As filed electronically with the Securities and Exchange Commission on
June 29, 1999
(File Nos. 33-95688 and 811-09084)
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 8 [x]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 10 [x]
THE WEISS FUND
(Exact Name of Registrant as Specified in Charter)
4176 Burns Road, Palm Beach Gardens, Florida 33410
(Address of Principal Executive Offices)
Registrant's Telephone Number: (561) 627-3300
John N. Breazeale
Weiss Money Management, Inc.
4176 Burns Road
Palm Beach Gardens, Florida 33410
(Name and Address of Agent for Service)
Copies to:
Joseph R. Fleming, Esq.
Dechert Price & Rhoads
Ten Post Office Square, South - Suite 1230
Boston, MA 02109
[ X ] It is proposed that this Post-Effective Amendment become effective on June
30, 1999 pursuant to paragraph (b) of Rule 485.
THIS POST-EFFECTIVE AMENDMENT NO. 8 TO THE REGISTRATION STATEMENT OF THE WEISS
FUND (THE "REGISTRANT") IS BEING MADE TO UPDATE REGISTRANT'S FINANCIAL
STATEMENTS, TO FILE CERTAIN EXHIBITS TO THE REGISTRANT'S REGISTRATION STATEMENT
AND TO EFFECT CERTAIN OTHER CHANGES.
THE WEISS FUND
CROSS REFERENCE SHEET
Post-Effective Amendment No. 8 contains the Prospectuses and Statement
of Additional Information to be used with the Class A and Class S shares of
Weiss Millenium Opportunity Fund, a series of The Weiss Fund (the "Trust").
ITEMS REQUIRED BY FORM N-1A:
PART A:
ITEM 1 FRONT AND BACK COVER PAGES: Front and back cover pages
ITEM 2 RISK/RETURN SUMMARY: INVESTMENTS, RISKS AND PERFORMANCE: Fund Goal,
Principal Strategies, Performance and Principal Risks
ITEM 3 RISK/RETURN SUMMARY: FEE TABLE: Fees and Expenses
ITEM 4 INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES, AND RELATED
RISKS: More Information About the Fund's Principal Strategies and Risks
ITEM 5 MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE: Not applicable
ITEM 6 MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE: Fund Management
ITEM 7 SHAREHOLDER INFORMATION: Dividends and Distributions; Taxes; How to
Invest in the Fund; Opening an Account; Adding to Your Investment;
Redeeming Fund Shares; Exchanging Fund Shares; Transaction Information;
Shareholder Services
ITEM 8 DISTRIBUTION ARRANGEMENTS: How to Invest in the Fund; Opening an Account;
Exchanging Fund Shares ITEM 9 FINANCIAL HIGHLIGHTS INFORMATION: Financial
Highlights
PART B
ITEM 10 COVER PAGE AND TABLE OF CONTENTS: Cover Page; Table of Contents
ITEM 11 FUND HISTORY: Organization of the Fund
ITEM 12 DESCRIPTION OF THE FUND AND ITS INVESTMENTS AND RISKS: Investment
Objectives, Restrictions and Techniques
ITEM 13 MANAGEMENT OF THE FUND: Trustees and Officers; Management Compensation
ITEM 14 CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES: Trustees and
Officers
ITEM 15 INVESTMENT ADVISORY AND OTHER SERVICES: Investment Advisory and Other
Services
ITEM 16 BROKERAGE ALLOCATION AND OTHER PRACTICES: Brokerage Allocation
ITEM 17 CAPITAL STOCK AND OTHER SECURITIES: Organization of the Fund
ITEM 18 PURCHASE, REDEMPTION AND PRICING OF SHARES: Buying Shares; Net Asset
Value; Redemptions
ITEM 19 TAXATION OF THE FUND: Taxes
ITEM 20 UNDERWRITERS: Investment Advisory and Other Services
ITEM 21 CALCULATION OF PERFORMANCE DATA: Performance Information
ITEM 22 FINANCIAL STATEMENTS: Financial Statements
WEISS MILLENNIUM OPPORTUNITY FUND
Prospectus
June 30, 1999
This Prospectus relates to the Class A shares of Weiss Millennium
Opportunity Fund.
No other shares are offered in this Prospectus.
Weiss Millennium Opportunity Fund seeks capital appreciation.
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this prospectus. Any representation to
the contrary is a criminal offense.
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TABLE OF CONTENTS
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FUND GOAL, PRINCIPAL STRATEGIES, PERFORMANCE AND PRINCIPAL RISK..........1
FEES AND EXPENSES........................................................2
FUND MANAGEMENT..........................................................6
DIVIDENDS AND DISTRIBUTIONS..............................................7
TAXES....................................................................7
FINANCIAL HIGHLIGHTS.....................................................8
HOW TO INVEST IN THE FUND................................................8
OPENING AN ACCOUNT.......................................................9
ADDING TO YOUR INVESTMENT...............................................11
REDEEMING FUND SHARES...................................................11
EXCHANGING FUND SHARES..................................................12
TRANSACTION INFORMATION.................................................13
SHAREHOLDER SERVICES....................................................15
ADDITIONAL INFORMATION..................................................17
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FUND GOAL, PRINCIPAL STRATEGIES, PERFORMANCE AND PRINCIPAL RISK
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GOAL The Weiss Millennium Opportunity Fund seeks capital appreciation. The
Fund's investment objective may be changed without shareholder approval.
PRINCIPAL STRATEGIES In seeking its investment objective of capital
appreciation, the Fund will invest primarily in a portfolio of equity
securities, such as common stocks, and will engage in short sales of such
securities. Although equity securities are the primary focus of the Fund, the
Manager intends to purchase investment-grade fixed income securities in
attempting to achieve the Fund's objective. Under normal circumstances it is
expected that approximately 20% of the Fund's assets will be invested in such
securities. The Fund's investment manager, Weiss Money Management, Inc. (which
we refer to as "Weiss" or the "Manager"), will use both fundamental analysis and
proprietary computer models to identify those securities to be purchased, sold
or sold short. Under normal conditions, the Fund will invest at least 65% of its
assets in long and/or short equity positions.
The Fund employs a long-short approach. With this approach, the Fund will seek
to purchase stocks of companies that, in the Manager's opinion, have (1) strong
or improving fundamentals, (2) lower vulnerability to adverse factors such as
Year 2000 ("Y2K") related problems or deflation, and/or (3) operate in sectors
of the market that show accelerating momentum and strong relative strength. At
the same time, the Fund will seek to sell short stocks of issuers which the
Manager believes have (1) weak or deteriorating fundamentals, (2) greater
vulnerability to adverse factors, and/or (3) operate in sectors of the market
that show decelerating momentum and weak relative strength. Although the Manager
expects that the Fund's "long" equity positions will generally outweigh its
"short" equity positions, the Fund is not restricted in the amount of its assets
that it may commit to short sales.
The investment policies of the Fund may lead to frequent changes in the Fund's
investments, particularly in periods of volatile market movements. A change in
the securities held by the Fund is known as "portfolio turnover." Although the
rate of portfolio turnover is difficult to predict, it is anticipated that under
normal circumstances the Fund's portfolio turnover rate could reach 400% or
more.
PRINCIPAL RISKS There are market and investment risks with any security. The
value of an investment in the Fund will fluctuate over time and it is possible
to lose money invested in the Fund.
o Stock Market Stock market movements will affect the Fund's share price on a
daily basis. The Fund's portfolio securities could lose value as a result
of a decline in the overall stock market. When the Fund purchases a stock,
it is said to have a "long" position in that stock. Selling a stock "short"
means that the Fund has sold a stock it does not own with the expectation
that it will be able to buy the stock later at a lower price in order to
close the transaction and realize a gain on the difference between the
respective sale and purchase prices. The Fund's investment results will
suffer if there is a stock market advance when the Fund has significant
"short" equity positions, or if there is a stock market decline when the
Fund has a significant "long" equity position.
o Equity Investing An investment in the common stock of a company represents
a proportionate ownership interest in that company. Therefore, the Fund
participates in the success or failure of any company in which it holds
stock. In addition, the market value of common stocks can fluctuate
significantly.
o Short Investing If the Fund's Manager takes short positions in stocks that
increase in value, then the losses of the Fund may exceed those of other
stock mutual funds that hold long positions only. Since the Fund is not
restricted in the amount of its assets that may be allocated to short
sales, significant short equity positions could increase the Fund's risk
profile. Investment in shares of the Fund is more volatile and risky than
many other mutual funds or other forms of investment.
o Portfolio Strategy The Manager's skill in choosing appropriate investments
for the Fund will determine in large part the Fund's ability to achieve its
investment objective. The risk exists that the Manager may incorrectly
allocate the Fund's investments between long and short equity positions.
o Debt Securities Investing in debt securities involves both interest rate
and credit risk. The value of debt instruments generally increase as
interest rates decline. In addition, the risk of prepayment could adversely
impact the Fund during a period of falling interest rates as the Fund would
be required to invest the proceeds from such investments at lower interest
rates. Conversely, rising interest rates tend to cause the value of debt
securities to decrease. The market value of debt securities also tends to
vary according to the relative financial condition of the issuer.
o Portfolio Turnover Portfolio turnover generally involves some expense to
the Fund, including brokerage commissions or dealer mark-ups and other
transaction costs on the sale of securities and reinvestment in other
securities. Such sales may result in realization of taxable capital gains.
A high portfolio turnover will result in higher brokerage costs and taxes,
which will affect the Fund's performance.
PERFORMANCE Since this is a new fund, no past performance data are available.
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FEES AND EXPENSES
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The table below describes the fees and expenses that you may pay if you buy and
hold shares of the Fund.
SHAREHOLDER FEES (Fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases (1) 1.50%
(as a percentage of offering price)
Redemption Fee (2) None
(as a percentage of amount redeemed)
Exchange Fee $5.00
(1) Up to a maximum of $75 per account.
(2) A $15 service fee may be charged for redemptions by wire.
ANNUAL FUND OPERATING EXPENSES (Expenses that are deducted from Fund assets)
Management Fee: 1.50%
Other Expenses:* 0.55%
Total Annual Fund Operating Expenses: 2.05%
* "Other Expenses" are based on estimated amounts for the current fiscal year.
EXAMPLE:
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual Funds. The example assumes that you
invest $10,000 in the Fund for the periods indicated and then redeem all of your
shares at the end of those periods. The example also assumes that your
investment has a 5% return each year, that the Fund's operating expenses remain
the same, and that dividends and distributions are reinvested. Although your
actual costs may be higher or lower than those in this example, based on these
assumptions your cost would be:
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1 YEAR $281
3 YEARS $713
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MORE INFORMATION ABOUT THE FUND'S PRINCIPAL STRATEGIES AND RISKS
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PRINCIPAL STRATEGIES:
The Manager uses a variety of investments and investment techniques in seeking
to achieve the Fund's investment objective. The Fund's primary investment
strategies are described below; however, the Fund may also invest in other
securities, use other strategies or engage in other investment practices. These
investments and strategies, as well as those described in this prospectus, are
described in detail in the Statement of Additional Information. Although the
Fund will attempt to achieve its investment objective, there is no assurance it
will be successful.
The following describes the Manager's investment approach in greater detail.
Analysis:
o Fundamental analysis: Companies are evaluated for their fundamental ability
to withstand, or even take advantage of, adverse economic conditions, such
as the Y2K computer problem (considered paramount factors in the years 1999
and 2000) as well as global deflation or a domestic recession. Factors such
as cash flow, asset values, competitive position, current price and
industry outlook may also be considered. A Strongest List and a Weakest
List are produced based on this analysis.
o Sector analysis: A proprietary computer model evaluates various market
sectors to aid the Manager in selecting for purchase securities from
sectors of the economy that are showing strength or, conversely, selling
securities short in sectors that are showing weakness.
o Market trend analysis: Based on a proprietary model, a bullish (indicating
a rising market) or bearish (indicating a falling market) signal is
generated.
Security Selection:
Based upon the results of both the fundamental and sector analyses discussed
above:
o A Buy Candidates List is created containing stocks in sectors ranked high.
o A Short-Sale Candidates List is created with stocks in sectors ranked low.
Portfolio Structure:
The Fund's assets will normally be invested as set forth below. Depending on the
Manager's perception of market conditions, these percentages may differ
substantially at various times.
o Approximately 30% of the Fund's assets will be allocated to core positions
(positions the Manager intends to hold for a while). The Manager intends to
split these between (a) long positions in stocks selected from the
Strongest List and (b) short positions in stocks selected from the Weakest
List.
o Approximately 50% of the Fund's assets will consist of actively traded
equity positions which will be allocated based upon the market trend
analysis discussed above. In a bullish market trend, trading positions will
be primarily allocated to long positions in stocks selected from the Buy
Candidates List. In a bearish market trend, this portion of the portfolio
will consist primarily of short equity positions in stocks selected from
the Short-Sale Candidates List.
o Approximately 20% of the Fund's assets will be invested in debt securities
issued or guaranteed by the United States government and its agencies or
instrumentalities, debt securities of investment grade corporate issuers
and zero coupon bonds. If a debt security held by the Fund ceases to be
rated or its rating is reduced below investment-grade, the Fund's Manager
will review the investment in light of the Fund's investment philosophy to
determine whether or not selling the security would be in the best
interests of the Fund.
RISKS:
EQUITY SECURITIES Since it purchases common stocks (referred to above as taking
a "long" equity position), the Fund is subject to the risk that stock prices
will fall over short or extended periods of time. Historically, the equity
markets have moved in cycles, and the value of the Fund's equity securities may
fluctuate drastically from day to day. Individual companies may report poor
results or be negatively affected by industry and/or economic trends and
developments. The prices of securities issued by such companies may suffer a
decline in response. These factors contribute to price volatility.
SHORT SALES When the Manager anticipates that the price of a security will
decline, it may sell the security short and borrow the same security from a
broker or other institution to complete the sale (referred to above as taking a
"short" equity position). The Fund may make a profit or incur a loss depending
upon whether the market price of the security decreases or increases between the
date of the short sale and the date on which the Fund must replace the borrowed
security. An increase in the value of a security sold short by the Fund over the
price at which it was sold short will result in a loss to the Fund, and there
can be no assurance that the Fund will be able to close out the position at a
particular time or at an acceptable price.
FIXED INCOME SECURITIES The market values of fixed income investments change in
response to interest rate changes and other factors. During periods of falling
interest rates, the values of outstanding fixed income securities generally
rise. Further, while securities with longer maturities tend to produce higher
yields, the prices of longer maturity securities are also subject to greater
market fluctuations as a result of changes in interest rates. In addition to
these fundamental risks, different types of fixed income securities may be
subject to the following additional risks:
o Credit Quality Risk - The possibility that an issuer will be unable to make
timely payments of either principal or interest.
o Prepayment or Call Risk - During periods of falling interest rates, certain
debt obligations with high interest rates may be prepaid (or "called") by
the issuer prior to maturity. As a result, the Fund may be required to
invest the proceeds from such investments at lower interest rates.
TEMPORARY DEFENSIVE INVESTMENTS The Fund may, from time to time, take temporary
defensive positions that are inconsistent with the Fund's principal investment
strategies in attempting to respond to adverse market, economic, political or
other conditions. During these times, the Fund may invest up to 100% of its
assets in cash or cash equivalents, shares of money market mutual funds,
commercial paper, zero coupon bonds, repurchase agreements, and other securities
the Manager believes to be consistent with the Fund's best interests. During a
period in which the Fund takes a temporary defensive position, the Fund may not
achieve its investment objective.
NON-PRINCIPAL INVESTMENT STRATEGIES To a more limited extent, the Fund may, but
is not required to, utilize other investments and investment techniques that may
impact fund performance, including, but not limited to, options on securities
and stock indices, options on stock index futures contracts, and other
derivatives (i.e., financial instruments that derive their value from other
securities or commodities, or that are based on indices).
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FUND MANAGEMENT
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INVESTMENT MANAGER
Weiss Money Management, Inc., 4176 Burns Road, Palm Beach Gardens, Florida
33410, is the investment adviser to the Fund, and is responsible for the
day-to-day management of the portfolio. The Manager has been providing advisory
services to The Weiss Fund (formerly known as Weiss Treasury Fund) since the
Trust's commencement of operations in 1996, and to individual clients since its
inception in 1980.
Under the investment advisory agreement with the Fund, the Manager provides
continuous advice and recommendations concerning the Fund's investments. The
Fund has agreed to compensate the Manager for its services by the monthly
payment of a fee at the annual rate of 1.50% of the Fund's average net assets.
SUB-ADVISER
Harvest Advisors, Inc., 11612 Bee Cave Road, Suite 110, Austin, Texas 78733, has
been retained by the Manager to provide sub-advisory services to the Fund. Tony
Sagami, President of Harvest Advisors, has been actively involved in the
development of sophisticated investment software and quantitative investment
strategies. Harvest Advisors and/or its principals have been continuously
serving institutional and individual investors since 1993. Under its agreement
with the Manager, the Sub-Adviser renders continuous investment advice to the
Manager with respect to investment and reinvestment of the Fund's assets in
various securities, based upon computer models constructed in accordance with
the Fund's investment objective and policies; however, the Manager, in the
exercise of its independent judgment, retains ultimate discretion regarding and
responsibility for the implementation of transactions in seeking to achieve the
Fund's objective. The Manager pays the Sub-Adviser a fee out of the investment
advisory fees it receives from the Fund.
