<PAGE>
As filed with the Securities and Exchange Commission
on April 30, 1998
1933 Act Registration Number 33-66714
1940 Act Registration Number 811-7918
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
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. 5 /X/
---
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 6 /X/
---
-----------------------------
Weitz Partners, 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, ESQ.
Dechert Price & Rhoads
1775 Eye Street
Washington, DC 10017
It is proposed that this filing will become effective April 30, 1998 pursuant to
paragraph (b) of rule 485 under the Securities Act of 1940.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
WEITZ PARTNERS, INC.
Cross-Reference Sheet
Required by Rule 404(a)
<TABLE>
<CAPTION>
PART A
N-1A Item Number Location in Prospectus
- ---------------- ----------------------
<S> <C>
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
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 and History
<PAGE>
13. Investment Objective and Policies . . . . . . . Investment Objective, Policies and Restrictions
14. Management of the Fund. . . . . . . . . . . . . Directors and Executive Officers
15. Control Persons and Principal
Holders of Securities . . . . . . . . . . . . . Investment Advisory and Other Services;
Capital Stock
16. Investment Advisory and Other Services. . . . . Investment Advisory and Other Services
17. Brokerage Allocation. . . . . . . . . . . . . . Portfolio Transactions and Brokerage
Allocations
18. Capital Stock and Other Securities. . . . . . . Capital Stock
19. Purchase, Redemption and Pricing
of Securities Being Offered . . . . . . . . . . Purchasing Shares; Determination of Net
Asset Value; Redemption
20. Tax Status. . . . . . . . . . . . . . . . . . . Taxation
21. Underwriters. . . . . . . . . . . . . . . . . . Investment Advisory and Other Services
22. Calculation of Performance Data . . . . . . . . Calculation of Performance Data
23. Financial Statements. . . . . . . . . . . . . . Financial Statements
</TABLE>
PART C
Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C to this Registration Statement.
<PAGE>
PARTNERS VALUE FUND
----------------------------------------------------------------------------
SERIES OF
WEITZ PARTNERS, INC.
1125 SOUTH 103 STREET, SUITE 600, OMAHA, NEBRASKA 68124-6008
402-391-1980 800-232-4161
FAX 402-391-2125
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PARTNERS VALUE FUND (the "Fund"), is a series of Weitz Partners, Inc., a
Nebraska corporation which is a no-load, open-end management investment company.
The Fund, which is non-diversified, seeks to achieve its investment objective of
capital appreciation primarily through its investment 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 governmental issuers. The Fund's investment strategy is based on
the concept of "value investing." For further information see "Investment
Objective & Policies" on page 8.
Shares can be purchased directly without the payment of any sales charges by
contacting the Fund. 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 Fund before
purchasing shares. More detailed information about the 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 Fund at the address shown
above.
PURCHASE OF SHARES OF THE FUND INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 APRIL 30, 1998
<PAGE>
(This page left blank intentionally.)
<PAGE>
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
Fund Expenses...................................................................... 4
Financial Highlights............................................................... 5
Investment Management Information.................................................. 8
Investment Objective and Policies................................................ 8
Investment Securities............................................................ 8
Investment Restrictions.......................................................... 10
Investment Risks................................................................. 11
Purchasing Shares.................................................................. 12
Opening a Regular New Account.................................................... 12
Opening a Retirement Account..................................................... 12
Purchasing Shares of the Fund.................................................... 12
Changing Your Address............................................................ 13
Confirmations and Shareholder Reports............................................ 13
Redeeming Shares................................................................... 15
Redemption Procedures............................................................ 15
Redemption Payments.............................................................. 15
Signature Guarantees............................................................. 16
Other Redemption Information..................................................... 16
Exchanging Shares.................................................................. 17
Pricing of Shares.................................................................. 18
Dividends, Distributions and Taxes................................................. 19
Management......................................................................... 20
Investment Adviser............................................................... 20
Transfer Agent and Administrative Services....................................... 20
Code of Ethics................................................................... 20
Additional Information............................................................. 21
Organization and Capital Structure............................................... 21
Performance Information.......................................................... 21
The Year 2000 Issue.............................................................. 22
Fund Distributor................................................................. 22
Fund Custodian................................................................... 22
Fund Auditor..................................................................... 22
Fund Legal Counsel............................................................... 22
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
-3-
<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 the Fund.
<TABLE>
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Sales Load Imposed on Purchases None
Sales Load Imposed on Reinvested Dividends None
Deferred Sales Load None
Redemption Fees None
Exchange Fees None
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees
Investment Advisory Fee 1.00%
12b-1 Fees None
Other Expenses
Administrative Fee* .12%
All Other Expenses .12%
------
Total Fund Operating Expenses 1.24%
</TABLE>
<TABLE>
<S> <C> <C>
EXAMPLE:
Based on the "Total Fund Operating Expenses" set 1 Year $ 13
forth above, you would pay the following expenses on 3 Years $ 40
a $1,000 investment, assuming: (1) a 5% annual return; 5 Years $ 69
and (2) redemption at the end of each time period. 10 Years $ 151
</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 THE FUND.
*Under the Administration Agreement, during the year ended December 31, 1997,
the administrative fee was calculated as a monthly fee which represented the
costs of providing administrative services to the Fund based upon the
Administrator's reasonable allocation of expenses, not to exceed .25% of average
daily net assets.
-4-
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The following information provides selected data for a share of the Fund
outstanding throughout the periods indicated. Information for the years ended
December 31, 1996, and 1997 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 January 1, 1996, was audited by other certified public
accountants.
<TABLE>
<CAPTION>
Years Ended December 31,
1997 1996 1995 1994**
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.524 $ 10.384 $ 8.275 $ 10.000
-------------- -------------- -------------- --------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.134 0.057 0.084 0.057
Net gains or losses on securities (realized
and unrealized) 4.326 1.933 3.108 (0.964 )
-------------- -------------- -------------- --------------
Total from investment operations 4.460 1.990 3.192 (0.907 )
-------------- -------------- -------------- --------------
LESS DISTRIBUTIONS
Dividends from net investment income -- (0.061 ) (0.237 ) --
Distributions from realized gains (0.531 ) (0.789 ) (0.846 ) (0.818 )
-------------- -------------- -------------- --------------
Total distributions (0.531 ) (0.850 ) (1.083 ) (0.818 )
-------------- -------------- -------------- --------------
NET ASSET VALUE, END OF PERIOD $ 15.453 $ 11.524 $ 10.384 $ 8.275
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
TOTAL RETURN 40.6% 19.2% 38.7% -9.0%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($000) 133,737 94,846 73,781 51,287
Ratio of expenses to average net assets 1.24% 1.23% 1.27% 1.29%
Ratio of net investment income to average net
assets 1.11% 0.51% 0.82% 0.67%
Portfolio turnover rate 30% 37% 51% 33%
Average commission rate paid (per share)* $ 0.0504 $ 0.0495 N/A N/A
</TABLE>
*Required by regulations issued in 1995.
