Portfolio to another party, such
as a bank or broker dealer, in return for cash, and an agreement 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 a reverse repurchase agreement is outstanding, the Government
Money Market Portfolio will maintain cash and liquid securities in a segregated
account at the Custodian with a value at least equal to its obligations under
the agreement.
WHEN ISSUED OR FORWARD COMMITMENT transactions involve the purchase or sale
of a security by a Fund with payment and delivery taking place in the future to
secure what is considered an advantageous yield and price to the Fund at the
time of entering into the transaction. To the extent a Fund enters into such
forward commitments, it will maintain a segregated account with the Custodian
with an aggregate value equal to the amount of its commitment in connection with
such purchase transactions.
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INVESTMENT COMPANY SECURITIES consist 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 Fund. 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 Fund,
but also the advisory and related fees charged to the other investment
companies. The respective Fund will only invest in investment company securities
to the extent allowed by the 1940 Act or the fundamental investment restrictions
for the respective Fund.
SHORT SALES involve the sale of a security that a Fund does not own (but
instead has borrowed) in anticipation of a decline in the value of the security.
The Value Portfolio, Hickory Portfolio and Fixed Income Portfolio may engage in
short sales. To the extent that a Fund engages in short sales, the Fund will
place in a segregated account a sufficient amount of cash and securities as
required by applicable federal securities regulations in order to cover the
transaction. In the event that the value of the security sold short increases in
value rather than decreases, the Fund would suffer a loss when it purchases the
security sold short. Since there is, theoretically, no limit to how high the
price of the stock might rise, the potential loss from the short sale is greater
than the original proceeds of the short sale. The Value Portfolio, Hickory
Portfolio and Fixed Income Portfolio may also engage in short sales "against the
box." A short sale "against the box" is a form of short sale in which the
respective Fund contemporaneously owns or has the right to obtain at no
additional cost securities identical to those sold short. The segregation of
cash or other securities is not required for short sales "against the box." In
the event that a Fund were to sell securities short "against the box" and the
price of such securities were to then increase rather than decrease, the Fund
would forego the potential realization of the increased value of the shares sold
short.
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INVESTMENT RESTRICTIONS
Each Fund has adopted a number of investment restrictions set forth in the
Statement of Additional Information. Each Fund's investment objective described
above and certain of each Fund's investment restrictions are fundamental
policies which cannot be changed without a vote of a majority of the outstanding
shares of the Fund. Certain nonfundamental investment restrictions have also
been adopted by each Fund and are subject to change by the Board of Directors of
the Company without shareholder approval.
The Value Portfolio and the Fixed Income Portfolio's fundamental investment
restrictions, among others, include the following:
1. With respect to 75% of its total assets, the Value Portfolio and the
Fixed Income Portfolio may not 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 obligations issued, or
guaranteed by, the United States of America, its agencies or
instrumentalities), or own more than 10% of the outstanding voting
securities of any one issuer; and
2. The Value Portfolio and the Fixed Income Portfolio may not invest more
than 25% of its total assets, taken at market value at the time of a
particular purchase, in securities of issuers in any one industry (other
than obligations issued, or guaranteed by, the United States of America,
its agencies or instrumentalities).
The Hickory Portfolio's fundamental investment restrictions, among others,
include the following:
1. With respect to 50% of its total assets, the Hickory Portfolio may not
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 obligations issued, or guaranteed by, the United States of America,
its agencies or instrumentalities); and
2. The Hickory Portfolio may not invest more than 25% of its total assets,
taken at market value at the time of a particular purchase, in
securities of issuers in any one industry (other than obligations
issued, or guaranteed by, the United States of America, its agencies or
instrumentalities).
The Government Money Market Portfolio's fundamental investment restrictions
require the Fund to comply with the provisions of Rule 2a-7 of the Investment
Company Act of 1940, which includes, among other things, certain maturity and
quality standards for the Fund's investments. Certain of those requirements are
set forth below:
1. The average portfolio maturity of the Government Money Market Portfolio
must be maintained at 90 days or less;
2. The securities in the Fund's portfolio must have maturities no greater
than 13 months; and
3. The Government Money Market Portfolio may not invest more than 5% of its
total assets in the securities of any one issuer (other than U.S.
Government securities).
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INVESTMENT RISKS
You should be aware of the fact that an investment in the Funds involves
certain risks. Portions of the section titled "Investment Securities" discuss
certain risks which could be present if a Fund acquires particular kinds of
investments.
Prices of the securities in the Value Portfolio, Fixed Income Portfolio and
Hickory Portfolio will generally fluctuate daily depending on general market
conditions. Therefore, the value of the shares of the Value Portfolio, Fixed
Income Portfolio and Hickory Portfolio will also fluctuate. Because the Hickory
Portfolio is nondiversified, it may, with respect to 50% of its total assets,
concentrate its investments by investing more than 5% of its total assets in the
securities of any one issuer. As a result, its shares may be more susceptible to
adverse changes in the value of the securities of a particular company.
The Fixed Income Portfolio is subject to various market forces which
influence the value of fixed income securities. There is an inverse relationship
between the market value of fixed income securities and the yield of such
securities. As interest rates rise, the market value of fixed income securities
falls; conversely, as interest rates fall, the market value of such securities
rises. Therefore the price of shares 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 generally results in a lower level of volatility in the share
prices of the Fixed Income Portfolio. A longer average maturity may result in a
greater volatility in such share prices.
There can be no assurance that the investment objectives of the Value
Portfolio, Fixed Income Portfolio or Hickory Portfolio can be achieved, and the
value of your investment upon redemption may be more or less than the purchase
price.
Although the Government Money Market Portfolio attempts to maintain a
constant price of $1.00 per share, there is no guarantee that it will always be
able to maintain such a constant price. An investment in the Government Money
Market Portfolio is neither insured nor guaranteed by the U.S. Government.
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PURCHASING SHARES
OPENING A REGULAR NEW ACCOUNT
You can open a new account by completing and signing a Purchase Application,
enclosing a check made payable to WEITZ SERIES FUND, INC. and mailing the
application and check to:
Weitz Series Fund, Inc.
1125 South 103rd Street, Suite 600
Omaha, NE 68124-6008
PLEASE NOTE THAT THE MINIMUM INVESTMENT REQUIRED TO OPEN A REGULAR ACCOUNT IS
$25,000 WHICH MAY BE ALLOCATED AMONG THE FUNDS. SUBSEQUENT MINIMUM INVESTMENTS
OF $5,000 MAY BE REQUIRED, SUBJECT TO CERTAIN EXCEPTIONS. The Company 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 from time to time. All purchase orders are subject to acceptance by
authorized officers of the Company and are not binding until so accepted.
OPENING A RETIREMENT ACCOUNT
Certain individuals may be eligible to open an IRA or a SEP-IRA. In
addition, existing IRA accounts and certain qualified pension and profit sharing
plans can be rolled over or transferred into a new IRA account, which can be
invested in shares of one or more of the Funds. You can request the IRA
Application Kit which contains an explanation of IRAs, including certain tax
considerations, by calling the Company at 402-391-1980 or 800-232-4161. After
reading the information included in the kit, complete the IRA application and
the transfer form, if applicable, and mail it to the address shown above. IRA
accounts may be charged an annual maintenance fee.
Monies deposited into other types of pension or profit sharing plans may
also be invested in shares of any of the Funds. Although the Company will
endeavor to provide assistance to investors in such plans, it does not have
forms of such plans for adoption and does not undertake to offer advice relating
to the establishment of such plans or compliance with ongoing requirements for
such plans. The investor should seek the guidance of a professional adviser
before investing retirement monies in shares of the Funds.
The minimum investment requirement for the purchase of a Fund's shares may
be waived for purchases in retirement accounts.
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<PAGE>
PURCHASING SHARES OF A FUND
The purchase of shares of a Fund is not subject to any sales commissions or
any other transaction fees. The price you pay for the shares you buy in a Fund
will be the respective Fund's next-determined net asset value after the Company
receives your request, provided we receive your request prior to the close of
trading on the New York Stock Exchange (ordinarily 3:00 p.m., Central time). See
"Pricing of Shares". The shares you are purchasing must be qualified for sale in
your state of residence. You can purchase shares in the following manner:
BY MAIL. To purchase additional shares in an existing account, send a check
payable to WEITZ SERIES FUND, INC. together with the remittance stub which is
the bottom portion of your most recent transaction statement to:
Weitz Series Fund, Inc.
1125 South 103rd Street, Suite 600
Omaha, NE 68124-6008
If the remittance stub is not available, please indicate on your check or on a
separate piece of paper the account name, your address and the account number.
If the purchase is for a new account, include your completed Purchase
Application as described above.
BY WIRE. To purchase shares with payment by bank wire:
1. Call the Company at 402-391-1980 or 800-232-4161 and furnish your
account name, address and account number together with the amount being
wired and the name of the wiring bank.
2. Instruct the bank to wire funds as follows:
Norwest Bank Nebraska, N.A.
Omaha, NE
ABA #104000058
Weitz Funds
#1155095248
For credit to: Weitz Series Fund, Inc.
Value Portfolio
Fixed Income Portfolio
Govt Money Mkt Portfolio
Hickory Portfolio
For the Account of: Your Account
Number and Name
THE COMPANY WILL NOT BE RESPONSIBLE FOR THE CONSEQUENCES OF DELAYS IN THE BANK
OR FEDERAL RESERVE WIRE SYSTEM. BANKS MAY IMPOSE A CHARGE FOR THE WIRE TRANSFER
OF FUNDS.
If you are purchasing shares by wire for a new account, a completed Purchase
Application must be sent to the Company at the address set forth above prior to
your purchase. Wired funds are considered received on the day they are deposited
in the respective Fund's account if you have notified the Company that the funds
have been wired and the funds have been deposited prior to the close of business
on the New York Stock Exchange, usually 3:00 p.m. Central time. If received
after the close of business of the exchange, shares will be purchased at the
price determined on the following day. See "Pricing of Shares."
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<PAGE>
BY AUTOMATIC INVESTMENT. At the time you open an account, you can choose to
make automatic investments in shares of a Fund at regular intervals (on the 1st
or the 15th day of the month or, if such day is not a business day, on the next
following business day) by completing the Automatic Investment Plan section of
the Purchase Application and sending a voided check from your bank account. You
can add or cancel the automatic investment service or change the amount by
sending a request in writing to the Company.
If your automatic investment transaction or check mailed for purchase of
shares is returned by the bank, the Company may hold you responsible for any
costs to the Company resulting from (i) fees charged to the Company or (ii) a
decline in the net asset value of a Fund when the shares issued are canceled.
Shares of the Funds may also be purchased through certain broker-dealers and
other financial intermediaries that have entered into selling agreements or
related arrangements with the Adviser. Investors may be charged a fee by such
broker or financial intermediary if they effect transactions through such
entity. The Adviser may, from time to time, make payments to broker-dealers or
other financial intermediaries for certain services to the Funds and/or their
shareholders, including sub-administration, sub-transfer agency and shareholder
servicing. Such payments are made out of the Adviser's own resources and do not
involve additional costs to the Funds or their shareholders.
CHANGING YOUR ADDRESS
You can change the address on your account by sending a written request to
the Company. The written request must be signed by all registered
owners of the account and should include your account name(s), account number(s)
and both the new and old addresses. To protect you and the Company, redemptions
from an account are not allowed if the written request to change an address has
been received by the Company within 24 hours of the redemption request.
CONFIRMATIONS AND SHAREHOLDER REPORTS
Each time you purchase, redeem or exchange shares, you will receive a
confirmation of the transaction from the Company. At the end of each calendar
quarter you will receive a statement which will include complete information on
activity in your account during that quarter. At the end of each year your
statement will include detailed information on all transactions for that year.
You should save the year-end statement for tax purposes. In addition, the
Company provides quarterly shareholder reports which include a listing of the
securities in the respective portfolio at the end of that quarter, together with
a letter from the portfolio manager discussing, among other things, investment
results for the quarter. The report for the period ending September 30 will also
include unaudited financial statements. The annual report for the period ending
March 31 will include the respective Fund's audited financial statements for the
previous fiscal year.
It is the Company's practice to send a single copy of each quarterly 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 Company.
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REDEEMING SHARES
REDEMPTION PROCEDURES
The Company will redeem your shares or any portion of your shares at any
time if you request such a redemption in writing. Shares will be redeemed at the
net asset value next determined after receipt of a redemption request in good
order. See "Pricing of Shares". There are no fees for redeeming shares. You
must, however, have a completed application on file with the Company before a
redemption request will be accepted. In addition, the Company must have received
payment for the shares being redeemed and may delay the redemption payment
(normally not more than 15 days) until the purchase funds have cleared. Such
delays can be avoided by purchasing shares with a certified or cashier's check
or by wire transfer.
A redemption request in good order can be sent by mail or facsimile
transmission to:
Weitz Series Fund, Inc.
1125 South 103rd Street, Suite 600
Omaha, NE 68124-6008
Fax Number 402-391-2125
A redemption request in good order should include the following information:
1. Your account name, account number and Fund name;
2. The amount of the transaction (specified in dollars or shares);
3. The signatures of ALL owners exactly as they are registered on the
account; if you are a corporate or trust shareholder, the signature must
be by an authorized person with an indication of the capacity in which
such person is signing;
4. A signature guarantee if required;
5. Other supporting legal documents that may be required in the case of
estates, trusts, guardianships, custodianships, partnerships,
corporations and certain other accounts.
You may call the Company at 402-391-1980 or 800-232-4161 if you have
questions about the requirements for redemption requests.
REDEMPTION PAYMENTS
Payment for the shares redeemed will be made as soon as possible, but no
later than seven days after the date of the Company's receipt of your redemption
request in good order. Payment will normally be made by check. Payment may also
be made by wire transfer in accordance with wire transfer instructions provided
in writing to the Company accompanied by a signature guarantee. See "Signature
Guarantees" below. The Company reserves the right to require you to pay for the
cost of transmitting the wire transfer. Your bank may also impose a charge to
receive the wire transfer.
A redemption of shares is treated as a sale for tax purposes and, for the
Value, Fixed Income and Hickory Portfolios, will generally result in a short-
term or long-term capital gain or loss, depending on how long you have owned the
shares.
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SIGNATURE GUARANTEES
The Company reserves the right to require a signature guarantee on all
redemptions. Signature guarantees will be required in the following
circumstances:
1. A redemption request which is payable to anyone other than the
shareholder(s) of record;
2. A redemption request which is to be mailed to an address other than the
address of record;
3. A redemption request which is 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, AND MEMBER
FIRMS OF A DOMESTIC STOCK EXCHANGE. A NOTARY PUBLIC IS NOT AN ELIGIBLE
GUARANTOR.
OTHER REDEMPTION INFORMATION
The Company reserves the right to automatically redeem any account balance
in cases where (i) the account balance falls below $500; or (ii) the shareholder
has failed to provide the Company a tax identification number. Shareholders will
be notified in writing at least 60 days prior to the automatic redemption of
their account. Such automatic redemptions will reduce unnecessary administrative
expenses and, therefore, benefit the majority of shareholders.
Redemption payments normally will be made wholly in cash. The Company may,
however, redeem the shares of a Fund through the 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 respective 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.
The Company may suspend redemption privileges or postpone payment at times
when the New York Stock Exchange is closed for other than weekends or holidays,
or under emergency circumstances as permitted by the U.S. Securities and
Exchange Commission.
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EXCHANGING SHARES
You can exchange shares of one Fund for shares of another Fund or for shares
of Weitz Partners, Inc. - Partners Value Fund ("Partners Value Fund"). EXCHANGES
WILL ONLY BE MADE BETWEEN ACCOUNTS WITH IDENTICAL REGISTRATIONS. The ability to
initiate such exchanges by telephone is automatically established on your
account unless you request otherwise. You should be aware that although there
are no sales commissions or other transaction fees related to exchanging shares,
such an exchange involves the redemption of shares from a Fund and the purchase
of shares of the other Fund or of Partners Value Fund and any gain or loss on
the redemption will be reportable on your tax return. The price for the shares
being exchanged will be the net asset value of the respective shares next
determined after the Company receives your exchange request. See "Pricing of
Shares".
You can request the exchange of shares by telephone or in writing in the
following manner:
1. If you are exchanging for shares of Partners Value Fund and do not
currently have an account in Partners Value Fund, request an application
and prospectus for Partners Value Fund by calling 402-391-1980 or
800-232-4161. Read the prospectus, complete the application and return
it to the Company at the address set forth under the caption "Purchasing
Shares". The shares being acquired must be qualified for sale in your
state of residence.
2. If you are exchanging for shares of another Fund in Weitz Series Fund,
Inc. or have an account in Partners Value Fund, provide the name of the
Fund, the account name, your address and account number and the dollar
amount of shares to be exchanged.
The Company will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine, which will include use of specific
identifying information. When such procedures are followed, the Company will not
be liable for losses caused by following telephone instructions which are
reasonably believed to be genuine. The Company reserves the right to revise or
terminate the telephone exchange privilege at any time.
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. The Company reserves the right at any time upon sixty days' prior notice
to suspend, limit, modify or terminate exchange privileges in order to prevent
transactions considered to be harmful to existing shareholders.
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PRICING OF SHARES
Each Fund's net asset value per share is determined once each day as of the
close of trading on the New York Stock Exchange (ordinarily 3:00 p.m., Central
time) on days on which the New York Stock Exchange is open for business.
The net asset value per share is determined by calculating the market value
of all a Fund's assets, deducting total liabilities and dividing the result by
the number of shares outstanding.
In calculating net asset value of the shares of the Value, Fixed Income and
Hickory Portfolios:
1. Securities traded on a national or regional securities exchange and
over-the-counter securities traded on the NASDAQ national market are
valued at the last sales price; if there were no sales on that day,
securities are valued at the mean between the latest available and
representative bid and asked prices;
2. Securities not listed on an exchange are valued at the mean between the
latest available and representative bid and asked prices;
3. The value of certain debt securities for which market quotations are not
readily available may be based upon current market prices of securities
which are comparable in coupon, rating and maturity or an appropriate
matrix utilizing similar factors; and
4. The value of securities for which market quotations are not readily
available, including restricted and not readily marketable securities,
is determined in good faith under the supervision of the Company's Board
of Directors.
The securities in the Government Money Market Portfolio are valued on an
amortized-cost basis. Under this method of valuation, each security is initially
valued at its acquisition cost, and thereafter, amortization of any discount or
premium is assumed each day, regardless of the impact of fluctuating interest
rates on the market value of the security. The Adviser believes that under most
conditions it will be possible to maintain the net asset value of the Government
Money Market Portfolio at $1.00 per share. Periodic calculations are made to
compare the value of the securities the Fund owns valued at amortized cost with
the market values of such securities. If a deviation of 1/2 of 1% or more were
to occur between the net asset value calculated by reference to market values
and the Fund's per share net asset value, or if there were any other deviation
that the Board of Directors of the Company believed would result in a material
dilution to shareholders, the Board of Directors would promptly consider what
action, if any, should be initiated.
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DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund has qualified and intends to continue to qualify under Subchapter
M of the Internal Revenue Code of 1986 as a "regulated investment company" in
part by distributing substantially all of its net income and capital gains to
its shareholders. As a result, the Funds should not incur any significant
federal income tax liability. Should a Fund fail to distribute the required
amounts, it would be subject to a non-deductible 4% excise tax on certain
undistributed taxable income and realized capital gains.
Dividends and distributions will be paid at such times as may be required to
maintain the status of the Fund as a "regulated investment company." The Value
Portfolio and the Hickory Portfolio expect to declare and pay dividends on a
semi-annual basis. The Fixed Income Portfolio expects to declare and pay
dividends on a quarterly basis. The Government Money Market Portfolio declares
dividends each business day. Dividends in the Government Money Market Portfolio
are accrued and credited to your account each business day and reinvested or
distributed in cash within five days of the first business day of the following
month.
Unless you have elected otherwise by checking the appropriate box on the
Purchase Application either when you became a shareholder or by subsequently
amending your Purchase Application, all income dividends and capital gains
distributions will automatically be reinvested when paid in additional shares of
a Fund. Cash payment of dividends and distributions, if requested, will
generally be mailed within five days of the date such dividends and
distributions are paid. Shareholders subject to federal income taxation must
report dividends and distributions as income. Ordinary income distributions,
such as distributions from net investment income and distributions of short-term
capital gains, are taxable to shareholders as ordinary income whether received
in cash or in additional shares. In addition, capital gains distributions,
whether received in cash or in additional shares, are taxable as long-term
capital gains regardless of how long you have owned shares of a Fund. A portion
of the distributions paid by a Fund may qualify for the corporate
dividends-received deduction.
The information you will need in order to report the amount and type of
dividends and distributions you receive on your tax return will be sent to you
by the Company early each calendar year.
You should consider the tax implications of buying shares of the Value,
Fixed Income or Hickory Portfolios immediately prior to a distribution. If you
purchase shares shortly before the record date for a distribution, you will pay
a price for such shares that includes the value of the anticipated distribution
and you will be taxed on the distribution when it is received even though the
distribution represents a return of a portion of the purchase price.
Each Fund is required by the Internal Revenue Code of 1986 to withhold 31%
of distributions, redemptions, exchanges and other payments made from your
account if you have not complied with certain regulations of the Internal
Revenue Service. In order to avoid this withholding requirement, you must
certify on your Purchase Application that the Social Security Number or Taxpayer
Identification Number you have provided to the Company is correct and that
either you are not currently subject to backup withholding or are exempt from
backup withholding.
For additional information relating to taxes, see "Taxation" in the
Statement of Additional Information. You are advised to consult your own tax
advisor for more detailed information concerning federal, state and local income
taxation of Fund distributions as applied to your particular circumstances.
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<PAGE>
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MANAGEMENT
INVESTMENT ADVISER
Each Fund's Investment Adviser is Wallace R. Weitz & Company, a Nebraska
corporation formed in March, 1983 and wholly owned by Wallace R. Weitz. The
Adviser provides investment advice to each Fund and is responsible for the
overall management of the Company's business affairs, subject to the supervision
of the Company's Board of Directors. Under the terms of individual investment
advisory contracts with each Fund, the Adviser receives a monthly fee equal to
1% per annum of the average daily net assets of the Value and Hickory Portfolios
and .5% of the average daily net assets of the Fixed Income and Government Money
Market Portfolios.
Each Fund pays all expenses directly attributable to it. Certain expenses
such as fees of the Company's directors and other fees not directly attributable
to a particular Fund are allocated among the Funds based upon the total assets
of the Funds. The Adviser has agreed to reimburse the Value and Hickory
Portfolios or pay directly for a portion of the Value and Hickory Portfolio's
operating expenses to the extent of the advisory fee paid if the total of such
expenses exceeds 1.50% of the respective Fund's annual average net assets. The
Adviser has also agreed to reimburse the Fixed Income and Government Money
Market Portfolios or to pay directly for a portion of the Fixed Income or
Government Money Market Portfolio's operating expenses to the extent of the
advisory fee paid if the total of such expenses exceeds 1% of the respective
Fund's annual average net assets.