PORTFOLIO MANAGER
John N. Breazeale. Mr. Breazeale, President of Weiss Money Management, Inc.,
President and Chairman of the Board of Trustees of Weiss Fund, and portfolio
manager of the Weiss Treasury Only Money Market Fund, a separate series of Weiss
Fund, is primarily responsible for implementing the Fund's principal investment
strategy; however, he is assisted by a team of investment professionals from the
Manager and the Sub-Adviser. Mr. Breazeale has been a portfolio manager with
Weiss since 1994. Prior to 1994, Mr. Breazeale provided portfolio management
services at Provident Institutional Management Inc., Mitchell Hutchins Asset
Management Inc. (a subsidiary of PaineWebber Group), and with Mackenzie
Investment Management Inc. Mr. Breazeale has over 28 years' experience in the
securities industry.
YEAR 2000 READINESS
The services provided to the Fund by Weiss and the Fund's other service
providers are dependent on those service providers' computer systems. Computer
software and hardware systems in use today may not be able to distinguish
between the year 2000 and the year 1900 because of the way dates are encoded and
calculated (the "Year 2000 Problem"). The failure to make this distinction could
have a negative impact on handling securities trades, pricing and account
services. Weiss is working with the Fund's other service providers to address
the Year 2000 Problem with respect to the computer systems that they use.
Specifically, Weiss has completed changes to its internal hardware and software
in order to complete its Year 2000 readiness. In addition, completed Y2K
readiness questionnaires have been received from all of the financial vendors
and service providers of the Manager and are currently being evaluated as to the
quality of their Y2K readiness status. The Fund believes these steps will be
sufficient to avoid any material adverse impact on the Fund. At this time,
however, there can be no assurance that these steps will be sufficient to avoid
any adverse impact on the Fund.
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DIVIDENDS AND DISTRIBUTIONS
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The Fund intends to distribute to shareholders substantially all of its net
investment income annually. Net investment income for the Fund consists of all
income accrued on the Fund's assets, less all actual and accrued expenses. The
Fund intends to distribute to shareholders net realized capital gains after
utilization of capital loss carryforwards, if any, at least annually.
Distributions by the Fund are reinvested in additional shares of the Fund or
paid in cash at the election of the shareholder. If no election is made, all
distributions will be reinvested in additional Fund shares. If an investment is
in the form of a retirement plan, all dividends and capital gains distributions
must be reinvested into the shareholder's account. Distributions are generally
taxable, whether received in cash or reinvested.
Exchanges among the Weiss funds are also taxable events.
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TAXES
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Dividends paid out of the Fund's net investment income and net short-term
capital gains will be taxable to you as ordinary income. Distributions of net
long-term capital gains are taxable to you as long-term capital gains,
regardless of how long you have held your Fund shares. Distributions are taxable
to you in the same manner whether received in cash or reinvested in additional
Fund shares.
If shares of the Fund are held in a tax-deferred retirement plan account, income
and gain will not be taxable each year. Instead, the taxable portion of amounts
held in a retirement plan account generally will be subject to tax only when
distributed from that account, and all of those taxable amounts will be taxable
as ordinary income.
A distribution will be treated as paid to you on December 31 of the current
calendar year if it is declared by the Fund in October, November or December
with a record date in such a month and paid by the Fund during January of the
following calendar year.
Each year the Fund will notify you of the tax status of dividends and other
distributions.
Upon the sale or other disposition of your Fund shares, you may realize a
capital gain or loss which will be long-term or short-term, generally depending
upon how long you held your shares.
The foregoing discussion of federal tax consequences is intended for general
information only. You should consult your own tax adviser regarding the
particular tax consequences of an investment in the Fund.
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FINANCIAL HIGHLIGHTS
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Since this is a new fund, no financial highlights data are available.
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HOW TO INVEST IN THE FUND
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BUYING SHARES
Purchase orders for shares of the Fund which are received by the transfer agent
on any business day by the close of regular trading on the New York Stock
Exchange, normally 4:00 p.m. eastern time, receive the net asset value per share
next determined after receipt of the order by the transfer agent, less any
applicable front-end sales charge. Purchase orders received after the close of
regular trading on the Exchange receive the net asset value per share next
determined after receipt of the order by the transfer agent, less any applicable
front-end sales charge. Federal funds must be immediately available to the
Fund's custodian in order for the transfer agent to execute a purchase order on
a given day. Shares of the Fund cannot be purchased by Federal Reserve wire on
days that either the Exchange or the Federal Reserve is closed.
A front-end sales charge of 1.50% is assessed on purchases of Fund shares,
subject to a maximum of $75 per account. Broker-dealers other than the
distributor may assess additional transaction charges in connection with
purchases of Fund shares.
PURCHASES BY CHECK
Fund shares may be purchased by a check drawn on an account belonging to the
prospective shareholder. See "Opening an Account" for minimum purchase
requirements. If you purchase shares with a check that does not clear, your
purchase order will be canceled and you will be liable for any losses or fees
the Fund or the transfer agent incurred. Checks must be drawn on a U.S. bank.
Purchases by check are executed on the day the check is received in good order
by the transfer agent. Purchases are made in full and fractional shares. Checks
for investment should be payable to the Fund.
Please see "Transaction Information" later in this Prospectus for additional
information on buying, redeeming and exchanging Fund shares.
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OPENING AN ACCOUNT
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MINIMUM INVESTMENT
The minimum initial investment in the Fund is $5,000.
BY MAIL
Complete an account application and mail it along with a check payable to the
Fund to either:
The Weiss Fund The Weiss Fund
P.O. Box 8969 c/o PFPC Trust Company
Wilmington, DE 19899-8969 400 Bellevue Parkway, Suite 108
......... Wilmington, DE 19899
BY WIRE
If you are wiring funds, please contact a Fund representative at (800) 430-9617
to open an account.
Ask your bank to send immediately available funds by wire to:
PNC Bank N.A.
Philadelphia, PA 19103
ABA No. 031000053
DDA Account # 86-1030-3574
Further Credit to: (Shareholder Name and Account Number)
The wire should include your name, address and taxpayer identification number
and the name of the Fund. An account application indicating the name in which
the purchase is to be made must be completed and mailed by you to the address
under "Opening an Account--By Mail" above via overnight delivery or sent by
facsimile transmission. Purchase money will be returned promptly in the event a
completed account application is not received. Please call the Fund's transfer
agent at (800) 430-9617 for additional information prior to making a purchase by
wire and consult your bank regarding bank wire or other charges.
FRONT-END SALES CHARGE
The offering price of the Fund's shares is the net asset value next determined
after the Fund receives a valid purchase request, plus the front-end sales load.
The amount of the front-end sales load as a percentage of the offering price is
1.50%, which equals 1.52% of the net amount invested. Assessment of the
front-end sales charge is limited to a maximum of $75 per account. Applicable
sales charge assessments in excess of such amount will be waived. In addition,
the sales charge is not assessed on (i) Fund shares purchased with reinvested
dividends or distributions, (ii) subsequent investments in the Fund, (iii)
exchanges from another Weiss fund with the same or a higher sales charge, and
(iv) exchanges from another Weiss fund whose shares were purchased through a
previous exchange from this Fund.
WAIVER OF FRONT-END SALES CHARGE
In addition to the examples discussed in the preceding paragraph, the front-end
sales charge will be waived on Fund shares purchased:
o in connection with shares purchased through the cross reinvestment
privilege;
o by persons repurchasing shares they redeemed within the last 30 days (see
"Repurchase of Fund Shares");
o by directors, officers and employees and members of their immediate
families of the Manager, the Sub-Adviser and their affiliates and dealers
that enter into agreements with the Fund's distributor;
o by Trustees and officers of Weiss Fund;
o through wrap fee and asset allocation programs and financial institutions
that, under their dealer agreements with the Fund's distributor or
otherwise, do not receive any or receive a reduced portion of the front-end
sales charge; and
o by persons purchasing shares of the Fund through a payroll deduction plan
or a qualified retirement plan which permits purchases of shares of the
Fund.
Repurchase of Fund Shares
Investors may repurchase any amount of Fund shares at net asset value (without
the normal front-end sales charge), up to the limit of the value of any amount
of the shares (other than those which were purchased with reinvested dividends
and distributions) that they redeemed within the past 30 days. In effect, this
allows investors to reacquire shares that they may have had to redeem, without
re-paying the front-end sales charge. An investor may only exercise this
privilege once. To exercise this privilege, we must receive the purchase order
within 30 days of that investor's redemption. In addition, an investor must
provide written notification and indicate on the purchase order that shares are
being repurchased.
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ADDING TO YOUR INVESTMENT
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MINIMUM INVESTMENT
The minimum amount required to make subsequent investments is $100.
BY MAIL
Make a check payable to the Fund and mail to the address shown above in "Opening
an Account--By Mail." Please be sure to include your account number on the check
and, if possible, use the tear off form attached to your regular Fund account
statement.
BY WIRE
Ask your bank to send immediately available funds by wire to:
PNC Bank N.A.
Philadelphia, PA 19103
ABA No. 031000053
DDA Account # 86-1030-3574
Further Credit to: (Shareholder Name and Account Number)
The wire should include your name and account number. Please call the Fund's
transfer agent at (800) 430-9617 regarding purchases by wire and consult your
bank regarding bank wire or other charges.
AUTOMATIC INVESTMENT PLAN
Please call (800) 430-9617 for more information and to request an election form.
Or, you may elect this option at the time you open your account by completing
sections 6 and 8 of the new account application form. See "Shareholder
Services--Automatic Investment Plan."
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REDEEMING FUND SHARES
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The Fund mails redemption proceeds within three business days following the
receipt of a redemption request in proper form as described below, except in the
case of shares recently purchased by check. The Fund may delay payment of
redemption proceeds for shares purchased by check until the check clears, which
may take up to 15 days from the purchase date. Once the purchase check has
cleared, redemption proceeds will be sent within three business days.
Redemptions in the amount of $50,000 or more require a Medallion Signature
Guarantee. Please refer to "Medallion Signature Guarantees" later in this
Prospectus for more information.
The redemption requirements for corporations, other organizations, trusts,
fiduciaries, agents, institutional investors and retirement plans may be
different from those for regular accounts. Please call (800) 430-9617 for more
information.
BY TELEPHONE
Call (800) 430-9617 and speak with a service representative of The Weiss Fund
anytime between 8:30 a.m. and 4:00 p.m. Transactions by telephone cannot be in
an amount in excess of $50,000. Redemptions may be by check, or, if you
previously selected wire redemption privileges on your account application, by
wire. Checks must be sent to the shareholder's address of record and can be for
any amount. Wire redemptions must be made in amounts of at least $1000. A $15
service charge may be charged for redemptions by wire. See "Transaction
Information Telephone Transaction" below.
BY MAIL
Send a letter of instruction signed by each owner on the account (sign exactly
as each name appears on the account) to the address shown above in "Opening an
Account--By Mail." Please be sure to include your account number in your
request.
AUTOMATIC WITHDRAWAL PLAN
Call (800) 430-9617 for more information and to request an election form. Or,
you may elect this option at the time you open your account by completing
section 9 of the new account application form. See "Shareholder
Services--Automatic Withdrawal Plan."
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EXCHANGING FUND SHARES
- ---------------------------------------------------------------------
Shareholders of the Fund have an exchange privilege with other Weiss funds. The
Fund reserves the right to reject any exchange order. Shareholders of the Fund
may exchange their outstanding shares for shares of another Weiss fund on the
basis of relative net asset value per share. Before exchanging shares into
another Weiss fund, please call (800) 430-9617 to obtain the appropriate fund
prospectus.
The exchange requirements for corporations, other organizations, trusts,
fiduciaries, agents, institutional investors and retirement plans may be
different from those for regular accounts. Please call (800) 430-9617 for more
information.
This exchange privilege is available only in states where the Fund's shares may
be legally sold.
MINIMUM INVESTMENT
A minimum initial investment must be made to establish an account into which
exchange proceeds may be invested. If you are opening an account in a different
Weiss fund by exchange, the shares being exchanged must be at least equal in
value to the minimum investment requirement for the fund into which exchange
proceeds are being invested. If shares of a Weiss fund purchased without a sales
charge or with a lower sales charge are exchanged for shares of another Weiss
fund with a sales charge or a higher sales charge, the exchange is subject to an
incremental sales charge (e.g., the difference between the lower and the higher
applicable sales charges). If Weiss fund shares are exchanged into another Weiss
fund with the same, lower or no sales charge, there is no incremental sales
charge for the exchange. Finally, the Fund's sales charge is not assessed on
exchanges from another Weiss fund whose shares were purchased through a previous
exchange from this Fund. A $5 fee is assessed for each exchange transaction.
BY TELEPHONE
Call (800) 430-9617 and speak with a service representative of The Weiss Fund
anytime between 8:30 a.m. and 4:00 p.m. Transactions by telephone cannot be in
an amount in excess of $50,000. See "Transaction Information--Telephone
Transactions" below.
BY MAIL
Send a letter of instruction signed by each owner on the account (sign exactly
as each name appears on the account) to the address shown above in "Opening an
Account--By Mail." Please be sure to include in your instructions:
-- the dollar amount or number of shares you wish to exchange; -- your
account number; -- the name of the Fund you are exchanging from; -- the
name of the Fund you are exchanging into; and -- a daytime telephone
number at which you can be reached.
- ------------------------------------------------------
TRANSACTION INFORMATION
- ------------------------------------------------------
NET ASSET VALUE
For purposes of processing purchase and redemption orders, the net asset value
per share of the Fund is calculated as of the close of regular trading on the
New York Stock Exchange, normally 4:00 p.m. eastern time, on each business day
except those holidays which the Exchange observes.
On those days where the Fund's custodian or the Exchange closes early as a
result of such day being a partial holiday or otherwise, the Fund reserves the
right to advance on that day the time by which purchase and redemption requests
must be received.
The Fund's administrator determines net asset value per share by adding the
value of the Fund's investments, cash and other assets, subtracting liabilities
attributable to the Fund and then dividing the result by the number of shares
outstanding. Market prices are used to determine the value of the Fund's assets.
If market prices are not readily available for a security or if a security's
price is not considered to be market indicative, that security may be valued by
another method that the Fund's Board of Trustees or its delegate believes
accurately reflects fair value. In those circumstances where a security's price
is not considered to be market indicative, the security's valuation may differ
from an available market quotation.
TELEPHONE TRANSACTIONS
Shareholders automatically receive the Telephone Transaction Privilege. The
Telephone Transaction Privilege allows a shareholder to effect exchanges from
the Fund into an identically registered account in another Weiss fund as well as
other transactions as outlined in this prospectus, by calling (800) 430-9617. If
a shareholder does not wish to have this privilege, he or she must place a
checkmark in the appropriate box in the Telephone Transaction Authorization
portion of the account application.
Neither the Fund nor the transfer agent will be liable for following
instructions communicated by telephone reasonably believed to be genuine and a
loss to the shareholder may result due to an unauthorized transaction. The Fund
and the transfer agent will employ reasonable procedures (which may include one
or more of the following: recording all telephone calls, requesting telephone
exchanges or other instructions, verifying authorization and requiring some form
of personal identification prior to acting upon instructions, and sending a
statement each time a telephone transaction is effected) to confirm that
instructions communicated by telephone are genuine. The Fund and the transfer
agent may be liable for any losses due to unauthorized or fraudulent
instructions only if such reasonable procedures are not followed.
Of course, shareholders are not obligated in any way to execute a telephone
transaction and may choose to give such instructions in writing. During periods
of drastic economic or market changes, it is possible that the Telephone
Transaction Privilege may be difficult to implement. In this event, shareholders
should follow the other transaction procedures such as those discussed under
"Exchanging Shares" and/or "Redeeming Shares," including the procedures for
processing exchanges through securities dealers.
MEDALLION SIGNATURE GUARANTEES
Certain types of redemption requests must include a Medallion Signature
Guarantee for each name in which the account is registered. Medallion Signature
Guarantees must accompany redemption requests for: (i) an amount in excess of
$50,000 per day; (ii) any amount, if the redemption proceeds are to be sent
elsewhere than the address of record on the Fund's books; or (iii) an amount of
$50,000 or less if the address of record has been changed on the Fund's books
for less than 60 days, although the transfer agent reserves the right to require
Medallion Signature Guarantees on all redemptions. A Medallion Signature
Guarantee stamp may be obtained from a member of a national securities exchange,
a U.S. commercial bank, trust company, or Federally chartered savings and loan,
or other recognized member of the Medallion Signature Guarantee program. A
notarization from a notary public is NOT acceptable. Guarantees must be signed
by an authorized person at one of these institutions.
TAX IDENTIFICATION NUMBER
When you complete your account application, please be sure to certify that your
Social Security or tax identification number is correct and that you are not
subject to 31% backup withholding for failing to report income to the IRS.