**Fund commenced public offering of shares on January 1, 1994.
-5-
<PAGE>
The chart below depicts the change in the value of a $100,000 investment
for the period since inception (June, 1983), through December 31, 1997, for
Weitz Partners II - Limited Partnership, the predecessor to the Fund, (the
"Predecessor Partnership") and the Fund 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. The Fund succeeded to
substantially all of the assets of the Predecessor Partnership, a Nebraska
investment limited partnership as of December 31, 1993. The Fund's investment
objectives and policies are substantially identical to those of the Predecessor
Partnership and Wallace R. Weitz was the General Partner and portfolio manager
for the Predecessor Partnership and is the portfolio manager for the Fund. The
Predecessor Partnership was not registered under the Investment Company Act of
1940 (the "1940 Act") and therefore was not subject to certain investment
restrictions imposed by the 1940 Act. If the Predecessor Partnership had been
registered under the 1940 Act, the performance of the Predecessor Partnership
may have been adversely affected. As indicated, $100,000 originally invested in
the Predecessor Partnership on June 1, 1983, would have been valued at
$1,018,501 on December 31, 1997, assuming reinvestment of dividends and capital
gains.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
VALUE OF $100,000 INVESTMENT
SINCE INCEPTION OF THE PREDECESSOR
PARTNERSHIP
PV VALUE S&P VALUE
OF $100,000 OF $100,000
<S> <C> <C>
05/31/83 $100,000 $100,000
06/30/83 100,190 103,891
07/31/83 99,719 100,824
08/31/83 101,614 102,330
09/30/83 107,426 103,742
10/31/83 108,876 102,541
11/30/83 111,718 104,703
12/31/83 109,900 104,154
01/31/84 114,703 103,572
02/29/84 109,759 99,926
03/31/84 111,680 101,655
04/30/84 112,238 102,618
05/31/84 109,690 96,942
06/30/84 111,566 99,052
07/31/84 110,238 97,822
08/31/84 120,104 108,281
09/30/84 122,650 108,553
10/31/84 123,840 109,068
11/30/84 125,054 107,845
12/31/84 125,835 110,685
01/31/85 131,649 119,307
02/28/85 138,192 120,760
03/31/85 146,290 120,838
04/30/85 145,910 120,729
05/31/85 151,980 127,703
06/30/85 155,065 129,702
07/31/85 157,267 129,511
08/31/85 157,644 128,397
09/30/85 158,527 124,379
10/31/85 169,656 130,122
11/30/85 178,580 139,046
12/31/85 177,051 145,771
01/31/86 177,582 146,584
02/28/86 189,054 157,532
03/31/86 197,788 166,326
04/30/86 195,573 164,452
05/31/86 199,465 173,193
06/30/86 199,804 176,125
07/31/86 194,769 166,280
08/31/86 198,528 178,610
09/30/86 195,729 163,836
10/31/86 199,174 173,290
11/30/86 199,313 177,501
12/31/86 196,704 172,963
01/31/87 206,598 196,252
02/28/87 210,813 203,998
03/31/87 216,041 209,883
04/30/87 212,390 208,018
05/31/87 212,857 209,813
06/30/87 215,113 220,407
07/31/87 220,233 231,571
08/31/87 223,735 240,203
09/30/87 224,205 234,936
10/31/87 205,372 184,374
11/30/87 202,024 169,207
12/31/87 205,162 182,107
01/31/88 211,768 189,761
02/29/88 216,639 198,563
03/31/88 217,224 192,437
04/30/88 220,243 194,565
05/31/88 221,498 196,219
06/30/88 226,482 205,216
07/31/88 228,339 204,434
08/31/88 228,248 197,499
09/30/88 232,653 205,903
10/31/88 234,165 211,632
11/30/88 232,315 208,604
12/31/88 235,730 212,239
01/31/89 244,971 227,737
02/28/89 245,951 222,072
03/31/89 251,239 227,245
04/30/89 262,796 239,031
05/31/89 264,820 248,660
06/30/89 269,084 247,259
07/31/89 278,233 269,563
08/31/89 281,711 274,811
09/30/89 284,951 273,690
10/31/89 280,620 267,342
11/30/89 281,237 272,768
12/31/89 283,585 279,307
01/31/90 268,016 260,566
02/28/90 270,401 263,942
03/31/90 270,158 270,930
04/30/90 269,239 264,180
05/31/90 282,082 289,876
06/30/90 283,267 287,921
07/31/90 278,253 287,000
08/31/90 263,033 261,085
09/30/90 254,879 248,396
10/31/90 244,174 247,344
11/30/90 257,481 263,296
12/31/90 265,719 270,624
01/31/91 282,698 282,379
02/28/91 297,907 302,544
03/31/91 304,580 309,862
04/30/91 308,205 310,597
05/31/91 317,050 323,944
06/30/91 306,492 309,113
07/31/91 314,338 323,508
08/31/91 320,185 330,713
09/30/91 325,372 325,175
10/31/91 326,836 329,536
11/30/91 317,064 316,290
12/31/91 340,385 352,400
01/31/92 344,368 345,840
02/29/92 349,534 350,313
03/31/92 349,884 343,506
04/30/92 351,144 353,578
05/31/92 355,077 355,301
06/30/92 356,107 350,015
07/31/92 359,882 364,302
08/31/92 352,972 356,855
09/30/92 357,914 361,047
10/31/92 354,550 362,286
11/30/92 378,730 374,583
12/31/92 391,786 379,177
01/31/93 403,383 382,344
02/28/93 411,088 387,549
03/31/93 418,652 395,719
04/30/93 407,181 386,154
05/31/93 420,089 396,448
06/30/93 430,087 397,604
07/31/93 437,054 396,002
08/31/93 465,200 410,990
09/30/93 461,525 407,836
10/31/93 477,540 416,266
11/30/93 470,854 412,311
12/31/93 481,897 417,294
01/31/94 487,776 431,467
02/28/94 468,693 419,763
03/31/94 445,899 401,486
04/30/94 447,778 406,638
05/31/94 461,030 413,288
06/30/94 450,573 403,163
07/31/94 460,018 416,391
08/31/94 471,439 433,428
09/30/94 458,042 422,844
10/31/94 462,716 432,310
11/30/94 444,211 416,581
12/31/94 438,388 422,746
01/31/95 453,910 433,700
02/28/95 473,035 450,582
03/31/95 477,273 463,855
04/30/95 487,074 477,504
05/31/95 509,272 496,545
06/30/95 530,728 508,068
07/31/95 550,806 524,906
08/31/95 574,487 526,216
09/30/95 585,718 548,410
10/31/95 575,970 546,450
11/30/95 601,664 570,411
12/31/95 607,860 581,397
01/31/96 634,319 601,161
02/29/96 647,783 606,747
03/31/96 645,207 612,589
04/30/96 649,714 621,610
05/31/96 661,948 637,611
06/30/96 668,914 640,039
07/31/96 628,581 611,775
08/31/96 654,865 624,695
09/30/96 678,456 659,822
10/31/96 680,798 678,013
11/30/96 715,453 729,214
12/31/96 724,288 714,767
01/31/97 750,497 759,396
02/28/97 770,295 765,354
03/31/97 737,047 733,965
04/30/97 745,175 777,743
05/31/97 819,389 825,060
06/30/97 844,105 862,002
07/31/97 892,680 930,569
08/31/97 882,200 878,474
09/30/97 940,728 926,555
10/31/97 960,237 895,646
11/30/97 963,862 937,070
12/31/97 1,018,501 953,150
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Returns
Since
Inception
1 year 5 years 10 years (June 1, 1983)
--------- ----------- ----------- --------------
<S> <C> <C> <C> <C>
Partners Value Fund (and Predecessor Partnership) 40.6% 21.1% 17.4% 17.2%
Standard & Poor's 500 Index 33.4% 20.2% 18.0% 16.7%
</TABLE>
-6-
<PAGE>
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 Fund's
price-sensitivity leads the Fund to sell early and to hold cash reserves rather
than pay inflated prices for stocks.
In 1997, in spite of cash reserves which averaged 10-20% of the
portfolio, the Fund 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 Fund has been relatively
concentrated in financial, media, and communications stocks in the past several
years, so Fund 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 Fund's
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.
-7-
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT INFORMATION
INVESTMENT OBJECTIVE & POLICIES
The investment objective of the Fund is capital appreciation. The Fund seeks
to achieve its objective through investment in equity securities (stocks). The
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 Fund only if they intend to be patient, long-term investors.
The Fund will be invested primarily in common stocks and securities which
are convertible into common stocks, such as convertible bonds, preferred stocks,
and warrants. The Fund may also invest in non-convertible securities which are
deemed to be under-valued and which offer potential for capital gains. 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.
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 the Fund is shown in the Financial Highlights
table on page 5 of this Prospectus. To the extent that a substantial portion of
the Fund's total return over time is earned in the form of long-term capital
gains, this type of investing may be more tax-efficient than a higher-turnover
strategy. However, while tax consequences for shareholders may be a factor in
investment decisions, tax-efficiency of the portfolio is not a primary
consideration.
INVESTMENT SECURITIES
As discussed above, the Fund invests primarily in common stocks and
securities convertible into common stocks. Provided below is a brief description
of certain investment practices and types of securities in which the Fund 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 Fund 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 Fund's income since it
receives a payment (the "premium") for writing the option. To the extent that it
writes covered call
-8-
<PAGE>
options, the 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 include direct obligations of the U.S. Treasury
(such as Treasury bills, notes and bonds) and federal agency obligations
guaranteed as to principal and interest by the U.S. Treasury. U.S. Government
Securities may also include securities issued by U.S. Government
instrumentalities and certain federal agencies which are neither direct
obligations of, nor guaranteed by, the U.S. Treasury. However, such securities
generally involve some type of federal sponsorship which may include the backing
of the security by specific types of collateral, the support of the issuer's
right to borrow from the U.S. Treasury, the discretionary authority of the U.S.
Treasury to purchase certain obligations of the issuer, or the credit of the
issuing government agency or instrumentality.
CORPORATE DEBT SECURITIES acquired by the Fund, 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); however, the Fund may
from time to time invest up to 5% of its net assets in lower rated corporate
debt securities (i.e. "junk bonds") available in the secondary market. Such an
investment will be made only if it appears likely to the Adviser that the
investment will generate capital gains as a result of the issuer's merger,
reorganization or anticipated favorable change of financial condition.
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. See Appendix A to the Statement of
Additional Information for a description of ratings.
BANK OBLIGATIONS include negotiable certificates of deposit and bankers'
acceptances which evidence the obligation of the banking institution to repay
funds deposited with it for a specified period of time at a stated interest
rate. 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 Fund
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 A to the Statement of Additional Information for a description of
ratings.
FOREIGN SECURITIES purchased by the Fund 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 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 Fund will not invest in forward foreign currency
contracts. While the 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
-9-
<PAGE>
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.
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 Fund will only invest in investment company securities to the
extent allowed by the fundamental investment restrictions for the Fund.
SHORT SALES involve the sale of a security that the Fund does not own (but
instead has borrowed) in anticipation of a decline in the value of the security.
To the extent that the 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 Fund may also engage in short sales
"against the box." A short sale "against the box" is a form of short sale in
which the 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 the 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.
INVESTMENT RESTRICTIONS
The Fund has adopted a number of investment restrictions set forth in the
Statement of Additional Information. The Fund's investment objective described
above and certain of the 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 the Fund and are subject to change by the Board of Directors of the
Fund without shareholder approval. The Fund's fundamental investment
restrictions, among others, include the following:
1. With respect to 50% of its total assets, the Fund 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
-10-
<PAGE>
2. The Fund 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).
INVESTMENT RISKS
You should be aware of the fact that an investment in the Fund involves
certain risks. Prices of the securities in the Fund's portfolio will generally
fluctuate daily depending on general market conditions. Therefore, the value of
the Fund's shares will also fluctuate. Portions of the section titled
"Investment Securities" discuss certain additional risks which could be present
if the Fund acquires particular kinds of investments. Because the Fund 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. There is no
assurance that the investment objectives of the Fund can be achieved, and the
value of your investment upon redemption may be more or less than the purchase
price.
-11-
<PAGE>
- --------------------------------------------------------------------------------
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 PARTNERS, INC. and mailing the
application and check to:
Weitz Partners, Inc.