Wallace R. Weitz is primarily responsible for the day-to-day management of
the Value Portfolio. Mr. Weitz has been in the securities business since 1970,
serving as an account executive and securities analyst with G.A. Saxton & Co.,
Inc. from 1970 to 1973 and with Chiles, Heider & Co., from 1973 to 1983. Mr.
Weitz also provides investment advice to Weitz Partners, Inc., a registered
investment company consisting of one portfolio. In addition, he manages an
equity-oriented private investment partnership, an income private investment
partnership and certain individual accounts.
Mr. Weitz and Thomas D. Carney are primarily responsible for the day-to-day
management of the Fixed Income and Government Money Market Portfolios. Mr.
Carney, who was previously a municipal securities analyst with Smith Barney,
joined the Adviser as a fixed income analyst and securities trader in February,
1995 and became a co-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.
Richard F. Lawson is primarily responsible for the day-to-day management of
the Hickory Portfolio. Mr. Lawson, a Vice President of the Adviser and a
Chartered Financial Analyst, is a graduate of the Harvard Business School and
has previously been associated with Temple, Barker & Sloan, a management
consulting firm. Mr. Lawson has been an analyst with the Adviser since March,
1991 and a vice president since December, 1992.
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<PAGE>
TRANSFER AGENT AND ADMINISTRATIVE SERVICES
Wallace R. Weitz & Company also serves as the Transfer Agent, Dividend
Disbursing Agent and Administrator for the Funds pursuant to the terms of an
administration agreement. In this capacity it provides various administrative
and compliance services to each Fund, including, among others, daily pricing of
Fund shares, disbursing income dividends and capital gains distributions,
maintaining shareholder accounts, shareholder servicing and monitoring
compliance with recordkeeping and other regulatory requirements.
CODE OF ETHICS
The Company and Wallace R. Weitz & Company have each adopted a written Code
of Ethics which, among other things, requires all employees to obtain
preclearance before executing any personal securities transactions. In addition,
employees are required to report their personal securities transactions at the
end of each quarter. The Code of Ethics also restricts employees from executing
personal trades in a security if there are any pending orders in that security
by a Fund or other clients of Wallace R. Weitz & Company, restricts portfolio
managers from executing personal trades in a security for a period seven days
before and seven days after a transaction in that security by any Fund managed
by that portfolio manager, and prohibits employees from profiting from the
purchase and sale of the same security within a period of 60 days. The Board of
Directors of the Company, which reviews the administration of the Code of Ethics
on an annual basis, may impose penalties for violations of the Code of Ethics.
-29-
<PAGE>
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ADDITIONAL INFORMATION
ORGANIZATION AND CAPITAL STRUCTURE
Weitz Series Fund, Inc., a Minnesota corporation, is authorized to issue a
total of one hundred million shares of common stock in series with a par value
of $.001 per share. The Board of Directors has authorized ninety million of
these shares to be issued in four series, designated Value Portfolio, Fixed
Income Portfolio, Government Money Market Portfolio and Hickory Portfolio. The
Value Portfolio and the Government Money Market Portfolio each are authorized to
issue 30 million shares. The Hickory Portfolio and the Fixed Income Portfolio
are authorized to issue 20 million shares and 10 million shares respectively.
Upon receipt of payment for the shares, all issued and outstanding shares are
fully paid, nonassessable, redeemable and fully transferable. All shares, which
have no preemptive or conversion rights, have equal voting rights and 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.
On certain issues, such as the election of directors, all shares of Weitz
Series Fund, Inc. vote together. The shareholders of a particular Fund, however,
would vote separately on issues affecting only that particular Fund, such as the
approval of a change in a fundamental investment restriction for that Fund.
Annual shareholder meetings must be held only in certain specific situations
required by the Investment Company Act of 1940 or if called by the shareholders
pursuant to Minnesota law. Whether annual meetings will be held in the future
when not specifically required will be at the discretion of the Board of
Directors of the Company.
PERFORMANCE INFORMATION
The Funds may include their total returns in advertisements or reports to
shareholders or prospective investors. Total return is the percentage change in
the net asset value of a Fund share over a given period of time, with dividends
and distributions treated as reinvested. Performance of a Fund may be shown by
presenting one or more performance measurements, including cumulative total
return or average annual total return. Cumulative total return is the actual
total return of an investment in a Fund over a specific period of time and does
not reflect how much the value of the investment may have fluctuated during the
period of time indicated. Average annual total return is the annual compound
total return of a Fund over a specific period of time that would have produced
the cumulative total return over the same period if the Fund's performance had
remained constant throughout the period.
The Government Money Market Portfolio may also provide information on its
yield which is calculated by measuring the income generated by an investment in
the Fund over a seven-day period (net of fund expenses). This income is then
annualized. That is, the amount of income generated by the investment over the
seven-day period is assumed to be generated over each similar period each week
throughout a full year and is shown as a percentage of the investment. The
effective yield is calculated in a similar manner but, when annualized, the
income earned by the investment is assumed to be reinvested. The effective yield
will be slightly higher than the yield because of the compounding effect of the
assumed reinvestment.
The Fixed Income Portfolio may also provide information on its yield which
is calculated by dividing net investment income per share earned during a 30-day
period by the net asset value per share on the last day of the period. Net
investment income includes interest and dividend income earned on the Fund's
securities; it is net of all expenses. The yield calculation assumes that net
investment income earned over 30 days is compounded semiannually and then
annualized. Methods used to calculate advertised yields are standardized for all
bond mutual funds. However, these methods differ from the accounting methods
used by the Fund to maintain its books and records, and so the advertised 30-day
yield may not fully reflect the income paid to your own account.
-30-
<PAGE>
YOU SHOULD UNDERSTAND THAT ANY PERFORMANCE DATA PRESENTED REPRESENTS PAST
PERFORMANCE OF A FUND AND IS NOT INTENDED TO BE REPRESENTATIVE OF FUTURE
PERFORMANCE. INVESTMENT RESULTS WILL FLUCTUATE OVER A PERIOD OF TIME SO THAT
SHARES IN THE VALUE, FIXED INCOME AND HICKORY PORTFOLIOS WHEN REDEEMED MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. THERE CAN BE NO ASSURANCE THAT THE
GOVERNMENT MONEY MARKET PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE NET ASSET
VALUE OF $1.00 PER SHARE.
The Value Portfolio and Hickory Portfolio may compare their respective
performance to that of certain widely managed stock indices including the Dow
Jones Industrial Average, the Standard & Poor's 500 Stock Index, the Lipper
Growth Fund (Hickory Portfolio), the Lipper Growth and Income Fund Index (Value
Portfolio) and the NASDAQ and Value Line Composites. The Fixed Income Portfolio
may compare its performance to that of indices of bond prices and yields
prepared by Lehman Brothers and Salomon Brothers, Inc. The Funds may also use
comparative performance information compiled by entities that monitor the
performance of mutual funds generally such as Lipper Analytical Services, Inc.,
Morningstar, Inc. and The Value Line Mutual Fund Survey.
THE YEAR 2000 ISSUE
The Funds rely extensively on various computer systems in carrying out their
business activities, including the computer systems employed by their service
providers, such as Wallace R. Weitz & Company as the investment adviser, manager
and shareholder servicing agent and Norwest Bank Minnesota, N.A., as the
custodian (collectively, the "Service Providers"). In this connection, the Funds
are aware of the so-called "Year 2000 Issue" which involves the potential
problems that may be confronted by computer systems users the day after December
31, 1999, when computers using date-sensitive software must be able to properly
identify the Year 2000 in their systems. In the event that a computer system
fails to make the proper identification of the Year 2000, this could result in a
system failure or miscalculations causing disruptions of operations such as
pricing errors and account maintenance failures. The Funds are working with the
Service Providers to take steps that are reasonably designed to address the Year
2000 Issue with respect to the computer systems relied upon by the Funds. The
Funds have no reason to believe that these steps will not be sufficient to avoid
any material adverse impact on the Funds, although there can be no assurance of
this. The costs or consequences of incomplete or untimely resolution of the Year
2000 Issue are unknown to the Funds and the Service Providers at this time, but
could have a material adverse impact on the operations of the Funds and the
Service Providers.
DISTRIBUTOR
The Funds are distributed by Weitz Securities, Inc., a Nebraska corporation
which is affiliated with Wallace R. Weitz & Company, the Funds' investment
adviser. Weitz Securities, Inc. is wholly owned by Wallace R. Weitz. Shares of
each Fund are sold without any sales commissions or other transaction fees.
Weitz Securities, Inc. pays any sales or promotional costs incurred in
connection with the sale of shares of the Funds.
CUSTODIAN
Norwest Bank Minnesota, N.A., Sixth and Marquette, Minneapolis, Minnesota
55499, is the Custodian for the Funds.
AUDITOR
McGladrey & Pullen, LLP, 555 Fifth Avenue, New York, New York 10017, is the
independent certified public accountant and auditor for the Company.
LEGAL COUNSEL
Dechert Price & Rhoads, 1775 Eye Street, Washington, D.C. 20006 is the
Company's legal counsel.
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<PAGE>
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No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus. If given or
made, such other information or representations must not be relied upon as
having been authorized by the Company, the Investment Adviser or the
Distributor. This Prospectus does not constitute an offering by the Distributor
in any state in which such offering may not lawfully be made.
- --------------------------------------------------------------------------------
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WEITZ SERIES FUND, INC.
- --------------------------------------------------------------------------------
VALUE PORTFOLIO
FIXED INCOME PORTFOLIO
GOVERNMENT MONEY
MARKET PORTFOLIO
HICKORY PORTFOLIO
---------------------------
---------------------------
PROSPECTUS
JULY 30, 1998
------------------------------------
INVESTMENT ADVISER
WALLACE R. WEITZ & COMPANY
One Pacific Place, Suite 600
1125 South 103 Street
Omaha, Nebraska 68124-6008
----------------------------------------
<PAGE>
Weitz Series Fund, Inc.
STATEMENT OF ADDITIONAL INFORMATION
July 30, 1998
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
General Information
Investment Objective and Policies
Portfolio Turnover. . . . . . . . . . . . . . . . . . . . . . . . . . . 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 . . . . . . . . . . . . . . . . . . . 8
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 . . . . . . . . . . . . . 20
Capital Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Determination of Net Asset Value . . . . . . . . . . . . . . . . . . . . . 25
Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Calculation of Performance Data. . . . . . . . . . . . . . . . . . . . . . 27
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Appendix A - Interest Rate Futures Contracts, Bond
Index Futures, and Related Options. . . . . . . . . . . . . . . . . . . A-1
Appendix B - Ratings of Corporate Obligations
and Commercial Paper. . . . . . . . . . . . . . . . . . . . . . . . . . B-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 30, 1998, and should be read in conjunction therewith. Copies of the
Prospectus may be obtained from the Company at 1125 South 103 Street, Suite 600,
Omaha, Nebraska, 68124-6008.
<PAGE>
GENERAL INFORMATION
The shares of Weitz Series Fund, Inc. (the "Company") 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 "Fund" or, collectively, as the "Funds"). 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 Fund are set forth
below.
INVESTMENT OBJECTIVES AND POLICIES 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 Funds 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 Fund 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 Fund's outstanding shares. "Majority," as used herein means the
lesser of (a) 67% of the Fund'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 Fund's outstanding
shares.
Any investment restriction or limitation referred to below 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 and
results therefrom.
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 Fund 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, 1998 and March 31, 1997 was 39% and
39% respectively. The portfolio turnover for the Fixed Income Portfolio for the
periods ending March 31, 1998 and March 31, 1997 was 21% and 24% respectively.
The portfolio turnover for the Hickory Portfolio for the periods ending
March 31, 1998 and March 31, 1997, was 29% and 28% 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
<PAGE>
appropriate. The higher a portfolio's turnover rate, the higher will be its
expenditures for brokerage commissions and related transaction costs.
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 Wallace R. Weitz & Company (the AInvestment 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.
-2-
<PAGE>
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.
INVESTMENT COMPANY SHARES The Value Portfolio may purchase securities of
other investment companies subject to the restrictions of the 1940 Act. 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
-3-
<PAGE>
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 exceed 10% of the value of the Value
Portfolio's total 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
"Pricing of Shares" 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.
SHORT SALES, PUT AND CALL OPTIONS The Value Portfolio may engage in short
sales and sell put and call options. Short sales involve the sale of a security
that the Value Portfolio does not own (but instead has borrowed) in anticipation
of a decline in the value of the security. To the extent that the Value
Portfolio engages in short sales, the Fund will place in a segregated account a
sufficient amount of cash and securities as required by applicable federal
securities regulations in order to cover the transaction. In the event that the
value of the security sold short increases in value rather than decreases, the
Value Portfolio would suffer a loss when it purchases the security sold short.
Since there is, theoretically, no limit to how high the price of the stock might
rise, the potential loss from the short sale is greater than the original
proceeds of the short sale. The Value Portfolio may also engage in short sales
"against the box." A short sale "against the box" is a form of short sale in
which the Value Portfolio contemporaneously owns or has the right to obtain at
no additional cost securities identical to those sold short. The segregation of
cash or other securities is not required for
-4-
<PAGE>
short sales "against the box." In the event that the Value Portfolio were to
sell securities short "against the box" and the price of such securities were to
then increase rather than decrease, the Value Portfolio would forego the
potential realization of the increased value of the shares sold short.
Options such as puts and calls are contracts giving the holder the right to
either buy or sell a financial instrument at a specified price before a
specified time. Investments in puts and calls involve certain risks including
the risk that since puts and calls are options which have an expiration date,
the Value Portfolio could lose the entire cost of those puts and calls which
expire worthless.
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. 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,
except to the extent that the Fund is permitted to use options.
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 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.
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 Value
Portfolio's net assets at the time any borrowing is made.
7. 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.
8. Participate on a joint or joint and several basis in any securities
trading account.
9. Invest in companies for the purpose of exercising management or
control.
10. 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 U.S.
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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.
11. 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 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.
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.
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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 Fixed Income Portfolio and all affiliated
persons of the Fixed Income Portfolio, (ii) no issuer of a security acquired by
the Fixed Income 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 Fixed Income
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.
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.
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 not exceeding 13 months
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issued or guaranteed by the U.S. Government and its agencies and
instrumentalities and repurchase agreements thereon. 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. 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;
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;
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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 Government Money
Market Portfolio and all affiliated persons of the Government Money Market
Portfolio, (ii) no issuer of a security acquired by the Government Money
Market 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 Government
Money Market 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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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.
INVESTMENT COMPANY SHARES The Hickory Portfolio may purchase securities
of other investment companies subject to the restrictions of the 1940 Act.
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 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
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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 "Pricing of Shares" 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" 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
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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.
SHORT SALES, PUT AND CALL OPTIONS The Hickory Portfolio may engage in
short sales and sell put and call options. Short sales involve the sale of a
security that the Hickory Portfolio does not own (but instead has borrowed)
in anticipation of a decline in the value of the security. To the extent
that the Hickory Portfolio engages in short sales, the Fund will place in a
segregated account a sufficient amount of cash and securities as required by
applicable federal securities regulations in order to cover the transaction.
In the event that the value of the security sold short increases in value
rather than decreases, the Hickory Portfolio would suffer a loss when it
purchases the security sold short. Since there is, theoretically, no limit
to how high the price of the stock might rise, the potential loss from the
short sale is greater than the original proceeds of the short sale. The
Hickory Portfolio may also engage in short sales "against the box." A short
sale "against the box" is a form of short sale in which the Hickory Portfolio
contemporaneously owns or has the right to obtain at no additional cost
securities identical to those sold short. The segregation of cash or other
securities is not required for short sales "against the box." In the event
that the Hickory Portfolio were to sell securities short "against the box"
and the price of such securities were to then increase rather than decrease,
the Hickory Portfolio would forego the potential realization of the increased
value of the shares sold short.
Options such as puts and calls are contracts giving the holder the right
to either buy or sell a financial instrument at a specified price before a
specified time. Investments in puts and calls involve certain risks
including the risk that since puts and calls are options which have an
expiration date, the Hickory Portfolio could lose the entire cost of those
puts and calls which expire worthless.
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.
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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.
8. Participate on a joint or joint and several basis in any securities
trading account.
9. Invest in companies for the purpose of exercising management or
control.
10. 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.
11. Adopt any investment objective otherwise than as described under
"Investment Objective and Policies" in the Prospectus.
PURCHASE OF SHARES
See "Purchasing Shares" in the Prospectus for basic information on how
to purchase shares of the Portfolios.
To purchase shares, a shareholder should complete a Purchase Application
and transfer funds for such purchase either by sending a check or a wire
transfer to the Fund. The price paid for such shares will be the next
determined net asset value after the Fund receives the application and
payment for the shares. All purchase orders are subject to acceptance by
authorized officers of the Fund and are not binding until so accepted. Net
asset value of a Fund's shares is determined once each day at the close of
the New York Stock Exchange (ordinarily 3:00 p.m. Central time). If the
completed order is received before such 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 such time the
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investor will become a shareholder of record at the net asset value
determined the following business day.
When an investor purchases shares of the Funds, a shareholder's
investment account is opened in his/her name on the books of the Company. No
certificates for shares are issued. A continuing permanent record of each
shareholder's investment account is maintained by the Company. 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 Funds, unless the shareholder has elected on the
Purchase Application or has subsequently directed the Company that the
shareholder will receive such distributions in cash.
The Fund has authorized one or more brokers or other financial
intermediaries to accept on its behalf purchase and redemption orders. Such
brokers or financial intermediaries are authorized to designate other
intermediaries to accept purchase and redemption orders on the Fund's behalf.
The Fund will be deemed to have received a purchase or redemption order when
an authorized intermediary or, if applicable, a intermediary's authorized
designee, accepts the order. A shareholder's order will be priced at the
Fund's net asset value next computed after such order is accepted by an
authorized broker or the broker's authorized designee.
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 registered
President, Treasurer investment adviser, since July 1983; President, Weitz
and Director Securities, Inc., a registered broker-dealer, since its
Age: 49 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 public accountants)
Director since its inception in 1985; Vice President, Wallace
Age: 50 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.
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Thomas R. Pansing, Jr.* Partner, Gaines, Mullen, Pansing & Hogan, attorneys,
Director since 1973; Director, Weitz Value fund, Inc., January
Age: 53 1986 until March 1990; director, Weitz Partners, Inc.
since July, 1993.
Richard D. Holland Prior to his retirement in 1984, Mr. Holland was Vice
Director Chairman, Rollheiser, Holland & Kahler (1979-1984)
Age: 77 (advertising) and President of Holland, Dreves & Reilly
(1954-1979) (advertising); Director, Weitz Partners,
Inc. since June, 1995.
Delmer L. Toebben President, Curzon Advertising & Display, Inc. since
Director 1977; Director, Weitz Partners, Inc., since July, 1996.
Age: 67
Lorraine Chang Independent Consultant (organizational change
Director strategies-government and non-profit organizations)
Age: 47 since 1995; Associate Assistant Secretary, United
States Department of Labor (1993-1995); General
Manager, Union Pacific Railroad (1987-1993); Law
Department, Union Pacific Railroad (1980-1987);
Director, Weitz Partners, Inc. since June, 1997.
Mary K. Beerling Vice President, Wallace R. Weitz & Company since July
Vice President and 1994; Vice President, Weitz Securities, Inc., since
Secretary July 1994; Vice President and Secretary, Weitz Partners
Age: 57 Inc., July 1994; Partner, Kutak Rock, attorneys, from
1989 to 1994.
Linda L. Lawson Vice President, Wallace R. Weitz & Company since June,
Vice President 1992; Vice President, Weitz Partners, Inc. since July,
Age: 44 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 & Company since
Vice President and December 1992 and a financial analyst since January
Assistant Secretary 1991; Portfolio Manager, Weitz Series Fund, Inc., since
Age: 40 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.
-16-
<PAGE>
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, 1998. Under the Advisory Agreement remuneration of officers
is paid by the Investment Adviser.
COMPENSATION TABLE
<TABLE>
<CAPTION>
Total compensation
Aggregate from Company and
Name of compensation from Weitz Partners Fund, Inc.
Person, Position the Company Paid to Directors
---------------- ------------ ------------------
<S> <C> <C>
Lorraine Chang, Director (1) $4,800 $6,000
John W. Hancock, Director 5,160 6,600
Richard D. Holland, Director 5,160 6,600
Thomas R. Pansing, Jr., Director 4,800 6,000
Delmer L. Toebben, Director 4,000 5,000
Wallace R. Weitz, Director (2) N/A N/A
</TABLE>
(1) Ms. Chang became a member of the Board of Directors June 2, 1997.
(2) As a director who is also an officer of the Investment Adviser,
Mr. Weitz received no compensation for his service as a director.
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 Funds is
Wallace R. Weitz & Company. The Investment Adviser acts as such pursuant to
a written agreement with each Fund which will be periodically approved by the
directors or the shareholders of the respective Fund. Weitz Securities, Inc.
acts as the Fund's distributor ("Distributor"). The address for the
Investment 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
Investment Adviser to the Funds under individual Management and Investment
Advisory Agreements ("Advisory Agreements") with each Fund. The Advisory
Agreement with respect to the Fixed Income Portfolio was last approved by the
Board of Directors on February 10, 1998, 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 February 10, 1998 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,
-17-
<PAGE>
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 February 10, 1998, 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 February 10,
1998.
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 Company or by vote of a
majority of each Funds' outstanding voting securities on not more than 60
days' written notice to the Investment Adviser, or by the Investment Adviser,
on not more than on 60 days' written notice to the Company. 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
respective Fund, 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 Investment Adviser for the fiscal years ended March 31, 1998, 1997 and
1996 was $3,401,132, $2,514,149 and $1,429,179 respectively for the Value
Portfolio, $199,039, $88,889, and $50,292 respectively for the Hickory
Portfolio, and $130,406, $86,579 and $71,277 respectively for the Fixed
Income Portfolio. Advisory fees owed by the Government Money Market
Portfolio were $41,977, $26,351 and $17,638 for the fiscal years ended March 31,
1998 1997, and 1996, respectively. After fee waivers the Government Money
Market Portfolio paid $20,988, $13,175 and $8,819, respectively, for such
fiscal years.
Under the Advisory Agreements, the Investment Adviser is responsible for
selecting the Funds' 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
shares of the Funds.
The Company will pay all expenses of operations not specifically assumed
by the Investment Adviser. These will include, without 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
-18-
<PAGE>
carried by the Company; and expenses of complying with federal, state and
other laws. Such expenses will be charged to the Fund for which such items
were incurred, but if such items are not directly related to a Fund, they
will be allocated among the Funds based upon the relative net assets of the
Funds.