Federal tax law requires the Fund to withhold 31% of taxable distributions from
most accounts without a certified Social Security or tax identification number
and certain other certified information or upon notification from the IRS or a
broker that withholding is required. The Fund reserves the right to reject
account applications without a certified Social Security or tax identification
number and certain other certified information or upon notification from the IRS
or a broker that withholding is required. The Fund also reserves the right to
redeem shares from accounts without such information upon 30 days' notice.
Shareholders may avoid redemption by providing the Fund with a tax
identification number during the notice period.
SUBMINIMUM ACCOUNTS
The Fund reserves the right to involuntarily redeem an account after 30 days'
written notice, if the account's net asset value falls and remains below a
$2,500 minimum due to share redemptions and not market fluctuations.
SUSPENSION OF TRADING
Purchase and redemption orders may be suspended on days when the Exchange is
closed, closes early as a result of such day being a partial holiday or
otherwise, when trading is restricted or otherwise as permitted by the SEC.
REDEMPTIONS IN KIND
In unusual circumstances, the Fund may make payment in readily marketable
portfolio securities at their market value equal to the redemption price.
SHORT-TERM TRADING
The Fund and the transfer agent may restrict purchase transactions (including
exchanges) when a pattern of frequent purchases and redemptions in response to
short-term fluctuations in the Fund's share price appears evident.
- ------------------------------------------------------
SHAREHOLDER SERVICES
- ------------------------------------------------------
AUTOMATIC INVESTMENT PLAN
You may elect to have money automatically transferred from your bank account
into your Fund account(s) at regular intervals of your choice. Your bank account
must be a checking or bank money market account maintained at a domestic
financial institution that is an Automated Clearinghouse Member. A minimum
investment of $50 per transaction is required for participation in the Automatic
Investment Plan. Please call (800) 430-9617 for additional information.
AUTOMATIC WITHDRAWAL PLAN
You may elect to have money automatically withdrawn from your Fund account on a
monthly, quarterly, semi-annual or annual basis in the amount of $100 or more.
The automatic withdrawal will be made on or about the 25th day of each month.
Please call (800) 430-9617 for additional information.
DIVIDEND REINVESTMENT PLAN
Dividends will be automatically reinvested in additional Fund shares unless
otherwise indicated on the account application. Please call (800) 430-9617 for
additional information.
CROSS REINVESTMENT PRIVILEGE
You may want to have your dividends received from the Fund automatically
invested in shares of another Weiss fund. Investments will be made at a price
equal to the net asset value of the acquired shares next determined after
receipt of the distribution proceeds by the transfer agent. In order to qualify
for the Cross Reinvestment Privilege, the value of your account in the acquired
fund must equal or exceed the acquired fund's minimum initial investment
requirement. There are no subsequent investment requirements for amounts to
which dividends are directed nor are service fees currently charged for
effecting these transactions. The election to cross-reinvest dividends will not
affect the tax treatment of such dividends, which will be treated as received by
you and then used to purchase shares of the acquired fund. Please call (800)
430-9617 for additional information.
INDIVIDUAL RETIREMENT ACCOUNTS
The Fund offers Individual Retirement Account ("IRA") and Roth IRA plans, which
generally allow a maximum annual contribution of $2,000 per person for
individuals eligible to contribute to such a plan. PNC Trust Company, which
serves as custodian or trustee under the Fund's IRA and Roth IRA plans, charges
certain nominal fees for the annual maintenance of such accounts. Please call
(800) 430-9617 for additional information and account materials.
<PAGE>
- ------------------------------------------------------
ADDITIONAL INFORMATION
- ------------------------------------------------------
The following document contains further details about the Fund's Class A shares
and is available upon request and without charge:
Statement of Additional Information ("SAI") - The SAI contains more detailed
disclosure on features, investments and policies of the Fund. A current SAI has
been filed with the U.S. Securities and Exchange Commission ("SEC") and is
incorporated by reference into this document, making it legally part of this
prospectus.
You can make inquiries and obtain the above documentation free of charge by
contacting:
The Weiss Fund
4176 Burns Road
Palm Beach Gardens, Fl 33410
(800) 289-8100
These documents are also available from the SEC:
U.S. Securities and Exchange Commission
Public Reference Section
450 Fifth Street NW
Washington, DC 20549-6009
1-800-SEC-0330
http://www.sec.gov
Note: The SEC requires a duplicating fee for paper copies.
SEC File Number
811-09084
WEISS MILLENNIUM OPPORTUNITY FUND
Prospectus
June 30, 1999
This Prospectus relates to the Class S shares of Weiss Millennium
Opportunity Fund.
No other shares are offered in this Prospectus.
Weiss Millennium Opportunity Fund seeks capital appreciation.
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this prospectus. Any representation to
the contrary is a criminal offense.
<PAGE>
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TABLE OF CONTENTS
- ------------------------------------------------------------
FUND GOAL, PRINCIPAL STRATEGIES, PERFORMANCE AND PRINCIPAL RISK.........1
FEES AND EXPENSES.......................................................2
FUND MANAGEMENT.........................................................6
DIVIDENDS AND DISTRIBUTIONS.............................................7
TAXES...................................................................7
FINANCIAL HIGHLIGHTS....................................................8
HOW TO INVEST IN THE FUND...............................................8
REDEEMING FUND SHARES...................................................8
TRANSACTION INFORMATION.................................................9
ADDITIONAL INFORMATION.................................................10
<PAGE>
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FUND GOAL, PRINCIPAL STRATEGIES, PERFORMANCE AND PRINCIPAL RISK
- ----------------------------------------------------------------------------
GOAL The Weiss Millennium Opportunity Fund seeks capital appreciation. The
Fund's investment objective may be changed without shareholder approval.
PRINCIPAL STRATEGIES In seeking its investment objective of capital
appreciation, the Fund will invest primarily in a portfolio of equity
securities, such as common stocks, and will engage in short sales of such
securities. Although equity securities are the primary focus of the Fund, the
Manager intends to purchase investment-grade fixed income securities in
attempting to achieve the Fund's objective. Under normal circumstances it is
expected that approximately 20% of the Fund's assets will be invested in such
securities. The Fund's investment manager, Weiss Money Management, Inc. (which
we refer to as "Weiss" or the "Manager"), will use both fundamental analysis and
proprietary computer models to identify those securities to be purchased, sold
or sold short. Under normal conditions, the Fund will invest at least 65% of its
assets in long and/or short equity positions.
The Fund employs a long-short approach. With this approach, the Fund will seek
to purchase stocks of companies that, in the Manager's opinion, have (1) strong
or improving fundamentals, (2) lower vulnerability to adverse factors such as
Year 2000 ("Y2K") related problems or deflation, and/or (3) operate in sectors
of the market that show accelerating momentum and strong relative strength. At
the same time, the Fund will seek to sell short stocks of issuers which the
Manager believes have (1) weak or deteriorating fundamentals, (2) greater
vulnerability to adverse factors, and/or (3) operate in sectors of the market
that show decelerating momentum and weak relative strength. Although the Manager
expects that the Fund's "long" equity positions will generally outweigh its
"short" equity positions, the Fund is not restricted in the amount of its assets
that it may commit to short sales.
The investment policies of the Fund may lead to frequent changes in the Fund's
investments, particularly in periods of volatile market movements. A change in
the securities held by the Fund is known as "portfolio turnover." Although the
rate of portfolio turnover is difficult to predict, it is anticipated that under
normal circumstances the Fund's portfolio turnover rate could reach 400% or
more.
PRINCIPAL RISKS There are market and investment risks with any security. The
value of an investment in the Fund will fluctuate over time and it is possible
to lose money invested in the Fund.
o Stock Market Stock market movements will affect the Fund's share price on a
daily basis. The Fund's portfolio securities could lose value as a result
of a decline in the overall stock market. When the Fund purchases a stock,
it is said to have a "long" position in that stock. Selling a stock "short"
means that the Fund has sold a stock it does not own with the expectation
that it will be able to buy the stock later at a lower price in order to
close the transaction and realize a gain on the difference between the
respective sale and purchase prices. The Fund's investment results will
suffer if there is a stock market advance when the Fund has significant
"short" equity positions, or if there is a stock market decline when the
Fund has a significant "long" equity position.
o Equity Investing An investment in the common stock of a company represents
a proportionate ownership interest in that company. Therefore, the Fund
participates in the success or failure of any company in which it holds
stock. In addition, the market value of common stocks can fluctuate
significantly.
o Short Investing If the Fund's Manager takes short positions in stocks that
increase in value, then the losses of the Fund may exceed those of other
stock mutual funds that hold long positions only. Since the Fund is not
restricted in the amount of its assets that may be allocated to short
sales, significant short equity positions could increase the Fund's risk
profile. Investment in shares of the Fund is more volatile and risky than
many other mutual funds or other forms of investment.
o Portfolio Strategy The Manager's skill in choosing appropriate investments
for the Fund will determine in large part the Fund's ability to achieve its
investment objective. The risk exists that the Manager may incorrectly
allocate the Fund's investments between long and short equity positions.
o Debt Securities Investing in debt securities involves both interest rate
and credit risk. The value of debt instruments generally increase as
interest rates decline. In addition, the risk of prepayment could adversely
impact the Fund during a period of falling interest rates as the Fund would
be required to invest the proceeds from such investments at lower interest
rates. Conversely, rising interest rates tend to cause the value of debt
securities to decrease. The market value of debt securities also tends to
vary according to the relative financial condition of the issuer.
o Portfolio Turnover Portfolio turnover generally involves some expense to
the Fund, including brokerage commissions or dealer mark-ups and other
transaction costs on the sale of securities and reinvestment in other
securities. Such sales may result in realization of taxable capital gains.
A high portfolio turnover will result in higher brokerage costs and taxes,
which will affect the Fund's performance.
PERFORMANCE Since this is a new fund, no past performance data are available.
- -------------------------------------------------------------------------------
FEES AND EXPENSES-------------------------------------------------------------
The table below describes the fees and expenses that you may pay if you buy and
hold shares of the Fund.
SHAREHOLDER FEES (Fees paid directly from your investment)
Redemption Fee (1) None
(as a percentage of amount redeemed)
Exchange Fee $5.00
(1) A $15 service fee may be charged for redemptions by wire.
<PAGE>
ANNUAL FUND OPERATING EXPENSES (Expenses that are deducted from Fund assets)
Management Fee: 1.50%
Distribution and/or Service (12b-1) Fees: 0.25%
Other Expenses:* 0.55%
Total Annual Fund Operating Expenses: 2.30%
* "Other Expenses" are based on estimated amounts for the current fiscal year.
EXAMPLE:
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Fund for the periods indicated and then redeem all of your
shares at the end of those periods. The example also assumes that your
investment has a 5% return each year, that the Fund's operating expenses remain
the same, and that dividends and distributions are reinvested. Although your
actual costs may be higher or lower than those in this example, based on these
assumptions your cost would be:
<PAGE>
1 YEAR $233
3 YEARS $718
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MORE INFORMATION ABOUT THE FUND'S PRINCIPAL STRATEGIES AND RISKS
- -----------------------------------------------------------------------------
PRINCIPAL STRATEGIES:
The Manager uses a variety of investments and investment techniques in seeking
to achieve the Fund's investment objective. The Fund's primary investment
strategies are described below; however, the Fund may also invest in other
securities, use other strategies or engage in other investment practices. These
investments and strategies, as well as those described in this prospectus, are
described in detail in the Statement of Additional Information. Although the
Fund will attempt to achieve its investment objective, there is no assurance it
will be successful.
The following describes the Manager's investment approach in greater detail.
Analysis:
o Fundamental analysis: Companies are evaluated for their fundamental ability
to withstand, or even take advantage of, adverse economic conditions, such
as the Y2K computer problem (considered paramount factors in the years 1999
and 2000) as well as global deflation or a domestic recession. Factors such
as cash flow, asset values, competitive position, current price and
industry outlook may also be considered. A Strongest List and a Weakest
List are produced based on this analysis.
o Sector analysis: A proprietary computer model evaluates various market
sectors to aid the Manager in selecting for purchase securities from
sectors of the economy that are showing strength or, conversely, selling
securities short in sectors that are showing weakness.
o Market trend analysis: Based on a proprietary model, a bullish (indicating
a rising market) or bearish (indicating a falling market) signal is
generated.
Security Selection:
Based upon the results of both the fundamental and sector analyses discussed
above:
o A Buy Candidates List is created containing stocks in sectors ranked high.
o A Short-Sale Candidates List is created with stocks in sectors ranked low.
Portfolio Structure:
The Fund's assets will normally be invested as set forth below. Depending on the
Manager's perception of market conditions, these percentages may differ
substantially at various times.
o Approximately 30% of the Fund's assets will be allocated to core positions
(positions the Manager intends to hold for a while). The Manager intends to
split these between (a) long positions in stocks selected from the
Strongest List and (b) short positions in stocks selected from the Weakest
List.
o Approximately 50% of the Fund's assets will consist of actively traded
equity positions which will be allocated based upon the market trend
analysis discussed above. In a bullish market trend, trading positions will
be primarily allocated to long positions in stocks selected from the Buy
Candidates List. In a bearish market trend, this portion of the portfolio
will consist primarily of short equity positions in stocks selected from
the Short-Sale Candidates List.
o Approximately 20% of the Fund's assets will be invested in debt securities
issued or guaranteed by the United States government and its agencies or
instrumentalities, debt securities of investment grade corporate issuers
and zero coupon bonds. If a debt security held by the Fund ceases to be
rated or its rating is reduced below investment-grade, the Fund's Manager
will review the investment in light of the Fund's investment philosophy to
determine whether or not selling the security would be in the best
interests of the Fund.
RISKS:
EQUITY SECURITIES Since it purchases common stocks (referred to above as taking
a "long" equity position), the Fund is subject to the risk that stock prices
will fall over short or extended periods of time. Historically, the equity
markets have moved in cycles, and the value of the Fund's equity securities may
fluctuate drastically from day to day. Individual companies may report poor
results or be negatively affected by industry and/or economic trends and
developments. The prices of securities issued by such companies may suffer a
decline in response. These factors contribute to price volatility.
SHORT SALES When the Manager anticipates that the price of a security will
decline, it may sell the security short and borrow the same security from a
broker or other institution to complete the sale (referred to above as taking a
"short" equity position). The Fund may make a profit or incur a loss depending
upon whether the market price of the security decreases or increases between the
date of the short sale and the date on which the Fund must replace the borrowed
security. An increase in the value of a security sold short by the Fund over the
price at which it was sold short will result in a loss to the Fund, and there
can be no assurance that the Fund will be able to close out the position at a
particular time or at an acceptable price.
FIXED INCOME SECURITIES The market values of fixed income investments change in
response to interest rate changes and other factors. During periods of falling
interest rates, the values of outstanding fixed income securities generally
rise. Further, while securities with longer maturities tend to produce higher
yields, the prices of longer maturity securities are also subject to greater
market fluctuations as a result of changes in interest rates. In addition to
these fundamental risks, different types of fixed income securities may be
subject to the following additional risks:
o Credit Quality Risk - The possibility that an issuer will be unable to make
timely payments of either principal or interest.
o Prepayment or Call Risk - During periods of falling interest rates, certain
debt obligations with high interest rates may be prepaid (or "called") by
the issuer prior to maturity. As a result, the Fund may be required to
invest the proceeds from such investments at lower interest rates.
TEMPORARY DEFENSIVE INVESTMENTS The Fund may, from time to time, take temporary
defensive positions that are inconsistent with the Fund's principal investment
strategies in attempting to respond to adverse market, economic, political or
other conditions. During these times, the Fund may invest up to 100% of its
assets in cash or cash equivalents, shares of money market mutual funds,
commercial paper, zero coupon bonds, repurchase agreements, and other securities
the Manager believes to be consistent with the Fund's best interests. During a
period in which the Fund takes a temporary defensive position, the Fund may not
achieve its investment objective.
NON-PRINCIPAL INVESTMENT STRATEGIES To a more limited extent, the Fund may, but
is not required to, utilize other investments and investment techniques that may
impact fund performance, including, but not limited to, options on securities
and stock indices, options on stock index futures contracts, and other
derivatives (i.e., financial instruments that derive their value from other
securities or commodities, or that are based on indices).
<PAGE>
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FUND MANAGEMENT
- ------------------------------------------------------
INVESTMENT MANAGER
Weiss Money Management, Inc., 4176 Burns Road, Palm Beach Gardens, Florida
33410, is the investment adviser to the Fund, and is responsible for the
day-to-day management of the assets. The Manager has been providing investment
advisory services to The Weiss Fund (formerly known as Weiss Treasury Fund)
since the Trust's commencement of operations in 1996 and to individual clients
since its inception in 1980.
Under the investment advisory agreement with the Fund, the Manager provides
continuous advice and recommendations concerning the Fund's investments. The
Fund has agreed to compensate the Manager for its services by the monthly
payment of a fee at the annual rate of 1.50% of the Fund's average net assets.