1125 South 103rd Street, Suite 600
Omaha, NE 68124-6008
PLEASE NOTE THAT THE MINIMUM INVESTMENT REQUIRED TO OPEN A REGULAR ACCOUNT IS
$100,000. SUBSEQUENT MINIMUM INVESTMENTS OF $5,000 MAY BE REQUIRED, SUBJECT TO
CERTAIN EXCEPTIONS. The Fund reserves the right, in its sole discretion, to
reject any order, to waive initial and subsequent investment minimums for new
accounts, including such accounts opened by or for family members of existing
shareholders, and to modify investment minimums from time to time. All purchase
orders are subject to acceptance by authorized officers of the Fund and are not
binding until so accepted.
OPENING A RETIREMENT ACCOUNT
Certain individuals may be eligible to open an IRA (including a traditional
or Roth 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 the Fund. You can
request the IRA Application Kit which contains an explanation of IRAs, including
certain tax considerations, by calling the Fund 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 are generally charged an annual maintenance fee.
Monies deposited into other types of pension or profit sharing plans may
also be invested in shares of the Fund. Although the Fund 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 Fund.
The minimum investment requirement for the purchase of the Fund's shares may
be waived for purchases in retirement accounts.
PURCHASING SHARES OF THE FUND
Purchases of Fund shares are not subject to any sales commissions or any
other transaction fees. The price you pay for the shares you buy in the Fund
will be the Fund's next-determined net asset value after the Fund 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 Partners, Inc. together with the remittance stub which is the
bottom portion of your most recent transaction statement to:
Weitz Partners, 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.
-12-
<PAGE>
BY WIRE. To purchase shares with payment by bank wire:
1. Call the Fund 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 Minnesota, N.A.
Minneapolis, MN
ABA #091000019
Norwest Trust Clearing Mpls
#0840245
For credit to: Weitz Partners, Inc. 25308000
For the Account of: Your Account Number and Name
THE FUND 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 Fund at the address set forth above prior to
your purchase. Wired funds are considered received on the day they are deposited
in the Fund's account if they are 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."
BY AUTOMATIC INVESTMENT. At the time you open an account, you can choose to
make automatic investments in Fund shares 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 Fund.
If your automatic investment transaction or check mailed for purchase of
shares is returned by the bank, the Fund may hold you responsible for any costs
to the Fund resulting from (i) fees charged to the Fund or (ii) a decline in the
net asset value when the shares issued are canceled.
Shares of the Fund 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 Fund 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 Fund or their shareholders.
CHANGING YOUR ADDRESS
You can change the address on your account by sending a written request to
the Fund. 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 Fund, redemptions from an account
are not allowed if the written request to change an address has been received by
the Fund 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 Fund. 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
-13-
<PAGE>
all transactions for that year. You should save the year-end statement for tax
purposes. In addition, the Fund provides quarterly shareholder reports which
include a listing of the securities in the 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
June 30 will also include unaudited financial statements. The annual report for
the period ending December 31 will include the Fund's audited financial
statements for the previous fiscal year.
It is the Fund'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 Fund.
-14-
<PAGE>
- --------------------------------------------------------------------------------
REDEEMING SHARES
REDEMPTION PROCEDURES
The Fund 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 Fund before a redemption
request will be accepted. In addition, the Fund 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 Partners, 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 Fund 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 Fund'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 Fund accompanied by a signature guarantee. See "Signature
Guarantees" below. The Fund 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 which will
generally result in a short-term or long-term capital gain or loss, depending on
how long you have owned the shares.
-15-
<PAGE>
SIGNATURE GUARANTEES
The Fund 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 Fund 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 Fund 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 Fund may,
however, redeem its shares 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 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 Fund 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.
-16-
<PAGE>
- --------------------------------------------------------------------------------
EXCHANGING SHARES
You can exchange shares of the Fund for shares of a portfolio of Weitz
Series Fund, Inc. (a "Series Fund Portfolio"). 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 the Fund and the purchase of
shares of a Series Fund Portfolio 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 Fund
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 do not currently have an account in Weitz Series Fund, Inc.,
request an application and prospectus for Weitz Series Fund, Inc. by
calling 402-391-1980 or 800-232-4161. Read the prospectus, complete the
application and return it to the Fund 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. Provide the name of the Series Fund Portfolio, the account name, your
address and account number and the dollar amount of shares to be
exchanged.
The Fund 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 Fund will not be
liable for losses caused by following telephone instructions which are
reasonably believed to be genuine. The Fund 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 Fund 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.
-17-
<PAGE>
- --------------------------------------------------------------------------------
PRICING OF SHARES
The 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.
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, Jr. Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas.
The net asset value per share is determined by calculating the market value
of all the Fund's assets, deducting total liabilities and dividing the result by
the number of shares outstanding.
In calculating net asset value of the Fund's shares:
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 Fund's Board of
Directors.
-18-
<PAGE>
- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES
The 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 Fund should not incur any significant federal
income tax liability. Should the 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." Certain
dividends declared in December of a calendar year and payable to shareholders of
record in such month but actually paid during January of the following year will
be taxable to shareholders as though received on December 31st of the year in
which such dividend was declared.
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
the 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 distribution 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 the Fund. A
portion of the distributions paid by the 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 Fund early each calendar year.
You should consider the tax implications of buying shares 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.
The 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 Fund 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.
-19-
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT
INVESTMENT ADVISER
The 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 the Fund and is responsible for the
overall management of the Fund's business affairs, subject to the supervision of
the Fund's Board of Directors. Under the terms of an investment advisory
contract, the Adviser receives a monthly fee equal to 1% per annum of the Fund's
average daily net assets.
The Fund pays all expenses directly attributable to it. The Adviser has
agreed to reimburse the Fund or pay directly for a portion of the Fund's
operating expenses to the extent of the advisory fee paid if the total of such
expenses exceeds 1.50% of the Fund's annual average net assets.
Wallace R. Weitz is primarily responsible for the day-to-day management of
the Fund's 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 Series Fund, Inc., a registered
investment company consisting of four separate portfolios. In addition, he
manages an equity-oriented private investment partnership, an income private
investment partnership and certain individual accounts.
TRANSFER AGENT AND ADMINISTRATIVE SERVICES
Wallace R. Weitz & Company also serves as the Fund's Transfer Agent,
Dividend Disbursing Agent and Administrator pursuant to the terms of an
administration agreement. In this capacity it provides various administrative
and compliance services to the 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 Fund 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 the
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 Fund, which reviews the administration of the Code of Ethics on
an annual basis, may impose penalties for violations of the Code of Ethics.
-20-
<PAGE>
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
ORGANIZATION AND CAPITAL STRUCTURE
Weitz Partners, Inc., a Nebraska corporation formed in July of 1993, is
authorized to issue a total of one billion shares of common stock in series with
a par value of $.00001 per share. The Board of Directors has authorized fifty
million of these shares to be issued by the Fund. The Board of Directors may
authorize additional shares in the Fund and, in addition, may authorize
additional series of Weitz Partners, Inc. each with its own investment
objectives, policies and restrictions. 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
Partners, Inc. vote together. If additional series were to be authorized by the
Board of Directors, the shareholders of a particular series would vote
separately on issues affecting only that particular series, such as the approval
of a change in a fundamental investment restriction for that series.
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 the Nebraska Business Corporation Act. 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 Fund.
PERFORMANCE INFORMATION
The Fund may include its 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 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 the 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 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.
YOU SHOULD UNDERSTAND THAT ANY PERFORMANCE DATA PRESENTED REPRESENTS PAST
PERFORMANCE OF THE 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 FUND WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST.
The Fund may compare its 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 and Income Fund Index and the NASDAQ and Value
Line Composites. The Fund 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.
-21-
<PAGE>
THE YEAR 2000 ISSUE
The Fund relies extensively on various computer systems in carrying out its
business activities, including the computer systems employed by its 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 Fund
is 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 Fund is 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 Fund. The
Fund has no reason to believe that these steps will not be sufficient to avoid
any material adverse impact on the Fund, 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 Fund and the Service Providers at this time, but
could have a material adverse impact on the operations of the Fund and the
Service Providers.
FUND DISTRIBUTOR
The Fund is distributed by Weitz Securities, Inc., a Nebraska corporation
which is affiliated with Wallace R. Weitz & Company, the Fund's investment
adviser. Weitz Securities, Inc. is wholly owned by Wallace R. Weitz. Shares of
the 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 the Fund's shares.
FUND CUSTODIAN
Norwest Bank Minneapolis, N.A., Sixth and Marquette, Minneapolis, Minnesota
55479-0001, is the Custodian for the Fund.
FUND AUDITOR
McGladrey & Pullen LLP, 555 Fifth Avenue, New York, New York 10017, is the
independent certified public accountant and auditor for the Fund.
FUND LEGAL COUNSEL
Dechert Price & Rhoads, 1775 Eye Street, Washington, D.C. 20006-2401 is the
Fund's legal counsel.
-22-
<PAGE>
WEITZ PARTNERS, INC.
- --------------------------------------------------------------------------------
PARTNERS VALUE FUND
-----------------------------------------------------------
-----------------------------------------------------------
PROSPECTUS
APRIL 30, 1998
-------------------------
-------------------------
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 Fund, 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.
------------------------------------------
------------------------------------------
------------------------------------------
INVESTMENT ADVISER
WALLACE R. WEITZ & COMPANY
One Pacific Place, Suite 600
1125 South 103 Street
Omaha, Nebraska 68124-6008
------------------------------------------
<PAGE>
Weitz Partners, Inc.