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 Company 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 Company entered into an agreement with another investment
adviser the Company could be required to change its corporate name.
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 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
effective March 1, 1998, the Funds pay a monthly fee equal, on an annual
basis to the following amounts, based upon total assets of the Funds:
<TABLE>
<CAPTION>
Asset break points
greater than less than % of Nav
------------ ------------------ --------
<S> <C> <C>
0 25,000,000 0.225%
25,000,000 100,000,000 0.200%
100,000,000 500,000,000 0.175%
500,000,000 1,000,000,000 0.150%
</TABLE>
In no event will the fee be less than $25,000 per year. Prior to March 1,
1998 the Funds paid a monthly fee based upon the costs to the Administrator
of providing services to the Funds based upon the Administrator's reasonable
allocation of expenses, but not to exceed .30% of average daily net assets
for the Value Portfolio and .25% of average daily net assets for the Fixed
Income, Government Money Market and Hickory Portfolios. Services provided
under the Administration Agreement include, without limitation, customary
services related to fund accounting, recordkeeping, compliance, registration,
transfer agent and dividend disbursing.
-19-
<PAGE>
The administrative fees for the fiscal year ended March 31, 1998 were .18%
for the Value Portfolio, and after fee waivers, were .06% for the Fixed Income
Portfolio, 0.0% for the Government Money Market Portfolio and .24% for the
Hickory Portfolio. The total amount of fees owed under the Administration
Agreement for the fiscal years ended March 31, 1998, 1997 and 1996,
respectively, was $608,221, $504,410 and $346,065 for the Value Portfolio,
$58,302, $43,290 and $35,532 for the Fixed Income Portfolio, $20,810, $13,175
and $8,819 for the Government Money Market Portfolio and $48,725, $22,222 and
$12,573 for the Hickory Portfolio. After fee waivers, the Fixed Income
Portfolio paid $16,727, $11,982 and $10,821 for such fiscal years and the
Hickory Portfolio paid $17,068 and $6,922, for the fiscal years ended March 31,
1997 and 1996, respectively. All administrative fees for the Government Money
Market Portfolio were waived in such fiscal years. No administrative fees were
waived for the Value Portfolio in such fiscal years or for the Hickory Portfolio
in the fiscal year ended March 31, 1998.
THE DISTRIBUTOR The Distributor offers shares of the Funds on a continuous
basis without compensation from the Company.
OTHER SERVICES The custodian for the Funds is Norwest Bank Minnesota,
N.A., Minneapolis, Minnesota. The Company's accountant is McGladrey &
Pullen, LLP, New York, New York. The Company's legal counsel is Dechert
Price & Rhoads, Washington, DC.
PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATIONS
The Investment Adviser furnishes advice and recommendations with respect to
the Funds' 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 Funds' 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 Fund securities with brokers or dealers who have provided research,
statistical or other financial information.
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 a 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
-20-
<PAGE>
reasonable in relation to the value of the brokerage and research services
provided by the broker 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 Funds.
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, Fund 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, 1998, 1997 and 1996, the Fund paid
the following brokerage commissions for securities transactions in the
Portfolios:
<TABLE>
<CAPTION>
Fiscal Years Ended March 31,
Portfolios 1998 1997 1996
---------- ---- ---- ----
<S> <C> <C> <C>
Value 948,886 689,400 452,206
Fixed Income 36,750 8,538 9,647
Government Money Market 1,602 234 -0-
Hickory 107,253 41,382 29,572
</TABLE>
The percent of total commissions paid by each Fund during the fiscal year
ended March 31, 1998 to firms that provided research service to the Investment
Adviser was 87% for the Value Portfolio, 79% for the Fixed Income Portfolio,
100% for the Government Money Market Portfolio and 81% for the Hickory
Portfolio.
As of March 31, 1998, Fixed Income Portfolio owned $1,022,383 aggregate
amount of the securities of Merrill, Lynch & Co., a regular broker-dealer of the
Funds within the meaning of Rule 10b-1 of the Investment Company Act of 1940.
OPTION TRADING LIMITS The writing by the Company 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 Fund may write may be affected by options written by the other
Funds, 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
-21-
<PAGE>
Limits, and it may impose certain other sanctions. The Investment Adviser
believes it is unlikely that the level of option trading by the Company will
exceed applicable limitations.
CAPITAL STOCK
On June 30, 1998, the Fund had 19,212,716, 2,998,849, 15,328,965 and 6,482,251
shares outstanding designated Value Portfolio, Fixed Income Portfolio,
Government Money Market Fund and Hickory Portfolio respectively. As of such
date the directors and officers of the Company owned collectively the amounts of
each Fund set forth below. Also as of such date the persons set forth below
owned 5% or more of the shares of a Fund.
VALUE PORTFOLIO
The Officers and Directors of the Fund owned 776,849 shares or 4% of the Value
Portfolio's outstanding shares.
<TABLE>
<CAPTION>
NAME AND ADDRESS SHARES/NATURE OF OWNERSHIP %
---------------- -------------------------- ---
<S> <C> <C>
Charles Schwab & Co Inc. 1,491,329 7.8%
Special Custody Acct for the Record
Benefit of Customers
ATTN: Mutual Funds
101 Montgomery ST
San Francisco, CA 94104
</TABLE>
FIXED INCOME PORTFOLIO
The Officers and Directors of the Fund owned 926,284 shares or 31% of the
outstanding shares of the Fixed Income Portfolio.
<TABLE>
<CAPTION>
NAME AND ADDRESS SHARES/NATURE OF OWNERSHIP %
---------------- -------------------------- ---
<S> <C> <C>
Holland Annuity Trust 154,011 5.1%
Norwest Bank, Custodian Record
10010 Regency CIR #300
Omaha, NE 68114
The Holland Foundation 573,012 19.1%
Richard D. Holland, President Record
1501 South 80th ST
Omaha, NE 68124
</TABLE>
-22-
<PAGE>
<TABLE>
<S> <C> <C>
Wallace R. Weitz & Co. 161,098 5.4%
1125 South 103 ST Suite 600 Record
Omaha, NE 68124
</TABLE>
GOVERNMENT MONEY MARKET
The Officers and Directors of the Fund owned 851,575 shares or 6% of the
Government Money Market Portfolio's outstanding shares.
<TABLE>
<CAPTION>
NAME AND ADDRESS SHARES/NATURE OF OWNERSHIP %
---------------- -------------------------- ---
<S> <C> <C>
Immanuel Healthcare Systems 2,006,301 13.1%
6803 North 68 PLZ Record
Omaha, NE 68152
Southwest Iowa Eye Clinic 3,164,622 20.6%
P/S Plan FBO TJG Leitch Record
Drs. Leitch, Hoff, & Hanks,
Trustees
801 Harmony ST #304
Council Bluffs, IA 51503
Wallace R. Weitz & Co. 844,130 5.5%
1125 South 103 ST Suite 600 Record
Omaha, NE 68124
</TABLE>
HICKORY PORTFOLIO
The Officers and Directors of the Fund owned 162,261 shares or 3 % of the
Hickory Portfolio's outstanding shares.
<TABLE>
<CAPTION>
NAME AND ADDRESS SHARES/NATURE OF OWNERSHIP %
---------------- -------------------------- ---
<S> <C> <C>
Donaldson, Lufkin & Jenrette 675,815 10.4%
Securities Corp. Record
Mutual Funds, 5th Floor
PO Box 2052
Jersey City, NJ 07303
</TABLE>
-23-
<PAGE>
<TABLE>
<S> <C> <C>
Charles Schwab & Co. Inc. 1,769,473 27.3%
Special Custody Acct for the Record
Benefit of Customers
ATTN Mutual Funds
101 Montgomery ST
San Francisco, CA 94104
</TABLE>
- --------------------
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
Company 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.
-24-
<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
"Pricing of Shares." The net asset value of the Fund 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, Martin Luther King
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas.
The Securities and Exchange Commission adopted Rule 2a-7 under the
Investment Company Act of 1940 which permits the Company to compute the
Government Money Market Portfolio's net asset value per share using the
amortized cost method of valuing portfolio securities. 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 Fund 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 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.
-25-
<PAGE>
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 Funds also fluctuates. On March 31, 1998, the net asset value per
share for the Value Portfolio was calculated as follows:
Net Assets $448,276,485 Net Asset Value per
----------------------------- =
Shares Outstanding 15,293,691 Share $29.311
On March 31, 1998, the net asset value per share for the Fixed Income Portfolio
was calculated as follows:
Net Assets $30,334,427 Net Asset Value per
---------------------------- =
Shares Outstanding 2,693,036 Share $11.264
On March 31, 1998, the net asset value per share for the Hickory Portfolio was
calculated as follows:
Net Assets $44,328,113 Net Asset Value per
---------------------------- =
Shares Outstanding 1,507,036 Share $29.414
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 Funds of securities owned by them
is not reasonably practicable, or it is not reasonably practicable for the Funds
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 Company intends to qualify each of its Funds 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 Fund 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. The Code also
requires a regulated investment company to diversify its holdings. This means
that a Fund 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
-26-
<PAGE>
by a Fund may not exceed 5% of the value of 50% of a Fund's assets.
Additionally, a Fund 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 Fund 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 Fund
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 or is exempt from
back-up withholding. 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 net investment income per share
earned during a 30-day period by the net asset value per share on the last
day of the period. Net investment income includes interest and dividend
income earned on the Fund's securities; it is net of all expenses. The yield
calculation assumes that net investment income earned over 30 days is
compounded semiannually and then annualized. Methods used to calculate
advertised yields are standardized for all bond mutual funds. However, these
methods differ from the accounting methods used by the Fund to maintain its
books and records, and so the advertised 30-day yield may not fully reflect
the income paid to a shareholder's account. The Fixed Income Portfolio's net
investment income changes in response to fluctuations in interest rates and
in the expenses of the Fund. 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
-27-
<PAGE>
for providing a basis for comparison with other investment alternatives.
However, the Fixed Income 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. 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, 1998
was 5.7%.
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 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
-28-
<PAGE>
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, 1998, was 5.0%
and 5.1%, respectively.
The Value Portfolio and Hickory Portfolio may include their respective
total return in advertisements or reports to shareholders or prospective
investors. Total return is the percentage change in the net asset value of a
Fund share over a given period of time, with dividends and distributions treated
as reinvested. Performance of the Value Portfolio and Hickory Portfolio may be
shown by presenting one or more performance measurements, including cumulative
total return or average annual total return. Cumulative total return is the
actual total return of an investment in the respective Fund over a specific
period of time and does not reflect how much the value of the investment may
have fluctuated during the period of time indicated. Average annual total
return is the annual compound total return of the respective Fund over a
specific period of time that would have produced the cumulative total return
over the same period if the Fund's performance had remained constant throughout
the period.
The Value Portfolio and Hickory Portfolio may compare their respective
performance to that of certain widely managed stock indices including the Dow
Jones Industrial Average, the Standard & Poor's 500 Stock Index, the Lipper
Growth Fund Index (Hickory Portfolio), the Lipper Growth and Income Fund Index
(Value Portfolio) and the NASDAQ and Value Line Composites. The Funds may also
use comparative performance information compiled by entities that monitor the
performance of mutual funds generally such as Lipper Analytical Services, Inc.,
Morningstar, Inc. and The Value Line Mutual Fund Survey.
The average annual total return for the Value Portfolio for the one, five
and ten year periods ended March 31, 1998, was 58.8%, 21.9%, 17.9%,
respectively. Cumulative total return for the Value Portfolio from inception
(May 9, 1986) to March 31, 1998, was 478.5%. The total return and cumulative
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,
1998 and for the period since inception (December 23, 1988) to March 31, 1998
was 10.7%, 6.3% and 7.6%, respectively. Cumulative total return for the Fixed
Income Portfolio from inception to March 31, 1998 was 97.2%. The average annual
total return for the Hickory Portfolio for the one year period ended March 31,
1998 and for the period since inception (April 1, 1993) to March 31, 1998 was
71.8% and 26.7%, respectively. Cumulative total return for the Hickory
Portfolio from inception to March 31, 1998 was 226.7%.
YOU SHOULD UNDERSTAND THAT ANY PERFORMANCE DATA PRESENTED REPRESENTS PAST
PERFORMANCE OF A FUND AND IS NOT INTENDED TO BE REPRESENTATIVE OF FUTURE
PERFORMANCE. INVESTMENT RESULTS WILL FLUCTUATE OVER A PERIOD OF TIME SO THAT
YOUR SHARES IN THE VALUE PORTFOLIO, FIXED INCOME PORTFOLIO OR HICKORY PORFOLIO
WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
-29-
<PAGE>
FINANCIAL STATEMENTS
The audited statements and notes included in the Annual Reports for the
Value Portfolio, Fixed Income Portfolio, Government Money Market Portfolio and
the Hickory Portfolio dated March 31, 1998 and filed with the Securities and
Exchange Commission 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 Company at its address or phone number shown on the cover
page of this Statement of Additional Information.
-30-
<PAGE>
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
A-2
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exceeds, in the case of a call, or is less than, in the case of 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
A-3
<PAGE>
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 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
A-4
<PAGE>
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 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 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.
A-5
<PAGE>
APPENDIX B
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.
B-1
<PAGE>
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 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
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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
B-3
<PAGE>
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, 1998
Statements of Assets and Liabilities
Statement of Operations
Statements of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
B. Weitz Series Fund, Inc.-Value Portfolio
(i) Accountants' Report dated April 17, 1998
Statements of Assets and Liabilities
Statement of Operations
Statements of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
C. Weitz Series Fund, Inc.-Government Money Market Portfolio
(i) Accountants' Report dated April 17, 1998
Statements of Assets and Liabilities
Statement of Operations
<PAGE>
Statements of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
D. Weitz Series Fund, Inc.-Hickory Portfolio
(i) Accountants' Report dated April 17, 1998
Statements of Assets and Liabilities
Statement of Operations
Statements of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
(b) Exhibits
Exhibit No. Description
----------- -----------
1. Articles of Incorporation
1.(a) Articles of Amendment to Articles of Incorporation
*2. Amended and Restated Bylaws
*5.(a) Amended and Restated Management and Investment Advisory
Agreement dated October 28, 1996-Fixed Income Portfolio
*5.(b) Amended and Restated Management and Investment Advisory
Agreement dated October 28, 1996-Value Portfolio
*5.(c) Amended and Restated Management and Investment Advisory
Agreement dated October 28, 1996-Government Money
Market Portfolio
*5.(d) Amended and Restated Management and Investment Advisory
Agreement dated October 28, 1996-Hickory Portfolio
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<PAGE>
6. Underwriting Agreement
8. Custodian Agreement
9.(a) Amended and Restated Administration Agreement dated
February 10, 1998
9.(b) Agreement and Plan of Merger between Weitz Value Fund,
Inc. and Weitz Series Fund, Inc.
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)
11.(a) Consent of McGladrey & Pullen, LLP
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. Schedules of Computation for Performance Quotations
27. Financial Data Schedules
* Incorporated by reference to Fund's Registration Statement on Form N-IA
filed May 30, 1997.
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**Incorporated by reference to Fund's Post-Effective Amendment No. 12 filed
April 19, 1996
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None.
Item 26. NUMBER OF HOLDERS OF SECURITIES
<TABLE>
<CAPTION>
Title of Class Number of Record Holders
-------------- ------------------------
<S> <C>
Fixed Income Portfolio 286 as of June 30, 1998
Value Portfolio 3,845 as of June 30, 1998
Government Money Market Portfolio 213 as of June 30, 1998
Hickory Portfolio 2,987 as of June 30, 1998
</TABLE>
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
C-4
<PAGE>
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 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 "Directors and Executive
Treasurer Officers" in the Statement of Additional
and Director 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. Vice President See caption "Directors and Executive
Lawson Officers" in the Statement of Additional
Information forming a part of the
Registration Statement
C-5
<PAGE>
Barbara Weitz Secretary and Faculty Member, University of Nebraska
Director 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.
(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 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
C-6
<PAGE>
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.
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 30th day of July,
1998. 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 30th, 1998:
Signature Title
--------- -----
/s/ Wallace R. Weitz President, Principal Executive Officer,
- ------------------------------ Principal Financial and Accounting Officer
Wallace R. Weitz and Director
/s/ John W. Hancock* Director
- ------------------------------
John W. Hancock
/s/ Richard D. Holland* Director
- ------------------------------
Richard D. Holland
/s/ Thomas R. Pansing, Jr.* Director
- ------------------------------
Thomas R. Pansing, Jr. /s/ Wallace R. Weitz*
-----------------------------
Wallace R. Weitz
Attorney-in-fact
C-7
<PAGE>
/s/ Delmer L. Toebben* Director
- ------------------------------
Delmer L. Toebben
/S/ Lorraine Chang** Director
- ------------------------------
Lorraine Chang
*Pursuant to Power of Attorney filed May 30, 1997
**Pursuant to Power of Attorney filed herewith
C-8
<PAGE>
[WEITZ LETTERHEAD]
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENT, that the undersigned constitutes and
appoints Wallace R. Weitz, Mary K. Beerling, Linda L. Lawson, Richard F.
Lawson, Patrick W.D. Turley and Paul F. Roye and each of them, his true and
lawful attorney-in-fact and agent with full power of substitution and
resubstitution for him in his name, place, and stead, to sign any and all
registration statements applicable to Weitz Partners, Inc. and any amendments
or supplements thereto, and to file the same, with all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, or the securities administrator of any jurisdiction, granting
unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent, or his or
her substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
June 3, 1997
/S/ Lorraine Chang
-----------------------------
Lorraine Chang
<PAGE>
Exhibits
To
Weitz Series Fund, Inc.
Post-Effective Amendment Number 15
To
Form N1-A
as filed on July 30, 1998
C-9
<PAGE>
Exhibit No. Description
----------- -----------
1. Articles of Incorporation
1.(a) Articles of Amendment to Articles of Incorporation
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.
10.(a) Opinion of Cline Williams-Fixed Income Portfolio
10.(b) Opinion of Cline Williams-Value Portfolio
10.(c) Opinion and Consent of Cline Williams arising out of Plan of
Merger
10.(d) Opinion of Cline Williams-Government Money Market Portfolio
10.(e) Opinion of Cline Williams-Hickory Portfolio
11. Consent of McGladrey & Pullen, LLP
13.(a) Subscription Agreement of Wallace R. Weitz
13.(b) Subscription Agreement for initial capitalization of Hickory
Portfolio
16. Schedules of Computations
27. Financial Data Schedules
C-10
<PAGE>
ARTICLES OF INCORPORATION
OF
Weitz Series Fund, Inc.
For the purpose of forming a Minnesota business corporation pursuant to
the provisions of Minnesota Statutes, Chapter 302A, as now enacted or hereafter
amended, the following Articles of Incorporation are adopted:
ARTICLE 1.
The name of this corporation is Weitz Series Fund, Inc.
ARTICLE 2.
This corporation shall have general business purposes and shall have
unlimited power to engage in and do any lawful act concerning any and all lawful
businesses for which corporations may be organized under the Minnesota Statutes,
Chapter 302A. Without limiting the generality of the foregoing, this corporation
shall have specific power:
(a.) To conduct, operate and carry on the business of an
"open-end" management investment company pursuant to applicable state
and federal regulatory statues, and exercise all the powers necessary
and appropriate to the conduct of such operations.
(b) To purchase, subscribe for, invest in or otherwise
acquire, and to own, hold, pledge, mortgage, hypothecate, sell,
possess, transfer or otherwise dispose of, or turn to account or
realize upon, and generally deal in, all forms of securities of every
kind, nature, character, type and form, and other financial instruments
which may not be deemed to be securities, including but not limited to
futures contracts and options thereon. Such securities and other
financial instruments may include but are not limited to shares,
stocks, bonds, debentures, notes, scrip, participation certificates,
rights to subscribe, warrants, options, certificates of deposit,
bankers' acceptances, repurchase agreements, commercial paper, choses
in action, evidences of indebtedness, certificates of indebtedness and
certificates of interest of any and every kind and nature whatsoever,
secured and unsecured, issued or to be issued, by any corporation,
company, partnership (limited or general), association, trust, entity
or person, public or private, whether organized under the laws of the
United States, or any state, commonwealth, territory or possession
thereof, or organized under the laws of any foreign country, or any
state, province, territory or possession thereof, or issued or to be
issued by the United States government or any agency or instrumentality
thereof, and futures contracts and options thereon.
(c) In the above provisions of this Article 2, purposes shall
also be construed as powers and powers shall also be construed as
purposes, and the enumeration of specific purposes or powers shall not
be construed to limit other statements of purposes or to limit purposes
or powers which the corporation may otherwise have under applicable
law, all of the same being separate and cumulative, and all of the same
may be carried on, promoted and pursued, transacted or exercised in any
place whatsoever.
ARTICLE 3.
This corporation shall have perpetual existence.
<PAGE>
ARTICLE 4.
The location and post office address of the registered agent and office
of the corporation in Minnesota is The Prentice-Hall Corporation System, Inc.,
Multi-Foods Tower, 33 South Sixth Street, Minneapolis, Minnesota 55402.
ARTICLE 5.
The total number of authorized shares of this corporation is
100,000,000 all of which shall be common shares of the par value of $.001 each.
Of said common shares, 10,000,000 shares may be issued in the series of common
shares hereby designated Intermediate Term Fixed Income Portfolio shares. The
balance of 90,000,000 shares may be issued in such series with such
designations, preferences and relative, participating, optional or other special
rights, or qualifications, limitations or restrictions thereof, or may be
authorized for issuance as additional shares of any existing series or portfolio
as and to the extent stated or expressed in a resolution or resolutions
providing for the issue of any such series or shares of common shares adopted
from time to time by the Board of Directors of this corporation pursuant to the
authority hereby vested in said Board of Directors. The corporation may issue
and sell any of its shares in fractional denominations to the same extent as its
whole shares, and shares and fractional denominations shall have, in proportion
to the relative fractions represented thereby, all the rights of whole shares,
including, without limitation, the right to vote, the right to receive dividends
and distributions, and the right to participate upon liquidation of the
corporation. The Intermediate Term Fixed Income Portfolio Common Shares and each
other series of common shares which the Board of Directors may establish , as
provided herein, may evidence, if the Board of Directors shall so determine by
resolution, an interest in a separate and distinct portion of the corporation's
assets, which shall take the form of a separate portfolio of investment
securities, cash and other assets. Authority to establish such separate
portfolios is hereby vested in the Board of Directors of this corporation, and
such separate portfolios may be established by the Board of Directors without
the authorization or approval of the holders of any series of shares of this
corporation.
ARTICLE 6.