SUB-ADVISER
Harvest Advisors, Inc., 11612 Bee Cave Road, Suite 110, Austin, Texas 78733, has
been retained by the Manager to provide sub-advisory services to the Fund. Tony
Sagami, President of Harvest Advisors, has been actively involved in the
development of sophisticated investment software and quantitative investment
strategies. Harvest Advisors and/or its principals have been continuously
serving institutional and individual investors since 1993. Under its agreement
with the Manager, the Sub-Adviser renders continuous investment advice to the
Manager with respect to investment and reinvestment of the Fund's assets in
various securities, based upon computer models constructed in accordance with
the Fund's investment objective and policies; however, the Manager, in the
exercise of its independent judgment, retains ultimate discretion regarding and
responsibility for the implementation of transactions in seeking to achieve the
Fund's objective. The Manager pays the Sub-Adviser a fee out of the investment
advisory fees it receives from the Fund.
PORTFOLIO MANAGER
John N. Breazeale. Mr. Breazeale, President of Weiss Money Management, Inc.,
President and Chairman of the Board of Trustees of Weiss Fund, and assets
manager of the Weiss Treasury Only Money Market Fund, a separate series of Weiss
Fund, is primarily responsible for implementing the Fund's principal investment
strategy; however, he is assisted by a team of investment professionals from the
Manager and the Sub-Adviser. Mr. Breazeale has been a assets manager with Weiss
since 1994. Prior to 1994, Mr. Breazeale provided assets management services at
Provident Institutional Management Inc., Mitchell Hutchins Asset Management Inc.
(a subsidiary of PaineWebber Group), and with Mackenzie Investment Management
Inc. Mr. Breazeale has over 28 years' experience in the securities industry.
YEAR 2000 READINESS
The services provided to the Fund by Weiss and the Fund's other service
providers are dependent on those service providers' computer systems. Computer
software and hardware systems in use today may not be able to distinguish
between the year 2000 and the year 1900 because of the way dates are encoded and
calculated (the "Year 2000 Problem"). The failure to make this distinction could
have a negative impact on handling securities trades, pricing and account
services. Weiss is working with the Fund's other service providers to address
the Year 2000 Problem with respect to the computer systems that they use.
Specifically, Weiss has completed changes to its internal hardware and software
in order to complete its Year 2000 readiness. In addition, completed Y2K
readiness questionnaires have been received from all of the financial vendors
and service providers of the Manager and are currently being evaluated as to the
quality of their Y2K readiness status. The Fund believes these steps will be
sufficient to avoid any material adverse impact on the Fund. At this time,
however, there can be no assurance that these steps will be sufficient to avoid
any adverse impact on the Fund.
- ------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS
- ------------------------------------------------------
The Fund intends to distribute to shareholders substantially all of its net
investment income annually. Net investment income for the Fund consists of all
income accrued on the Fund's assets, less all actual and accrued expenses. The
Fund intends to distribute to shareholders net realized capital gains after
utilization of capital loss carryforwards, if any, at least annually.
Distributions by the Fund are reinvested in additional shares of the Fund or
paid in cash at the election of the shareholder. If no election is made, all
distributions will be reinvested in additional Fund shares. If an investment is
in the form of a retirement plan, all dividends and capital gains distributions
must be reinvested into the shareholder's account. Distributions are generally
taxable, whether received in cash or reinvested.
Exchanges among the Weiss funds are also taxable events.
- ------------------------------------------------------
TAXES
- ------------------------------------------------------
Dividends paid out of the Fund's net investment income and net short-term
capital gains will be taxable to you as ordinary income. Distributions of net
long-term capital gains are taxable to you as long-term capital gains,
regardless of how long you have held your Fund shares. Distributions are taxable
to you in the same manner whether received in cash or reinvested in additional
Fund shares.
If shares of the Fund are held in a tax-deferred retirement plan account, income
and gain will not be taxable each year. Instead, the taxable portion of amounts
held in a retirement plan account generally will be subject to tax only when
distributed from that account, and all of those taxable amounts will be taxable
as ordinary income.
A distribution will be treated as paid to you on December 31 of the current
calendar year if it is declared by the Fund in October, November or December
with a record date in such a month and paid by the Fund during January of the
following calendar year.
Each year the Fund will notify you of the tax status of dividends and other
distributions.
Upon the sale or other disposition of your Fund shares, you may realize a
capital gain or loss which will be long-term or short-term, generally depending
upon how long you held your shares.
The foregoing discussion of federal tax consequences is intended for general
information only. You should consult your own tax adviser regarding the
particular tax consequences of an investment in the Fund.
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------
Since this is a new fund, no financial highlights data are available.
- ------------------------------------------------------
HOW TO INVEST IN THE FUND
- ------------------------------------------------------
BUYING SHARES
You may buy shares of the Fund through accounts with brokers and other
institutions that are authorized to place trades in Fund shares for their
customers. If you invest through an authorized institution, you will have to
follow its procedures. Your institution may charge a fee for its services, in
addition to the fees charged by the Fund. You will also generally have to
address your correspondence or questions regarding the Fund to your institution.
The minimum initial investment in the Fund is $5,000. The minimum amount
required to make subsequent investments is $100.
Purchase orders for shares of the Fund which are received by the transfer agent
on any business day by the close of regular trading on the New York Stock
Exchange, normally 4:00 p.m. eastern time, receive the net asset value per share
next determined after receipt of the order by the transfer agent. Purchase
orders received after the close of regular trading on the Exchange receive the
net asset value per share next determined after receipt of the order by the
transfer agent. Federal funds must be immediately available to the Fund's
custodian in order for the transfer agent to execute a purchase order on a given
day. Shares of the Fund cannot be purchased by Federal Reserve wire on days that
either the Exchange or the Federal Reserve is closed.
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REDEEMING FUND SHARES
- ---------------------------------------------------------------------
If you own your shares through an account with a broker or other institution,
contact that broker or institution to sell your shares.
<PAGE>
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TRANSACTION INFORMATION
- ------------------------------------------------------
NET ASSET VALUE
For purposes of processing purchase and redemption orders, the net asset value
per share of the Fund is calculated as of the close of regular trading on the
New York Stock Exchange, normally 4:00 p.m. eastern time, on each business day
except those holidays which the Exchange observes.
On those days where the Fund's custodian or the Exchange closes early as a
result of such day being a partial holiday or otherwise, the Fund reserves the
right to advance on that day the time by which purchase and redemption requests
must be received.
The Fund's administrator determines net asset value per share by adding the
value of the Fund's investments, cash and other assets, subtracting liabilities
attributable to the Fund and then dividing the result by the number of shares
outstanding. Market prices are used to determine the value of the Fund's assets.
If market prices are not readily available for a security or if a security's
price is not considered to be market indicative, that security may be valued by
another method that the Fund's Board of Trustees or its delegate believes
accurately reflects fair value. In those circumstances where a security's price
is not considered to be market indicative, the security's valuation may differ
from an available market quotation.
SUBMINIMUM ACCOUNTS
The Fund reserves the right to involuntarily redeem an account after 30 days'
written notice, if the account's net asset value falls and remains below a
$2,500 minimum due to share redemptions and not market fluctuations.
SUSPENSION OF TRADING
Purchase and redemption orders may be suspended on days when the Exchange is
closed, closes early as a result of such day being a partial holiday or
otherwise, when trading is restricted or otherwise as permitted by the SEC.
REDEMPTIONS IN KIND
In unusual circumstances, the Fund may make payment in readily marketable assets
securities at their market value equal to the redemption price.
SHORT-TERM TRADING
The Fund and the transfer agent may restrict purchase transactions (including
exchanges) when a pattern of frequent purchases and redemptions in response to
short-term fluctuations in the Fund's share price appears evident.
<PAGE>
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ADDITIONAL INFORMATION
- ------------------------------------------------------
The following document contains further details about the Fund's Class S shares
and is available upon request and without charge:
Statement of Additional Information ("SAI") - The SAI contains more detailed
disclosure on features, investments and policies of the Fund. A current SAI has
been filed with the U.S. Securities and Exchange Commission ("SEC") and is
incorporated by reference into this document, making it legally part of this
prospectus.
You can make inquiries and obtain the above documentation free of charge by
contacting:
The Weiss Fund
4176 Burns Road
Palm Beach Gardens, Fl 33410
(800) 289-8100
These documents are also available from the SEC:
U.S. Securities and Exchange Commission
Public Reference Section
450 Fifth Street NW
Washington, DC 20549-6009
1-800-SEC-0330
http://www.sec.gov
Note: The SEC requires a duplicating fee for paper copies.
SEC File Number
811-09084
THE WEISS FUND
4176 Burns Road
Palm Beach Gardens, FL 33410
(800) 289-8100
Statement of Additional Information
June 30, 1999
Weiss Millennium Opportunity Fund
This Statement of Additional Information ("SAI") pertains to the Class A and
Class S shares of Weiss Millennium Opportunity Fund (the "Fund"), which is a
separate series of The Weiss Fund, a Massachusetts business trust (the "Trust")
that currently consists of two portfolios, each of which is diversified. The
Fund is managed by Weiss Money Management, Inc. (the "Manager").
This SAI is not a prospectus and should be read in conjunction with the
prospectus for the Fund dated June 30, 1999 (the "Prospectus"), as amended from
time to time, copies of which may be obtained from the Trust without charge by
writing to the above address or by calling (800) 289-8100.
<PAGE>
TABLE OF CONTENTS
INVESTMENT OBJECTIVE, RESTRICTIONS AND TECHNIQUES...........................1
Investment Objective...............................................1
Investments........................................................1
Investment Restrictions...........................................12
ORGANIZATION OF THE FUND...................................................14
TRUSTEES AND OFFICERS.............................................16
MANAGEMENT COMPENSATION....................................................17
INVESTMENT ADVISORY AND OTHER SERVICES.....................................17
Investment Manager................................................17
Sub-Adviser.......................................................18
Distributor.......................................................18
Administrator.....................................................19
Transfer Agent, Dividend Disbursing Agent and Custodian...........19
PERFORMANCE INFORMATION....................................................20
Average Annual Total Return.......................................20
Cumulative Total Return...........................................20
Total Return......................................................21
Capital Change....................................................21
Comparison of Portfolio Performance...............................21
BUYING SHARES..............................................................22
REDEMPTIONS................................................................23
DIVIDENDS AND DISTRIBUTIONS................................................23
TAXES ..................................................................23
BROKERAGE ALLOCATION.......................................................27
NET ASSET VALUE............................................................28
INDEPENDENT ACCOUNTANTS....................................................28
FINANCIAL STATEMENTS.......................................................29
ADDITIONAL INFORMATION.....................................................29
APPENDIX A.................................................................30
APPENDIX B.................................................................33
<PAGE>
INVESTMENT OBJECTIVE, RESTRICTIONS AND TECHNIQUES
Investment Objective
The Fund is a diversified series of The Weiss Fund, an open-end, management
investment company. The investment objective of the Fund is to seek capital
appreciation. The investment objective of the Fund is not fundamental and may be
changed by the Trustees without shareholder approval. There is no assurance that
the Fund will achieve its objective.
Investments
The Fund's investment policies and techniques are summarized in the Prospectus
and set forth in greater detail below. Unless otherwise stated, the Fund's
policies are not fundamental.
The Fund pursues its objective by investing primarily in a portfolio of equity
securities, such as common stocks, and engaging in short sales of such
securities. The Fund employs a "long-short" approach. With this approach, the
Fund will seek to purchase stocks of companies that, in the Manager's opinion,
have (1) strong or improving fundamentals, (2) lower vulnerability to adverse
factors such as Year 2000 ("Y2K") related problems or deflation, and/or (3)
operate in sectors of the market that show accelerating momentum and strong
relative strength. At the same time, the Fund will seek to sell short stocks of
issuers which the Manager believes have (1) weak or deteriorating fundamentals,
(2) greater vulnerability to adverse factors, and/or (3) operate in sectors of
the market that show decelerating momentum and weak relative strength. Although
the Manager expects that the Fund's "long" equity positions will generally
outweigh its "short" equity positions, the Fund is not restricted in the amount
of its assets that it may commit to short sales.
Investments may be made in well-known, established companies, as well as in
newer and relatively unseasoned companies. Individual security selection aided
by computer technology is an important part of the Fund's investment approach.
The Fund's sub-advisor, Harvest Advisors, Inc. ("Harvest Advisors" or the
"Sub-Adviser"), utilizes a risk management system based upon a quantitative
model that is a combination of momentum, price behavior, and volatility
indicators. The objective of this model is to identify those periods when the
stock market is vulnerable. This model is used to adjust the level of the Fund's
equity exposure, ranging from fully invested, neutral, or short. Potential
investments of the Fund are also evaluated using fundamental analysis including
criteria such as earnings outlook, cash flow, asset values, sustainability of
product cycles, expansion opportunities, management capabilities, industry
outlook, competitive position, and current price relative to long-term value of
the company. The Fund also employs a relative strength ranking system to
identify the strongest and weakest sectors of the stock market.
Under normal circumstances, it is expected that at least 65% of the Fund's
assets will be invested in equity securities, comprised of both long and short
positions. The Manager anticipates that a portion of the Fund's assets will be
allocated, in both long and short positions, to stocks selected by the Manager
based primarily upon fundamental analysis, with a buy and hold strategy in mind.
In addition, another part of the Fund's assets will be comprised of both long
and short positions in stocks selected by the Manager based upon such criteria
as fundamental momentum and relative value, invested with a short-term
investment strategy driven primarily by sector analysis. The Manager expects
that approximately 20% of the Fund's assets will, under normal conditions, be
invested in fixed-income securities, cash and cash equivalents. Depending on the
Manager's perception of market conditions, these percentages may differ
substantially at various times.
The following describes the Manager's investment approach in greater detail.
Analysis:
o Fundamental analysis: Companies are evaluated for their fundamental ability
to withstand, or even take advantage of, adverse economic conditions, such
as the Y2K computer problem (considered paramount factors in the years 1999
and 2000) as well as global deflation or a domestic recession. Factors such
as cash flow, asset values, competitive position, current price and
industry outlook may also be considered. A Strongest List and a Weakest
List are produced based on this analysis.
o Sector analysis: A proprietary computer model evaluates various market
sectors to aid the Manager in selecting for purchase securities from
sectors of the economy that are showing strength or, conversely, selling
stocks short in sectors that are showing weakness.
o Market trend analysis: Based on a proprietary model, a bullish
(indicating a rising market) or bearish (indicating a falling market)
signal is generated.
Security Selection:
Based upon the results of both the fundamental and sector analyses discussed
above:
o A Buy Candidates List is created containing stocks in sectors ranked high.
o A Short-Sale Candidates List is created with stocks in sectors ranked low.
Portfolio Structure:
The Fund's assets will normally be invested as set forth below. Depending on the
Manager's perception of market conditions, these percentages may differ
substantially at various times.
o Approximately 30% of the Fund's assets be allocated to core positions
(positions the Manager intends to hold for a while). The Manager intends to
split these between (a) long positions in stocks selected from the
Strongest List and (b) short positions in stocks selected from the Weakest
List.
o Approximately 50% of the Fund's assets will normally consist of actively
traded equity positions which will be allocated based upon the market trend
analysis discussed above. In a bullish market, trading positions will be
primarily allocated to long positions in stocks selected from the Buy
Candidates List. In a bearish market, this portion of the assets will
consist primarily of short equity positions in stocks selected from the
Short-Sale Candidates List.
o Approximately 20% of the Fund's assets will be invested in debt securities
of corporate issuers, including convertible securities, commercial paper
and zero coupon bonds, and debt securities issued or guaranteed by the
United States government and its agencies or instrumentalities. In a
neutral market or for temporary defensive or emergency purposes, the Fund's
exposure to these types of securities may be increased significantly.
The Fund may, but is not required to, effect transactions in options on
securities and stock indices and options on stock index futures contracts for
hedging purposes.
As a result of the investment techniques used by the Fund, the Fund expects that
a significant portion (up to 100%) of its assets will be held in liquid
securities in a segregated account as "cover" for the investment techniques the
Fund employs. These assets may not be sold while the position in the
corresponding instrument or transaction (e.g., option or short sale) is open
unless they are replaced by similar assets. As a result, the commitment of a
large portion of the Fund's assets to "cover" investment techniques could impede
portfolio management or the Fund's ability to meet redemption requests or other
current obligations.
Descriptions in this SAI of a particular investment practice or technique in
which the Fund may engage (such as short selling or hedging) or a financial
instrument which the Fund may purchase (such as options) are meant to describe
the spectrum of investments that the Manager, in its discretion, might, but is
not required to, use in managing the Fund's portfolio assets. The Manager may,
in its discretion, at any time employ such practice, technique or instrument for
one or more funds but not for all funds advised by it. Furthermore, it is
possible that certain types of financial instruments or investment techniques
described herein may not be available, permissible, economically feasible or
effective for their intended purposes in all markets. Certain practices,
techniques, or instruments may not be principal activities of the Fund but, to
the extent employed, could from time to time have a material impact on the
Fund's performance.
Common Stocks
Common stock can be issued by companies to raise cash; all common stock shares
represent a proportionate ownership interest in a company. As a result, the
value of common stock rises and falls with a company's success or failure. The
market value of common stock can fluctuate significantly, with smaller companies
being particularly susceptible to price swings. Transaction costs in smaller
company stocks may also be higher than those of larger companies.