STATEMENT OF ADDITIONAL INFORMATION
April 30, 1998
Table of Contents
Page
----
General Information and History. . . . . . . . . . . . . . . . . . . . . . 2
Investment Objective, Policies and Restrictions. . . . . . . . . . . . . . 2
Purchase of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Directors and Executive Officers . . . . . . . . . . . . . . . . . . . . . 9
Investment Advisory and Other Services . . . . . . . . . . . . . . . . . . 11
Portfolio Transactions and Brokerage Allocations . . . . . . . . . . . . . 13
Capital Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Determination of Net Asset Value . . . . . . . . . . . . . . . . . . . . . 16
Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Calculation of Performance Data. . . . . . . . . . . . . . . . . . . . . . 18
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Appendix A - Ratings of Corporate
Obligations and Commercial Paper. . . . . . . . . . . . . . . . . . . . A-1
This Statement of Additional Information is not a prospectus. This
Statement of Additional Information relates to the Prospectus of the Partners
Value Fund, dated April 30, 1998, and should be read in conjunction therewith.
Copies of the Prospectus may be obtained from the Fund at 1125 South 103 Street,
Suite 600, Omaha, Nebraska, 68124-6008.
<PAGE>
GENERAL INFORMATION AND HISTORY
The shares of Weitz Partners, Inc. (the "Company") are offered in series
with each series designated as and representing a separate fund of investments
with its own investment objectives, policies and restrictions. At the present
time, only one series is authorized and is designated the Partners Value Fund
(the "Fund").
On December 31, 1993, the Fund succeeded to substantially all of the assets
of Weitz Partners II-Limited Partnership (the "Partnership"), a Nebraska
investment limited partnership, which was formed in May 1983. Wallace R. Weitz,
the portfolio manager for the Fund, was the General Partner of the Partnership
and managed its assets according to investment objectives and policies
substantially identical to those of the Fund. The investment objective and
policies of the Fund are set forth below.
The Fund is a non-diversified investment management company as defined
under the Investment Company Act of 1940 (the "1940 Act"). However, the Fund is
a diversified investment management company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). See "Investment Objective,
Policies and Restrictions" for the Fund below and see "Taxation".
Certain of the investment restrictions set forth separately below for the
Fund are considered fundamental policies and cannot be changed without the vote
of a majority of the Fund's outstanding shares. "Majority," as used herein,
means the lesser of (a) 67% or more of the Fund's outstanding shares voting at a
special or annual meeting of shareholders at which more than 50% of the
outstanding shares are represented in person or by proxy or (b) more than 50% of
the Fund's outstanding shares.
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS
SECURITIES AND OTHER INVESTMENT PRACTICES
GENERAL The Fund's investment objective is capital appreciation.
Ordinarily, the Fund will be principally invested in common stocks and other
securities convertible to equity, such as rights, warrants, convertible bonds
and preferred stock. However, the Fund has adopted a policy which permits
Wallace R. Weitz & Company (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 U.S. Government Securities 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. U.S. Government
Securities are securities issued or guaranteed by the U.S. Government and may
include treasury bills, notes and bonds which are direct obligations of the U.S.
Government and obligations of its agencies and instrumentalities. Obligations
issued or guaranteed by 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
2
<PAGE>
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.
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.
INDUSTRY CONCENTRATION Although the Fund will not concentrate its
investments in any one industry, it reserves the right to invest up to 25% of
the value of its net 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
Fund 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.
LOWER RATED CORPORATE DEBT SECURITIES Convertible corporate debt
securities purchased by the Fund 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, however, the Fund may from time to time
invest up to 5% of its net assets in lower rated corporate debt securities (i.e.
"junk bonds") available in the
3
<PAGE>
secondary market. Such an investment will be made only if it would appear
likely to the Investment Adviser that the investment will generate capital gains
as a result of the issuer's merger, reorganization or anticipated favorable
change of financial condition.
The Fund's investment in "junk bonds", while generally providing greater
income and opportunity for gain than investments in higher rated securities,
usually entails greater risk of principal and income (including the possibility
of default or bankruptcy of the issuers of such securities), and involves
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. In particular,
securities rated lower than "Baa" by Moody's or "BBB" by S&P or comparable
securities either rated by another rating organization or unrated (commonly
known as "junk bonds") are considered speculative. These lower rated, higher
yielding fixed income securities generally tend to reflect economic changes (and
the outlook for economic growth), short-term corporate and industry developments
and the market's perception of their credit quality (especially during times of
adverse publicity) to a greater extent than higher rated securities (which react
primarily to fluctuations in the general level of interest rates), although
these lower rated fixed income securities are also affected by changes in
interest rates. In the past, economic downturns or an increase in interest
rates have under certain circumstances caused a higher incidence of default by
the issuers of these securities and may do so in the future, especially in the
case of highly leveraged issuers. During certain periods, the higher yields on
the Fund's lower rated, high yielding fixed income securities will be paid
primarily because of the increased risk of loss of principal and income, arising
from such factors as the heightened possibility of default or bankruptcy of the
issuers of such securities. Because of the nature of a portfolio of fixed
income securities, the Fund may continue to earn the same level of interest
income while its net asset value declines as a result of a market value decline
of the bonds. This could result in an increase in the Fund's yield despite the
actual loss of principal.
The prices for lower rated bonds may also be affected by legislative and
regulatory developments. Such legislation may depress the prices of outstanding
lower rated, high yielding fixed income securities.
Changes in the value of securities subsequent to their acquisition will not
affect cash income but will be reflected in the net asset value of shares of the
Fund. The market for these lower rated fixed income securities may be less
liquid than the market for investment grade fixed income securities.
Furthermore, the liquidity of these lower rated securities may be affected by
the market's perception of their credit quality. Therefore, the Investment
Adviser's judgment may at times play a greater role in valuing these securities
than in the case of investment grade fixed income securities, and it also may be
more difficult during times of certain adverse market conditions to sell these
lower rated securities at their fair market value to meet redemption requests or
to respond to changes in the market. While the Investment Adviser will refer to
ratings issued by established ratings agencies, it is not a policy of the Fund
to rely exclusively on ratings issued by these agencies, but rather to
supplement such ratings with the independent and ongoing review by the
Investment Adviser of credit quality. The Fund did not invest in any lower rated
corporate debt securities during
4
<PAGE>
the fiscal year ended December 31, 1997. A complete description of the S&P and
Moody's ratings of fixed income securities is attached as Appendix A.
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 Fund may purchase securities of other
investment companies subject to the restrictions of the 1940 Act. The Fund 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 Fund has a particular interest or shares of closed-end
investment companies which frequently trade at a discount from their net asset
value. Investing in the securities of other investment companies indirectly
results in the investor paying not only fees of the Fund, but also fees of the
other investment company.
FOREIGN SECURITIES The Fund 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 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 Fund will not invest in forward
foreign currency contracts. While the Fund 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
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.
RESTRICTED/ILLIQUID SECURITIES The Fund may invest in securities acquired
in a privately negotiated transaction directly from the issuer or a holder of
the issuer's securities and which,
5
<PAGE>
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 Fund will not invest in any such restricted securities or
illiquid securities which will cause the then aggregate value of all such
securities to exceed 10% of the value of the Fund's total 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 Fund 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 Fund's income since
it receives a payment (the "premium") for writing the option. To the extent
that it writes covered call options, the Fund 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 Fund 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.
BANK OBLIGATIONS include negotiable certificates of deposit and bankers'
acceptances which evidence the obligation of the banking institution to repay
funds deposited with it for a specified period of time at a stated interest
rate. Such obligations will be purchased from banks which have capital, surplus
and undivided profits, as of the date of their most recently published financial
statements, in excess of $100,000,000 and obligations of other banks and savings
and loan associations if such obligations are insured by the Federal Deposit
Insurance Corporation ("FDIC"). Certificates of deposit generally have
penalties for early withdrawal, but can be sold to third parties subject to the
same risks as other fixed income securities.
COMMERCIAL PAPER consists of short-term unsecured promissory notes. The
Fund 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
6
<PAGE>
of investment have an outstanding debt issue rated AA or better by Standard &
Poors or Aa or better by Moody's. See Appendix A for a description of ratings.
SHORT SALES, PUT AND CALL OPTIONS The Fund may engage in short sales and
sell put and call options. Short sales involve the sale of a security that the
Fund does not own (but instead has borrowed) in anticipation of a decline in the
value of the security. To the extent that the 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 sort
sale is greater than the original proceeds of the short sale. The Fund may also
engage in short sales "against the box." A short sale "against the box" is a
form of short sale in which the 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 the 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.
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 Fund could lose the entire cost of those puts and calls which expire
worthless.
FUNDAMENTAL INVESTMENT RESTRICTIONS
The Fund may not:
1. Underwrite the securities of other issuers, except the Fund 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 Fund
may purchase marketable securities of companies holding real estate or interests
in real estate.
3. Purchase or sell commodities or commodity futures contracts.
4. Issue any senior securities (as defined in the Investment Company Act
of 1940, as amended) other than that as set forth below in restriction number 6.
5. Make loans to other persons except by the purchase of a portion of an
issue of publicly distributed bonds, debentures or other debt securities;
provided that the Fund 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.
7
<PAGE>
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
Fund's total assets at the time any borrowing is made.
7. Purchase securities on margin, but the Fund 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. Invest more than 25% of the value of its net assets (at the time of
purchase and after giving effect thereto) in the securities of any one industry.
11. 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).
12. Adopt any investment objective otherwise than as described under
"Investment Objective" in the Prospectus.