The shareholders of each series of common shares of this corporation:
(a) shall not have the right to cumulate votes for the election
of the Directors; and
(b) shall have no preemptive right to subscribe to any issue of
shares of any class or series of this corporation now or hereafter
made.
ARTICLE 7.
The shareholders of the Intermediate Term Fixed Income
Portfolio Common Shares and all future series of shares authorized by the Board
of Directors which evidence a separate portfolio of investment securities shall
have the following rights and preferences:
(a) On any matter submitted to a vote of shareholders of this
corporation, all common shares of this corporation then issued and
outstanding and entitled to vote, irrespective of series, shall be
voted in the aggregate and not by series, except: (i) when otherwise
required by Minnesota Statutes, Chapter 302A, in which case shares will
be voted by individual series; (ii) when otherwise required by the
Investment Company Act of 1940, as amended, or the rules adopted
thereunder, in which case shares shall be voted by individual series;
and (iii) when the matter does not affect the interests of a particular
series, in which case only shareholders of the series affected shall be
entitled to vote thereon and shall vote by individual series.
<PAGE>
(b) All consideration received by this corporation for the
issue or sale of shares of any series, together with all assets,
income, earnings, profits and proceeds derived therefrom (including all
proceeds derived from the sale, exchange or liquidation thereof and, if
applicable, any assets derived from any reinvestment of such proceeds
in whatever form the same may be) shall become part of the assets of
the portfolio to which the shares of that series relate, for all
purposes, subject only to the rights of creditors, and shall be so
treated upon the books of account of this corporation. Such assets,
income, earnings, profits and proceeds (including any proceeds derived
from the sale, exchange or liquidation thereof and, if applicable, any
assets derived from any reinvestment of such proceeds in whatever form
the same may be) are herein referred to as "assets belonging to" a
series of the common shares of this corporation.
(c) Assets of this corporation not belonging to any particular
series are referred to herein as "General Assets." General Assets shall
be allocated to each series in proportion to the respective net assets
belonging to such series. The determination of the Board of Directors
shall be conclusive as to the amount of assets, as to the
characterization of assets as those belonging to a series or as General
Assets, and as to the allocation of General Assets.
(d) The assets belonging to a particular series of common
shares shall be charged with the liabilities incurred specifically on
behalf of such series of common shares ("Specific Liabilities"). Such
assets shall also be charged with a share of the general liabilities of
the corporation ("General Liabilities") in proportion to the respective
net assets belonging to such series of common shares. The determination
of the Board of Directors shall be conclusive as to the amount of
liabilities, including accrued expenses and reserves, as to the
characterization of any liability as a Special Liability or General
Liability, and as to the allocation of General Liabilities.
(e) The Board of Directors may, to the extent permitted by
Minnesota Statutes, Chapter 302A, and in the manner provided herein,
declare and pay dividends or distributions in shares or cash on any or
all series of common shares, the amount of such dividends and the
payment thereof being wholly in the discretion of the Board of
Directors. Dividends or distributions on shares of any series of common
shares shall be paid only out of the earnings, surplus, or other
lawfully available assets belonging to such series (including, for this
purpose, any General Assets allocated to such series).
(f) In the event of the liquidation or dissolution of this
corporation, holders of the shares of any series shall have priority
over the holders of any other series with respect to, and shall be
entitled to receive, out of the assets of this corporation available
for distribution to holders of shares, the assets belonging to such
series of common shares and the General Assets allocated to such series
of common shares, and the assets so distributable to the holders of the
shares of any series shall be distributed among such holders in
proportion to the number of shares of such series held by them and
recorded on the books of this corporation
(g) With the approval of a majority of the shareholders of
each of the affected series of common shares, the Board of Directors
may transfer the assets of any portfolio to any other portfolio. Upon
such a transfer, the corporation shall issue common shares representing
interests in the portfolio to which the assets were transferred in
exchange for all common shares representing interests in the portfolio
from which the assets were transferred. Such shares shall be exchanged
at their respective net asset values.
<PAGE>
ARTICLE 8.
The following additional provisions, when consistent with law, are
hereby established for the management of the business, for the conduct of the
affairs of the corporation, and for the purpose of describing certain specific
powers of the corporation and of its Directors and shareholders.
(a) In furtherance and not in limitation of the powers
conferred by statute and pursuant to these Articles of Incorporation,
the Board of Directors is expressly authorized to do the following:
(1) to make, adopt, alter, amend and repeal Bylaws of
the corporation unless reserved to the shareholders by the
Bylaws or by the laws of the State of Minnesota, subject to
the power of the shareholders to change or repeal such Bylaws;
(2) to distribute, in its discretion, for any fiscal
year (in the year or in the next fiscal year) as ordinary
dividends and as capital gains distributions, respectively,
amounts sufficient to enable the corporation to qualify under
the Internal Revenue Code as a regulated investment company to
avoid any liability for federal income tax in respect of such
year. Any distribution or dividend paid to shareholders from
any capital source shall be accompanied by a written statement
showing the source or sources of such payment;
(3) to authorize, subject to such vote, consent, or
approval of shareholders and other conditions, if any, as may
be required by any applicable statute, rule or regulation, the
execution and performance by the corporation of any agreement
or agreements with any person, corporation, association,
company, trust, partnership (limited or general) or other
organization whereby, subject to supervision and control of
the Board of Directors, any such other person, corporation,
association, company, trust, partnership (limited or general),
or other organization shall render managerial, investment,
advisory, distribution, transfer agent, accounting and/or
other services to the corporation (including, if deemed
advisable, the management or supervision of the investment
portfolios of the corporation) upon such terms and conditions
as may be provided in such agreement or agreements;
(4) to authorize any agreement of the character
described in subparagraph 3 of this paragraph (a) with any
person, corporation, association, company, trust, partnership
(limited or general) or other organization, although one or
more of the members of the Board of Directors or officers of
the corporation may be the other party to any such agreement
or an officer, director, employee, shareholder, or member of
such other party, and no such agreement shall be invalidated
or rendered voidable by reason of the existence of any such
relationship;
(5) to allot and authorize the issuance of the
authorized but unissued shares of any class or series of this
corporation;
(6) to accept or reject subscriptions for shares of
any series made after incorporation; and
(7) to fix the terms, conditions and provisions of
and authorize the issuance of options to purchase or subscribe
for shares of any series including the option price or prices
at which shares may be purchased or subscribed for.
<PAGE>
(b) The determination as to any of the following matters made by or
pursuant to the direction of the Board of Directors consistent with these
Articles of Incorporation and in the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of duties, shall be final and conclusive
and shall be binding upon the corporation and every holder of shares of its
capital stock; namely, the amount of the assets, obligations, liabilities and
expenses of each portfolio of the corporation; the amount of the net income of
each portfolio of the corporation from dividends and interest for any period and
the amount of assets at any time legally available for the payment of dividends
in each portfolio; the amount of paid-in surplus, other surplus, annual or other
net profits, or net assets in excess of capital, undivided profits, or excess of
profits over losses on sales of securities of each portfolio; the amount,
purpose, time of creation, increase or decrease, alteration or cancellation of
any reserves or charges and the propriety thereof (whether or not any obligation
or liability for which such reserves or charges shall have been created shall
have been paid or discharged); the market value, or any sale, bid or asked price
to be applied in determining the market value, of any security owned or held by
or in each portfolio of the corporation; the fair value of any other asset owned
by or in each portfolio of the corporation; the number of shares of each series
of the corporation issued or issuable; any matter relating to the acquisition,
holding and disposition of securities and other assets by each portfolio of the
corporation; and any question as to whether any transaction constitutes a
purchase of securities on margin, a short sale of securities, or an underwriting
of the sale of, or participation in any underwriting or selling group in
connection with the public distribution of securities.
(c) The Board of Directors or the shareholders of the corporation may
adopt, amend, affirm or reject investment policies and restrictions upon
investment or the use of assets of each portfolio of the corporation and may
designate some such policies as fundamental and not subject to change other than
by a vote of a majority of the outstanding voting securities, as such phrase is
defined in the Investment Company Act of 1940, of the affected portfolio or
portfolios of the corporation.
(d) The corporation shall indemnify such persons for such expenses and
liabilities, in such manner, under such circumstances, and to the full extent
permitted by Section 302A.521 of the Minnesota Statutes, as now enacted or
hereafter amended, provided, however, that no such indemnification may be made
if it would be in violation of Section 17(h) of the Investment Company Act of
1940, as now enacted or hereafter amended.
(e) Any action which might be taken at a meeting of the Board of
Directors, or any duly constituted committee thereof, may be taken without a
meeting if done in writing and signed by a majority of the Directors or
committee members, unless otherwise provided by the Investment Company Act of
1940 or regulations thereunder.
ARTICLE 9.
The names and addresses of the first Directors, who shall serve until
the first meeting of shareholders or until their successors are elected and
qualified are:
<TABLE>
<S> <C>
John W. Hancock 9110 West Dodge Road, Suite 210
Omaha, NE 68114-3316
Clifford S. Hayes 9110 West Dodge Road, Suite 210
Omaha, NE 68114-3316
Thomas R. Pansing 10050 Regency Circle, Suite 200
Omaha, NE 68114
Wallace R. Weitz 9110 West Dodge Road, Suite 210
Omaha, NE 68114-3316
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Carroll E. Fredrickson 9360 Dewey Avenue
Omaha, NE 68114
</TABLE>
ARTICLE 10.
To the fullest extent permitted by Minnesota Statutes, Chapter 302A, as
the same exists or may hereafter be amended, and to the extent not inconsistent
with the Investment Company Act of 1940 and regulations thereunder, a director
of this corporation shall not be liable to this corporation or its shareholders
for monetary damages for breach of fiduciary duty as a director.
ARTICLE 11.
The name and address of the incorporator, who is a natural person of
full age, is:
<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
John C. Miles 1900 FirsTier Bank Building
Lincoln, NE 68508
</TABLE>
IN WITNESS WHEREOF, the undersigned sole incorporator has executed
these Articles of Incorporation on September 6, 1988.
/s/ John C. Miles
-----------------
John C. Miles
STATE OF NEBRASKA )
) ss
COUNTY OF LANCASTER )
On September 6, 1988, before me, a Notary Public, personally appeared
John C. Miles, to me known to be the person named as the incorporator of Weitz
Series Fund, Inc., a Minnesota corporation, who executed the foregoing Articles
of Incorporation on behalf of said corporation.
/s/ Lori S. Busch
-----------------
Lori S. Busch
<PAGE>
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
WEITZ SERIES FUND, INC.
I.
The name of the corporation is Weitz Series Fund, Inc.
II.
On October 19, 1988, the Board of Directors of Weitz Series Fund, Inc.,
and the sole shareholder unanimously consented to the adoption of the following
amendments to the Articles of Incorporation.
(A) That Article 5 be amended and restated as follows:
"ARTICLE 5.
The total number of authorized shares of this corporation is
100,000,000 all of which shall be common shares of the par value of
$.001 each. Of said common shares, 10,000,000 shares may be issued in
the series of common shares hereby designated Fixed Income Portfolio
shares. The balance of 90,000,000 shares may be issued in such series
with such designations, preferences and relative, participating,
optional or other special rights, or qualifications, limitations or
restrictions thereof, or may be authorized for issuance as additional
shares of any existing series or portfolio as and to the extent stated
or expressed in a resolution or resolutions providing for the issue of
any such series or shares of common shares adopted from time to time by
the Board of Directors of this corporation pursuant to the authority
hereby vested in said Board of Directors. The corporation may issue and
sell any of its shares in fractional denominations to the same extent
as its whole shares, and shares and fractional denominations shall
have, in proportion to the relative fractions represented thereby, all
the rights of whole shares, including, without limitation, the right to
vote, the right to receive dividends and distributions, and the right
to participate upon liquidation of the corporation. The Fixed Income
Portfolio Common Shares and each other series of common shares which
the Board of Directors may establish, as provided herein, may evidence,
if the Board of Directors shall so determine by resolution, an interest
in a separate and distinct portion of the corporation's assets, which
shall take the form of a separate portfolio of investment securities,
cash and other assets. Authority to establish such separate portfolios
is hereby vested in the Board of Directors of this corporation, and
such separate portfolios may be established by the Board of Directors
without the authorization or approval of the holders of any series of
shares of this corporation."
(B) That Article 7 be amended and restated as follows:
"ARTICLE 7.
The shareholders of the Fixed Income Portfolio Common Shares and all
future series of shares authorized by the Board of Directors which evidence a
separate portfolio of investment securities shall have the following rights and
preferences:
(a) On any matter submitted to a vote of shareholders of this
corporation, all common shares of this corporation then issued and
outstanding and entitled to vote, irrespective of series, shall be
voted in the aggregate and not by series, except: (i) when otherwise
required by Minnesota Statutes, Chapter 302A, in which case shares will
be voted by individual series; (ii)
<PAGE>
when otherwise required by the Investment Company Act of 1940, as
amended, or the rules adopted thereunder, in which case shares shall be
voted by individual series; and (iii) when the matter does not affect
the interests of a particular series, in which case only shareholders
of the series affected shall be entitled to vote thereon and shall vote
by individual series.
(b) All consideration received by this corporation for the
issue or sales of shares of any series, together with all assets,
income, earnings, profits and proceeds derived therefrom (including all
proceeds derived from the sale, exchange or liquidation thereof and, if
applicable, any assets derived from any reinvestment of such proceeds
in whatever form the same may be) shall become part of the assets of
the portfolio to which the shares of that series relate, for all
purposes, subject only to the rights of creditors, and shall be so
treated upon the books of account of this corporation. Such assets,
income, earnings, profits and proceeds (including any proceeds derived
from the sale, exchange or liquidation thereof and, if applicable, any
assets derived from any reinvestment of such proceeds in whatever form
the same may be) are herein referred to as "assets belonging to" a
series of the common shares of this corporation.
(c) Assets of this corporation not belonging to any particular
series are referred to herein as "General Assets." General Assets shall
be allocated to each series in proportion to the respective net assets
belonging to such series. The determination of the Board of Directors
shall be conclusive as to the amount of assets, as to the
characterization of assets as those belonging to a series or as General
Assets, and as to the allocation of General Assets.
(d) The assets belonging to a particular series of common
shares shall be charged with the liabilities incurred specifically on
behalf of such series of common shares ("Special Liabilities"). Such
assets shall also be charged with a share of the general liabilities of
this corporation ("General Liabilities") in proportion to the
respective net assets belonging to such series of common shares. The
determination of the Board of Directors shall be conclusive as to the
amount of liabilities, including accrued expenses and reserves, as to
the characterization of any liability as a Special Liability or General
Liability, and as to the allocation of General Liabilities.
(e) The Board of Directors may, to the extent permitted by
Minnesota Statutes, Chapter 302A, and in the manner provided herein,
declare and pay dividends or distributions in shares or cash on any or
all series of common shares, the amount of such dividends and the
payment thereof being wholly in the discretion of the Board of
Directors. Dividends or distributions on shares of any series of common
shares shall be paid only out of the earnings, surplus, or other
lawfully available assets belonging to such series (including, for this
purpose, any General Assets allocated to such series).
(f) In the event of the liquidation or dissolution of this
corporation, holders of the shares of any series shall have priority
over the holders of any other series with respect to, and shall be
entitled to receive, out of the assets of this corporation available
for distribution to holders of shares, the assets belonging to such
series of common shares and the General Assets allocated to such series
of common shares, and the assets so distributable to the holders of the
shares of any series shall be distributed among such holders in
proportion to the number of shares of such series held by them and
recorded on the books of this corporation.
(g) With the approval of a majority of the shareholders of
each of the affected series of common shares, the Board of Directors
may transfer the assets of any portfolio to any other portfolio. Upon
such a transfer, the corporation shall issue common shares representing
interests in the portfolio to which the assets were transferred in
exchange for all common shares representing interests in the portfolio
from which the assets were transferred. Such shares shall be exchanged
at their respective net asset values."
<PAGE>
(C) That Article 8 be amended to include a new subparagraph (f) which reads as
follows:
"(f) Notwithstanding any other provision of these Articles of
Incorporation, no person shall serve as a director of this corporation
after the holders of record of not less than two-thirds of the
outstanding shares of the corporation have declared that such director
be removed from office by votes cast in person or by proxy at a meeting
called for such purpose. Notwithstanding the provisions of Minnesota
Statutes, subchapter 302(A), the Board of Directors shall promptly call
a meeting of shareholders for the removal of a director if
recordholders of not less than 10 percent of the outstanding shares
request in writing that such a meeting be held. Whenever 10 or more
shareholders of record who have been such for at least six months
preceding the date of application and who in the aggregate own shares
having a net asset value of at least $25,000 or at least 1 percent of
the outstanding shares, whichever is less, shall apply to the Board of
Directors in writing stating that they wish to communicate with other
shareholders with a view to obtaining signatures to request a meeting
pursuant to this section and which is accompanied by the form of
communication proposed to be transmitted to such other shareholders,
the Board of Directors shall within five business days after receipt
thereof either afford such applicants access to the list of the names
and addresses of all shareholders of record on such date or inform such
applicants as to the approximate number of such shareholders of record
and the approximate cost of mailing to them the proposed communication
and form of request. If such applicants provide sufficient copies of
all materials to be so mailed and provide payment for all reasonable
costs and expenses of mailing, the Board of Directors shall mail such
materials to all shareholders of record, unless within five days of the
tender of the materials and payment therefor the Board of Directors
files with the Securities and Exchange Commission and provides to the
applicants a copy of a written statement signed by a majority of the
directors which indicates that in their opinion such material contains
untrue statements of fact or omits to state facts necessary to make the
statements contained therein not misleading, or would be in violation
of law, and specifying the basis of such opinion."
These Articles of Amendment are executed by the President and Secretary of
Weitz Series Fund, Inc., this 19th day of October, 1988.
/s/ Wallace R. Weitz
--------------------
Wallace R. Weitz, President
/s/ Ellie E. Miller
-------------------
Ellie E. Miller, Secretary
<PAGE>
UNDERWRITING AGREEMENT
This amended and restated Agreement dated March 10, 1995 amends and
restates the Agreement dated September 12, 1988, between Weitz Series Fund,
Inc., a Minnesota corporation (the "Fund"), and Weitz Securities, Inc. (the
"Underwriter"):
WITNESSETH:
-----------
In consideration of the mutual covenants herein contained, it is agreed
as follows:
1. Appointment of Fund Underwriter. The Fund hereby appoints the
Underwriter as its exclusive agent to sell shares of common stock of the Fund
("Shares") during the term of this Agreement. The Underwriter hereby accepts the
appointment and agrees to use its best efforts to find investors to purchase
Shares through the Underwriter. The Underwriter does not undertake to sell any
specific number of Shares.
2. Sale of Shares through Underwriter. The Fund hereby agrees to offer
and sell through the Underwriter as its agent, Shares of the Fund at the
applicable public offering price consisting of the net asset value per share.
The Fund reserves the right to reject any offer to purchase its Shares.
3. Fund to Supply Net Asset Value. The Fund shall determine in the
manner provided in the Fund's By-Laws, and promptly furnish to the
Underwriter, a statement of the net asset value per Share as often and at
such times as the Fund shall determine, but not less than daily as of the
close of business of the New York Stock Exchange on any business day on which
the New York Stock Exchange is open for unrestricted trading. The net asset
value shall become effective at such time and shall remain in effect during
such period as may be stated in a statement thereof furnished to the
Underwriter by the Fund.
4. Delivery of Shares. Upon receipt by the Fund at its principal
place of business of a written order or confirmation from the Underwriter,
the Fund will, if it elects to accept such order, as promptly as practicable,
cause certificates for the Shares called for in such order or confirmation to
be delivered in such amounts and in such names as shall be requested by the
Underwriter if shares are then evidenced by certificates, or, in the absence
of such a request or if the shares shall not then be evidenced by
certificates, shall cause an entry to be made in the records maintained by or
on behalf of the Fund crediting such Shares to the account of the purchaser
thereof, in either event against payment therefor in such manner as may be
acceptable to the Fund.
5. Underwriter Not Agent of Fund in Certain Circumstances. In making
agreements with its salesmen or with dealers, the Underwriter shall act only
in its own behalf as principal and not as agent for the Fund. Underwriter
shall be agent for the Fund only in respect of sales of the Fund's Shares.
6. Issue of Shares by Fund to Shareholders as Dividend. Nothing
herein shall prevent the Fund from issuing, distributing, or transferring
Shares, whether treasury or newly issued shares, at any time to its
stockholders as stock dividends, for not less than the net asset value of
such Shares.
7. Information Furnished by Fund to Underwriter. The Fund shall
furnish the Underwriter from time to time for use under Federal and state
laws in the filing of registration statements, copies of corporate documents,
agreements and any other related documents; provided that the Fund shall pay
all legal, accounting, registration and filing fees incident to such
registrations and filings.
8. Sales Literature. The Underwriter shall pay the initial and
continuing expenses of preparing, printing and distributing all advertising
and sales literature.
<PAGE>
9. Indemnities.
(a) The Fund agrees to indemnify, defend and hold Underwriter, its
officers and directors and any person who controls Underwriter within the
meaning of Section 15 of the Securities Act of 1933, free and harmless from
and against any and all claims, demands, liabilities and expenses (including
the cost of investigating or defending such claims, demands or liabilities
and any counsel fees incurred in connection therewith) which Underwriter, its
officers and directors or any such controlling person may incur under the
Securities Act of 1933, or under the common law or otherwise, arising out of
or based upon any alleged untrue statement of a material fact contained in
the Fund's Registration Statement or Prospectus or arising out of or based
upon any alleged omission to state a material fact required to be stated in
either thereof or necessary to make the statements in either thereof not
misleading; providing, however, that this indemnity, to the extent that it
might require indemnity of any person who is an officer or director or
controlling person of Underwriter and who is also a director or officer of
the Fund, shall not inure to the benefit of such officer or director or
controlling person unless a court of competent jurisdiction shall determine,
or it shall have been determined by controlling precedent, that such result
would not be against public policy as expressed in the Securities Act of
1933; and further provided, that in no event shall anything herein contained
be so construed as to protect Underwriter (or its officers and directors or
any controlling persons) against any liability to the Fund or its security
holders to which Underwriter would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence, in the performance of its duties
or by reason of its reckless disregard of its obligations and duties under
this Agreement. The Fund's agreement to indemnify Underwriter, its officers
and directors and any such controlling person as aforesaid is expressly
conditioned upon its being notified of any action brought against
Underwriter, its officers and directors or any such controlling person, such
notification to be given by letter or telegram addressed to the Fund at its
principal office in Omaha, Nebraska, and sent to it by the person against
whom such action is brought, within ten (10) days after the summons or other
legal process shall have been served. The failure to so notify the Fund of
any such action shall not relieve it from any liability which it may have to
the person against whom such action is brought by reason of any such alleged
untrue statement or omission otherwise than on account of the indemnity
contained in this paragraph. The Fund will be entitled, at its election, to
assume the defense of any suit brought to enforce any such claim, demand or
liability, but, in such case, such defense shall be conducted by counsel of
good standing chosen by the Fund and approved by Underwriter. In the event
the Fund does elect to assume the defense of any such suit and retain counsel
of good standing approved by the Underwriter, the defendant or defendants in
such suit shall bear the fees and expenses of any additional counsel retained
by any of them; but in case the Fund does not elect to assume the defense of
any such suit, or in case Underwriter does not approve of counsel chosen by
the Fund, the Fund will reimburse Underwriter, its officers and directors, or
the controlling person named as defendant or defendants in such suit, for the
reasonable fees and expenses of any counsel retained by Underwriter or them.