Short Sales
The Fund may seek to realize additional gains or hedge investments through short
sales. Short sales are transactions in which the Fund sells a security it does
not own in anticipation of a decline in the market value of that security. To
complete such a transaction, the Fund must borrow the security to make delivery
to the buyer. The Fund then is obligated to replace the security borrowed by
purchasing it at the market price at or prior to the time of replacement. The
price at such time may be more or less than the price at which the security was
sold by the Fund. Until the security is replaced, the Fund is required to repay
the lender any dividends or interest that accrue during the period of the loan.
To borrow the security, the Fund also may be required to pay a premium, which
would increase the cost of the security sold. The net proceeds of the short sale
will be retained by the broker (or by the Fund's custodian in a special custody
account), to the extent necessary to meet margin requirements, until the short
position is closed out. The Fund also will incur transaction costs in effecting
short sales.
The Fund will incur a loss as a result of the short sale if the price of the
security increases between the date of the short sale and the date on which the
Fund replaces the borrowed security. The Fund will realize a gain if the
security declines in price between those dates. The amount of any gain will be
decreased, and the amount of any loss increased, by the amount of the premium,
dividends, interest or expenses the Fund may be required to pay in connection
with a short sale. There can be no assurance that the Fund will be able to close
out a short position at a particular time or at an acceptable price.
Convertible Securities
The convertible securities in which the Fund may invest include corporate bonds,
notes, debentures, preferred stock and other securities that may be converted or
exchanged at a stated or determinable exchange ratio into underlying shares of
common stock. Investments in convertible securities can provide income through
interest and dividend payments as well as an opportunity for capital
appreciation by virtue of their conversion or exchange features. Because
convertible securities can be converted into equity securities, their values
will normally vary in some proportion with those of the underlying equity
securities. Convertible securities usually provide a higher yield than the
underlying equity, however, so that the price decline of a convertible security
may sometimes be less substantial than that of the underlying equity security.
The exchange ratio for any particular convertible security may be adjusted from
time to time due to stock splits, dividends, spin-offs, other corporate
distributions or scheduled changes in the exchange ratio. Convertible debt
securities and convertible preferred stocks, until converted, have general
characteristics similar to both debt and equity securities. Although to a lesser
extent than with debt securities generally, the market value of convertible
securities tends to decline as interest rates increase and, conversely, tends to
increase as interest rates decline. In addition, because of the conversion or
exchange feature, the market value of convertible securities typically changes
as the market value of the underlying common stock changes, and, therefore, also
tends to follow movements in the general market for equity securities. When the
market price of the underlying common stock increases, the price of a
convertible security tends to rise as a reflection of the value of the
underlying common stock, although typically not as much as the price of the
underlying common stock. While no securities investments are without risk,
investments in convertible securities generally entail less risk than
investments in common stock of the same issuer.
As debt securities, convertible securities are investments that provide for a
stream of income. Like all debt securities, there can be no assurance of income
or principal payments because the issuers of the convertible securities may
default on their obligations (see following section). Convertible securities
generally offer lower yields than non-convertible securities of similar quality
because of their conversion or exchange features.
Convertible securities generally are subordinated to other similar but
non-convertible securities of the same issuer, although convertible bonds, as
corporate debt obligations, are senior in right of payment to all equity
securities, and convertible preferred stock is senior to common stock, of the
same issuer. However, convertible bonds and convertible preferred stock
typically have lower coupon rates than similar non-convertible securities.
Convertible securities may be issued as fixed income obligations that pay
current income.
Debt Securities
In General. Investment in debt securities involves both interest rate
and credit risk. Generally, the value of debt instruments rises and falls
inversely with fluctuations in interest rates. As interest rates decline, the
value of debt securities generally increases. Conversely, rising interest rates
tend to cause the value of debt securities to decrease. Bonds with longer
maturities generally are more volatile than bonds with shorter maturities. The
market value of debt securities also varies according to the relative financial
condition of the issuer. In general, lower-quality bonds offer higher yields due
to the increased risk that the issuer will be unable to meet its obligations on
interest or principal payments at the time called for by the debt instrument.
Investment-Grade Debt Securities. The Fund may invest in debt
securities that are given an investment-grade rating by Moody's Investors
Service, Inc. ("Moody's") or Standard & Poor's Ratings Group ("S&P"), and may
also invest in unrated debt securities that are considered by the Manager to be
of comparable quality. Bonds rated Aaa by Moody's and AAA by S&P are judged to
be of the best quality (i.e., capacity to pay interest and repay principal is
extremely strong). Bonds rated Aa/AA are considered to be of high quality (i.e.,
capacity to pay interest and repay principal is very strong and differs from the
highest rated issues only to a small degree). Bonds rated A are viewed as having
many favorable investment attributes, but elements may be present that suggest a
susceptibility to the adverse effects of changes in circumstances and economic
conditions than debt in higher rated categories. Bonds rated Baa/BBB (considered
by Moody's to be "medium grade" obligations) are considered to have an adequate
capacity to pay interest and repay principal, but certain protective elements
may be lacking (i.e., such bonds lack outstanding investment characteristics and
have some speculative characteristics). See Appendix A for a description of
these ratings.
Commercial Paper. Commercial paper represents short-term unsecured promissory
notes issued in bearer form by bank holding companies, corporations and finance
companies. The Fund may invest in commercial paper that is rated Prime-1 by
Moody's or A-1 by S&P or, if not rated by Moody's or S&P, is issued by companies
having an outstanding debt issue rated Aaa or Aa by Moody's or AAA or AA by S&P.
U.S. Treasury Securities. The Fund may invest in direct obligations of the U.S.
Treasury (e.g., Treasury bills, notes, and bonds). When such securities are held
to maturity, the payment of principal and interest is unconditionally guaranteed
by the U.S. Government, and therefore they are of the highest possible credit
quality. U.S. Treasury securities that are not held to maturity are subject to
variations in market value caused by fluctuations in interest rates.
Zero Coupon Securities. The Fund may invest in zero coupon securities. Zero
coupon bonds are issued and traded at a discount from their face value. They do
not entitle the holder to any periodic payment of interest prior to maturity.
Current federal income tax law requires holders of zero coupon securities to
report the portion of any original issue discount on such securities that
accrues during a given year as interest income, even though the holders receive
no cash payments of interest during the year. In order to qualify as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended (the "Code"), and the regulations thereunder, the Fund must distribute
its investment company taxable income, including any original issue discount
accrued on zero coupon bonds. Because the Fund will not receive cash payments on
a current basis in respect of any accrued original issue discount on these
bonds, in some years the Fund may have to distribute cash obtained from other
sources in order to satisfy the distribution requirements under the Code. The
Fund might obtain such cash from selling other portfolio holdings which might
cause the Fund to incur capital gains or losses on the sale. Additionally, these
actions are likely to reduce the assets to which Fund expenses could be
allocated and to reduce the rate of return for the Fund. In some circumstances,
such sales might be necessary in order to satisfy cash distribution requirements
even though investment considerations might otherwise make it undesirable for
the Fund to sell the securities at the time.
Generally, the market prices of zero coupon securities are more volatile than
the prices of securities that pay interest periodically and in cash and are
likely to respond to changes in interest rates to a greater degree than other
types of debt securities having similar maturities and credit quality.
When-Issued Securities. When the Fund purchases new issues of securities on a
when-issued basis, the Fund's custodian will establish a segregated account for
the Fund consisting of cash, U.S. Treasury securities or other high-grade debt
securities equal to the amount of the commitment. If the value of securities in
the account should decline, additional cash or securities will be placed in the
account so that the market value of the account will equal the amount of such
commitments by the Fund on a daily basis.
Securities purchased on a when-issued basis and the securities held in the
Fund's portfolio are subject to changes in market value based upon various
factors including changes in the level of market interest rates. Generally, the
value of such securities will fluctuate inversely to changes in interest rates
(i.e., they will appreciate in value when market interest rates decline and
decrease in value when market interest rates rise). For this reason, placing
securities rather than cash in the segregated account may have a leveraging
effect on the Fund's net assets. In other words, to the extent that the Fund
remains substantially fully invested in securities at the same time that it has
committed to purchase securities on a when-issued basis, there will be greater
fluctuations in its net assets than if it had set aside cash to satisfy its
purchase commitment. Upon the settlement date of the when-issued securities, the
Fund ordinarily will meet its obligation to purchase the securities from
available cash flow, use of the cash (or liquidation of securities) held in the
segregated account or sale of other securities. Although it would not normally
expect to do so, the Fund also may meet its obligation from the sale of the
when-issued securities themselves (which may have a current market value greater
or less than the Fund's payment obligation). The sale of securities to meet such
obligations carries with it a greater potential for the realization of capital
gains.
Warrants
The Fund may invest up to 5% of its total assets in warrants. The holder of a
warrant has the right, until the warrant expires, to purchase a given number of
shares of a particular issuer at a specified price. Such investments can provide
a greater potential for profit or loss than an equivalent investment in the
underlying security. However, prices of warrants do not necessarily move in a
tandem with the prices of the underlying securities and are, therefore,
considered speculative investments. Warrants pay no dividends and confer no
rights other than a purchase option. Thus, if a warrant held by the Fund were
not exercised by the date of its expiration, the Fund would lose the entire
purchase price of the warrant.
Repurchase Agreements
The Fund may enter into repurchase agreements with selected brokers-dealers,
banks or other financial institutions. A repurchase agreement is an arrangement
under which the purchaser (i.e., the Fund) purchases a U.S. Government or other
high quality short-term debt obligation (an "Obligation") and the seller agrees
at the time of sale to repurchase the Obligation at a specified time and price.
Custody of the Obligation will be maintained by the Fund's custodian. The
repurchase price may be higher than the purchase price, the difference being
income to the applicable Fund, or the purchase and repurchase prices may be the
same, with interest at a stated rate due to the Fund together with the
repurchase price on repurchase. In either case, the income to the Fund is
unrelated to the interest rate on the Obligation subject to the repurchase
agreement.
Repurchase agreements pose certain risks for all entities, including the Fund,
that utilize them. Such risks are not unique to the Fund but are inherent in
repurchase agreements. The Fund seeks to minimize such risks by, among others,
the means indicated below, but because of the inherent legal uncertainties
involved in repurchase agreements, such risks cannot be eliminated.
For purposes of the 1940 Act, a repurchase agreement is deemed to be a loan from
the Fund to the seller of the Obligation. It is not clear whether for other
purposes a court would consider the Obligation purchased by the Fund subject to
a repurchase agreement as being owned by the Fund or as being collateral for a
loan by the Fund to the seller.
If in the event of bankruptcy or insolvency proceedings against the seller of
the Obligation, a court holds that the Fund does not have a perfected security
interest in the Obligation, the Fund may be required to return the Obligation to
the seller's estate and be treated as an unsecured creditor of the seller. As an
unsecured creditor, the Fund would be at risk of losing some or all of the
principal and income involved in the transaction. To minimize this risk, the
Fund utilizes custodians and subcustodians that the Manager believes follow
customary securities industry practice with respect to repurchase agreements,
and the Manager analyzes the creditworthiness of the obligor, in this case the
seller of the Obligation. But because of the legal uncertainties, this risk,
like others associated with repurchase agreements, cannot be eliminated.
Also, in the event of commencement of bankruptcy or insolvency proceedings with
respect to the seller of the Obligation before repurchase of the Obligation
under a repurchase agreement, the Fund may encounter delay and incur costs
before being able to sell the security. Such a delay may involve loss of
interest or a decline in price of the Obligation.
Apart from risks associated with bankruptcy or insolvency proceedings, there is
also the risk that the seller may fail to repurchase the security. However, if
the market value of the Obligation subject to the repurchase agreement becomes
less than the repurchase price (including accrued interest), the applicable Fund
will direct the seller of the Obligation to deliver additional securities so
that the market value of all securities subject to the repurchase agreement
equals or exceeds the repurchase price.
Certain repurchase agreements which provide for settlement in more than seven
days can be liquidated before the nominal fixed term on seven days' or less
notice. Such repurchase agreements will be regarded as illiquid instruments. The
Fund currently intends to limit its investments in repurchase agreements to
those with maturities of less than seven days.
The Fund may also enter into repurchase agreements with any party deemed
creditworthy by the Manager, including broker-dealers, if the transaction is
entered into for investment purposes and the counterparty's creditworthiness is
at least equal to that of issuers of securities which the Fund may purchase.
Other Investment Companies
When the Fund invests in another mutual fund, it pays a pro rata portion of the
advisory fees and other expenses of that fund as a shareholder of that fund.
These expenses are in addition to the advisory and other expenses the Fund pays
in connection with its own operations.
Options
The Fund may, but is not required to, purchase and sell put and call options on
its portfolio securities to protect against changes in market prices. There is
no assurance that the Fund's use of put and call options will achieve its
desired objective, and the Fund's use of options may result in losses to the
Fund.
Covered Call Options. The Fund may write covered call options as a
limited form of hedging against a decline in the price of securities owned by
the Fund.
A call option gives the holder the right to purchase, and obligates the writer
to sell, a security at the exercise price at any time before the expiration
date. A call option is "covered" if the writer, at all times while obligated as
a writer, either owns the underlying securities (or comparable securities
satisfying the cover requirements of the securities exchanges), or has the right
to acquire such securities through immediate conversion of securities.
In return for the premium received when it writes a covered call option, the
Fund gives up some or all of the opportunity to profit from an increase in the
market price of the securities covering the call option during the life of the
option. The Fund retains the risk of loss should the price of such securities
decline. If the option expires unexercised, the Fund realizes a gain equal to
the premium, which may be offset by a decline in price of the underlying
security. If the option is exercised, the Fund realizes a gain or loss equal to
the difference between the Fund's cost for the underlying security and the
proceeds of sale (exercise price minus commissions) plus the amount of the
premium.
The Fund may terminate a call option that it has written before it expires by
entering into a closing purchase transaction. The Fund may enter into closing
purchase transactions in order to free itself to sell the underlying security or
to write another call on the security, realize a profit on a previously written
call option, or protect a security from being called in an unexpected market
rise. Any profits from a closing purchase transaction may be offset by a decline
in the value of the underlying security. Conversely, because increases in the
market price of a call option will generally reflect increases in the market
price of the underlying security, any loss resulting from a closing purchase
transaction is likely to be offset in whole or in part by unrealized
appreciation of the underlying security owned by the Fund.
Covered Put Options. The Fund may write covered put options as a
limited form of hedging against an increase in the price of securities that the
Fund plans to purchase. A put option gives the holder the right to sell, and
obligates the writer to buy, a security at the exercise price at any time before
the expiration date. A put option is "covered" if the writer segregates cash and
high-grade short-term debt obligations or other permissible collateral equal to
the price to be paid if the option is exercised.
In addition to the receipt of premiums and the potential gains from terminating
such options in closing purchase transactions, the Fund also receives interest
on the cash and debt securities maintained to cover the exercise price of the
option. By writing a put option, the Fund assumes the risk that it may be
required to purchase the underlying security for an exercise price higher than
its then current market value, resulting in a potential capital loss unless the
security later appreciates in value.
The Fund may terminate a put option that it has written before it expires by a
closing purchase transaction. Any loss from this transaction may be partially or
entirely offset by the premium received on the terminated option.
Although it has no current intention of doing so, the Fund may also write
covered put and call options to attempt to enhance its current return.
Purchasing Put and Call Options. The Fund may also purchase put options
to protect portfolio holdings against a decline in market value. This protection
lasts for the life of the put option because the Fund, as a holder of the
option, may sell the underlying security at the exercise price regardless of any
decline in its market price. In order for a put option to be profitable, the
market price of the underlying security must decline sufficiently below the
exercise price to cover the premium and transaction costs that the Fund must
pay. These costs will reduce any profit the Fund might have realized had it sold
the underlying security instead of buying the put option.
The Fund may purchase call options to hedge against an increase in the price of
securities that the Fund wants ultimately to buy. Such hedge protection is
provided during the life of the call option since the Fund, as holder of the
call option, is able to buy the underlying security at the exercise price
regardless of any increase in the underlying security's market price. In order
for a call option to be profitable, the market price of the underlying security
must rise sufficiently above the exercise price to cover the premium and
transaction costs. These costs will reduce any profit the Fund might have
realized had it bought the underlying security at the time it purchased the call
option.
Although it has no current intention of doing so, the Fund may also purchase put
and call options to attempt to enhance its current return.
Risks Involved in the Sale of Options. Options transactions involve
certain risks, including the risks that the Manager will not forecast interest
rate or market movements correctly, that the Fund may be unable at times to
close out such positions, or that hedging transactions may not accomplish their
purpose because of imperfect market correlations. The successful use of these
strategies depends on the ability of the Manager to forecast market and interest
rate movements correctly.
An exchange-listed option may be closed out only on an exchange which provides a
secondary market for an option of the same series. There is no assurance that a
liquid secondary market on an exchange will exist for any particular option or
at any particular time. If no secondary market were to exist, it would be
impossible to enter into a closing transaction to close out an option position.
As a result, the Fund may be forced to continue to hold, or to purchase at a
fixed price, a security on which it has sold an option at a time when the
Manager believes it is inadvisable to do so.