PORTFOLIO TURNOVER
The portfolio turnover rate for the Fund is the ratio of the lesser of
annual purchases or sales of securities for the Fund to the average monthly
value of such securities, not including short-term securities maturing in less
than 12 months. 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 Fund for the periods ended December 31,
1997, and December 31, 1996, was 30% and 37%, respectively. The Fund is not
expected to have a portfolio turnover rate in excess of 100%. The portfolio
turnover rate will not be a limiting factor when management deems changes in the
Fund's portfolio appropriate. The higher a portfolio's turnover rate, the
higher will be its expenditures for brokerage commissions and related
transaction costs.
PURCHASE OF SHARES
See "Purchasing Shares" in the Prospectus for basic information on how to
purchase shares of the Fund.
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. Net asset value of the 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
8
<PAGE>
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 investor will become a shareholder of record at the net
asset value determined the following business day.
When an investor purchases shares of the Fund, a shareholder's investment
account is opened in his/her name on the books of the Fund. No certificates for
shares are issued. A continuing permanent record of each shareholder's
investment account is maintained by the Fund. 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
Fund, unless the shareholder has elected on the Purchase Application to receive
such distributions in cash.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
officers and directors of the Company:
*Wallace R. Weitz President, Wallace R. Weitz & Company, a
President, Treasurer registered investment adviser, since July 1983;
and Director President, Weitz Securities, Inc., a registered
Age: 49 broker-dealer, since its inception in January
1986; President, Treasurer and Director of Weitz
Series Fund, Inc., a registered investment
company, since 1990; President, Treasurer and
Director, Weitz Value Fund, Inc., a registered
investment company, January 1986 until March
1990; 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
Director accountants) since its inception in 1985;
Age: 50 Director, Weitz Series Fund, Inc., since 1990;
Director, Weitz Value Fund, Inc., January 1986
until March 1990; Vice President, Wallace R.
Weitz & Company, July 1988 until December 1988;
Senior Tax Manager, Peat, Marwick, Mitchell &
Co., Omaha, Nebraska, from 1978 to 1985.
*Thomas R. Pansing, Jr. Partner, Gaines, Mullen, Pansing, Hogan,
Director attorneys, since 1973; Director, Weitz Series
Age: 53 Fund, Inc., since 1990; Director, Weitz Value
Fund, Inc., January 1986 until March 1990.
Richard D. Holland Prior to his retirement in 1984, Mr. Holland was
Director Vice Chairman, Rollheiser, Holland & Kahler
Age: 77 (1979-1984) (advertising) and President of
Holland, Dreves & Reilly (1954-1979)
(advertising); Director, Weitz Series Fund, Inc.
since June, 1995.
9
<PAGE>
Delmer L. Toebben President, Curzon Advertising & Display, Inc.
Director since 1977; Director, Weitz Series Fund, Inc.
Age: 67 since July of 1996.
Lorraine Chang Independent Consultant (organizational change
Director strategies-government and non-profit
Age: 47 organizations) 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
Series Fund, Inc. since June, 1997.
Mary K. Beerling Vice President, Wallace R. Weitz & Company since
Vice President and July 1994; Vice President, Weitz Securities,
Secretary Inc., since July 1994; Vice President and
Age: 57 Secretary, Weitz Series Fund, Inc., since July
1994; Partner, Kutak Rock, attorneys, from 1989
to 1994.
Linda L. Lawson Vice President, Wallace R. Weitz & Company since
Vice President June, 1992; Vice President of Weitz Series Fund,
Age: 44 Inc., since 1992; 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
Assistant Secretary January 1991; Portfolio Manager, Hickory
Age: 40 Portfolio of Weitz Series Fund, Inc. since 1992;
Vice President, Weitz Securities, Inc. since
March 1995; management consultant, Temple, Barker
& Sloane, Inc., July, 1984-September, 1989. 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 Company and the Investment
Adviser. The mailing address of all officers and directors of the Company is
1125 South 103 Street, Suite 600, Omaha, Nebraska 68124-6008.
10
<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 December 31, 1997. Under the Advisory Agreement remuneration of officers
is paid by the Investment Adviser.
<TABLE>
<CAPTION>
COMPENSATION TABLE
Total Compensation
Aggregate from Company and
Name of Compensation from Weitz Series Fund, Inc.
Person, Position the Company Paid to Directors
---------------- ----------------- -----------------------
<S> <C> <C>
Lorraine Chang, Director (1) $ 600 $3,000
John W. Hancock, Director 1,440 6,600
Richard D. Holland, Director 1,440 6,600
Thomas R. Pansing, Jr., Director 1,200 6,000
Delmer L. Toebben, Director 1,000 5,000
Wallace R. Weitz, Director (2) 0 0
</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 of his time to the business of the Investment Adviser.
INVESTMENT ADVISORY AND OTHER SERVICES
GENERAL
The investment adviser and administrator for the Fund is Wallace R. Weitz &
Company. The Investment Adviser acts pursuant to a written agreement which will
be periodically approved by the directors or the shareholders of the Fund. Weitz
Securities, Inc. acts as the Fund's distributor ("Distributor"). The address
for the Adviser and Distributor is 1125 South 103 Street, Suite 600, Omaha,
Nebraska, 68124-6008.
CONTROL OF THE ADVISER AND THE DISTRIBUTOR
The Adviser and Distributor are wholly owned by Wallace R. Weitz.
THE INVESTMENT ADVISORY AGREEMENT
The Investment Adviser and the Fund have entered into a Management and
Investment Advisory Agreement ("Advisory Agreement") last approved by the Board
of Directors of the Company on February 10, 1998.
11
<PAGE>
The Advisory Agreement terminates automatically in the event of assignment.
In addition, the Advisory Agreement is terminable at any time, without penalty,
by the Board of Directors of the Company or by vote of a majority of the Fund's
outstanding voting securities on not more than 60 days' written notice to the
Investment Adviser, or by the Adviser, on not more than 60 days' written notice
to the Company. Unless sooner terminated, the Advisory Agreement shall continue
in effect for more than two years after its 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
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 Agreement, the Company pays to the Adviser, on a
monthly basis, an annual advisory fee equal to 1% of the Fund's average daily
net assets. The total amount of advisory fees paid to the Investment Adviser
for the fiscal years ended December 31, 1997, 1996 and 1995 was $1,124,589,
$862,790, and $642,570, respectively.
Under the Advisory Agreement, the Investment Adviser is responsible for
selecting the Fund's securities. The Investment Adviser will also provide
certain management and certain other personnel to the Company. The Distributor,
Weitz Securities, Inc., in its capacity of principal underwriter, will bear any
sales or promotional costs incurred in connection with the sale of the Fund's
shares.
The Fund will pay all expenses of operations not specifically assumed by
the Investment Adviser. These will include, 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 carried
by the Fund, and expenses of complying with federal, state and other laws. Such
expenses will be charged to the Fund.
The Advisory Agreement provides 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 Company. In the event the
Company entered into an agreement with another investment adviser the Company
could be required to change its corporate name.
12
<PAGE>
The Adviser has voluntarily agreed to reimburse the Fund 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.
THE ADMINISTRATOR
The Investment Adviser has also been engaged as the Fund's Administrator
under an Administration Agreement. Under this Agreement effective March 1,
1998, the Fund will pay a monthly fee equal, on an annual basis, to .150% of
average daily net assets, but not less than $25,000 per year. Prior to this date
the Fund paid a monthly fee based upon the costs to the Administrator of
providing services to the Fund based upon the Administrator's reasonable
allocation of expenses, but not to exceed .25% of the average daily net assets
of the Fund. Services provided under the Administration Agreement include,
without limitation, customary services related to fund accounting, record
keeping, compliance, registration, transfer agent and dividend disbursing. The
average administrative fee for the fiscal year ended December 31, 1997 was .12%.
The total amount of fees paid under the Administration Agreement for the fiscal
years ended December 31, 1997, 1996 and 1995 was $126,978, $99,953, and $79,655,
respectively.
THE DISTRIBUTOR
The Distributor offers shares of the Fund on a continuous basis without
compensation from the Fund.
OTHER SERVICES
The Fund's custodian is Norwest Bank Minnesota, N.A., Minneapolis,
Minnesota. The Fund's accountant is McGladrey & Pullen, LLP, New York, New
York. The Fund'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 Fund's investment decisions and, subject to the instructions of the Board of
Directors of the Company, determines the broker to be used in each specific
transaction. Principal market makers will be used for the execution of
transactions of unlisted securities unless it has been determined that better
price and execution are available elsewhere.
The Investment Adviser attempts to obtain from brokers the most favorable
price and execution available. In determining the most favorable price and
execution all factors relevant to the Fund's best interest are considered,
including, for example, price, the size of the transaction, the nature of the
market for the security, the amount of commission, the timing of the transaction
taking into account market prices and trends, the reputation, experience and
financial stability of the broker-dealer involved and the quality of service
rendered by the broker-dealer in other transactions. Subject to these
considerations, the Investment Adviser may place orders for the purchase or sale
13
<PAGE>
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 the Fund an amount of commission for
effecting a securities transaction in excess of the amount of commission another
broker-dealer would have charged for effecting that transaction, provided that
the Investment Adviser has determined in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by the broker 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 Adviser effects securities transactions are used by the Adviser in
servicing all of its accounts and are not used exclusively with respect to
transactions for the Fund.
Brokerage and research services, as provided in Section 28(e)(3) of the
Securities Exchange Act of 1934, include advice as to the value of securities,
the advisability of investing in, purchasing or selling securities, the
availability of securities or purchasers or sellers of securities; furnishing
analyses and reports concerning issuers, industries, securities, economic
factors and trends, 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 December 31, 1997, 1996 and 1995, the Fund
paid $246,365, $242,786, and $162,891, respectively in brokerage commissions for
securities transactions in the Fund. $210,163 or approximately 85% of the total
commissions paid during the fiscal year ended December 31, 1997, were paid to
firms that provided research services to the Investment Adviser.