This indemnity will inure exclusively to Underwriter's benefit, to the
benefit of its successors, to the benefit of its officers and directors and
their respective estates, and to the benefit of any controlling person and
its successors. The Fund agrees to notify the Underwriter promptly of the
commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issue and sale of any of its
Shares.
(b) Underwriter agrees to indemnify, defend and hold the Fund, its
several officers and directors, and any person who controls the Fund within
the meaning of Section 15 of the Securities Act of 1933, free and harmless
from and against any and all claims, demands, liabilities and expenses
(including the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection therewith) which the
Fund, its officers or directors, or any such controlling person may incur
under the Securities Act of 1933 or under the common law or otherwise: but
only to the extent that such liability or expense incurred by the Fund, its
officers of directors, or such controlling person resulting from such claims
or demands shall arise out of or be based upon any alleged untrue statement
of a material fact contained in information furnished in writing by
Underwriter to the Fund for use in the Fund's Registration Statement or
Prospectus or shall arise out of or be based upon any alleged omission to
state a material fact in connection with such information required to be
stated in the Registration Statement or
<PAGE>
Prospectus or necessary to make such information not misleading. Underwriter's
agreement to indemnify the Fund, its officers and directors, and any such
controlling person is expressly conditioned upon its being notified of any
action brought against the Fund, its officers and directors and any such
controlling person, such notification to be given by letter or telegram
addressed to Underwriter at its principal office in Omaha, Nebraska, and sent to
it by the person against whom such action is brought, within ten (10) days after
the summons or other first legal process shall have been served. Underwriter
shall have a right to control the defense of such action, with counsel of its
own choosing, satisfactory to the Fund, if such action is based solely upon such
alleged misstatement or omission on its part, and in any other event Underwriter
or such controlling person shall each have the right to participate in the
defense or preparation of the defense of any such action. The failure to so
notify Underwriter of any such action shall not relieve Underwriter from any
liability which Underwriter may have to the Fund, its officers or directors, or
to such controlling person by reason of any such untrue statement or omission on
Underwriter's part otherwise than on account of its indemnity contained in this
paragraph.
10. Registration and Qualification of Underwriter and Salesmen.
(a) Underwriter shall be registered and qualified to act as a
broker-dealer with the U.S. Securities and Exchange Commission, the National
Association of Securities Dealers, Inc. and the securities commissions of the
states where the Shares of the Fund will be offered. Underwriter will comply
with all Federal and state securities laws applicable to the offer and sale of
securities and to the operation and conduct of the business of a broker-dealer.
(b) Underwriter, at its sole expense, shall employ, train, register and
qualify such securities salesmen in such states as shall be agreed upon by the
Underwriter and the Fund. Thereafter, Underwriter shall supervise the activities
of such salesmen to assure their continuing compliance with the applicable
securities law.
11. Assignment Terminates this Agreement; Amendment of this Agreement.
This Agreement shall automatically terminate in the event of its assignment; and
this Agreement may be amended only if the terms of the amendment are approved
either (a) by action of a majority of the Fund's directors and by a majority of
those directors of the Fund who are not interested or affiliated persons of the
Underwriter or officers or employees of the Fund or (b) by affirmative vote of
the holders of a majority of the outstanding voting securities of the Fund.
12. Effective Period and Termination of this Agreement.
(a) This Agreement shall become effective as of the date first set
forth above and shall continue in force for an indefinite period, subject to
prior termination as provided herein, but only so long as its continuance shall
be specifically approved at least annually by a vote of a majority of the Board
of Directors of the Fund or by a vote of the majority of the outstanding voting
securities of the Fund. In any event, this Agreement shall not be renewed or
performed unless it has been approved annually by a majority vote of those
directors of the Fund who are not parties to such agreement or interested or
affiliated persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
(b) This Agreement may be terminated at any time, without payment of
any penalty, by the Board of Directors of the Fund, or by vote of a majority of
the outstanding voting securities of the Fund, in either case upon sixty (60)
days' written notice to the Underwriter, and it may be terminated by the
Underwriter upon sixty (60) days' written notice to the Fund.
13. Definitions. For the purpose of this Agreement, the terms "vote of
a majority of the outstanding securities," "assignment," "affiliated person" and
"interested person" shall have the respective meanings specified in the
Investment Company Act of 1940 as now or hereafter in effect.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their proper officers and their corporate seals to be hereunto
affixed, all as of the day and year first above written.
WEITZ SERIES FUND, INC.
By /s/ Wallace R. Weitz
---------------------
President
Attest:
/s/ Mary K. Beerling
- --------------------
Secretary
WEITZ SECURITIES, INC.
By /s/ Wallace R. Weitz
---------------------
President
Attest:
/s/ Mary K. Beerling
- --------------------
Secretary
<PAGE>
CUSTODIAN CONTRACT
between
Weitz Series Fund, Inc.
and
NORWEST BANK MINNESOTA, N.A.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
1. Employment of Custodian and Property to be Held by It..................................1
2. Duties of the Custodian with Respect to Property of the Fund Held by
the Custodian in the United States.....................................................1
2.1 Holding Securities.............................................................1
2.2 Delivery of Securities.........................................................1
2.3 Registration of Securities.....................................................3
2.4 Bank Accounts..................................................................3
2.5 Payments for Shares............................................................3
2.6 Availability of Federal Funds..................................................3
2.7 Collection of Income...........................................................3
2.8 Payment of Company Monies......................................................3
2.9 Liability for Payment in Advance of Receipt of Securities Purchased............4
2.10 Payments for Repurchases or Redemptions of Shares of a Fund....................4
2.11 Appointment of Agents..........................................................4
2.12 Deposit of Fund Assets in Securities System....................................4
2.13 Segregated Account.............................................................5
2.14 Ownership Certificates for Tax Purposes........................................6
3. Duties of Custodian with Respect to Fund Property Held Outside of the United States....6
3.1 Appointment of Foreign Sub-Custodians..........................................6
3.2 Assets to be Held..............................................................6
3.3 Segregation of Securities......................................................6
3.4 Agreement with Foreign Banking Institution.....................................6
3.5 Access of Independent Accountants of the Company...............................7
3.6 Reports by Custodian...........................................................7
3.7 Foreign Securities Transactions................................................7
3.8 Foreign Securities Lending.....................................................8
3.9 Liability of Foreign Sub-Custodians............................................8
3.10 Monitoring Responsibilities....................................................8
3.11 Branches of United States Banks................................................8
3.12 Expropriation Insurance........................................................8
4. Proxies ...............................................................................9
5. Communications Relating to Fund Portfolio Securities...................................9
6. Proper Instructions....................................................................9
7. Actions Permitted Without Express Authority............................................9
8. Evidence of Authority..................................................................9
9. Class Actions..........................................................................10
10. Duties of Custodian With Respect to the Books of Account and Calculation of Net
Asset Value and Net Income.............................................................10
11. Records................................................................................10
12. Opinion of Company's Independent Accountant............................................10
</TABLE>
<PAGE>
<TABLE>
<S> <C>
13. Reports to Company by Independent Public Accountant....................................10
14. Compensation of Custodian..............................................................11
15. Responsibility of Custodian............................................................11
16. Effective Period, Termination and Amendment............................................11
17. Successor Custodian....................................................................12
18. Interpretive and Additional Provisions.................................................12
19. Minnesota Law to Apply.................................................................12
20. Prior Contracts........................................................................12
21. General................................................................................13
</TABLE>
<PAGE>
CUSTODIAN CONTRACT
This AGREEMENT made as of March 23, 1998, by and between Weitz Series
Fund, Inc., a Nebraska corporation having its principal office and place of
business at One Pacific Place, suite 600, 1125 South 103 Street, Omaha,
Nebraska, (the "Company"), and Norwest Bank Minnesota, N.A., a national banking
association having its principal office and place of business at Sixth and
Marquette, Minneapolis, MN 55479 (the "Custodian").
WHEREAS, the Company is a mutual fund whose shares are currently
offered in the following series (which, together with each future series of the
Company that adopts this contract are hereafter referred to individually as a
"Fund" and collectively as the "Funds") as set forth in Exhibit A.
WHEREAS, the Company desires to appoint the Custodian as the custodian
for each Fund, and the Custodian desires to accept such appointment;
WITNESSETH, that in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It.
The Company hereby employs the Custodian as the custodian of the assets
of each Fund, including securities the Company desires to be held in places
within the United States ("domestic securities") and securities the Company
desires to be held outside of the United States ("foreign securities"). The
Company agrees to deliver to the Custodian all securities and cash owned by each
Fund, and all payments of income, payments of principal or capital distributions
received by the Fund with respect to all securities owned by the Fund from time
to time, and the cash consideration received by the Fund for such new or
treasury shares of capital stock ("Shares") of the Fund as may be issued or sold
from time to time. The Custodian shall not be responsible for any property of a
Fund held or received by the Fund and not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article
6), the Custodian shall from time to time employ one or more sub-custodians, but
only in accordance with any necessary approvals by the Board of Directors of the
Company, and provided that the appointment by the Custodian of any
sub-custodians shall not relieve the Custodian of any of its responsibilities or
liabilities hereunder.
2. Duties of the Custodian with Respect to Fund Property held by the
Custodian in the United States.
2.1 Holding Securities.
The Custodian shall hold and physically segregate for the account of
each of the Funds all non-cash property, including all securities owned by the
Funds, other than securities which are maintained pursuant to Section 2.12 in a
clearing agency which acts as a securities depository or in a Federal Reserve
Bank, as Custodian may select, and to permit such deposited assets to be
registered in the name of Custodian or Custodian's agent or nominee on the
records of such Federal Reserve Bank or such registered clearing agency or the
nominee of either, and to employ and use securities depositories, clearing
agencies, clearance systems, sub-custodians or agents located outside the United
States in connection with transactions involving foreign securities,
collectively referred to herein as a "Securities System".
2.2 Delivery of Securities.
The Custodian shall release and deliver securities owned by the Company
for the account of a Fund held by the Custodian or in a Securities System
account of the Custodian only upon receipt of Proper Instructions, which may be
continuing instructions when deemed appropriate by the parties, and only in the
following cases:
1) Upon sale of such securities for the account of a Fund and
receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the
Company on behalf of a Fund;
3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.12 hereof;
4) To the depository agent in connection with tender or other
similar offers for portfolio securities of a Fund;
1
<PAGE>
5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable;
provided that, in any such case, the cash or other
consideration is to be delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer into the
name of the Company for the account of a Fund or into the name
of any nominee or nominees of the Custodian or into the name
or nominee name of any agent appointed pursuant to Section
2.11 or into the name or nominee name of any sub-custodian
appointed pursuant to Article 1; or for exchange for a
different number of bonds, certificates or other evidence
representing the same aggregate face amount or number of
units; provided that, in any such case, the new securities are
to be delivered to the Custodian;
7) Upon the sale of such securities for the account of a Fund, to
the broker or its clearing agent, against a receipt, for
examination in accordance with "street delivery" custom;
provided that in any such case, the Custodian shall have no
responsibility or liability for any loss arising from the
delivery of such securities prior to receiving payment for
such securities except as may arise from the Custodian's own
negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion contained
in such securities, or pursuant to any deposit agreement;
provided that, in any such case, the new securities and cash,
if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts of
temporary securities for definitive securities; provided that,
in any such case, the new securities and cash, if any, are to
be delivered to the Custodian;
10) For delivery in connection with any loans of securities made
by the Company on behalf of a Fund, but only against receipt
of adequate collateral as agreed upon from time to time by the
Custodian and the Company, which may be in the form of cash or
obligations issued by the United States government, its
agencies or instrumentalities, except that in connection with
any loans for which collateral is to be credited to the
Custodian's account in the book-entry system authorized by the
U.S. Department of the Treasury, the Custodian will not be
held liable or responsible for the delivery of securities
owned by a Fund prior to the receipt of such collateral;
11) For delivery as security in connection with any borrowings by
the Company on behalf of a Fund requiring a pledge of assets
by the Company on behalf of such Fund, but only against
receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any
agreement among the Company on behalf of a Fund, the Custodian
and a broker-dealer registered under the Securities Exchange
Act of 1934 (the "Exchange Act") and a member of the National
Association of Securities Dealers, Inc. ("NASD"), relating to
the compliance with the rules of The Options Clearing
Corporation and of any registered national securities
exchange, or of any similar organization or organizations,
regarding escrow or other arrangements in connection with
transactions by the Company;
13) For delivery in accordance with the provisions of any
agreement among the Company on behalf of a Fund, the
Custodian, and a Futures Commission Merchant registered under
the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission and/or any
Contract Market, or any similar organization or organizations,
regarding account deposits in connection with transactions by
the Company on behalf of a Fund;
14) Upon receipt of instructions from the transfer agent
("Transfer Agent") for the applicable Fund, for delivery to
such Transfer Agent or to the holders of shares in connection
with distributions in kind, as may be described from time to
time in the Fund's currently effective prospectus and
statement of additional information ("prospectus"), in
satisfaction of requests by holders of Shares for repurchase
or redemptions; and
15) For any other proper corporate purpose, but only upon receipt
of, in addition to Proper Instructions, a certificate signed
by an officer of the Company, specifying the securities to be
delivered, setting forth the purpose for which such delivery
is to be made, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom delivery of
such securities shall be made.
2
<PAGE>
2.3 Registration of Securities.
Domestic securities held by the Custodian (other than bearer
securities) shall be registered in the name of the Company for the account of
the applicable Fund(s) or in the name of any nominee of the Company or of any
nominee of the Custodian which nominee shall be assigned exclusively to the
Company, unless the Company has authorized in writing the appointment of a
nominee to be used in common with other registered investment companies having
the same investment adviser as the applicable Fund(s), or in the name or nominee
name of any agent appointed pursuant to Section 2.11 or in the name or nominee
name of any sub-custodian appointed pursuant to Article 1. All securities
accepted by the Custodian on behalf of the Company under the terms of this
Contract shall be in "street name" or other good delivery form.
2.4 Bank Accounts.
Cash held by the Custodian for each Fund and otherwise uninvested may
be deposited in the Banking Department of the Custodian or in such other banks
or trust companies as the Custodian may in its discretion deem necessary or
desirable; provided, however, that every such bank or trust company shall be
qualified to act as a custodian under the Investment Company Act of 1940 and
that each such bank or trust company and the cash to be deposited with each such
bank or trust company shall be approved by vote of a majority of the Board of
Directors of the Company. Such cash shall be deposited by the Custodian in its
capacity as Custodian and shall be withdrawable by the Custodian only in that
capacity.
2.5 Payments for Shares.
The Custodian shall receive from the Transfer Agent of each Fund and
deposit into the Fund account such payments as are received for Shares of the
Fund issued or sold from time to time by the Fund. The Custodian will provide
timely notification to the Fund and the Transfer Agent of any receipt by it of
payments for Shares of the Funds.
2.6 Availability of Federal Funds.
Upon mutual agreement between the Company and the Custodian, the
Custodian shall, upon the receipt of Proper Instructions, make federal funds
available to the Funds as of specified times agreed upon from time to time by
the Company and the Custodian in the amount of checks received in payment for
Shares of the Funds which are deposited into the Funds' accounts.
2.7 Collection of Income.
The Custodian shall, or shall cause its agent or sub-custodian to,
collect on a timely basis all income and other payments with respect to
registered securities held hereunder to which each Fund shall be entitled either
by law or pursuant to custom in the securities business, and shall collect on a
timely basis all income and other payments with respect to bearer securities if,
on the date of payment by the issuer, such securities are held by the Custodian
or its agent or sub-custodian and shall credit such income, as collected, to the
applicable Fund's custodian account. Without limiting the generality of the
foregoing, the Custodian shall detach and present for payment all coupons and
other income items requiring presentation as and when they become due and shall
collect interest when due on securities held hereunder. Unless the Custodian is
the lending agent in connection with securities loaned by the Fund, income due
each Fund on securities loaned pursuant to the provisions of Section 2.2 (10)
shall be the responsibility of the Company. The Custodian will have no duty or
responsibility in connection therewith, other than to provide the Company with
such information or data as may be necessary to assist the Company in arranging
for the timely delivery to the Custodian of the income to which each Fund is
properly entitled.
2.8 Payment of Company Monies.
Upon receipt of Proper Instructions, which may be continuing
instructions when deemed appropriate by the parties, the Custodian shall pay out
monies of each Fund in the following cases only:
1) Upon the purchase of domestic securities, options, futures
contracts or options on futures contracts for the account of
each Fund but only (a) against the delivery of such securities
or evidence of title to such options, futures contracts or
options on futures contracts, to the Custodian (or any bank,
banking firm or trust company doing business in the United
States or abroad which is qualified under the Investment
Company Act of 1940 to act as a custodian and has been
designated by the Custodian as its agent for this purpose)
registered in the name of the Company for the account of a
Fund or in the name of a nominee of the Custodian referred to
in Section 2.3 hereof or in proper form for transfer; (b) in
the case of a purchase effected through a Securities System,
in accordance with the conditions
3
<PAGE>
set forth in Section 2.12 hereof or (c) in the case of the
repurchase agreements entered into between the Company and the
Custodian, or another bank, or a broker-dealer which is a
member of NASD, (i) against delivery of the securities either
in certificate form or through an entry crediting the
Custodian's account at the Federal Reserve Bank with such
securities or (ii) against delivery of the receipt evidencing
purchase by the Company for the account of a Fund of
securities owned by the Custodian along with written evidence
of the agreement by the Custodian to repurchase such
securities from a Fund;
2) In connection with conversion, exchange or surrender of
securities owned by a Fund as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by a Fund as
set forth in Section 2.10 hereof;
4) For the payment of any expense or liability incurred by a
Fund, including but not limited to the following payments for
the account of such Fund: interest, taxes, management,
accounting, transfer agent and legal fees, and operating
expenses of the Fund whether or not such expenses are to be in
whole or part capitalized or treated as deferred expenses;
5) For the payment of any dividends declared pursuant to the
governing documents of the Company and the applicable Fund;
6) For payment of the amount of dividends received in respect of
securities sold short; or
7) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions, a certificate signed by an
officer of the Company, specifying the amount of such payment,
setting forth the purpose for which such payment is to be
made, declaring such purpose to be a proper purpose, and
naming the person or persons to whom such payment is to be
made.
2.9 Liability for Payment in Advance of Receipt of Securities Purchased.
The Custodian shall not make payment for the purchase of domestic
securities for the account of a Fund in advance of receipt of the securities
purchased in the absence of specific written instructions from the Company to so
pay in advance. In any and every case where payment for purchase of domestic
securities for the account of a Fund is made by the Custodian in advance of
receipt of the securities purchased in the absence of specific written
instructions from the Company to so pay in advance, the Custodian shall be
absolutely liable to the Company (for the account of the Fund) for such
securities to the same extent as if the securities had been received by the
Custodian.
2.10 Payments for Repurchases or Redemptions of Shares of a Fund.
From such funds as may be available for the purpose but subject to the
limitations of the Articles of Incorporation or Bylaws and any applicable votes
of the Board of Directors of the Company, the Custodian shall, upon receipt of
instructions from the Transfer Agent, make funds available for payment to
holders of Shares who have delivered to the Transfer Agent a request for
redemption or repurchase of their Shares. In connection with the redemption or
repurchase of Shares of a Fund, the Custodian is authorized upon receipt of
instructions from the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholders.
2.11 Appointment of Agents.
The Custodian may at any time or times in its discretion appoint (and
may at any time remove) any other bank or trust company which is itself
qualified under the Investment Company Act of 1940 to act as a custodian, as its
agent to carry out such of the provisions of this Article 2 as the Custodian may
from time to time direct; provided, however, that the appointment of any agent
shall not relieve the Custodian of any of its responsibilities or liabilities
hereunder.
2.12 Deposit of Fund Assets in Securities Systems.
The Custodian may deposit and/or maintain domestic securities owned by
any Fund in a clearing agency registered with the Securities and Exchange
commission under Section 17A of the Exchange Act, which acts as a securities
depository, or in a Federal Reserve Bank, as Custodian may select, and to permit
such deposited assets to be registered in the name of Custodian or Custodian's
agent or nominee on the records of such Federal Reserve Bank or such registered
clearing agency or the nominee of either (collectively referred to herein as
"Securities System") in accordance with applicable Federal Reserve Board and
Securities and Exchange Commission rules and regulations, if any, and subject to
the following provisions:
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1) The Custodian may keep domestic securities of a Fund in a
Securities System provided that such securities are
represented in an account ("Account") of the Custodian in the
Securities System which shall not include any assets of the
Custodian other than assets held as a fiduciary, custodian or
otherwise for customers;
2) The records of the Custodian with respect to domestic
securities of a Fund which are maintained in a Securities
System shall identify by book-entry those securities belonging
to such Fund;
3) The Custodian shall pay for domestic securities purchased for
the account of a Fund upon (i) the simultaneous receipt of
advice from the Securities System that such securities have
been transferred to the Account, and (ii) the making of an
entry on the records of the Custodian to reflect such payment
and transfer for the account of the Fund. The Custodian shall
transfer domestic securities sold for the account of a Fund
upon (i) the simultaneous receipt of advice from the
Securities System that payment for such securities has been
transferred to the Account, and (ii) the making of an entry on
the records of the Custodian to reflect such transfer and
payment for the account of the Fund. Copies of all advises
from the Securities System of transfers of securities for the
account of a Fund shall identify the Fund, be maintained for
the Fund by the Custodian and be provided to the Company at
its request. Upon request, the Custodian shall furnish the
Company confirmation of each transfer to or from the account
of a Fund in the form of a written advice or notice and shall
furnish to the Company copies of daily transaction sheets
reflecting each day's transactions in the Securities System
for the account of each Fund.