Higher than anticipated trading activity or order flow or other unforeseen
events might cause The Options Clearing Corporation or an exchange to institute
special trading procedures or restrictions that might restrict the Fund's use of
options. The exchanges have established limitations on the maximum number of
calls and puts of each class that may be held or written by an investor or group
of investors acting in concert. It is possible that the Trust and other clients
of the Manager may be considered such a group. These position limits may
restrict the Fund's ability to purchase or sell options on particular
securities.
Options which are not traded on national securities exchanges may be closed out
only with the other party to the option transaction. For that reason, it may be
more difficult to close out unlisted options than listed options. Furthermore,
unlisted options are not subject to the protection afforded purchasers of listed
options by The Options Clearing Corporation.
Government regulations may also restrict the Fund's use of options.
Futures Contracts
Index Futures Contracts and Options. The Fund may buy and sell options
on stock index futures contracts for hedging purposes. The Fund may also buy and
sell stock index futures contracts to the extent necessary to close out an open
futures option. A stock index futures contract is a contract to buy or sell
units of a stock index at a specified future date at a price agreed upon when
the contract is made. A unit is the current value of the stock index.
The following example illustrates generally the manner in which index futures
contracts operate. The Standard & Poor's 100 Stock Index (the "S&P 100 Index")
is composed of 100 selected common stocks, most of which are listed on the New
York Stock Exchange. The S&P 100 Index assigns relative weightings to the common
stocks included in the Index, and the Index fluctuates with changes in the
market values of those common stocks. In the case of the S&P 100 Index,
contracts are to buy or sell 100 units. Thus, if the value of the S&P 100 Index
were $180, one contract would be worth $18,000 (100 units x $180). The stock
index futures contract specifies that no delivery of the actual stocks making up
the index will take place. Instead, settlement in cash must occur upon the
termination of the contract, with the settlement being the difference between
the contract price and the actual level of the stock index at the expiration of
the contract. For example, if the Fund enters into a futures contract to buy 100
units of the S&P 100 Index at a specified future date at a contract price of
$180 and the S&P 100 Index is at $184 on that future date, the Fund will gain
$400 (100 units x gain of $4). If the Fund enters into a futures contract to
sell 100 units of the stock index at a specified future date at a contract price
of $180 and the S&P 100 Index is at $182 on that future date, the Fund will lose
$200 (100 units x loss of $2).
Positions in index futures may be closed out only on an exchange or board of
trade which provides a secondary market for such futures.
In order to hedge its investments successfully using futures contracts and
related options, the Fund must invest in futures contracts with respect to
indexes or sub-indexes the movements of which will, in its judgment, have a
significant correlation with movements in the prices of the Fund's securities.
Options on index futures contracts give the purchaser the right, in return for
the premium paid, to assume a position in an index futures contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the period of the option. Upon
exercise of the option, the holder would assume the underlying futures position
and would receive a variation margin payment of cash or securities approximating
the increase in the value of the holder's option position. If an option is
exercised on the last trading day prior to the expiration date of the option,
the settlement will be made entirely in cash based on the difference between the
exercise price of the option and the closing level of the index on which the
futures contract is based on the expiration date. Purchasers of options who fail
to exercise their options prior to the exercise date suffer a loss of the
premium paid.
As an alternative to purchasing and selling call and put options on index
futures contracts, the Fund may purchase and sell call and put options on the
underlying indexes themselves to the extent that such options are traded on
national securities exchanges. Index options are similar to options on
individual securities in that the purchaser of an index option acquires the
right to buy (in the case of a call) or sell (in the case of a put), and the
writer undertakes the obligation to sell or buy (as the case may be), units of
an index at a stated exercise price during the term of the option. Instead of
giving the right to take or make actual delivery of securities, the holder of an
index option has the right to receive a cash "exercise settlement amount." This
amount is equal to the amount by which the fixed exercise price of the option
exceeds (in the case of a put) or is less than (in the case of a call) the
closing value of the underlying index on the date of the exercise, multiplied by
a fixed "index multiplier."
The Fund may purchase or sell options on stock indices in order to close out its
outstanding positions in options on stock indices which it has purchased. The
Fund may also allow such options to expire unexercised.
Compared to the purchase or sale of futures contracts, the purchase of call or
put options on an index involves less potential risk to the Fund because the
maximum amount at risk is the premium paid for the options plus transactions
costs. The writing of a put or call option on an index involves risks similar to
those risks relating to the purchase or sale of index futures contracts.
Although it does not currently intend to do so, the Fund may buy and sell stock
index futures contracts and related options to attempt to increase investment
return, provided that the aggregate initial margins and premiums involved do not
exceed 5% of the fair market value of the Fund's total assets.
Margin Payments. When the Fund purchases or sells a futures contract,
it is required to deposit with its custodian an amount of cash, U.S. Treasury
bills, or other permissible collateral equal to a small percentage of the amount
of the futures contract. This amount is known as "initial margin." The nature of
initial margin is different from that of margin in security transactions in that
it does not involve borrowing money to finance transactions. Rather, initial
margin is similar to a performance bond or good faith deposit that is returned
to the Fund upon termination of the contract, assuming the Fund satisfies its
contractual obligations.
Subsequent payments to and from the broker occur on a daily basis in a process
known as "marking to market." These payments are called "variation margin" and
are made as the value of the underlying futures contract fluctuates. For
example, when the Fund sells a futures contract and the price of the underlying
index rises above the delivery price, the Fund's position declines in value. The
Fund then pays the broker a variation margin payment equal to the difference
between the delivery price of the futures contract and the value of the index
underlying the futures contract. Conversely, if the price of the underlying
index falls below the delivery price of the contract, the Fund's futures
position increases in value. The broker then must make a variation margin
payment equal to the difference between the delivery price of the futures
contract and the value of the index underlying the futures contract.
When the Fund terminates a position in a futures contract, a final determination
of variation margin is made, additional cash is paid by or to the Fund, and the
Fund realizes a loss or a gain. Such closing transactions involve additional
commission costs.
Special Risks of Transactions in Futures Contracts and Related Options
Liquidity Risks. Positions in futures contracts may be closed out only
on an exchange or board of trade which provides a secondary market for such
futures. Although the Fund intends to purchase or sell futures only on exchanges
or boards of trade where there appears to be an active secondary market, there
is no assurance that a liquid secondary market on an exchange or board of trade
will exist for any particular contract or at any particular time. If there is
not a liquid secondary market at a particular time, it may not be possible to
close a futures position at such time and, in the event of adverse price
movements, the Fund would continue to be required to make daily cash payments of
variation margin. However, in the event financial futures are used to hedge
portfolio securities, such securities will not generally be sold until the
financial futures can be terminated. In such circumstances, an increase in the
price of the portfolio securities, if any, may partially or completely offset
losses on the financial futures.
The ability to establish and close out positions in options on futures contracts
will be subject to the development and maintenance of a liquid secondary market.
It is not certain that such a market will develop. Although the Fund generally
will purchase only those options for which there appears to be an active
secondary market, there is no assurance that a liquid secondary market on an
exchange will exist for any particular option or at any particular time. In the
event no such market exists for particular options, it might not be possible to
effect closing transactions in such options, with the result that the Fund would
have to exercise the options in order to realize any profit.
Hedging Risks. There are several risks in connection with the use by
the Fund of futures contracts and related options as a hedging device. One risk
arises because of the imperfect correlation between movements in the prices of
the futures contracts and options and movements in the underlying securities or
index or movements in the prices of the Fund's securities which are the subject
of a hedge. The Manager will, however, attempt to reduce this risk by purchasing
and selling, to the extent possible, futures contracts and related options on
securities and indexes the movements of which will, in its judgment, correlate
closely with movements in the prices of the underlying securities or index and
the Fund's portfolio securities sought to be hedged.
Successful use of futures contracts and options by the Fund for hedging purposes
is also subject to the Manager's ability to predict correctly movements in the
direction of the market. It is possible that, where the Fund has purchased puts
on futures contracts to hedge its portfolio against a decline in the market, the
securities or index on which the puts are purchased may increase in value and
the value of securities held in the portfolio may decline. If this occurred, the
Fund would lose money on the puts and also experience a decline in value in its
portfolio securities. In addition, the prices of futures, for a number of
reasons, may not correlate perfectly with movements in the underlying securities
or index due to certain market distortions. First, all participants in the
futures market are subject to margin deposit requirements. Such requirements may
cause investors to close futures contracts through offsetting transactions which
could distort the normal relationship between the underlying security or index
and futures markets. Second, the margin requirements in the futures markets are
less onerous than margin requirements in the securities markets in general, and
as a result the futures markets may attract more speculators than the securities
markets do. Increased participation by speculators in the futures markets may
also cause temporary price distortions. Due to the possibility of price
distortion, even a correct forecast of general market trends by the Manager
still may not result in a successful hedging transaction over a very short time
period.
Other Risks. The Fund will incur brokerage fees in connection with
their futures and options transactions. In addition, while futures contracts and
options on futures will be purchased and sold to reduce certain risks, those
transactions themselves entail certain other risks. Thus, while the Fund may
benefit from the use of futures and related options, unanticipated changes in
interest rates or stock price movements may result in a poorer overall
performance for the Fund than if it had not entered into any futures contracts
or options transactions. Moreover, in the event of an imperfect correlation
between the futures position and the portfolio position which is intended to be
protected, the desired protection may not be obtained and the Fund may be
exposed to risk of loss.
Temporary Defensive Strategies
At times, the Fund's Manager may judge that economic or market conditions make
pursuing the Fund's basic investment strategy inconsistent with the best
interests of its shareholders. At such times, the Manager may temporarily use
alternative strategies, primarily designed to reduce fluctuations in the values
of the Fund's assets. In implementing these "defensive strategies", the Fund may
invest in cash or cash equivalents, shares of money market investment companies,
commercial paper, zero coupon bonds, repurchase agreements, and other securities
its Manager believes to be consistent with the Fund's best interests.
Investment Restrictions
The Fund has elected to be classified as a diversified series of an open-end
investment company. In addition, the Fund is subject to certain fundamental
policies and restrictions that may not be changed without shareholder approval.
Shareholder approval means approval by the lesser of (i) more than 50% of the
outstanding voting securities of the Trust (or a particular series if a matter
affects just that series), or (ii) 67% or more of the voting securities present
at a meeting if the holders of more than 50% of the outstanding voting
securities of the Trust (or a particular series) are present or represented by
proxy. As a matter of fundamental policy, the Fund may not:
(1) borrow money, except as permitted under the 1940 Act and as interpreted or
modified by regulatory authority having jurisdiction, from time to time;
(2) issue senior securities, except as permitted under the 1940 Act and as
interpreted or modified by regulatory authority having jurisdiction, from
time to time;
(3) engage in the business of underwriting securities issued by others, except
to the extent that the Fund may be deemed to be an underwriter in
connection with the disposition of portfolio securities;
(4) purchase or sell real estate, which term does not include securities of
companies which deal in real estate or mortgages or investments secured by
real estate or interests therein, except that the Fund reserves freedom of
action to hold and to sell real estate acquired as a result of the Fund's
ownership of securities;
(5) purchase physical commodities or contracts relating to physical
commodities; or
(6) make loans except as permitted under the 1940 Act and as interpreted or
modified by regulatory authority having jurisdiction, from time to time.
Nonfundamental policies may be changed by the Trustees of the Trust
and without shareholder approval. As a matter of nonfundamental
policy, the Fund does not currently intend to:
borrow money in an amount greater than one-third of its total assets,
except (i) for temporary or emergency purposes and (ii) by engaging in
reverse repurchase agreements, dollar rolls, or other investments or
transactions described in the Fund's registration statement which may
be deemed to be borrowings;
(2) enter into either of reverse repurchase agreements or dollar rolls in an
amount greater than 5% of its total assets;
(3) purchase securities on margin, except (i) in connection with arbitrage
transactions, (ii) for margin deposits in connection with short sales,
futures contracts, options or other permitted investments, and (iii) that
the Fund may obtain such short-term credits as may be necessary for the
clearance of securities transactions;
(4) purchase options, unless the aggregate premiums paid on all such options
held by the Fund at any time do not exceed 20% of its total assets; or sell
put options, if as a result, the aggregate value of the obligations
underlying such put options would exceed 50% of its total assets;
(5) enter into futures contracts or purchase options thereon for other than
bona fide hedging purposes unless immediately after the purchase, the value
of the aggregate initial margin with respect to such futures contracts
entered into on behalf of the Fund and the premiums paid for such options
on futures contracts does not exceed 5% of the fair market value of the
Fund's total assets; provided that in the case of an option that is
in-the-money at the time of purchase, the in-the-money amount may be
excluded in computing the 5% limit;
(6) purchase warrants if as a result, such securities, taken at the lower of
cost or market value, would represent more than 5% of the value of the
Fund's total assets (for this purpose, warrants acquired in units or
attached to securities will be deemed to have no value); and
(7) lend portfolio securities in an amount greater than one-third of its total
assets.
Whenever an investment objective, policy or restriction set forth in the
Prospectus or this Statement of Additional Information states a maximum
percentage of assets that may be invested in any security or other asset or
describes a policy regarding quality standards, such percentage limitation or
standard shall, unless otherwise indicated, apply to the Fund only at the time a
transaction is entered into. Accordingly, if a percentage limitation is adhered
to at the time of investment, a later increase or decrease in the percentage
which results from circumstances not involving any affirmative action by the
Fund, such as a change in market conditions or a change in the Fund's asset
level or other circumstances beyond the Fund's control, will not be considered a
violation.
ORGANIZATION OF THE FUND
The Fund is a diversified series of The Weiss Fund, an open-end management
investment company registered under the 1940 Act. The Trust was organized on
August 10, 1995 as a Massachusetts business trust under the name Weiss Treasury
Fund. The Trust's name was changed in April 1999. The Trust is comprised of two
series: Weiss Treasury Only Money Market Fund and Weiss Treasury Bond Fund, the
latter of which did not commence operations and has been redesignated as the
Fund. The Board of Trustees of the Trust oversees the business affairs of the
Trust and is responsible for significant decisions relating to the Fund's
investment objective and policies. The Trustees delegate the day-to-day
management of the Fund to the officers of the Trust.
The Trust's authorized capital consists of an unlimited number of shares of
beneficial interest, $.01 par value, all of which have equal rights as to
voting, dividends and liquidation. The Trustees have the authority to issue two
or more series of shares and to designate the relative rights and preferences as
between the different series. The Trustees, in their discretion, may authorize
the division of shares of a series into different classes, permitting shares of
different classes to be distributed by different methods. Although shareholders
of different classes of a series would have an interest in the same portfolio of
assets, shareholders of different classes may bear different expenses in
connection with different methods of distribution. The Trustees have authorized
the establishment and designation of two classes of shares of the Fund, Class A
and Class S shares. This SAI relates to the Fund's Class A shares. All shares
issued and outstanding will be fully paid and non-assessable by the Trust, and
redeemable as described in this Statement of Additional Information and in the
Prospectus.
On February 23, 1995, the SEC adopted Rule 18f-3 under the 1940 Act, which
permits a registered open-end investment company to issue multiple classes of
shares in accordance with a written plan approved by the investment company's
board of directors/trustees and filed with the SEC. At a meeting held on April
27, 1999, the Board adopted a Rule 18f-3 plan on behalf of the Fund. The key
features of the Rule 18f-3 plan are as follows: (i) shares of each class of the
Fund represent an equal pro rata interest in the Fund and generally have
identical voting, dividend, liquidation, and other rights, preferences, powers,
restrictions, limitations, qualifications, terms and conditions, except that
each class bears certain class-specific expenses and has separate voting rights
on certain matters that relate solely to that class or in which the interests of
shareholders of one class differ from the interests of shareholders of another
class and (ii) subject to certain limitations described in the Prospectus, Class
A shares of the Fund may be exchanged for shares of the same class of another
Weiss fund.
The assets of the Trust received for the issue or sale of the shares of each
series (or class thereof) and all income, earnings, profits and proceeds
thereof, subject only to the rights of creditors, are specifically allocated to
such series (or class thereof) and constitute the underlying assets of such
series (or class). The underlying assets of each series (or class thereof) are
segregated on the books of account, and are to be charged with the liabilities
in respect to such series (or class) and with a proportionate share of the
general liabilities of the Trust. If a series were unable to meet its
obligations, the assets of all other series may in some circumstances be
available to creditors for that purpose, in which case the assets of such other
series could be used to meet liabilities which are not otherwise properly
chargeable to them. Expenses with respect to any two or more series are to be
allocated in proportion to the asset value of the respective series except where
allocations of direct expenses can otherwise be fairly made. The officers of the
Trust, subject to the general supervision of the Trustees, have the power to
determine which liabilities are allocable to a given series, or which are
general or allocable to two or more series. In the event of the dissolution or
liquidation of the Trust or any series, the holders of the shares of any series
are entitled to receive as a class the underlying assets of such shares
available for distribution to shareholders.
Shares of each class of each series of the Trust entitle their holders to one
vote per share; however, separate votes are taken by each series on matters
affecting an individual series. Generally, all classes of shares of a series
will vote together, except with respect to a distribution plan applicable to a
class of that series or when a class vote is required by the 1940 Act. A change
in investment policy for a series would, for example, be voted upon only by
shareholders of the series involved. Additionally, approval of the investment
advisory agreement is a matter to be determined separately by each series.