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 other investment advisory clients of the Adviser. An
exchange may order the liquidations of positions found to be in excess of these
limits, and it may impose certain other sanctions. The Adviser believes it is
unlikely that the level of option trading by the Company will exceed applicable
limitations.
CAPITAL STOCK
On March 31, 1998, the Fund had 9,875,668 shares of its common stock
outstanding. As of that date the directors and officers of the Fund
collectively owned 292,771 shares which represented
14
<PAGE>
approximately 3% of the outstanding shares of Fund. Also as of that date the
following persons owned 5% or more of the Fund:
<TABLE>
<CAPTION>
Name and Address No. of Shares Percentage Ownership
---------------- ------------- --------------------
<S> <C> <C>
Marguerite Scribante 616,944 6.2%
10030 Fieldcrest Drive
Omaha, Nebraska 68114
Hawkins Construction Company 498,402 5.0%
PO Box 9008
Omaha, NE 68109
</TABLE>
ORGANIZATION AND CAPITAL STRUCTURE
The Company is authorized to issue a total of one billion shares of common
stock in series with a par value of $.00001 per share. Fifty million of these
shares have been authorized by the Board of Directors to be issued in the series
designated the Partners Value Fund. The Board of Directors may authorize
additional shares in series without shareholder approval.
All shares, when issued, will be fully paid and non-assessable and will be
redeemable and freely transferable. All shares have equal voting rights. They
can be issued as full or fractional shares. A fractional share has pro rata the
same kind of rights and privileges as a full share. The shares possess no
preemptive or conversion rights.
Each share of a Fund has one vote (with proportionate voting for fractional
shares) irrespective of the relative net asset value of the shares. On some
issues, such as the election of directors, all shares of the Fund vote together
as one series. Cumulative voting is authorized. This means that in a vote for
the election of directors, shareholders may multiply the number of shares they
own by the number of directors and then allocate such votes to one or more
directors, thereby allowing for the possibility that a shareholder may be able
to elect a director even though they do not have the majority of the outstanding
shares. In the event that the Company authorizes additional series of shares
of the Company as separate funds, on issues affecting only a particular fund,
the shares of the affected fund vote as a separate series. An example of such
an issue would be a fundamental investment restriction pertaining to only one
fund.
The Board of Directors of the Company is responsible for managing the
business and affairs of the Company. The Board currently consists of six
members and exercises all of the rights and responsibilities required by, or
made available under, Nebraska corporate law. Pursuant to the Investment
Advisory Agreement, the Investment Adviser provides the Fund with continuous
investment advice and is responsible for the overall management of the Company's
business affairs, subject to supervision of the Company's Board of Directors.
See "Investment Advisory and Other Services" above.
15
<PAGE>
SHAREHOLDER MEETINGS
It is possible that the Fund will not hold annual or periodically scheduled
regular meetings of shareholders. Annual meetings of shareholders will not be
held unless called by the shareholders pursuant to the Nebraska Business
Corporation Act or unless required by the Investment Company Act of 1940 and the
rules and regulations promulgated thereunder or otherwise at the direction of
the Board of Directors of the Fund. Special meetings of the shareholders may be
held, however, at any time and for any purpose, if called by (i) the Chairman of
the Board, the President and two or more directors, (ii) by one or more
shareholders holding ten percent or more of the shares entitled to vote on
matters presented to the meeting, or (iii) if the annual meeting is not held
within any thirteen month period, the local district court, upon application of
any shareholder, may summarily order that such meeting be held. In addition,
the Investment Company Act of 1940 requires a shareholder vote for all
amendments to fundamental investment policies and investment advisory contracts.
DETERMINATION OF NET ASSET VALUE
The method for determining the public offering price of the Fund shares is
described in the Prospectus in the text under the captions "Pricing of Shares."
The net asset value of the Fund's shares is determined each day that the New
York Stock Exchange is open, provided that the net asset value need not be
determined on days when no shares are tendered for redemption and no order for
shares is received. Currently the New York Stock Exchange and the Fund are
closed for business on the following holidays (or on the nearest Monday or
Friday if the holiday falls on a weekend): New Year's Day, Martin Luther King
Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving and Christmas.
The Fund's securities fluctuate in value, and hence, the net asset value
per share of the Fund also fluctuates. On December 31, 1997, the net asset
value per share for the Fund was calculated as follows:
Net Assets (133,737,054) Net Asset Value per
=
Shares Outstanding (8,654,541) Share ($15.453)
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 Fund of securities owned by it is
not reasonably practicable, or it is not reasonably practicable for the Fund
16
<PAGE>
to fairly determine the value of its 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 the Fund as a "regulated investment company"
under Subchapter M of the Internal Revenue Code of 1986, as amended "("the
Code"), 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 by a Fund may not exceed 5% of the value of
50% of the Fund's assets. Additionally, the 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 fund's investment in any one issuer to 5% as to 75% of the fund's
assets and 25% of a fund's total assets. The Partners Value Fund is
non-diversified 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 the 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
Company 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.
17
<PAGE>
CALCULATION OF PERFORMANCE DATA
The Fund may include its 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 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 the 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 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.
YOU SHOULD UNDERSTAND THAT ANY PERFORMANCE DATA PRESENTED REPRESENTS PAST
PERFORMANCE OF THE 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 FUND WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST.
The Fund may compare its 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 and Income Fund Index and the NASDAQ and
Value Line Composites. The Fund 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 Fund succeeded to substantially all of the assets of Weitz Partners
II-Limited Partnership, a Nebraska investment limited partnership (the
"Predecessor Partnership") as of December 31, 1993. The Fund's investment
objectives and policies are substantially identical to those of the Predecessor
Partnership and Wallace R. Weitz was the General Partner and portfolio manager
for the Predecessor Partnership and is the portfolio manager for the Fund. The
average annual total return for the Fund and the Predecessor Partnership for the
one, five and ten year periods ended December 31, 1997, and for the period from
inception (June 1, 1983) to December 31, 1997, was 40.6%, 21.1%, 17.4% and
17.2%, respectively. Cumulative total return for the Fund and the Predecessor
Partnership from inception (June 1, 1983) to December 31, 1997, was 918.5%. The
Predecessor Partnership was not registered under the Investment Company Act of
1940 (the "1940 Act") and therefore was not subject to certain investment
restrictions imposed by the 1940 Act. If the Predecessor Partnership had been
registered under the 1940 Act, the performance of the Predecessor Partnership
may have been adversely affected.
FINANCIAL STATEMENTS
The audited statements and notes included in the Fund's Annual Report for
the period ended December 31, 1997, and filed with the Securities and Exchange
Commission February 11, 1998, are
18
<PAGE>
incorporated herein by reference. An additional copy of such Annual Report may
be obtained without charge by request to the Fund at its address or phone number
shown on the cover page of this Statement of Additional Information.
19
<PAGE>
APPENDIX A
RATINGS OF CORPORATE OBLIGATIONS AND COMMERCIAL PAPER
RATINGS OF CORPORATE OBLIGATIONS
MOODY'S INVESTORS SERVICE, INC.
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
A: Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba: Bonds rated Ba are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
B: Bonds rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa: Bonds rated Caa are of poor standing. Such bonds may be in default
or there may be present elements of danger with respect to principal and
interest.
A-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
A-2
<PAGE>
of safety regarding timely payment is very strong. Those issues determined to
possess overwhelming safety characteristics will be denoted with a plus sign
designation.
MOODY'S INVESTORS SERVICE, INC.
Moody's commercial paper ratings are opinions of the ability of the issuers
to repay punctually promissory obligations not having an original maturity in
excess of nine months. Moody's makes no representation that such obligations
are exempt from registration under the Securities Act of 1933, nor does it
represent that any specific note is a valid obligation of a rated issuer or
issued in conformity with any applicable law. Moody's employs the following
three designations, all judged to be investment grade, to indicate the relative
repayment capacity of rated issuers:
Prime-1 Superior capacity for repayment
Prime-2 Strong capacity for repayment
Prime-3 Acceptable capacity for repayment
A-3
<PAGE>
PART C
OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
(1) Included in Part A: Financial Highlights
(2) Incorporated by reference in Part B:
A. Weitz Partners, Inc. - Partners Value Fund
Accountant's Report dated January 20, 1998.
Statement 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
**2. Amended and Restated Bylaws
**5. Management and Investment Advisory Agreement-Partners
Value Fund
6. Distribution Agreement
8. Custodian Agreement
**9. Amended and Restated Administration Agreement
10. Opinion and Consent of Messrs. Cline, Williams,
Wright, Johnson & Oldfather
11. Consent of McGladrey & Pullen, LLP
<PAGE>
13. Subscription Agreement of Wallace R. Weitz
*14. Prototype Individual Retirement Account
16. Schedule of Computation for Performance Quotations
27. Financial Data Schedule
* Incorporated by reference to Fund's Post-Effective Amendment No. 3 on Form
N-1A filed April 19, 1996.
** Incorporated by reference to Fund's Post Effective Amendment No. 4 on Form
N-1A filed April 30, 1997.
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None
Item 26. NUMBER OF HOLDERS OF SECURITIES
TITLE OF CLASS NUMBER OF RECORD HOLDERS
Partners Value Fund 432 as of March 31, 1998
Item 27. INDEMNIFICATION
Section 21-2004(15) of the Nebraska Business Corporation Act allows
indemnification of officers and directors of the Registrant under circumstances
set forth therein. The Registrant has made such indemnification mandatory.
Reference is made to Article 8.d. of the Articles of Incorporation (Exhibit 1),
Article XIII of the Bylaws of Registrant (Exhibit 2).