4) The Custodian shall provide the Company with any report
obtained by the Custodian on the Securities System's
accounting system, internal accounting control and procedures
for safeguarding securities deposited in the Securities
System;
5) The Custodian shall have received the initial certificate
required by Article 15 hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Company (for the account of
each Fund) for any loss or damage to the applicable Fund(s)
resulting from use of the Securities System by reason of any
negligence, misfeasance or misconduct of the Custodian or any
of its agents or of any of its or their employees or from
failure of the Custodian or any such agent or employee to
enforce effectively such rights as it may have against the
Securities System; at the election of the Company, it shall be
entitled to be subrogated to the rights of the Custodian with
respect to any claim against the Securities System or any
other person which the Custodian may have as a consequence of
any such loss or damage if and to the extent that the
applicable Funds have not been made whole for any such loss or
damage.
2.13 Segregated Account.
The Custodian shall upon receipt of Proper Instructions establish and
maintain a segregated account or accounts for and on behalf of each Fund, into
which account or accounts may be transferred cash and/or securities, including
securities maintained in an account by the Custodian pursuant to Section 2.12
hereof, (i) in accordance with the provisions of any agreement among the
Company, the Custodian and a broker-dealer registered under the Exchange Act and
a member of NASD (or any futures commission merchant registered under the
Commodity Exchange Act), relating to compliance with the rules of The Options
Clearing Corporation and of any registered national securities exchange (or the
Commodity Futures Trading Commission or any registered contract market), or of
any similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Company for the account of
any Fund, (ii) for the purpose of segregating cash or government securities in
connection with options purchased, sold or written by the Company for the
account of any Fund or commodity futures contracts or options thereon purchased
or sold by the Company for the account of any Fund, (iii) for the purpose of
compliance by the Company with the procedures required by Investment Company Act
Release No. 10666, or any subsequent release or releases of the Securities and
Exchange Commission relating to the maintenance of segregated accounts by
registered investment companies and (iv) for other proper corporate purposes,
but only, in the case of the clause (iv), upon receipt of, in addition to Proper
Instructions, a certified copy of a resolution of the Board of Directors of the
Company signed by an officer of the Company and certified by the Secretary or an
Assistant Secretary, setting forth the purpose or purposes of such segregated
account and declaring such purposes to be proper corporate purposes.
2.14 Ownership Certificates for Tax Purposes.
The Custodian shall execute ownership and other certificates and
affidavits for all federal and state tax purposes in connection with receipt of
income or other payments with respect to domestic securities of each Fund held
by it and in connection with transfers of securities.
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3. Duties of the Custodian with Respect to Fund Property Held Outside of
the United States.
3.1 Appointment of Foreign Sub-Custodians.
The Custodian is authorized and instructed, either directly or
indirectly (through one or more sub-custodian U.S. banks), to employ as
sub-custodians for any Fund's securities and other assets maintained outside of
the United States the foreign banking institutions, foreign securities
depositories and foreign clearing agencies designated in the Funds current
Statement of Additional Information; provided, however, that, notwithstanding
the list of institutions of such information set forth in the Statement of
Additional Information, the Custodian (including any of its agents and
subcustodians) is authorized to directly or indirectly employ or retain any
sub-custodian, depository or clearing agency only if said employed or retained
institution qualifies as either (a) an "eligible foreign custodian", as defined
in Rule 17f-5 under the Investment Company Act of 1940, or (b) a "bank", as
defined in Section 2(a)(5) of the Investment Company Act of 1940, that in turn
qualifies as an eligible domestic custodian under Section 17(f) of the
Investment Company Act of 1940; and provided further that the Custodian shall be
liable to the Company for any loss of any Fund assets custodied with any
institution directly or indirectly employed or retained by the Custodian (or any
of its agents or sub-custodians) that does not meet the qualifications of either
clause (a) of (b) of the preceding provision.
Upon receipt of Proper Instructions, together with a certified
resolution of the Company's Board of Directors, the Custodian and the Company
may agree to amend Schedule A hereto from time to time to designate additional
or alternative foreign banking institutions, foreign securities depositories and
foreign clearing agencies to act as sub-custodians. Each foreign banking
institution shall be authorized to deposit securities in foreign securities
depositories and foreign clearing agencies authorized pursuant to Rule 17f-5
under the Investment Company Act of 1940. Upon receipt of Proper Instructions
from the Company the Custodian shall promptly cease the employment of any one or
more of such sub-custodians for maintaining custody of the assets of the
applicable Fund(s).
3.2 Assets to be Held.
The Custodian shall limit the securities and other assets maintained in
the custody of the foreign sub-custodian to: (a) "foreign securities", as
defined in paragraph (c) (1) of Rule 17f-5 under the Investment Company Act of
1940, and (b) cash and cash equivalents in such amounts as the Custodian or the
Company may determine to be reasonably necessary to effect the foreign
securities transactions of the applicable Fund(s).
3.3 Segregation of Securities.
The Custodian shall identify on its books as belonging to the Company
for the account of one or more of the Fund(s), the foreign securities of each
such Fund held by each foreign sub-custodian. Each agreement pursuant to which
the Custodian or its duly appointed U.S. sub-custodian employs a foreign banking
institution shall require that such institution establish a custody account for
the Custodian (or its U.S. sub-custodian, as the case may be) on behalf of its
customers and physically segregate in that account securities and other assets
of the Custodian's customers, and, in the event that such institution deposits a
Fund's securities in a foreign securities depository, the sub-custodian shall
identify on its books as belonging to the Custodian (or its U.S. sub-custodian,
as the case may be), as agent for the Custodian's customers, the securities so
deposited (all collectively referred to as the "Account").
3.4 Agreement with Foreign Banking Institution.
Each agreement with a foreign banking institution shall provide that:
(a) each Fund's assets will not be subject to any right, charge, security
interest, lien or claim or any kind in favor of the foreign banking institution
or its creditors, except a claim of payment for their safe custody or
administration; (b) beneficial ownership for each Fund's assets will be freely
transferable without the payment of money or value other than for custody or
administration, which may include payment of stamp duties or government taxes;
(c) adequate records will be maintained identifying the assets as belonging to
the customers of Custodian; (d) officers of or auditors employed by, or other
representatives of the Custodian, including independent public accountants for
each Fund, will be given access to the books and records of the foreign banking
institution relating to its actions given under its agreement with the Custodian
or shall be given confirmation of the contents of such books and records; and
(e) assets of each Fund held by the foreign sub-custodian will be subject only
to the instructions of the Company, the Custodian or their agents.
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3.5 Access of Independent Accountants of the Company.
Upon request of the Company, the Custodian will use its best efforts to
arrange for the independent accountants of the Company to be afforded access to
the books and records of any foreign banking institution employed as a foreign
sub-custodian insofar as such books and records relate to the performance of
such foreign banking institutions under its agreement with the Custodian (or its
U.S. sub-custodian, as the case may be).
3.6 Reports by Custodian.
The Custodian will supply to the Company from time to time, as mutually
agreed upon, statements in respect of the securities and other assets of each
Fund held by foreign sub-custodians, including but not limited to an
identification of entities having possession of each applicable Fund's
securities and other assets and advices or notifications of any transfers of
securities to or from each custodial account maintained by a foreign
sub-custodian for the Custodian on behalf of each applicable Fund indicating, as
to securities acquired for the Fund, the identity of the entity having physical
possession of such securities.
3.7 Foreign Securities Transactions.
1) Upon receipt of Proper Instructions, which may be continuing
instructions when deemed appropriate by the parties, the
Custodian shall make or cause its foreign sub-custodian to
transfer, exchange or deliver foreign securities owned by the
Company for the account of a Fund, but except to the extent
explicitly provided herein only in any of the cases specified
in Section 2.2.
2) Upon receipt of Proper Instructions, which may be continuing
instructions when deemed appropriate by the parties, the
Custodian shall pay out or cause its foreign sub-custodian to
pay out monies of a Fund, but except to the extent explicitly
provided herein only in any of the cases specified in Section
2.8.
3) Settlement and payment for securities received for the account
of a Fund and delivery of securities maintained for the
account of a Fund may, upon receipt of Proper Instructions, be
effected in accordance with the customary or established
securities trading or securities processing practices and
procedures in the jurisdiction or market in which the
transaction occurs, including, without limitation, delivering
securities to the purchaser thereof or to a dealer therefor
(or an agent for such purchaser or dealer) against a receipt
with the expectation of receiving later payment for such
securities from such purchaser or dealer.
4) With respect to any transaction involving foreign securities,
the Custodian or any sub-custodian in its discretion may cause
a Fund's account to be credited on either the contractual
settlement date or the actual settlement date with the
proceeds of any sale or exchange of foreign securities from
the account of the applicable Fund and to be debited on either
the contractual settlement date or the actual settlement date
for the cost of foreign securities purchased or acquired for
such Fund according to Custodian's then current internal
policies and procedures pertaining to securities settlement,
which policies and procedures may change from time to time.
Custodian shall advise the Company of any changes to such
policies and procedures. The Custodian may reverse any such
credit or debit made on the contractual settlement date if the
transaction with respect to which such credit or debit was
made fails to settle within a reasonable period, determined by
Custodian in its reasonable discretion, after the contractual
settlement date except that if any foreign securities
delivered pursuant to this section are returned by the
recipient thereof, the Custodian may cause any such credits
and debits to be reversed at any time.
5) Securities maintained in the custody of a foreign
sub-custodian may be maintained in the name of such entity's
nominee to the same extent as set forth in Section 2.3 of this
Contract and the Fund agrees to hold any such nominee harmless
from any liability as a holder of record of such securities.
6) Until the Custodian receives written instructions to the
contrary the Custodian shall, or shall cause the sub-custodian
to, collect all interest and dividends paid on securities held
in each applicable Fund's account, unless such payment is in
default. Unless otherwise instructed, the Custodian shall
convert interest, dividends and principal received with
respect to securities in a Fund's account into United States
dollars, and the Custodian shall perform foreign exchange
contracts for the conversion of United States dollars to
foreign currencies for the settlement of trades whenever it is
practicable to do so through customary banking channels.
Customary banking channels may vary based upon industry
practice in each jurisdiction, and shall include the banking
facilities of the Custodian's affiliates, in accordance with
such affiliate's then prevailing internal policy on funds
repatriation. All risk and expense incident to such foreign
collection and conversions is the responsibility of each
applicable Fund's account, and Custodian shall have no
responsibility for fluctuation in exchange rates affecting
collections or conversions.
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3.8 Foreign Securities Lending.
Notwithstanding any other provisions contained in this Contract, the
Custodian and any sub-custodian shall deliver and receive securities loaned or
returned in connection with securities lending transactions only upon and in
accordance with Proper Instructions; provided, if the Custodian is not the
lending agent in connection with such securities lending, then neither the
Custodian or any sub-custodian shall undertake, or otherwise be responsible for,
(i) marking to market values for such loaned securities.
(ii) collection of dividends, interest or other disbursements or
distributions made with respect to such loaned securities
(iii)receipt of corporate action notices, communications, proxies or
instruments with respect to such loaned securities, and
(iv) custody, safekeeping, valuation or any other actions or services
with respect to any collateral securing any such securities
lending transactions.
In the event that the Custodian is the applicable Fund's lending agent
in connection with a specific securities loan, the Custodian shall undertake to
perform all of the above duties with regard to such loan, except that the
Company shall not receive, nor be enabled to vote, proxies in connection with
such loaned security.
3.9 Liability of Foreign Sub-Custodians.
Each agreement pursuant to which the Custodian (or its U.S.
sub-custodian bank, as applicable) employs a foreign banking institution as a
foreign sub-custodian shall require the institution to exercise reasonable care
in the performance of its duties and to indemnify, and hold harmless, the
Custodian and Custodian's customers from and against any loss, damage, cost,
expense, liability or claim arising out of such sub-custodian's negligence,
fraud, bad faith, willful misconduct or reckless disregard of its duties. At the
election of the Company, it shall be entitled to be subrogated to the right of
the Custodian with respect to any claims against the Custodian's U.S.
sub-custodian bank (if any) or a foreign banking institution as a consequence of
any such loss, damage, cost, expense, liability or claim if and to the extent
that the Company has not been made whole for any such loss, damage, cost,
expense, liability or claim.
3.10 Monitoring Responsibilities.
The Custodian shall furnish annually to the Company information
concerning the foreign sub-custodians employed by the Custodian (or its U.S.
sub-custodian bank, as applicable). Such information shall be similar in kind
and scope to that furnished to the Company in connection with the initial
approval of this Contract (and any contracts with U.S. and foreign
sub-custodians entered into pursuant hereto). In addition, the Custodian will
promptly inform the Company in the event that the Custodian learns of a material
adverse change in the financial condition of a foreign sub-custodian or is
notified by the Custodian's U.S. sub-custodian bank (if any) or a foreign
banking institution employed as foreign sub-custodian that there appears to be a
substantial likelihood that its shareholders' equity will decline below $200
million (United States dollars or the equivalent thereof) or that its
shareholders' equity has declined below $200 million (in each case computed in
accordance with generally accepted United States accounting principles).
3.11 Branches of United States Banks.
Except as otherwise set forth in this Contract, the provisions hereof
shall not apply where the custody of any Fund's assets maintained in a foreign
branch of a banking institution which is a "bank" as defined by Section 2(a) (5)
of the Investment Company Act of 1940 which meets the qualification set forth in
Section 26(a) of said Act. The appointment of any such branch as a sub-custodian
shall be governed by Article 1 of this Contract.
3.12 Expropriation Insurance.
The Custodian represents that it does not intend to obtain any
insurance for the benefit of the Company or any Fund which protects against the
imposition of exchange control restrictions or the transfer from any foreign
jurisdiction of the proceeds of sale of any securities or against confiscation,
expropriation or nationalization of any securities or the assets of the issuer
of such securities is organized or in which securities are held for safekeeping
either by Custodian or any sub custodians in such country. The Custodian
represents that its understanding of the position of the Staff of the Securities
and Exchange Commission is that any investment company investing in securities
of foreign issuers has the responsibility for reviewing the possibility of the
imposition of exchange control restrictions which would affect the liquidity of
such investment company's assets and the possibility of exposure to political
risk, including the appropriateness of insuring against such risk.
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4. Proxies.
The Custodian shall, with respect to the securities held hereunder,
cause to be promptly executed by the registered holder of such securities, if
the securities are registered otherwise than in the name of the Company or a
nominee of the Company, all proxies, without indication of the manner in which
such proxies are to be voted, and shall promptly deliver to the Company such
proxies, all proxy soliciting materials and all notices relating to such
securities.
5. Communications Relating to Fund Portfolio Securities.
The Custodian shall transmit promptly to the Company all written
information (including, without limitation, dependency of calls and maturities
of securities and expirations of rights in connection therewith and notices of
exercise of call and put options written by the Fund and the maturity of futures
contracts purchased or sold by the Company) received by the Custodian from
issuers of the securities being held for each Fund. With respect to tender or
exchange offers, the Custodian shall transmit promptly to the Company all
written information received by the Custodian from issuers of the securities
whose tender or exchange is sought and from the party (or his agents) making the
tender or exchange offer. If the Company desires to take action with respect to
any tender offer, exchange offer or any other similar transaction, the Company
shall notify the Custodian at least three business days prior to the date on
which the Custodian is to take such action.
6. Proper Instructions.
Proper Instructions as used in this Contract means a writing signed or
initialed by one or more person or persons as the Board of Directors of the
Company shall have from time to time authorized. Each such writing shall set
forth the specific transaction or type of transaction involved, including a
specific statement of the purpose for which such action is requested. Oral
instructions will be considered Proper Instructions if the Custodian reasonably
believes them to have been given by a person authorized to give such
instructions with respect to the transaction involved. The Company shall cause
all oral instructions to be confirmed in writing. Upon receipt of a certificate
of the Secretary or an Assistant Secretary as to the authorization by the Board
of Directors of the Company accompanied by a detailed description of procedures
approved by the Board of Directors, Proper Instructions may include
communications effected directly between electro-mechanical or electronic
devices provided that the Board of Directors and the Custodian are satisfied
that such procedures afford adequate safeguards for each Fund's assets.
7. Actions Permitted Without Express Authority.
The Custodian may in its discretion, without express authority from the
Company:
1) Make payments to itself or others for minor expenses of
handling securities provided that all such payments shall be
accounted for to the Company;
2) Surrender securities in temporary form for securities in
definitive form;
3) Endorse for collection, in the names of the applicable Fund,
checks, drafts and other negotiable instruments; and
4) In general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with the securities and property
of the Company except as otherwise directed by the Board of
Directors of the Company.
8. Evidence of Authority.
The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper believed by
it to be genuine and to have been properly executed by or on behalf of the
Company. The Custodian may receive and accept a certified copy of a vote of the
Board of Directors of the Company as conclusive evidence (a) of the authority of
any person to act in accordance with such vote or (b) of any determination or of
any action duly made or taken by the Board of Directors as described in such
vote, and such vote may be considered as in full force and effect until receipt
by the Custodian of written notice to the contrary.
9. Class Actions. The Custodian shall transmit promptly to the Company
all notices or other communications received by it in connection with any
class action lawsuit relating to securities currently or previously held for
one or more of the Funds. Upon being directed by the Company to do so, the
Custodian shall furnish to the Company any and all written materials which
establish the holding/ownership, amount held/owned, and period of
holding/ownership of the securities in question.
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10. Records.
The Custodian shall create and maintain all records relating to its
activities and obligations under this Contract in such manner as will meet the
obligations of the Company and each Fund under the Investment Company Act of
1940, with particular attention to Section 31 thereof and Rule 31a-1 and 31a-2
thereunder. The Custodian shall also maintain records as directed by the Company
in connection with applicable federal and state tax laws and any other law or
administrative rules or procedures which may be applicable to the Company and
the Funds. With respect to securities and cash deposited with a Securities
System, a sub-custodian or an agent of the Custodian, the Custodian shall
identify on its books all such securities and cash as belonging to the Company
for the account of the applicable Fund(s). All such records shall be the
property of the Company and shall at all times during the regular business hours
of the Custodian be open for inspection by duly authorized officers, employees
or agents of the Company. Such records shall be made available to the Company
for review by employees and agents of the Securities and Exchange Commission.
The Custodian shall furnish to the Company, and its agents as directed by the
Company, as of the close of business on the last day of each month a statement
showing all transactions and entries for the account of the Company during that
month, and all holdings as of month-end.
All records so maintained in connection with the performance of its
duties under this Agreement shall remain the property of the Company and, in the
event of termination of this Agreement, shall be delivered to the Company.
Subsequent to such delivery, and surviving the termination of this Agreement,
the Company shall provide the Custodian access to examine and photocopy such
records as the Custodian, in its discretion, deems necessary, for so long as
such records are retained by the Company.
11. Opinion of Company's Independent Accountant.
The Custodian shall take all reasonable action, as the Company may from
time to time request, to obtain from year to year favorable opinions from the
Company's independent accountants with respect to the Custodian's activities
hereunder and in connection with the preparation of the Company's Form N-1A and
Form N-SAR or other reports to the Securities and Exchange Commission and with
respect to any other requirements of such Commission.
12. Reports to Company by Independent Public Accountants.
The Custodian shall provide the Company, at such times as the Company
may reasonably require, with reports by independent public accountants on the
accounting system, internal accounting control and procedures for safeguarding
securities, futures contracts and options on futures contracts, including
securities deposited and/or maintained in a Securities System, relating to the
services provided by the Custodian under this Contract; such reports shall be of
sufficient scope, and in sufficient detail, as may reasonably be required by the
Company to provide reasonable assurance that any material inadequacies would be
disclosed by such examination, and, if there are no such inadequacies, the
reports shall so state.
13. Compensation of Custodian.
For performance by the Custodian pursuant to this Agreement, the
Company, out of the assets of each applicable Fund, agrees to pay the Custodian
annual asset fees and supplemental charges as set out in Exhibit B. Fees and
supplemental charges may be changed from time to time subject to mutual written
agreement between the Company and the Custodian.
14. Responsibility of Custodian.
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties.
The Custodian shall be held to the exercise of reasonable care in carrying out
the provisions of this Contract, but shall be kept indemnified by and shall be
without liability to the Company or any Fund for any action taken or omitted by
it in good faith and without negligence. It shall be entitled to rely on and may
act upon advice of counsel of, or reasonably acceptable to, the Company on all
matters, and shall be without liability for any action reasonably taken or
omitted pursuant to such advice.
If the Company requires the Custodian to take any action with respect
to securities, which action involves the payment of money or which action may,
in the reasonable opinion of the Custodian, result in the Custodian or its
nominee assigned to the Company being liable for the payment of money or
incurring liability of some other
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form, the Company, as a prerequisite to requiring the Custodian to take such
action, shall provide indemnity to the Custodian in an amount and form
reasonably satisfactory to it.
If the Company requires the Custodian to advance cash or securities for
any purpose or in the event that the Custodian or its nominee shall incur or be
assessed any taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of this Contract, except such as may arise from
its or its nominee's own negligent action, negligent failure to act or willful
misconduct, any property at any time held for the account of a Fund shall be
security therefor and should the Company fail to repay the Custodian promptly
with respect to any Fund, the Custodian shall be entitled to utilize available
cash and to dispose of assets to the extent necessary to obtain reimbursement.
The Custodian shall not be liable for any loss or damage to the Company
or any Fund resulting from participation in a securities depository unless such
loss or damage arises by reason of any negligence, misfeasance, or willful
misconduct of officers or employees of the Custodian, or from its failure to
enforce effectively such rights as it may have against any securities depository
or from use of a sub-custodian or agent. Anything in this Contract to the
contrary notwithstanding, the Custodian shall exercise, in the performance of
its obligations undertaken or reasonably assumed with respect to this Agreement,
reasonable care, for which the Custodian shall be responsible to the same extent
as if it were performing such duties directly. The Custodian shall be
responsible for the securities and cash held by or deposited with any
sub-custodian or agent to the same extent as if such securities and cash were
directly held by or deposited with the Custodian. The Custodian hereby agrees
that it shall indemnify and hold the Company and each applicable Fund harmless
from and against any loss which shall occur as a result of the failure of a
foreign sub-custodian holding the securities and cash to provide a level of
safeguards for maintaining any Fund's securities and cash not materially
different from that provided by a United States custodian holding such
securities and cash in the United States.
The Custodian agrees to indemnify and hold the Company and each of the
Funds harmless for any and all loss, liability and expense, including reasonable
legal fees and expenses, arising out of the Custodian's own negligence or
willful misconduct or that of its officers, agents, sub-custodians or employees
in the performance of the Custodian's duties and obligations under this
Contract.