Approval by the shareholders of one series is effective as to that series
whether or not enough votes are received from the shareholders of the other
series to approve such agreement as to the other series.
The Declaration of Trust provides that obligations of the Trust are not binding
upon the Trustees individually but only upon the property of the Trust, that the
Trustees and officers will not be liable for errors of judgment or mistakes of
fact or law, and that the Trust will indemnify its Trustees and officers against
liabilities and expenses incurred in connection with litigation in which they
may be involved because of their offices with the Trust, except if it is
determined, in the manner provided in the Declaration of Trust, that they have
not acted in good faith in the reasonable belief that their actions were in the
best interests of the Trust. However, nothing in the Declaration of Trust
protects or indemnifies a Trustee or officer against any liability to which he
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of his
office.
The Fund is not required to and does not currently intend to hold annual
shareholder meetings, although special meetings may be called for purposes such
as electing or removing Trustees, changing fundamental investment policies, or
approving certain contracts. Shareholders will be assisted in communicating with
other shareholders in connection with removing a Trustee as if Section 16(c) of
the 1940 Act were applicable.
<PAGE>
TRUSTEES AND OFFICERS
The Trustees and Officers of the Trust, their business addresses and their
principal occupations during the past five years are as follows:
<TABLE>
<S> <C> <C>
Principal Occupation(s)
Name, Address and Age Position with the Trust during past 5 years
- --------------------- ----------------------- -------------------
John N. Breazeale(1), 52 President and Chairman of President, Weiss Money Management,
Board of Trustees* Inc. (1995 - present). Director of
Investments, Weiss Money Management,
Inc. (1994 - 1995). Portfolio
Manager, Mackenzie Investment
Management Inc. (1988 - 1994).
David D. Marky, 32 Treasurer Vice President and Director of
103 Bellevue Parkway Accounting, PFPC Inc. (1996
Wilmington, DE 19809 -present). Assistant Vice President
and Accounting Conversion Manager,
PFPC Inc. (1992 - 1996).
Sharon A. Parker(1), 38 Secretary Vice President, Weiss Money
Management, Inc. (November 1993 -
present). Director of Client
Relations, Weiss Money Management,
Inc. (April 1990 - November 1993).
Joseph R. Fleming, 44 Assistant Secretary Partner, Dechert Price & Rhoads
Ten Post Office Square - South (1990 - present).
Boston, MA 02109
Martin D. Weiss(1), 53 Trustee* Editor of "Safe Money Report";
President, Weiss Group, Inc. (1971 -
present); President, Weiss Money
Management, Inc. (November 1980 -
April 1995).
Esther S. Gordon, 57 Trustee Retired. Formerly Assistant Manager
422 Woodview Circle with Southern Bell (1965 - 1994).
Palm Beach Gardens, FL 33410
Robert Z. Lehrer, 66 Trustee President, Wyndmoor Industries Inc.
P.O. Box 1679 (1957 - present). Registered
107 Commodore Drive securities broker.
Jupiter, FL 33468-1679
Donald Wilk, 61 Trustee President, Donald Wilk Corporation
6044 Petaluma Drive (1990 - present). Computer sales and
Boca Raton, FL 33433 credit card processing.
(1) 4176 Burns Road
Palm Beach Gardens, FL 33410
*Indicates persons who are "interested" Trustees of the Trust.
</TABLE>
<PAGE>
MANAGEMENT COMPENSATION
Fiscal Year Ended December 31, 1998*
<TABLE>
<S> <C> <C> <C> <C>
Pension or
Retirement Total Compensation
benefits Accrued from Trust and
Aggregate as Part of Trust Estimated Annual Fund Complex Paid
Compensation Expenses Benefits Upon to Trustee
Name (Position) from Trust Retirement
John N. Breazeale None None None None
(President and Chairman)
David D. Marky** None None None None
(Treasurer)
Sharon A. Parker None None None None
(Secretary)
Joseph R. Fleming None None None None
(Assistant Secretary)
Esther S. Gordon $500 None None $500
(Trustee)
Robert Z. Lehrer $500 None None $500
(Trustee)
Donald Wilk $500 None None $500
(Trustee)
Martin D. Weiss None None None None
(Trustee)
</TABLE>
* For the fiscal year ended December 31, 1998, each non-interested Trustee
received an annual fee of $500 plus reimbursement for out-of-pocket expenses.
During such fiscal year the Trust was comprised of three series: Weiss Treasury
Only Money Market Fund, Weiss Intermediate Treasury Fund and Weiss Treasury Bond
Fund, the latter of which had not commenced operations and has since been
redesignated as the Fund. On January 31, 1998, Weiss Intermediate Treasury Fund
was dissolved and liquidated. For the fiscal year ended December 31, 1999, each
non-interested Trustee will receive an annual fee of $2,000 plus reimbursement
for out-of-pocket expenses for serving in that capacity.
** Mr. Marky replaced Neal J. Andrews who resigned as Treasurer of the Trust
effective April 30, 1998.
INVESTMENT ADVISORY AND OTHER SERVICES
Investment Manager
As stated in the Prospectus, the Trust, on behalf of the Fund, has entered into
an Investment Advisory Agreement with the Manager, Weiss Money Management, Inc.
Under the Advisory Agreement, the Manager provides continuing investment
management for the Fund consistent with the Fund's investment objective,
policies and restrictions and determines what securities shall be purchased for
or sold by the Fund. The Manager is controlled (as that term is defined in the
1940 Act) by Martin D. Weiss, its sole director and shareholder.
The Fund has agreed to compensate the Manager for its services by the monthly
payment of a fee at the annual rate of 1.50% of the Fund's average net assets.
The Manager is responsible for fees and expenses of Trustees, officers and
employees of the Trust who are affiliated with the Manager. The Fund is
responsible for all of its other expenses, including fees and expenses incurred
in connection with membership in investment company organizations; brokers'
commissions; payments for portfolio pricing services to a pricing agent, if any;
legal, auditing and accounting expenses; taxes and governmental fees; transfer
agent fees; the cost of preparing share certificates or other share-related
expenses, such as expenses of issuance, sale, redemption or repurchase of shares
of beneficial interest; the expenses of and fees for registering or qualifying
securities for sale; the fees and expenses of Trustees, officers and employees
of the Trust who are not affiliated with the Manager; the cost of printing and
distributing reports and notices to shareholders; and the fees and disbursements
of custodians. The Fund is also responsible for expenses of shareholder meetings
and expenses incurred in connection with litigation proceedings and claims and
the legal obligation it may have to indemnify its officers and Trustees with
respect thereto.
Sub-Adviser
Harvest Advisors, Inc., 11612 Bee Cave Road, Suite 110, Austin, Texas 78733 has
been retained by the Manager to provide sub-advisory services to the Fund. Under
its agreement with the Manager, the Sub-Adviser renders continuous investment
advice to the Manager with respect to investment and reinvestment of the Fund's
assets in various securities, based upon computer models constructed in
accordance with the Fund's investment objective and policies; however, the
Manager, in the exercise of its independent judgment, retains ultimate
discretion regarding and responsibility for the implementation of transactions
in seeking to achieve the Fund's objective. The Manager pays the Sub-Adviser as
compensation for Sub-Adviser's services to the Fund, a quarterly fee in arrears
at the rate of 10% of all fees payable during the same quarter by the Fund to
the Adviser for investment advisory services provided pursuant to the Advisory
Agreement, net of any fee waivers or expense reimbursements made by the Adviser
with respect to the Fund relating to such quarter. The Manager pays the
Sub-Adviser this quarterly fee out of the investment advisory fees it receives
from the Fund. The Sub-Adviser is controlled (as that term is defined in the
1940 Act) by Anthony L. Sagami, its sole shareholder and officer.
Distributor
The Fund's shares are sold on a continuous, best efforts basis by Weiss Funds,
Inc. (the "Distributor"), 4176 Burns Road, Palm Beach Gardens, Florida 33410, a
registered broker-dealer and wholly-owned subsidiary of the Manager.
Rule 12b-1 Distribution Plan
The Trust has adopted on behalf of the Fund, in accordance with Rule 12b-1 under
the 1940 Act, a Rule 12b-1 distribution plan pertaining to the Fund's Class S
shares (the "Plan"). In adopting the Plan, a majority of the "independent"
Trustees have concluded in accordance with the requirements of Rule 12b-1 that
there is a reasonable likelihood that the Plan will benefit the Fund and its
shareholders. The Trustees of the Trust believe that the Plan should result in
greater sales and/or fewer redemptions of the Fund's shares, although it is
impossible to know for certain the level of sales and redemptions of the Fund's
shares in the absence of the Plan or under an alternative distribution
arrangement.
Under the Plan, the Fund pays the Distributor a fee relating to the distribution
and/or service of the Fund's Class S shares, accrued daily and paid monthly, at
the annual rate of 0.25% of the average daily net assets attributable to those
Class S shares. The Distributor may reallow to dealers all or a portion of the
service and distribution fees as the Distributor may determine from time to
time. The fee compensates the Distributor for expenses incurred in connection
with activities primarily intended to result in the sale of the Fund's Class S
shares and/or for account maintenance and personal service to shareholders,
including, but not limited to, compensation to broker-dealers that have entered
into a dealer and/or shareholder or administrative services agreement with the
Distributor; compensation to and expenses of employees of the Distributor who
engage in or support distribution and/or shareholder servicing of a Fund's Class
S shares; compensation to banks, investment advisers, financial institutions and
other entities (including the Distributor itself) for rendering certain
shareholder liaison and/or administrative services; telephone expenses; interest
expenses; printing of prospectuses and reports for other than existing
shareholders; preparation, printing and distribution of sales literature and
advertising materials; and profit on the foregoing. Pursuant to the Class S
Plan, the Distributor may include interest, carrying or other finance charges in
its calculation of distribution expenses, if not prohibited from doing so
pursuant to an order of or a regulation adopted by the SEC.
Among other things, the Plan provides that (1) the Distributor will submit to
the Board at least quarterly, and the Trustees will review, written reports
regarding all amounts expended under the Plan and the purposes for which such
expenditures were made; (2) the Plan will continue in effect only so long as
such continuance is approved at least annually, and any material amendment
thereto is approved by the votes of a majority of the Board, including the
"independent" Trustees, cast in person at a meeting called for that purpose; (3)
payments by the Fund under the Plan shall not be materially increased without
the affirmative vote of the holders of a majority of the outstanding shares of
Class S of the Fund; and (4) while the Plan is in effect, the selection and
nomination of "independent" Trustees shall be committed to the discretion of the
Trustees who are not "interested persons" of the Trust.
The Plan may be terminated at any time, without payment of any penalty, by vote
of a majority of the "independent" Trustees, or by vote of a majority of the
outstanding voting securities of Class S of the Fund.
Administrator
PFPC Inc., Bellevue Park Corporate Center, 103 Bellevue Parkway, Wilmington,
Delaware 19809 ("PFPC"), performs various administrative and accounting services
for the Fund. These services include maintenance of books and records,
preparation of certain governmental filings and shareholder reports and
computation of net asset values and dividend distributions. For its
administrative services, PFPC receives a fee, payable monthly, based upon the
following: .10% of the first $200 million of average net assets; .075% of the
next $200 million of average net assets; .05% of the next $200 million of
average net assets; and .03% of average net assets in excess of $600 million,
plus any out-of-pocket expenses.
Transfer Agent, Dividend Disbursing Agent and Custodian
PFPC serves as the Fund's transfer agent, dividend disbursing agent and
registrar.
PFPC Trust Company, 400 Bellevue Parkway, Wilmington, Delaware 19899, serves as
custodian for the Fund's portfolio securities and cash.
PERFORMANCE INFORMATION
From time to time, quotations of the Fund's performance may be included in
advertisements, sales literature or reports to shareholders or prospective
investors. Performance information will be calculated separately for each class
of the Fund. Different fees and expenses applicable to each of the classes,
including Rule 12b-1 fees applicable to Class S shares, will affect the
performance of those classes. The performance figures are calculated in the
following manners:
Average Annual Total Return
Average annual total return is the average annual compound rate of return for
periods of one year, five years, and ten years, all ended on the last day of a
recent calendar quarter. Average annual total return quotations reflect changes
in the price of the Fund's shares and assume that all dividends and capital
gains distributions during the respective periods were reinvested in additional
shares of the same class of the Fund. Average annual total return for the Fund's
Class A and Class S shares is calculated by finding the average annual compound
rates of return of a hypothetical investment over such periods according to the
following formula (average annual total return is then expressed as a
percentage):
T = (ERV/P)1/n - 1
Where:
P = a hypothetical initial investment of $1,000,
adjusted to deduct the applicable sales charge for Class
A shares.
T = average annual total return.
n = number of years.
ERV = ending redeemable value:
ERV is the value, at the end of the applicable period, of a hypothetical
$1,000 investment made at the beginning of the applicable period.
The Fund may, from time to time, include in advertisements, promotional
literature or reports to shareholders or prospective investors total return data
that are not calculated according to the formula set forth above
("Non-Standardized Return"). With respect to Class A shares, sales charges are
not taken into account in calculating Non-Standardized Return; a sales charge,
if deducted, would reduce the return.
Cumulative Total Return
Cumulative total return is the cumulative rate of return on a hypothetical
initial investment of $1,000 for a specified period. Cumulative total return
quotations reflect changes in the price of the Fund's shares and assume that all
dividends and capital gains distributions during the period were reinvested in
additional shares of the same class of the Fund. Cumulative total return for the
Fund's Class A shares is calculated by finding the cumulative rates of return of
a hypothetical investment over such periods according to the following formula
(cumulative total return is then expressed as a percentage):
C = (ERV/P) - 1
Where:
C = Cumulative Total Return adjusted to deduct the applicable sales
charge for Class A shares.
P = a hypothetical initial investment of $1,000.
ERV = ending redeemable value:
ERV is the value, at the end of the applicable period, of a hypothetical
$1,000 investment made at the beginning of the applicable period.
Total Return
Total Return is the rate of return on an investment for a specified period of
time calculated in the same manner as cumulative total return.
Capital Change
Capital change measures the return from invested capital including reinvested
capital gains distributions. Capital change does not include the reinvestment of
income dividends.
Comparison of Portfolio Performance
A comparison of the quoted non-standard performance offered for various
investments is valid only if performance is calculated in the same manner. Since
there are different methods of calculating performance, investors should
consider the effects of the methods used to calculate performance when comparing
performance of the Fund with performance quoted with respect to other investment
companies or types of investments.
In connection with communicating its performance to current or prospective
shareholders, the Fund also may compare these figures to the performance of
unmanaged indices which may assume reinvestment of dividends or interest but
generally do not reflect deductions for administrative and management costs.
Examples include, but are not limited to the Dow Jones Industrial Average, the
Consumer Price Index, Standard & Poor's 500 Composite Stock Price Index (S&P
500), the NASDAQ OTC Composite Index, the NASDAQ Industrials Index, the Russell
2000 Index, and the statistics published by the Small Business Administration.
From time to time, in advertising and marketing literature, the Fund's
performance may be compared to the performance of broad groups of mutual funds
with similar investment goals, as tracked by independent organizations such as,
Investment Company Data, Inc. ("ICD"), Lipper Analytical Services, Inc.
("Lipper"), CDA Investment Technologies, Inc. ("CDA"), Morningstar, Inc., Value
Line Mutual Fund Survey and other independent organizations. When these
organizations' tracking results are used, the Fund will be compared to the
appropriate fund category, that is, by fund objective and portfolio holdings, or
to the appropriate volatility grouping, where volatility is a measure of a
fund's risk.
From time to time, in marketing and other Fund literature, Trustees and officers
of the Fund, the Fund's portfolio manager, or members of the portfolio
management team may be depicted and quoted to give prospective and current
shareholders a better sense of the outlook and approach of those who manage the
Fund. In addition, the assets that the Manager has under management in various
geographical areas may be quoted in advertising and marketing materials.
Statistical and other information, as provided by the Social Security
Administration, may be used in marketing materials pertaining to retirement
planning in order to estimate future payouts of social security benefits.
Estimates may be used on demographic and economic data.
Marketing and other Fund literature may include a description of the potential
risks and rewards associated with an investment in the Fund. The description may
include a "risk/return spectrum" which compares the Fund to other Weiss funds or
broad categories of funds, such as money market, bond or equity funds, in terms
of potential risks and returns. Money market funds are designed to maintain a
constant $1.00 share price and have a fluctuating yield. Share price, yield and
total return of a bond fund will fluctuate. The share price and return of an
equity fund also will fluctuate. The description may also compare the Fund to
bank products, such as certificates of deposit. Unlike mutual funds,
certificates of deposit are insured up to $100,000 by the U.S.
Government and offer a fixed rate of return.
Because bank products guarantee the principal value of an investment and money
market funds seek stability of principal, these investments are considered to be
less risky than investments in either bond or equity funds, which may involve
the loss of principal. However, all long-term investments, including investments
in bank products, may be subject to inflation risk, which is the risk of erosion
of the value of an investment as prices increase over a long time period. The
risk/returns associated with an investment in bond or equity funds also will
depend upon currency exchange fluctuation.