The general effect of such provisions is to require indemnification of
persons who are in an official capacity 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.
C-2
<PAGE>
Nevertheless, Article 8.d. of the Articles of Incorporation prohibits any
indemnification which would be in violation of Section 17(h) of the Investment
Company Act of 1940, as now enacted or hereafter amended and Article XIII of the
Fund's Bylaws prohibit any indemnification inconsistent with the guidelines set
forth in Investment Company Act Releases No. 7221 (June 9, 1972) and No. 11330
(September 2, 1980). Such Releases prohibit indemnification in cases involving
willful misfeasance, bad faith, gross negligence and reckless disregard of duty
and establish procedures for the determination of entitlement to indemnification
and expense advances.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing 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.
In addition to the indemnification provisions contained in the Registrant's
Articles and Bylaws, there are also indemnification and hold harmless provisions
contained in the Investment Advisory Agreement, Distribution Agreement,
Administration Agreement and Custodian Agreement. Finally, the Registrant has
also included in its Articles of Incorporation (See Article X of the Articles of
Incorporation (Exhibit 1)) a provision which eliminates the liability of outside
directors to monetary damages for breach of fiduciary duty of such directors.
Pursuant to Neb. Rev. Stat. Section 21-2035(2), such limitation of liability
does not eliminate or limit liability of such directors for any act or omission
not in good faith which involves intentional misconduct or a knowing violation
of law, any transaction from which such director derived an improper direct or
indirect financial benefit, for paying a dividend or approving a stock
repurchase which was in violation of the Nebraska Business Corporation Act and
for any act or omission which violates a declaratory or injunctive order
obtained by the Registrant or its shareholders.
C-3
<PAGE>
Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Principal Occupations
Positions with (Present and for
Name Advisor Past Two Years)
---- ------- ---------------
Wallace R. Weitz President, Treasurer See caption "Management" in
and Director the Statement of Additional
Information forming a part of
this Registration Statement
Barbara Weitz Secretary and Faculty Member, University of
Director Nebraska at Omaha since 1986.
Mary K. Beerling Vice President and See caption "Management" in
Assistant Secretary the Statement of Additional
Information forming a part of
this Registration Statement
Linda L. Lawson Vice President See caption "Management in the
Statement of Additional
Information forming a part of
this Registration Statement
Richard F. Lawson Vice President See caption "Management in the
Statement of Additional
Information forming a part of
this Registration Statement
Item 29. PRINCIPAL UNDERWRITERS
(a) The Distributor is also the principal underwiter and distributor of
Weitz Series Fund, Inc., a registered investment management company
also advised by Wallace R. Weitz & Company.
C-4
<PAGE>
(b)
Positions and Positions and
Name and Principal Offices with Offices with
Business Address Underwriter Registrant
---------------- ----------- ----------
Wallace R. Weitz President, President, Treasurer,
Suite 600 Treasurer and Director
1125 South 103 Street and Director
Omaha, NE 68124-6008
Mary K. Beerling Vice President and
Suite 600 Vice President Secretary
1125 South 103 Street and Secretary
Omaha, NE 68124-6008
Richard F. Lawson
Suite 600 Vice President, Vice President
1125 South 103 Street Director
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 & Company, Suite 600, 1125 South 103 Street, Omaha, Nebraska 68124-6008.
Item 31. MANAGEMENT SERVICES
Not applicable.
Item 32. UNDERTAKINGS
The Registrant undertakes to call a meeting of shareholders for the purpose
of voting upon the question of removal of a director or directors, if requested
to do so by at least 10% of the Registrant's outstanding shares and in so doing
assist in communications with shareholders consistent with the requirement of
Section 16(c) of the Investment Company Act of 1940.
C-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, and the
Investment Company Act of 1940, the Registrant has duly caused this Amendment to
its Registration Statement on Form N-1A 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 April, 1998. By execution hereof, the undersigned hereby
certifies that this Port-Effective Amendment meets all the requirements for
effectiveness under Rule 485(b) of the Securities Act of 1933.
WEITZ PARTNERS, INC.
By: /s/ WALLACE R. WEITZ
-------------------------------------
Wallace R. Weitz, President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement on Form N-1A has been signed below by the
following persons in the capacities indicated on April 30, 1998:
SIGNATURE TITLE
/s/ WALLACE R. WEITZ President, Principal Executive Officer,
- ------------------------------- Principal Financial and Accounting Officer
Wallace R. Weitz and Director
/s/ DELMER L. TOEBBEN * Director
- ------------------------------- by /s/ WALLACE R. WEITZ
Delmer L. Toebben ----------------------------
Wallace R. Weitz
Attorney-in-Fact
/s/ JOHN W. HANCOCK * Director
- -------------------------------
John W. Hancock
/s/ THOMAS R. PANSING, JR. * Director
- -------------------------------
Thomas R. Pansing, Jr.
/s/ RICHARD D. HOLLAND * Director
- -------------------------------
Richard D. Holland
/s/ LORRAINE CHANG * Director
- -------------------------------
Lorraine Chang
* Pursuant to Power of Attorney filed herewith.
C-6
<PAGE>
WALLACE R. WEITZ & COMPANY
A REGISTERED INVESTMENT ADVISER
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
ONE PACIFIC PLACE, SUITE 600 - 1125 SOUTH 103 STREET -
OMAHA, NEBRASKA 68124-6008
402-391-1980 800-232-4161 FAX 402-391-2125
<PAGE>
WALLACE R. WEITZ & COMPANY
A REGISTERED INVESTMENT ADVISER
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.
May 6, 1997
/s/ Delmer L. Toebben
---------------------------
Delmer L. Toebben
ONE PACIFIC PLACE, SUITE 600 - 1125 SOUTH 103 STREET -
OMAHA, NEBRASKA 68124-6008
402-391-1980 800-232-4161 FAX 402-391-2125
<PAGE>
WALLACE R. WEITZ & COMPANY
A REGISTERED INVESTMENT ADVISER
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/ Thomas R. Pansing
---------------------------
Thomas R. Pansing
ONE PACIFIC PLACE, SUITE 600 - 1125 SOUTH 103 STREET -
OMAHA, NEBRASKA 68124-6008
402-391-1980 800-232-4161 FAX 402-391-2125
<PAGE>
WALLACE R. WEITZ & COMPANY
A REGISTERED INVESTMENT ADVISER
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/ Richard Holland
---------------------------
Richard Holland
ONE PACIFIC PLACE, SUITE 600 - 1125 SOUTH 103 STREET -
OMAHA, NEBRASKA 68124-6008
402-391-1980 800-232-4161 FAX 402-391-2125
<PAGE>
WALLACE R. WEITZ & COMPANY
A REGISTERED INVESTMENT ADVISER
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/ John Hancock
---------------------------
John Hancock
ONE PACIFIC PLACE, SUITE 600 - 1125 SOUTH 103 STREET -
OMAHA, NEBRASKA 68124-6008
402-391-1980 800-232-4161 FAX 402-391-2125
<PAGE>
EXHIBITS
TO
WEITZ PARTNERS, INC.
POST-EFFECTIVE AMENDMENT NUMBER 5
TO
FORM N-1A
as filed on April 30, 1998
C-7
<PAGE>
EXHIBITS
EXHIBIT NO. DESCRIPTION
1. Articles of Incorporation
6. Distribution Agreement
8. Custodian Agreement
10. Opinion and Consent of Messrs. Cline, Williams, Wright,
Johnson & Oldfather
11. Consent of McGladrey and Pullen, LLP
12. Subscription Agreement of Wallace R. Weitz
16. Schedule of Computation for Performance Quotations
27. Financial Data Schedule
C-8
<PAGE>
ARTICLES OF INCORPORATION
OF
WEITZ PARTNERS, INC.
The undersigned, a natural person of the age of twenty-one years or more,
acting as the incorporator of a corporation under the Nebraska Business
Corporation Act, adopts the following Articles of Incorporation of such
corporation:
ARTICLE I.
The name of this corporation is WEITZ PARTNERS, INC.
ARTICLE II.
The period of the Corporation's duration is perpetual.
ARTICLE III.
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 Nebraska Business
Corporation Act. 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 registered pursuant to the Investment Company Act
of 1940, 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 III, 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.
<PAGE>
ARTICLE IV.
The address of the initial registered agent and office of the corporation
in Nebraska is 1900 FirsTier Bank Building, 233 South 13th Street, Lincoln,
Nebraska and the name of the initial registered agent at such address is John C.
Miles.
ARTICLE V.
The total number of authorized shares of this corporation is 1,000,000 all
of which shall be common shares of the par value of $.00001 each. Of said
common shares, 50,000,000 shares may be issued in the series of common shares
hereby designated Partner's Value Fund shares. The balance of 950,000,000
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 Partners Value Fund shares and each other series of common shares which the
Board of Directors may establish, as provided herein, evidences 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 additional series representing 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 other series of shares of this
corporation.
ARTICLE VI.
The shareholders of each series of common shares of this corporation 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 VII.
The shareholders of the Partners Value Fund 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 the Nebraska Business
Corporation Act 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.
(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
<PAGE>
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 the Nebraska
Business Corporation Act 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 the 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.
ARTICLE VIII.
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 Nebraska, 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
<PAGE>
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 the 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.