15. Effective Period, Termination and Amendment.
The Contract shall become effective as of its execution, shall continue
in full force and effect until terminated as hereinafter provided, may be
amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not sooner
than sixty (60) days after the date of such delivery or mailing; provided,
however, that the Custodian shall not act under Section 2.12 hereof in the
absence of receipt of an initial certificate of the Secretary or an Assistant
Secretary that the Board of Directors of the Company has approved the initial
use of a particular Securities System, as required by Rule 17f-4 under the
Investment Company Act of 1940, provided further, however, that the Company
shall not amend or terminate this Contract in contravention of any applicable
federal or state regulations, or any provision of its Articles of Incorporation,
and further provided, that the Company may at any time by action of its Board of
Directors, with respect to any Fund (i) substitute another bank or trust company
for the Custodian by giving notice as described above to the Custodian, or (ii)
immediately terminate this Contract in the event of the appointment of a
conservator or receiver for the Custodian by the Comptroller of the Currency or
upon the happening of a like event at the direction of an appropriate regulatory
agency or court of competent jurisdiction.
Upon termination of the Contract, the Company on behalf of each Fund
shall pay to the Custodian such compensation as may be due as of the date of
such termination and shall likewise reimburse the Custodian for its costs,
expenses and disbursements.
16. Successor Custodian.
If a successor custodian shall be appointed by the Board of Directors
of the Company, the Custodian shall, upon termination, deliver to such successor
custodian all securities, funds and other properties held by the Custodian and
all instruments held by the Custodian relative thereto and all property held by
it under this Contract and to transfer to an account of such successor custodian
all of each Fund's securities held in any Securities System.
If no such successor custodian shall be appointed, the Custodian shall,
in like manner, upon receipt of a certified copy of a vote of the Board of
Directors of the Company, deliver at the office of the Custodian and transfer
such securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Directors shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as
11
<PAGE>
defined in the Investment Company Act of 1940, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $100,000,000, all securities, funds and other
properties held by the Custodian and all instruments held by the Custodian
relative thereto and all other property held by it under this Contract and to
transfer to an account of such successor custodian all of each Fund's securities
held in any Securities System. Thereafter, such bank or trust company shall be
the successor of the Custodian under and pursuant to this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Company to procure the certified copy of the vote referred to or
of the Board of Directors to appoint a successor custodian, the Custodian shall
be entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties and
the provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
17. Interpretive and Additional Provisions.
In connection with the operation of this Contract, the Custodian and
the Company may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall be
annexed hereto, provided that no such interpretive or additional provisions
shall contravene any applicable federal or state regulations or any provision of
the Articles of Incorporation or Bylaws of the Company. No interpretive or
additional provisions made as provided in the preceding sentence shall be deemed
to be an amendment of this Contract.
18. Minnesota Law to Apply.
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of the State of Minnesota.
19. Prior Contracts.
This Contract supersedes and terminates, as of the date hereof, all
prior contracts between the Company and the Custodian relating to the custody of
each Fund's assets. This Contract shall not be assignable by any party hereto;
provided however, that any entity into which the Company or the Custodian, as
the case may be, may be merged or converted or with which it may be
consolidated, or any entity succeeding to all or substantially all of the
business of the Company or the custody business of the Custodian, shall succeed
to the respective rights and shall assume the respective duties of the Company
or the Custodian, as the case may be, hereunder.
20. General.
Nothing expressed or mentioned in or to be implied from any provision
of this Contract is intended to, or shall be construed to give any person or
corporation other than the parties hereto, any legal or equitable right, remedy
or claim under or in respect to this Contract, or any covenant, condition and
provision herein contained, this Contract and all of the covenants, conditions
and provisions hereof being intended to be and being the sole and exclusive
benefit of the parties hereto and their respective successors and assigns.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized officers as of the day
and year first above written.
Weitz Series Fund, Inc. Norwest Bank Minnesota, N.A.
By /s/ Wallace R. Weitz By /s/ Denise V. Zapalka
ATTEST ATTEST
By /s/ Mary K. Beerling By /s/ Marie Johnson
12
<PAGE>
ADMINISTRATION AGREEMENT
This amended and restated Agreement dated February 10, 1998 amends and
restates the Agreement dated February 10, 1997 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 it duties and obligations hereunder in accordance with
industry practice.
1.04 Administrator agrees that it will perform all of the usual and
ordinary service as Transfer Administrator and Dividend Disbursing Administrator
and as agent for the various shareholder accounts including but not limited to:
issuing, transferring and canceling 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
paragraphs 1.04 and 1.05, the Fund agrees to pay Administrator a monthly fee
based upon the schedule set forth as Exhibit A.
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, blue sky notice filing fees, Securities and Exchange Commission
registration fees, costs related to insurance policies, legal counsel,
3
<PAGE>
postage, envelopes, checks, drafts, continuous forms, reports and statements,
telephone, telegraph, stationery, supplies, printing, Edgar filings, 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;
4.02 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
<PAGE>
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 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.
(d) Defaults by dealers with respect to payment for share orders
previously entered.
5
<PAGE>
(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 Administrotor 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 protec ted 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 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 fascimile
6
<PAGE>
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 resuloution 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 signature imprinting
devices, if any; and for the preparation or use, and for keeping accounting
of such certificates, forms and devices.
7
<PAGE>
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 Administgrator 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 counsel 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.
8
<PAGE>
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.
WEITZ SERIES FUND, INC.
ATTEST: By: /s/ Wallace R. Weitz
------------------------------
/s/ Mary K. Beerling President
- ---------------------------
Secretary
WALLACE R. WEITZ & COMPANY
ATTEST: By: /s/ Wallace R. Weitz
---------------------------
/s/ Mary K. Beerling President
- ----------------------------
Asst. Secretary
9
<PAGE>
WEITZ SERIES FUND, INC.
Exhibit A
<TABLE>
<CAPTION>
asset break points
--------------------------------
greater than less than % of NAV minimum
------------ ------------- -------- -------
<S> <C> <C> <C>
0 25,000,000 0.225% 25,000
25,000,000 100,000,000 0.200%
100,000,000 500,000,000 0.175%
500,000,000 1,000,000,000 0.150%
</TABLE>
10
<PAGE>
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger, dated as of October 16, 1989
("Agreement"), is between Weitz Series Fund, Inc. ("Series Fund"), a Minnesota
corporation, and Weitz Value Fund, Inc.
("Value Fund"), a Nebraska corporation.
WHEREAS, on October 16, 1989, the Board of Directors of Value Fund
approved this Agreement providing for the merger of Value Fund, with and into
Series Fund, and found that such transaction was in the best interests of its
shareholders; and
WHEREAS, on October 16, 1989 the Board of Directors of Series Fund
approved and adopted this Agreement and the transactions contemplated herein;
NOW, THEREFORE, in consideration of the mutual agreements set forth
below, the parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01 The Merger. Upon the terms and subject to the conditions
hereof, and in accordance with the Nebraska Business Corporation Act ("NBCA")
and the Business Corporations Law of the State of Minnesota (the "MBCL"), Value
Fund shall be merged with and into Series Fund (the "Merger") following the
satisfaction or waiver of the conditions set forth in Article V hereof.
Following the Merger, Series Fund shall continue as the successor corporation
(the "Surviving Corporation"), under the laws of the State of Minnesota and
shall be named "Weitz Series Fund, Inc." and the separate corporate existence of
Value Fund shall cease.
SECTION 1.02 Effective Time. The Merger shall be consummated by
(i) filing with the Secretary of State of the State of Nebraska Articles of
Merger and (ii) filing with the Secretary of State of the State of Minnesota
Articles of Merger, in each case in such form as required by, and executed in
accordance with, the relevant provisions of the NBCA and MBCL, respectively. The
Articles of Merger will be filed in Minnesota prior to, or concurrently with,
the filing of the Articles of Merger in Nebraska. The time of filing of the
Articles of Merger with the Secretary of State of Nebraska shall be the
"Effective Time" but for accounting purposes the Merger shall occur at the later
of 12:01 a.m. on April 1, 1990 or the Effective Time.
SECTION 1.03 Effects of the Merger. The Merger shall have the effects
set forth in the NBCA and the MBCL, except that Series Fund agrees that any
liability, obligation or penalty assumed by it relating to or arising from Value
Fund shall be satisfied first out of assets allocated to the Value Portfolio of
the Fund before recourse to any other assets of the Fund.
SECTION 1.04 Articles of Incorporation and By-Laws. (a) The Articles of
Incorporation of Series Fund in effect at the Effective Time shall be the
Articles of Incorporation of the Surviving Corporation.
(b) The By-Laws of Series Fund as in effect at the Effective Time shall
be the By-Laws of the Surviving Corporation.
SECTION 1.05 Directors and Officers. The directors and officers of
Series Fund at the Effective Time shall be the directors and officers of the
Surviving Corporation and will hold offices from the Effective Time until their
respective successors are duly elected or appointed and qualify in the
<PAGE>
manner provided in the Articles of Incorporation and By-Laws of the Surviving
Corporation, or as otherwise provided by law.
SECTION 1.06 Conversion of Shares. (a) Each share and each fractional
share of Value Fund Common Stock (the "Shares"), issued and outstanding
immediately prior to the Effective Time shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into one, or
an identical fraction of one fully paid and nonassessable Value Portfolio Share
of Series Fund, as described in Article 5 of the Articles of Incorporation of
Series Fund, as supplemented by a Resolution of the Board of Directors of Series
Fund dated October 16, 1989 establishing such Value Portfolio Shares, 10,000,000
of which are authorized and none of which will be outstanding prior to the
Effective Time.
ARTICLE II
TRANSFER OF SHARES
SECTION 2.01 Transfer of Shares. (a) Prior to the Effective Time,
Wallace R. Weitz & Company shall be designated to act as Transfer Agent for both
parties in connection with the Merger (the "Transfer Agent").
(b) At the Effective Time, ownership of the Shares by each registered
holder thereof, as evidenced by a book entry on the books of registry maintained
by the Transfer Agent, will become ownership of a like number of Value Portfolio
Shares, identically registered, without additional notice to such registered
holder.
(c) After the Effective Time there shall be no transfers on the stock
transfer books of Value Fund of the Shares. Any such purported transfer shall be
deemed a transfer of the Value Portfolio Shares into which such shares have been
converted.
ARTICLE III
REPRESENTATION AND WARRANTIES OF SERIES FUND
Series Fund hereby represents and warrants to Value Fund as follows:
SECTION 3.01 Organization and Qualification. Series Fund is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Minnesota and has the requisite corporate power to carry on its
business as it is now being conducted and is contemplated to be conducted.
Series Fund is duly qualified as a foreign corporation to do business, and is in
good standing, in each jurisdiction where the character of its properties or the
nature of its activities makes such qualifications necessary, except where the
failure to be so qualified will not have a material adverse effect on the
business, financial condition or operations of Series Fund taken as a whole.
SECTION 3.02 Capitalization. The authorized capital stock of Series
Fund consists of 100,000,000 shares, par value $.001 per share, of which
10,000,000 are classified as Fixed Income Portfolio Shares and 10,000,000 are
classified as Value Portfolio Shares. As of the date hereof 163,095.13 Fixed
Income Portfolio Shares were outstanding and no Value Portfolio Shares were
outstanding. The Value Portfolio Shares conform in all material respects to the
description thereof in Series Fund's registration statement on Form N-1A with
respect thereto (the "Registration Statement") filed with the Securities and
Exchange Commission (the "SEC").
SECTION 3.03 Authority Relative to This Agreement. Series Fund has the
requisite corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder. Any corporate action on the part of Series
Fund necessary to authorize this Agreement and the transactions contemplated
hereby has been taken. This Agreement has been duly and validly executed and
delivered
<PAGE>
by Series Fund and, upon approval by the shareholders of Series Fund as provided
for in Section 5.01(a) hereof, will constitute a valid and binding agreement of
Series Fund, enforceable against it in accordance with its terms.
SECTION 3.04 Absence of Breach; No Consents. The execution, delivery
and performance of this Agreement by Series Fund does not (i) conflict with or
result in a breach of any of the provisions of the articles of incorporation or
by-laws of Series Fund, (ii) contravene any law, rule or regulation of any state
or of the United States, or any order, writ, judgment, injunction, decree,
determination or award, or cause the suspension or revocation of any
authorization, consent, approval or license, presently in effect which affects
or binds Series Fund except where such contravention will not have a material
adverse effect on the business, financial condition or operations of Series
Fund, or (iii) require the authorization, consent, approval or license of any
third party or governmental entity.
SECTION 3.05 Full Disclosure. No representation or warranty made by or
on behalf of Series Fund to Value Fund pursuant to the provisions of this
Agreement contains or will contain as of the Effective Time any untrue statement
of a material fact or omits or will omit to state any material fact necessary to
make the statements herein, in light of the circumstances under which they were
made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF VALUE FUND
Value Fund represents and warrants to Series Fund as follows:
SECTION 4.01 Organization and Qualification. Value Fund is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Nebraska and has the requisite corporate power to carry on its
business as it is now being conducted. Value Fund is duly qualified to do
business as a foreign corporation and is in good standing, in each jurisdiction
where the character of its properties or the nature of its activities makes such
qualifications necessary, except where the failure to be so qualified will not
have a material adverse effect on the business, financial condition or
operations of Value Fund as a whole.
SECTION 4.02 Capitalization. The authorized capital stock of Value Fund
consists of 200,000,000 shares of Common Stock, par value $.001 per share. As of
the date hereof, 1,862,823.259 shares of Common Stock were validly issued and
outstanding, fully paid and nonassessable.
SECTION 4.03 Authority Relative to This Agreement. Value Fund has the
requisite corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder. Any corporate action on the part of Value
Fund necessary to authorize this Agreement and the transactions contemplated
hereby has been taken. This Agreement has been duly and validly executed and
delivered by Value Fund and, upon approval by the shareholders of Value Fund as
provided for in Section 5.01(a) hereof, will constitute a valid and binding
agreement of Value Fund, enforceable against it in accordance with its terms.
SECTION 4.04 Absence of Breach; No Consents. The execution, delivery
and performance of this Agreement by Value Fund does not (i) conflict with or
result in a breach of any of the provisions of its Articles of Incorporation or
By-Laws, (ii) contravene any law, rule or regulation of any state or of the
United States, or any order, writ, judgment, injunction, decree, determination
or award, or cause the suspension or revocation of any authorization, consent,
approval or license, presently in effect, which affects or binds Value Fund,
except where such contravention will not have a material adverse effect on the
business, financial condition or operations of Value Fund taken as a whole, or
(iii) require the authorization, consent, approval or license of any third party
or governmental entity.
<PAGE>
SECTION 4.05 Financial Statements; Public Reports. Value Fund has
previously furnished Series Fund true and complete copies of each registration
statement and proxy statement filed by Value Fund with the SEC. The consolidated
financial statements and schedules of Value Fund contained therein (or
incorporated therein by reference) were prepared in accordance with generally
accepted accounting principles applied on a consistent basis except as noted
therein, and present fairly the information purported to be shown therein
subject (in the case of interim unaudited financial statements) to normal
year-end audit adjustments. No such registration statement, proxy statement or
report, on the date of effectiveness in the case of such registration
statements, on the date of mailing in the case of such proxy statements and on
the date of filing in the case of such reports, contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
SECTION 4.06 Full Disclosure. No representation or warranty made by or
on behalf of Value Fund to Series Fund pursuant to the provisions of this
Agreement contains or will contain as of the Effective Time any untrue statement
of a material fact or omits to state any material fact necessary to make the
statements herein, in light of the circumstances under which they were made, not
misleading.
ARTICLE V
CONDITIONS TO CONSUMMATION OF THE MERGER;
SPECIAL COVENANT OF SERIES FUND
SECTION 5.01 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger are
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) this Agreement shall have been adopted by the affirmative vote of
the shareholders of Value Fund and Series Fund by the requisite vote of each in
accordance with applicable law;
(b) no statute, rule, regulation, executive order, decree, or
injunction shall be enacted, entered, promulgated or enforced by any court or
governmental authority which prohibits or restricts the consummation of the
Merger;
(c) no suit, action, claim, proceeding or investigation before any
court, arbitrator or administrative, government or regulatory body, United
States or foreign, shall have been threatened or shall have been commenced and
be pending against either party or any of their respective affiliates,
associates, officers or directors seeking to prevent or delay the transactions
contemplated by, or challenging any of the terms or provisions of, the Agreement
or seeking damages in connection therewith;
(d) all approvals, consents, authorizations, orders and waivers from
governmental and regulatory agencies and third parties required to consummate
the transactions contemplated hereby (including the order of the Securities and
Exchange Commission declaring effective the Post-Effective Amendment to Series
Fund's Registration Statement on Form N-1A registering the Value Portfolio
Shares under the Securities Act of 1933), which, either individually or in the
aggregate, if not obtained would preclude the merger from occurring without a
violation of law or would have a material adverse effect on the financial
condition, results of operations or business of either party taken as a whole
following the Merger, shall have been obtained.
SECTION 5.02 Special Covenant of Series Fund. Series Fund hereby agrees
to comply with the provisions of Neb. Rev. Stat. Section 22-2076(2), agrees to
file a copy of this Agreement with the Secretary of State of the State of
Nebraska and expressly agrees that (i) it may be served with process within or
without the State of Nebraska in any proceeding in the courts of Nebraska for
the enforcement of any obligation of the Value Fund and in any proceeding for
the enforcement of the rights of a dissenting shareholder of
<PAGE>
Value Fund against Series Fund and (ii) it will pay to the dissenting
shareholders of Value Fund, if any, the amount to which such disserting
shareholders would be entitled under the provisions of the NBCA.
ARTICLE VI
TERMINATION; AMENDMENT
SECTION 6.01 Termination. This Agreement may be terminated and the
merger contemplated hereby may be abandoned at any time prior to the Effective
Time, notwithstanding approval thereof by the shareholders of either or both
parties, by mutual consent of the Boards of Directors of Series Fund and Value
Fund.
SECTION 6.02 Amendment. This Agreement may be amended by action taken
by the Boards of Directors of Series Fund and Value Fund at any time before or
after approval of this Agreement by the respective shareholders thereof but,
after any such approval, no amendment shall be made which adversely affects the
rights of such shareholders hereunder without the approval of such shareholders
in the same manner as required for approval of this Agreement. This Agreement
may not be amended except by an instrument in writing signed on behalf of the
parties hereto by a duly authorized officer thereof.
SECTION 6.03 Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
SECTION 6.04 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Nebraska for contracts to
be performed in their entirety therein, without reference to choice of law
principles thereof.
SECTION 6.05 Notices. Notices shall be sent to the addresses provided
by the parties.
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed on its behalf by its officers thereunto duly
authorized, all as of the day and year first above written.
Weitz Series Fund, Inc.
By: /s/ Wallace R. Weitz
---------------------------
Wallace R. Weitz, President
ATTEST:
/s/ Ellie E. Miller
---------------------
Ellie E. Miller, Secretary
Weitz Value Fund, Inc.
By: /s/ Wallace R. Weitz
---------------------------
Wallace R. Weitz, President
ATTEST:
/s/ Ellie E. Miller
-----------------------
Ellie E. Miller, Secretary
The foregoing Agreement and Plan of Merger was duly adopted by the
Board of Directors of Weitz Value Fund, Inc. on October 16, 1989, and by the
Board of Directors of Weitz Series Fund, Inc. on the same day.
<PAGE>
[LETTERHEAD OF CLINE, WILLIAMS, WRIGHT, JOHNSON, & OLDFATHER]
[1900 FIRSTIER BANK BUILDING, LINCOLN, NEBRASKA 68508]
October 24, 1988
Weitz Series Fund, Inc.
9110 West Dodge Road, Suite 210
Omaha, NE 68114-3316
RE: Form N-1A Registration Statement
Ladies and Gentlemen:
Our opinion has been requested with respect to the shares of common stock, $.001
par value per share (the "shares"), of Weitz Series Fund, Inc. (the "Fund"),
which are being registered with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, by Form N-1A Registration Statement.
We have examined the Fund's Articles of Incorporation and Bylaws, reviewed
certain minutes of corporate proceedings, and have made such additional factual
and legal inquiry as we deemed necessary under the circumstances. Based upon the
foregoing, it is our opinion that:
1. The Fund is a duly and validly organized corporation presently
existing in good standing under the laws of the state of Minnesota.
2. The issuance and sale of the shares have been duly and validly
authorized by the necessary corporate action; and said shares will,
upon delivery against payment, be duly authorized, validly issued and
outstanding, fully paid, and nonassessable shares of common stock of
the Fund.
We consent to the use of this opinion as an exhibit to the Fund's Form N-1A
Registration Statement and further consent to the reference of our firm under
the heading "Legal Opinions" in the Prospectus forming a part thereof.
Very truly yours,
/s/JOHN C. MILES
For the Firm
<PAGE>
[LETTERHEAD OF CLINE, WILLIAMS, WRIGHT, JOHNSON, & OLDFATHER]
[1900 FIRSTIER BANK BUILDING, LINCOLN, NEBRASKA, 68508]
January 25, 1990
Weitz Series Fund, Inc.
Suite 450
9290 West Dodge Road
Omaha, NE 68114-3323
RE: Post-Effective Amendment No. 2 to Form N-1A Registration Statement-Value
Portfolio
Gentlemen:
Our opinion has been requested with respect to the shares of common
stock, $.001 par value per share (the "Shares"), of Weitz Series Fund, Inc. (the
"Fund"), designated Value Portfolio shares, which are being registered with the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
by Post-Effective Amendment No. 2 to Form N-1A Registration Statement and
arising out of the merger of Weitz Value Fund, Inc. into the Fund.
We have examined the Fund's Articles of Incorporation and Bylaws,
reviewed certain minutes of corporate proceedings, and have made such additional
factual and legal inquiries as we deemed necessary under the circumstances. Base
upon the foregoing, it is our opinion that:
1. The Fund is a duly and validly organized corporation presently
existing in good standing under the laws of the State of
Minnesota.
2. The issuance and sale of the Shares has been duly and validly
authorized by the necessary corporate action and said Shares will,
upon delivery against payment, be duly authorized, validly issued,
outstanding, fully paid and nonassessable shares of the common
stock of the Fund designated Value Portfolio Shares.
We consent to the use of this opinion as exhibit to the Fund's Form
N-1A Registration Statement and further consent to the reference of our firm
under the heading "Legal Opinions" in the Prospectus forming a part thereof.
Very truly yours,
/s/JOHN C. MILES
For the Firm
<PAGE>
[LETTERHEAD OF CLINE, WILLIAMS, WRIGHT, JOHNSON, & OLDFATHER]
[1900 FIRSTIER BANK BUILDING, LINCOLN, NEBRASKA, 68508]
January 23, 1990
Wallace R. Weitz & Co.
Weitz Value Fund, Inc.
Weitz Series Fund, Inc.