(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 any 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
<PAGE>
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 the Nebraska Business Corporation Act, 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 IX
In the absence of fraud no contract or other transaction between the corporation
and any other person, corporation, firm, syndicate, association, partnership, or
joint venture shall be wholly or partially invalidated or otherwise affected by
reason of the fact that one or more of the directors of the corporation are or
become directors or officers of such other corporation, firm, syndicate or
association, or members of such partnership or joint venture, or are pecuniarily
or otherwise interested in such contractual transaction, provided that the fact
that such director or directors of the corporation are so situated or so
interested or both, shall be disclosed or shall have been known to the Board of
Directors of the corporation. Any director or directors of the corporation who
is or are also a director or officer of such other corporation, firm, syndicate,
or association, or a member of such partnership, or joint venture, or
pecuniarily or otherwise interested in such contract or transaction, may be
counted for the purpose of determining the existence of a quorum at any meeting
of the Board of Directors of the corporation which shall authorize such contract
or transaction, with like force and effect as if he were not a director or
officer of such other corporation, firm, syndicate or association, or a member
of such partnership, or joint venture, or pecuniarily or otherwise interested in
such contract or transaction.
ARTICLE X
Pursuant to Neb. Rev. Stat. Section 21-2052 as it presently exists or is
hereafter amended, the corporation shall not be required to hold annual meetings
of shareholders pursuant to Neb. Rev. Stat. Section 21-2027 unless the
holding of an annual meeting of shareholders is otherwise required by these
articles of incorporation or is otherwise required by the Investment Company
Act of 1940 and the rules and regulations thereunder.
ARTICLE XI.
To the fullest extent permitted by Neb. Rev. Stat. Section 21-2035(2), 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, directors of this
corporation who are not officers and who do not control the corporation shall
not be liable to this corporation or its shareholders for monetary damages for
breach of fiduciary duty.
<PAGE>
ARTICLE XII.
The name and address of the incorporator is:
Name Address
---- -------
John C. Miles 1900 FirsTier Bank Building
Lincoln, NE 68508
IN WITNESS WHEREOF, the undersigned sole incorporator has executed these
Articles of Incorporation on July 2, 1993.
/s/ John C. Miles
-----------------------------
John C. Miles
<PAGE>
DISTRIBUTION AGREEMENT
AGREEMENT, made the 12 day of OCTOBER, 1993, between WEITZ PARTNERS, INC.,
a Nebraska corporation (hereinafter called the "Fund"), and WEITZ SECURITIES,
INC., a Nebraska corporation (hereinafter called 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, 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.
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
<PAGE>
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, it 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 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 proceeding 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 or 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 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, with ten (10) days
<PAGE>
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, it
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 the paragraph.
11. 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, as 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 laws.
12. 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.
13. 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.
14. 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 PARTNERS, INC.
By /s/ Wallace R. Weitz
--------------------
President
Attest:
/s/ Ellie E. Miller
- -------------------
Secretary
WEITZ SECURITES, INC.
By /s/ Wallace R. Weitz
--------------------
President
Attest:
/s/ Ellie E. Miller
- -------------------
Secretary
<PAGE>
CUSTODIAN CONTRACT
between
WEITZ PARTNERS, INC.
and
NORWEST BANK MINNESOTA, N.A.
<PAGE>
TABLE OF CONTENTS
Page
----
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
<PAGE>
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
<PAGE>
CUSTODIAN CONTRACT
This AGREEMENT made as of March 23, 1998, by and between Weitz Partners,
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 set forth in Section 2.12 hereof or
(c) in the case of the repurchase agreements entered into between
the Company
3
<PAGE>
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:
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
4
<PAGE>
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.
5
<PAGE>
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.
6
<PAGE>
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.
7
<PAGE>
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.
8
<PAGE>
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.
9
<PAGE>
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 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.
10
<PAGE>
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 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
11
<PAGE>
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 PARTNERS, INC. NORWEST BANK MINNESOTA, N.A.
By /s/ Wallace R. Weitz By /s/ Denise v. Zapzalka
--------------------------- -----------------------------
Trust Officer
ATTEST ATTEST
By /s/ Mary K. Beerling By /s/ Tim K. Schultz
--------------------------- -----------------------------
12
<PAGE>
EXHIBIT A
Weitz Partners, Inc. - Partners Value Fund - #25389200 & 25308000
13
<PAGE>
EXHIBIT B
- --------------------------------------------------------------------------------
FEE STRUCTURE FOR WALLACE R. WEITZ & CO.
- --------------------------------------------------------------------------------
1. ANNUAL ASSET-BASED FEE:
1 BASIS POINT ON FIRST $750 MILLION
.5 BASIS POINT OVER $750 MILLION
2. TRANSACTIONAL FEES
PER SECURITY PURCHASE, CALL, REDEMPTION, OR SALE = $10
3. PLEDGED ACCOUNT ANNUAL MAINTENANCE = $500 PER ACCOUNT
THE ABOVE FEE STRUCTURE WILL BE GUARANTEED BY NORWEST BANK FOR A THREE YEAR
PERIOD.
14
<PAGE>
[LETTERHEAD OF CLINE, WILLIAMS, WRIGHT, JOHNSON & OLDFATHER]
[1900 FIRSTIER BANK BUILDING, LINCOLN, NEBRASKA 68508-2095]
October 20, 1993
Board of Directors
Weitz Partners, Inc.
The Mark Suite 405
9290 West Dodge Road
Omaha, NE 68114-3323
RE: FORM N-1A REGISTRATION STATEMENT
Ladies and Gentlemen:
Our opinion has been requested with respect to the shares of common stock
designated Partner Value Fund shares, $.0001 par value per share (the "shares"),
of the Weitz Partners, 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 Nebraska.
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
JOHN C. MILES
For the Firm
JCM/rp
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference of our report dated
January 20, 1998 on the financial statements of Partners Value Fund, series of
Weitz Partners, Inc., referred to therein in Post-Effective Amendment No. 5 to
the Registration Statement on Form N-1A, File No. 33-66714 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 "Fund Auditors" and in the Statement of
Additional Information under the caption "Other Services."
McGLADREY & PULLEN, LLP
New York, New York
April 23, 1998
<PAGE>
July 6, 1993
Weitz Partners, Inc.
Attention Board of Directors
9290 West Dodge Road, Suite 405
Omaha, NE 68114
Ladies and Gentlemen:
Wallace R. Weitz (the "Subscriber") hereby subscribes to ten thousand (10,000)
shares of common stock, designated Partners Value Fund Shares, at $10 per share,
to be issued by Weitz Partners, 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 of 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 ninety (90) days
after the effective date of the Fund's Form N1A Registration Statement.
Very truly yours,
WALLACE R. WEITZ
By: /s/ Wallace R. Weitz
-------------------------
Wallace R. Weitz
<PAGE>
Schedule 16
SCHEDULE OF COMPUTATIONS OF PERFORMANCE
PARTNERS VALUE FUND
The Total Return and Cumulative Return Information presented in the
Prospectus and described in the Statement of Additional Information for the
Partners Value Fund and for the Predecessor Fund was calculated as follows:
TOTAL RETURN:
n
P(1 + T) = 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 ended December 31, 1997:
P = $1,000 (initial value)
n = 1 (1 year)
ERV = $1,406 (ending redeemable value)
Solve for T:
n
$1,000(1 + T) = 1,406
T = 40.6%
Average annual total return for the period five years ended December 31,
1997:
P = $1,000 (initial value)
n = 5 (5 years)
ERV = $2,600 (ending redeemable value)
Solve for T:
n
$1,000(1 + T) = 2,600
T = 21.1%
C-9
<PAGE>
Average annual total return for the ten year period ended December 31,
1997:
P = $1,000 (initial value)
n = 10
ERV = $4,964 (ending redeemable value)
Solve for T:
n
$1,000(1 + T) = 4,964
T = 17.4%
Average annual total return from inception, June 1, 1983 to December 31,
1997:
P = $1,000 (initial value)
n = 14.585
ERV = $10,185 (ending redeemable value)
Solve for T:
n
$1,000(1 + T) = 10,185
T = 17.2%
CUMULATIVE RETURN:
Total return from inception, June 1, 1983 to December 31, 1997:
P = $1,000 (initial value)
ERV = $10,185 (ending redeemable value)
Solve for T:
$1,000 (1 + T) = 10,185
T = 918.5%
C-10
<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>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 86,505,776
<INVESTMENTS-AT-VALUE> 132,637,822
<RECEIVABLES> 2,046,629
<ASSETS-OTHER> 4,012,522
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 138,696,973
<PAYABLE-FOR-SECURITIES> 214,751
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,745,168
<TOTAL-LIABILITIES> 4,959,919
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 71,785,779
<SHARES-COMMON-STOCK> 8,654,541
<SHARES-COMMON-PRIOR> 8,230,622
<ACCUMULATED-NII-CURRENT> 1,250,834
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 15,144,925
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 45,555,516
<NET-ASSETS> 133,737,054
<DIVIDEND-INCOME> 1,891,782
<INTEREST-INCOME> 833,147
<OTHER-INCOME> 0
<EXPENSES-NET> (1,478,468)
<NET-INVESTMENT-INCOME> 1,246,461
<REALIZED-GAINS-CURRENT> 15,266,989
<APPREC-INCREASE-CURRENT> 22,301,165
<NET-CHANGE-FROM-OPS> 38,814,615
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (4,460,935)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 575,844
<NUMBER-OF-SHARES-REDEEMED> (478,830)
<SHARES-REINVESTED> 326,905
<NET-CHANGE-IN-ASSETS> 38,890,643
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 4,343,243
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,124,589
<INTEREST-EXPENSE> 9,142
<GROSS-EXPENSE> 1,478,468
<AVERAGE-NET-ASSETS> 112,132,676
<PER-SHARE-NAV-BEGIN> 11.524
<PER-SHARE-NII> 0.134
<PER-SHARE-GAIN-APPREC> 4.326
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.531)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.453
<EXPENSE-RATIO> 1.24
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