RE: The Reorganization of the Weitz Value Fund, Inc. into a Series Fund
Gentlemen:
You have requested our opinion with respect to certain United States
federal income tax consequences of the transaction (the "Transaction")
contemplated by the Agreement and Plan of Merger (the "Agreement") dated as
of October 17, 1989, between the Weitz Value Fund, Inc. (the "Fund"), a
Nebraska corporation, and the Weitz Series Fund, Inc., a Minnesota
corporation ("Series Fund"). Specifically, you have requested our opinion as
to whether the Transaction will be treated as a tax-free reorganization
within the meaning of Section 368 of the Internal Revenue Code of 1986, as
amended (the "Code").
You have represented that both the "Fund" and Series Fund are
regulated investment companies as defined in Code Section 851 and that the
surviving corporation will continue to operate as a regulated investment
company. Under the Tax Reform Act of 1986 (the "Act"), each fund (within the
meaning of Section 851(q)[h] of the Code) is a regulated investment company
which has separate funds, the ownership of which is represented by a separate
Series of stock, is treated as a separate corporation for federal income tax
purposes. In the absence of regulations, rulings, or other direct precedent,
it is not entirely clear how this provision interacts with the various
requirements for different types of tax-free reorganizations. We are of the
opinion, based upon current law and upon certain assumptions and
representations set forth below, that the Transaction will constitute a
tax-free reorganization within the meaning of Section 368(a)(1)(A) of the
Code.
In rendering our opinion, we have examined and relied upon the
accuracy and completeness of the information set forth in (i) the financial
statements of the Fund dated March 31, 1989 and September 30, 1989; (ii) the
Proxy Statement of the Fund dated December 28, 1989; (iii) the Agreement; and
(iv) such other documents as we deemed necessary or appropriate for review.
We assume that the Transaction will be consummated in the manner described in
the aforesaid Proxy Statement. In our examination, we have further assumed
the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies, and the
authenticity of the originals of such latter documents. As to any facts
material to this opinion which we did not independently establish or verify,
we have relied upon statements and representations of officers and other
representatives of the Fund, Weitz Series Fund, Inc. and Wallace R. Weitz &
Co.
It has been represented that the Series Fund has no plan or
intention to reacquire any of the Stock to be issued in the Transaction,
except as required by the Investment Company Act of 1940. We assume that
there is no plan or intention on the part of any stockholder of the Fund,
apart from investment decisions made in the ordinary course of investing in a
mutual fund such as the Fund, to redeem, sell, exchange or otherwise dispose
of any Stock received in the Transaction. We are also assuming that even if
certain stockholders were to redeem their shares after the Transaction and
such redemptions were to be integrated with the Transaction, the amount of
shares redeemed would be such as not to violate the
<PAGE>
reorganization requirement that there be shareholder continuity of interest.
Such requirement, for the purpose of this opinion, will be satisfied if former
Fund common stockholders own at least 50% of the outstanding Weitz Series Fund,
Inc.-Value Portfolio Shares after the merger.
The Weitz Series Fund, Inc.-Value Portfolio Shares to be received in
the Transaction will have different voting rights with respect to different
matters. The Value Portfolio Shares have exclusive voting rights with respect
to matters with affect the Value Portfolio differently than other series of
the Series Fund. For general matters which do not affect the Value Portfolio
differently than other Series (e.g. , the election of directors), the Value
Portfolio, as well as all other series, will vote together as a single class.
This opinion assumes that the right to affect other series by voting on
general matters is not a separate property right and even if it were treated
as a separate property right, such right would have no value.
With respect to our opinion that the Transaction should constitute a
reorganization within the meaning of Section 368(a)(1)(A) of the Code, we
assume that (a) the state law corporate entity will not own any assets to be
subject to any liabilities, conduct any business operations or derive any
income or incur any costs other than on behalf of one or more of its funds;
(b) the Value Portfolio has no plan or intention to issue additional shares
following the Transaction other than in the ordinary course of its operation
as an open-end investment company; (c) immediately following the Transaction,
the Value Portfolio will possess the same assets and liabilities as the Fund
immediately prior to the Transaction (except for assets used to pay expenses
incurred in connection with the Transaction); and (d) the amount of assets
used to pay expenses incurred in connection with the Transaction and all
redemptions and dividends made or paid in the ordinary course of business)
made by the Fund prior to the Transaction will, in the aggregate, constitute
less than one percent of the net assets of the Fund prior to such payments,
redemptions, and distributions.
The opinions and other views expressed herein are expressly conditioned
on, among other things, the facts, information, and representations set forth
and referred to above.
In rendering our opinion we have considered the applicable provisions
of the Code, the Treasury Regulations promulgated thereunder, pertinent judicial
authorities and interpretative rulings of the Internal Revenue Service (the
"Service"), and such other authorities as we have deemed appropriate in the
circumstances.
Based on the foregoing, we are of the opinion that for federal
income tax purposes (a) the Transaction will constitute a tax-free
reorganization within the meaning of Section 368 of the Code and, subject to
the additional assumptions set forth above, should constitute a tax-free
reorganization within the meaning of Section 368(a)(1)(A) of the Code; (b)
stockholders will not recognize gain or loss as a result of the Transaction,
and the holder's aggregate basis in the Value Portfolio received in the
Transaction will be equal to the holder's aggregate adjusted basis in the
Fund common stock exchanged (subject to the assumption that the right to
affect other series by voting on general matters is not a separate property
right and /or has no Value); (c) if the Fund common stock is held as a
"capital asset" within the meaning of Section 1221 of the Code, the holding
period of the Value Portfolio in the hands of a former stockholder of the
Fund will include the holding period of the Fund common stock exchanged; and
(d) no gain or loss will be recognized by the Fund as a result of the
Transaction.
Except as set forth above, we express no other opinion with respect to
the tax consequences of the Transaction and related transactions to any party
under federal, state, local, or foreign laws.
<PAGE>
This opinion is furnished solely for use in connection with the
Registration Statement of Weitz Series Fund, Inc., (File No. 33-27633), and
any amendments thereto and in support of statements regarding the federal
income tax consequences of the Transaction made in the Fund's proxy statement
soliciting shareholder approval of the merger and may not be used,
circulated, quoted, or otherwise referred to for any other purpose without
our express permission. We hereby consent to the filing of this opinion as an
exhibit to the above-mentioned Registration Statement and to the use of our
name in the Proxy Statement of the Fund dated December 28, 1989.
Very truly yours,
/s/Larry A. Holle
-----------------
Larry A. Holle
For the Firm
<PAGE>
[LETTERHEAD OF CLINE, WILLIAMS, WRIGHT, JOHNSON, & OLDFATHER]
[1900 FIRSTIER BANK BUILDING, LINCOLN, NEBRASKA, 68508]
May 29, 1991
Weitz Series Fund, Inc.
The Mark, Suite 450
9290 West Dodge Road
Omaha, NE 68114-3323
RE: Post-Effective Amendment No. 4 to Form N-1A Registration
Statement-Government Money Market Portfolio
Gentlemen:
Our opinion has been requested with respect to the shares of common
stock, $.001 par value per share (the "Shares"), of Weitz Series Fund, Inc. (the
"Fund"), designated Government Money Market Portfolio shares, which are being
registered with the Securities and Exchange Commission under the Securities Act
of 1933, as amended, by Post-Effective Amendment No. 4 to Form N-1A Registration
Statement.
We have examined the Fund's Articles of Incorporation and Bylaws,
reviewed certain minutes of corporate proceedings, and have made such additional
factual and legal inquiries as we deemed necessary under the circumstances.
Based upon the foregoing, it is our opinion that:
1. The Fund is a duly and validly organized corporation presently
existing in good standing under the laws of the State of
Minnesota.
2. The issuance and sale of the Shares has been duly and validly
authorized by the necessary corporate action and said Shares will,
upon delivery against payment, be duly authorized, validly issued,
outstanding, fully paid and nonassessable shares of the common
stock of the Fund designated Government Money Market Portfolio
Shares.
We consent to the use of this opinion as exhibit to the Fund's Form
N-1A Registration Statement and further consent to the reference of our firm
under the heading "Legal Opinions" in the Prospectus forming a part thereof.
Very truly yours,
/s/JOHN C. MILES
For the Firm
<PAGE>
[LETTERHEAD OF CLINE, WILLIAMS, WRIGHT, JOHNSON, & OLDFATHER]
[1900 FIRSTIER BANK BUILDING, LINCOLN, NEBRASKA, 68508]
January 27, 1993
Board of Directors
Weitz Series Fund, Inc.
Omaha, Nebraska
Re: Form N-1A Registration Statement
Ladies and Gentlemen:
Our opinion has been requested with respect to the shares of common
stock designated Hickory Portfolio shares, $.001 par value share (the
"shares"), of the Weitz Series Fund, Inc. (the "Fund"), which are being
registered with the Securities and Exchange Commission under the Securities
Act of 1933, as amended, by Post-Effective Amendment to your Form N-1A
Registration Statement.
We have examined the Fund's Articles of Incorporation and Bylaws,
reviewed certain minutes of corporate proceedings, and have made such additional
factual and legal inquiry as we deemed necessary under the circumstances. Based
upon the foregoing, it is our opinion that:
1. The Fund is a duly and validly organized corporation presently
existing in good standing under the laws of the state of
Minnesota.
2. The issuance and sale of the shares have been duly and validly
authorized by the necessary corporate action; and said shares
will, upon delivery against payment, be duly authorized, validly
issued and outstanding, fully paid, and nonassessable shares of
common stock of the Fund.
We consent to the use of this opinion as an exhibit to the Fund's
Form N-1A Registration Statement and further consent to the reference of our
firm under the heading "Legal Opinions" in the Prospectus forming a part
thereof.
Very truly yours,
/s/JOHN C. MILES
For the Firm
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference of our report dated
April 17, 1998 on the financial statements of Value Portfolio, Fixed Income
Portfolio, Hickory Portfolio and Government Money Market Portfolio, series of
Weitz Series Fund, Inc. referred to therein in Post-Effective Amendment No.
15 to the Registration Statement on Form N1-A, as filed with the Securities
and Exchange Commission.
We also consent to the reference to our firm in the Prospectus under the
captions "Financial Highlights" and "Auditors" and in the Statement of
Additional Information under the caption "Other Services".
/s/McGladrey & Pullen
McGLADREY & PULLEN LLP
New York, New York
July 22, 1998
<PAGE>
September 8, 1988
Weitz Series Fund, Inc.
Attention Board of Directors
9110 West Dodge Road, Suite 210
Omaha, NE 68114
Ladies and gentlemen:
Wallace R. Weitz (the "Subscriber") hereby subscribes to ten thousand
(10,000) shares of common stock, designated Intermediate-Term Fixed Income
Portfolio Shares, at $10 per share, to be issued by Weitz Series Fund, Inc.
(the "Fund"), in consideration for an aggregate purchase price of $100,000 to
be paid upon demand at such time as the Board of Directors in their discretion
shall determine. Such shares will be held by the Subscriber for investment
purposes only, and should the Subscriber redeem any of said shares prior to
five (5) years after the effective date of the fund's Form N-1A Registration
Statement, it hereby agrees to reimburse the Fund for its pro rata share of
the unamortized organization costs of the Fund incurred during the period
from the Fund's incorporation to (90) days after the effective date of the
Fund's Form N-1A Registration Statement.
Very truly yours,
WALLACE R. WEITZ
By /s/Wallace R. Weitz
--------------------
Wallace R. Weitz
<PAGE>
December 10, 1992
Weitz Series Fund, Inc.
Attention Board of Directors
9290 West Dodge Road, Suite 405
Omaha, NE 68114
Gentlemen:
Wallace R. Weitz and Richard F. Lawson (the "Subscribers") hereby subscribe
to ten thousand (10,000) shares of common stock, designated Hickory Portfolio
Shares, at $10 per share, to be issued by Weitz Series Fund, Inc. (the
"Fund"), in consideration for an aggregate purchase price of $100,000 to be
paid upon demand at such time as the Board of Directors in their discretion
shall determine. Such shares will be held by the Subscribers for investment
purposes only.
Very truly yours,
/s/Wallace R. Weitz
Wallace R. Weitz
/s/Richard F. Lawson
Richard F. Lawson
<PAGE>
EXHIBIT 16
SCHEDULE OF COMPUTATIONS OF PERFORMANCE
FIXED INCOME PORTFOLIO
The Total Return, Average Annual Total Return, Yield, and Cumulative
Return Information presented in the Prospectus and described in 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 total 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, 1998:
P = $1,000 (initial value)
n = 1 (1 year)
ERV = $1,107.23 (ending redeemable value)
Solve for T:
$1,000(1 + T)1 = $1,107.23
T = .1072 or 10.72%
Average annual total return for the five years ended March 31, 1998:
P = $1,000 (initial value)
n = 5 (5 years)
ERV = $1,358.95 (ending redeemable value)
<PAGE>
Solve for T:
$1,000(1 + T)5 = $1,358.95
T = .0633 or 6.33%
Average annual total return from Inception, December 23, 1988, to March
31, 1998:
P = $1,000 (initial value)
n = 9.27 years
ERV = $1,972.12 (ending redeemable value)
Solve for T:
$1,000(1 + T)8.27 = $1,972.12
T = .0760 or 7.60%
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, 1998:
P = $1,000 (initial value)
n = 30 days
ERV = $1,004.65 (ending redeemable value)
Solve for Y:
$1,000(Y x 30/365 + 1) = $1,004.65
Y = .0566 or 5.66%
<PAGE>
CUMULATIVE RETURN:
Cumulative return from inception December 23, 1988 to March 31, 1998:
P = $1,000 (initial value)
ERV = $1,972.12 (ending redeemable value)
Solve for T:
$1,000(1 + T) = $1,972.12
T = .9721 or 97.21%
<PAGE>
VALUE PORTFOLIO
The Total Return, Average Annual Total Return and Cumulative Return
Information presented in the Prospectus and described in 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 total 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, 1998:
P = $1,000 (initial value)
n = 1 (1 year)
ERV = $1,588.49 (ending redeemable value)
Solve for T:
$1,000(1 + T)1 = $1,588.49
T = .5885 or 58.85%
Average annual total return for the five years ended March 31, 1998:
P = $1,000 (initial value)
n = 5 (5 years)
ERV = $2,695.19 (ending redeemable value)
Solve for T:
$1,000(1 + T)5 = $2,695.19
T = .2193 or 21.93%
<PAGE>
Average annual total return for the ten years ended March 31, 1998:
P = $1,000 (initial value)
n = 10 years
ERV = $5,186.48 (ending redeemable value)
Solve for T:
$1,000(1 + T)10 = $5,186.48
T = .1789 or 17.89%
CUMULATIVE RETURN:
Cumulative return from inception (May 9, 1986) to March 31, 1998:
P = $1,000 (initial value)
ERV = $4,785.05 (ending redeemable value)
Solve for T:
$1,000(1 + T) = $4,785.05
T = 4.7850 or 478.50%
<PAGE>
GOVERNMENT MONEY MARKET PORTFOLIO
The Yield Information presented in the Prospectus and described in 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, 1998:
P = $1,000 (initial value)
n = 7 days
ERV = $1,000.96 (ending redeemable value)
Solve for Y:
$1,000(Y x 7/365 + 1) = $1,000.96
Y = .0500 or 5.00%
7-day effective yield for the period ended March 31, 1998:
P = $1,000 (initial value)
n = 7 days
ERV = $1,000.96 (ending redeemable value)
Solve for E:
$1,000(E + 1)7/365 = $1,000.96
E = .0512 or 5.12%
<PAGE>
HICKORY PORTFOLIO
The Total Return, Average Annual Total Return and Cumulative Return
Information presented in the Prospectus and described in 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, 1998:
P = $1,000 (initial value)
n = 1 (1 year)
ERV = $1,718.14 (ending redeemable value)
Solve for T:
$1,000(1 + T)1 = $1,718.14
T = .7181 or 71.81%
Average annual total return for the three years ending March 31, 1998:
P = $1,000 (initial value)
n = 3 years
ERV = $3,095.89 (ending redeemable value)
Solve for T:
$1,000(1 + T)3 = $3,095.89
T = .4575 or 45.75%
<PAGE>
Average annual total return from Inception, April 1, 1993, to March 31,
1998:
P = $1,000 (initial value)
n = 4 years
ERV = $3,266.56 (ending redeemable value)
Solve for T:
$1,000(1 + T)4 = $3,266.56
T = .2671 or 26.71%
CUMULATIVE RETURN:
Cumulative return from inception (April 1, 1993) to March 31, 1998:
P = $1,000 (initial value)
ERV = $3,266.56 (ending redeemable value)
Solve for T:
$1,000(1 + T) = $3,266.56
T = .2671 or 26.71%
<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>
<SERIES>
<NUMBER> 1
<NAME> WEITZ VALUE PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 298,501,036
<INVESTMENTS-AT-VALUE> 448,105,012
<RECEIVABLES> 857,972
<ASSETS-OTHER> 528,762
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 449,491,746
<PAYABLE-FOR-SECURITIES> 207,336
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,007,925
<TOTAL-LIABILITIES> 1,215,261
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 266,264,073
<SHARES-COMMON-STOCK> 15,293,691
<SHARES-COMMON-PRIOR> 13,131,071
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 32,440,393
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 149,572,019
<NET-ASSETS> 448,276,485
<DIVIDEND-INCOME> 4,140,662
<INTEREST-INCOME> 3,393,357
<OTHER-INCOME> 0
<EXPENSES-NET> (4,574,011)
<NET-INVESTMENT-INCOME> 2,960,008
<REALIZED-GAINS-CURRENT> 51,507,135
<APPREC-INCREASE-CURRENT> 106,357,105
<NET-CHANGE-FROM-OPS> 160,824,248
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (4,210,726)
<DISTRIBUTIONS-OF-GAINS> (34,829,986)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,346,283
<NUMBER-OF-SHARES-REDEEMED> (1,914,458)
<SHARES-REINVESTED> 1,730,795
<NET-CHANGE-IN-ASSETS> 172,679,110
<ACCUMULATED-NII-PRIOR> 1,152,564
<ACCUMULATED-GAINS-PRIOR> 15,861,398
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,401,132
<INTEREST-EXPENSE> 33,608
<GROSS-EXPENSE> 4,574,011
<AVERAGE-NET-ASSETS> 341,691,888
<PER-SHARE-NAV-BEGIN> 20,988
<PER-SHARE-NII> 0.219
<PER-SHARE-GAIN-APPREC> 11,026
<PER-SHARE-DIVIDEND> (0.313)
<PER-SHARE-DISTRIBUTIONS> (2.609)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 29.311
<EXPENSE-RATIO> 1.27
<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>
<SERIES>
<NUMBER> 2
<NAME> WEITZ FIXED INCOME PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 30,659,517
<INVESTMENTS-AT-VALUE> 31,229,501
<RECEIVABLES> 426,959
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 31,656,460
<PAYABLE-FOR-SECURITIES> 1,229,739
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 22,294
<TOTAL-LIABILITIES> 1,322,033
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 29,716,466
<SHARES-COMMON-STOCK> 2,693,036
<SHARES-COMMON-PRIOR> 2,075,027
<ACCUMULATED-NII-CURRENT> 447,557
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (399,580)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 569,984
<NET-ASSETS> 30,334,427
<DIVIDEND-INCOME> 18,716
<INTEREST-INCOME> 1,791,220
<OTHER-INCOME> 0
<EXPENSES-NET> (195,609)
<NET-INVESTMENT-INCOME> 1,614,327
<REALIZED-GAINS-CURRENT> 59,909
<APPREC-INCREASE-CURRENT> 892,110
<NET-CHANGE-FROM-OPS> 2,566,346
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,462,725)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,080,177
<NUMBER-OF-SHARES-REDEEMED> (583,294)
<SHARES-REINVESTED> 121,126
<NET-CHANGE-IN-ASSETS> 7,985,387
<ACCUMULATED-NII-PRIOR> 295,955
<ACCUMULATED-GAINS-PRIOR> (459,490)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 130,406
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 237,184
<AVERAGE-NET-ASSETS> 26,148,495
<PER-SHARE-NAV-BEGIN> 10.770
<PER-SHARE-NII> 0.653
<PER-SHARE-GAIN-APPREC> 0.470
<PER-SHARE-DIVIDEND> (0.629)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.264
<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>
<SERIES>
<NUMBER> 3
<NAME> WEITZ GOVERNMENT MONEY MARKET PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 8,367,664
<INVESTMENTS-AT-VALUE> 8,367,664
<RECEIVABLES> 1,102
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 8,368,766
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 38,845
<TOTAL-LIABILITIES> 38,845
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 8,329,921
<SHARES-COMMON-STOCK> 8,329,921
<SHARES-COMMON-PRIOR> 5,819,938
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 8,329,921
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 457,092
<OTHER-INCOME> 0
<EXPENSES-NET> (41,977)
<NET-INVESTMENT-INCOME> 415,115
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 415,115
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (415,115)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 16,478,253
<NUMBER-OF-SHARES-REDEEMED> (14,371,953)
<SHARES-REINVESTED> 403,683
<NET-CHANGE-IN-ASSETS> 2,509,983
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 41,977
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 93,751
<AVERAGE-NET-ASSETS> 8,392,108
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.049
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (0.049)
<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>
<SERIES>
<NUMBER> 4
<NAME> WEITZ HICKORY PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 32,896,894
<INVESTMENTS-AT-VALUE> 45,544,063
<RECEIVABLES> 53,558
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 45,597,621
<PAYABLE-FOR-SECURITIES> 1,221,836
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 47,672
<TOTAL-LIABILITIES> 1,269,508
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 30,520,950
<SHARES-COMMON-STOCK> 1,507,036
<SHARES-COMMON-PRIOR> 646,671
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,159,994
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 12,647,169
<NET-ASSETS> 44,328,113
<DIVIDEND-INCOME> 176,690
<INTEREST-INCOME> 90,595
<OTHER-INCOME> 0
<EXPENSES-NET> (292,745)
<NET-INVESTMENT-INCOME> (25,460)
<REALIZED-GAINS-CURRENT> 1,995,094
<APPREC-INCREASE-CURRENT> 10,256,171
<NET-CHANGE-FROM-OPS> 12,225,805
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (54,656)
<DISTRIBUTIONS-OF-GAINS> (1,462,058)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 917,276
<NUMBER-OF-SHARES-REDEEMED> (128,242)
<SHARES-REINVESTED> 71,331
<NET-CHANGE-IN-ASSETS> 32,106,777
<ACCUMULATED-NII-PRIOR> 29,576
<ACCUMULATED-GAINS-PRIOR> 677,498
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 199,039
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 292,745
<AVERAGE-NET-ASSETS> 20,571,563
<PER-SHARE-NAV-BEGIN> 18.899
<PER-SHARE-NII> (0.007)
<PER-SHARE-GAIN-APPREC> 12.503
<PER-SHARE-DIVIDEND> (0.073)
<PER-SHARE-DISTRIBUTIONS> (1.908)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 29.414
<EXPENSE-RATIO> 1.46
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