A risk/return spectrum generally will position the various investment categories
in the following order: bank products, money market funds, bond funds and equity
funds. Shorter-term bond funds generally are considered less risky and offer the
potential for less return than longer-term bond funds. The same is true of
domestic bond funds relative to international bond funds, and bond funds that
purchase higher quality securities relative to bond funds that purchase lower
quality securities. Growth and income equity funds are generally considered to
be less risky and offer the potential for less return than growth funds. In
addition, international equity funds usually are considered more risky than
domestic equity funds but generally offer the potential for greater return.
Risk/return spectrums also may depict funds that invest in both domestic and
foreign securities or a combination of bond and equity securities.
Evaluation of Fund performance made by independent sources may also be used in
advertisements concerning the Fund, including reprints of, or selections from,
editorials or articles about the Fund.
BUYING SHARES
Share purchases are executed at the net asset value next calculated, less any
applicable front-end sales charge for Class A shares, after a purchase order is
received by the Fund's transfer agent in good order as described under "Opening
an Account" and "Adding to Your Investment" in the Fund's Class A Prospectus and
"Buying Shares" in the Fund's Class S Prospectus. Purchases are made in full and
fractional shares.
With respect to the Fund's Class A shares, a front-end sales charge of 1.50% is
assessed on purchases of Fund shares, subject to a maximum of $75 per account.
Broker-dealers other than the Distributor may assess additional transaction
charges in connection with purchases of the Fund's Class A shares. The front-end
sales charge may be waived in connection with certain purchases as described in
the Fund's Class A Prospectus under "Opening an Account - Waiver of Front-End
Sales Charge."
With respect to the Fund's Class S shares, broker-dealers or institutions may
assess additional transaction charges in connection with purchases of Fund
shares.
Individual Retirement Accounts ("IRAs"), Roth IRAs and Education IRAs. Shares of
the Trust may be used as a funding medium for retirement plans, including IRAs,
Roth IRAs and Education IRAs. Eligible individuals may establish an IRA, Roth
IRA or Education IRA by adopting a custodial account available from PNC Bank,
National Association, which may impose a charge for establishing and/or
maintaining the account.
REDEMPTIONS
The Trust may suspend the right of redemption of shares of the Fund and may
postpone payment: (i) for any period during which the New York Stock Exchange
(the "Exchange") is closed, other than customary weekend and holiday closings,
or during which trading on the Exchange is restricted, (ii) when the SEC
determines that a state of emergency exists which may make payment or transfer
not reasonably practicable, (iii) as the SEC may by order permit for the
protection of the Shareholders of the Trust, or (iv) at any other time when the
Trust may, under applicable laws and regulations, suspend payment on the
redemption of its shares.
The Trust agrees to redeem shares of the Fund solely in cash up to the lesser of
$250,000 or 1% of the net asset value of the Fund during any 90-day period for
any one shareholder. The Trust reserves the right to pay other redemptions,
either total or partial, by a distribution in kind of securities (instead of
cash) from the Fund's portfolio, although the Trust has no current intention to
do so. The securities distributed in such a distribution would be valued at the
same value as that assigned to them in calculating the net asset value of the
shares being redeemed. If a shareholder receives a distribution in kind, he or
she should expect to incur transaction costs when he or she converts the
securities to cash.
DIVIDENDS AND DISTRIBUTIONS
The Fund intends to distribute to shareholders substantially all of its net
investment income annually. Net investment income for the Fund consists of all
income accrued on the Fund's assets, less all actual and accrued expenses. The
Fund intends to distribute to shareholders net realized capital gains after
utilization of capital loss carryforwards, if any, at least annually.
Distributions by the Fund are reinvested in additional shares of the Fund or
paid in cash at the election of the shareholder. If no election is made, all
distributions will be reinvested in additional Fund shares. If an investment is
in the form of a retirement plan, all dividends and capital gains distributions
must be reinvested into the shareholder's account. Distributions are generally
taxable, whether received in cash or reinvested. Exchanges among the Weiss funds
are also taxable events.
TAXES
The following is a general discussion of certain tax rules thought to be
applicable with respect to the Fund. It is merely a summary and is not an
exhaustive discussion of all possible situations or of all potentially
applicable taxes. Accordingly, shareholders and prospective shareholders should
consult a competent tax adviser about the tax consequences to them of investing
in the Fund.
General. The Fund intends to qualify annually and elect to be treated as a
regulated investment company under Subchapter M of the Code. To qualify, the
Fund must, among other things, (a) derive in each taxable year at least 90% of
its gross income from dividends, interest, payments with respect to securities
loans, gains from the sale or other disposition of stock, securities, or foreign
currencies, or other income (including but not limited to gains from options,
futures, and forward contracts) derived with respect to its business of
investing in such stock, securities or currencies; and (b) diversify its
holdings so that, at the end of each fiscal quarter, (i) at least 50% of the
market value of the Fund's assets is represented by cash, U.S. Government
securities, the securities of other regulated investment companies, and other
securities, with such other securities of any one issuer limited for purposes of
this calculation to an amount not greater than 5% of the Fund's assets and 10%
of the outstanding voting securities of such issuer, and (ii) not more than 25%
of the value of its total assets is invested in securities of any other issuer
(other than U.S. Government securities and the securities of other regulated
investment companies).
As a regulated investment company, the Fund generally will not be subject to
U.S. Federal income tax on its investment company taxable income (which
includes, among other items, dividends, interest and net short-term capital
gains in excess of net long-term capital losses) and net capital gains (net
long-term capital gains in excess of net short-term capital losses) that it
distributes to shareholders, if at least 90% of its investment company taxable
income for the taxable year is distributed. The Fund intends to distribute such
income.
Amounts not distributed on a timely basis in accordance with a calendar year
distribution requirement are subject to a nondeductible 4% excise tax. To avoid
that tax, the Fund must distribute during each calendar year an amount equal to
(1) at least 98% of its ordinary income (not taking into account any capital
gains or losses) for the calendar year, (2) at least 98% of its capital gains in
excess of its capital losses (adjusted for certain ordinary losses) for the
twelve-month period ending on October 31 of the calendar year, and (3) all
ordinary income and capital gains for previous years that were not distributed
during such years. A distribution will be treated as paid on December 31 of the
current calendar year if it is declared by the Fund in October, November or
December of that year to shareholders of record at some date in such a month and
paid by the Fund during January of the following calendar year. Such
distributions will be taken into account by shareholders in the calendar year
the distributions are declared, rather than the calendar year in which the
distributions are received.
Distributions. Distributions of investment company taxable income are taxable to
a U.S. shareholder as ordinary income, whether paid in cash or shares.
Distributions of net capital gains, if any, which are designated as capital gain
dividends are taxable to shareholders as long-term capital gains, whether paid
in cash or in shares, and regardless of how long the shareholder has held the
Fund's shares. Such distributions are not eligible for the dividends received
deduction. The tax treatment of distributions from the Fund is the same whether
the dividends are received in cash or in additional shares. Shareholders
receiving distributions in the form of newly issued shares will have a cost
basis in each share received equal to the net asset value of a share of the Fund
on the reinvestment date. A distribution of an amount in excess of the Fund's
current and accumulated earnings and profits will be treated by a shareholder as
a return of capital which is applied against and reduces the shareholder's basis
in his or her shares. To the extent that the amount of any such distribution
exceeds the shareholder's basis in his or her shares, the excess will be treated
by the shareholder as gain from a sale or exchange of the shares. Shareholders
will be notified annually as to the U.S. Federal tax status of distributions and
shareholders receiving distributions in the form of newly issued shares will
receive a report as to the net asset value of the shares received.
If shares of the Fund are held in a tax-deferred retirement plan account, income
and gain will not be taxable each year. Instead, the taxable portion of amounts
held in a retirement plan account generally will be subject to tax only when
distributed from that account, and all of those taxable amounts will be taxable
as ordinary income.
If the net asset value of shares is reduced below a shareholder's cost as a
result of a distribution by the Fund, such distribution will be taxable even
though it represents a return of invested capital. Investors should be careful
to consider the tax implications of buying shares just prior to a distribution.
The price of shares purchased at this time may reflect the amount of the
forthcoming distribution. Those purchasing just prior to a distribution will
receive a distribution which will nevertheless be taxable to them.
Disposition of Shares. Upon a redemption, sale or exchange of his or her shares,
a shareholder will realize a taxable gain or loss depending upon his or her
basis in the shares. Such gain or loss will be treated as capital gain or loss
if the shares are capital assets in the shareholder's hands and, if so, will be
long-term or short-term, depending upon the shareholder's holding period for the
shares. Any loss realized on a redemption, sale or exchange will be disallowed
to the extent the shares disposed of are replaced (including through
reinvestment of dividends) within a period of 61 days beginning 30 days before
and ending 30 days after the shares are disposed of. In such a case, the basis
of the shares acquired will be adjusted to reflect the disallowed loss. Any loss
realized by a shareholder on the sale of Fund shares held by the shareholder for
six months or less will be treated as a long-term capital loss to the extent of
any distributions of net capital gains received or treated as having been
received by the shareholder with respect to such shares.
Discount. Certain of the bonds purchased by the Fund may be treated as bonds
that were originally issued at a discount. Original issue discount represents
interest for Federal income tax purposes and can generally be defined as the
difference between the price at which a security was issued and its stated
redemption price at maturity. Original issue discount is treated for Federal
income tax purposes as income earned by the Fund even though the Fund doesn't
actually receive any cash, and therefore is subject to the distribution
requirements of the Code. The amount of income earned by the Fund generally is
determined on the basis of a constant yield to maturity which takes into account
the semiannual compounding of accrued interest.
In addition, some of the bonds may be purchased by the Fund at a discount which
exceeds the original issue discount on such bonds, if any. This additional
discount represents market discount for Federal income tax purposes. The gain
realized on the disposition of any bond having market discount will be treated
as ordinary income to the extent it does not exceed the accrued market discount
on such bond (unless the Fund elects for all its debt securities acquired after
the first day of the first taxable year to which the election applies having a
fixed maturity date of more than one year from the date of issue to include
market discount in income in tax years to which it is attributable). Generally,
market discount accrues on a daily basis for each day the bond is held by the
Fund at a constant rate over the time remaining to the bond's maturity.
Hedging Transactions. The taxation of equity options and over-the-counter
options on debt securities is governed by Code section 1234. Pursuant to Code
section 1234, the premium received by the Fund for selling a put or call option
is not included in income at the time of receipt. If the option expires, the
premium is short-term capital gain to the Fund. If the Fund enters into a
closing transaction, the difference between the amount paid to close out its
position and the premium received is short-term capital gain or loss. If a call
option written by the Fund is exercised, thereby requiring the Fund to sell the
underlying security, the premium will increase the amount realized upon the sale
of such security and any resulting gain or loss will be a capital gain or loss,
and will be long-term or short-term depending upon the holding period of the
security. With respect to a put or call option that is purchased by the Fund, if
the option is sold, any resulting gain or loss will be a capital gain or loss,
and will be long-term or short-term, depending upon the holding period of the
option. If the option expires, the resulting loss is a capital loss and is
long-term or short-term, depending upon the holding period of the option. If the
option is exercised, the cost of the option, in the case of a call option, is
added to the basis of the purchased security and, in the case of a put option,
reduces the amount realized on the underlying security in determining gain or
loss.
Certain options and futures contracts in which the Fund may invest are "section
1256 contracts." Gains or losses on section 1256 contracts generally are
considered 60% long-term and 40% short-term capital gains or losses. Also,
section 1256 contracts held by the Fund at the end of each taxable year (and,
generally, for purposes of the 4% excise tax, on October 31 of each year) are
"marked-to-market" (that is, treated as sold at fair market value), resulting in
unrealized gains or losses being treated as though they were realized.
Generally, the hedging transactions undertaken by the Fund may result in
"straddles" for U.S. federal income tax purposes. The straddle rules may affect
the character of gains (or losses) realized by the Fund. In addition, losses
realized by the Fund on positions that are part of a straddle may be deferred
under the straddle rules, rather than being taken into account in calculating
the taxable income for the taxable year in which the losses are realized.
Because only a few regulations implementing the straddle rules have been
promulgated, the tax consequences to the Fund of engaging in hedging
transactions are not entirely clear. Hedging transactions may increase the
amount of short-term capital gain realized by the Fund which is taxed as
ordinary income when distributed to shareholders.
The Fund may make one or more of the elections available under the Code which
are applicable to straddles. If the Fund makes any of the elections, the amount,
character and timing of the recognition of gains or losses from the affected
straddle positions will be determined under rules that vary according to the
election(s) made. The rules applicable under certain of the elections may
operate to accelerate the recognition of gains or losses from the affected
straddle positions.
Because the straddle rules may affect the character of gains or losses, defer
losses and/or accelerate the recognition of gains or losses from the affected
straddle positions, the amount which may be distributed to shareholders, and
which will be taxed to them as ordinary income or long-term capital gain, may be
increased or decreased as compared to a fund that did not engage in such hedging
transactions.
Notwithstanding any of the foregoing, the Fund may recognize gain (but not loss)
from a constructive sale of certain "appreciated financial positions" if the
Fund enters into a short sale, offsetting notional principal contract or forward
contract transaction with respect to the appreciated position or substantially
identical property. Appreciated financial positions subject to this constructive
sale treatment are interests (including options and forward contracts and short
sales) in stock, partnership interests, certain actively traded trust
instruments and certain debt instruments. Constructive sale treatment does not
apply to certain transactions closed in the 90-day period ending with the 30th
day after the close of the taxable year, if certain conditions are met.
Unless certain constructive sale rules (discussed more fully above) apply, the
Fund will not realize gain or loss on a short sale of a security until it closes
the transaction by delivering the borrowed security to the lender. Pursuant to
Code Section 1233, all or a portion of any gain arising from a short sale may be
treated as short-term capital gain, regardless of the period for which the Fund
held the security used to close the short sale. In addition, the Fund's holding
period of any security which is substantially identical to that which is sold
short may be reduced or eliminated as a result of the short sale. Recent
legislation, however, alters this treatment by treating certain short sales
against the box and other transactions as a constructive sale of the underlying
security held by the Fund, thereby requiring current recognition of gain, as
described more fully above. Similarly, if the Fund enters into a short sale of
property that becomes substantially worthless, the Fund will recognize gain at
that time as though it had closed the short sale. Future Treasury regulations
may apply similar treatment to other transactions with respect to property that
becomes substantially worthless. Backup Withholding. The Fund generally will be
required to report to the IRS all distributions as well as gross proceeds from
the redemption of the Fund's shares, except in the case of certain exempt
shareholders. All such distributions and proceeds will be subject to withholding
of Federal income tax at a rate of 31% ("backup withholding") in the case of
non-exempt shareholders if (1) the shareholder fails to furnish the Fund with
and to certify the shareholder's correct taxpayer identification number or
social security number; (2) the IRS notifies the shareholder or the Fund that
the shareholder has failed to report properly certain interest and dividend
income to the IRS and to respond to notices to that effect; or (3) when required
to do so, the shareholder fails to certify that he or she is not subject to
backup withholding. If the withholding provisions are applicable, any such
distributions or proceeds, whether reinvested in additional shares or taken in
cash, will be reduced by the amounts required to be withheld.
Other Taxation. The foregoing discussion relates only to U.S. Federal income tax
law as applicable to U.S. persons (i.e., U.S. citizens and residents and
domestic corporations, partnerships, trusts and estates). Distributions by the
Fund also may be subject to state and local taxes, and their treatment under
state and local income tax laws may differ from the U.S. Federal income tax
treatment. In many states, Fund distributions which are derived from interest on
certain U.S. Government obligations are exempt from state and local taxation.
Shareholders should consult their tax advisers with respect to particular
questions of U.S. Federal, state and local taxation. Shareholders who are not
U.S. persons should consult their tax advisers regarding U.S. and foreign tax
consequences of ownership of shares of the Fund, including the likelihood that
distributions to them would be subject to withholding of U.S. Federal income tax
at a rate of 30% (or at a lower rate under a tax treaty).
BROKERAGE ALLOCATION
To the maximum extent feasible, the Manager places orders for portfolio
transactions through the Distributor, which in turn places orders on behalf of
the Fund with other broker-dealers. The Distributor receives no commissions,
fees or other remuneration from the Fund for this service. Allocation of
brokerage is supervised by the Manager.
The primary objective of the Manager in placing orders for the purchase and sale
of securities for the Fund's portfolio is to obtain the most favorable net
results taking into account such factors as price, commission (negotiable in the
case of U.S. national securities exchange transactions) where applicable, size
of order, difficulty of execution and skill required of the executing
broker-dealer. The Manager seeks to evaluate the overall reasonableness of
brokerage commissions paid (to the extent applicable) through the familiarity of
the Distributor with commissions charged on comparable transactions, as well as
by comparing commissions paid by the Fund to reported commissions paid by
others. The Manager reviews on a routine basis commission rates, execution and
settlement services performed, making internal and external comparisons.
The Fund's purchases and sales of fixed-income securities are generally placed
by the Manager with primary market makers for these securities on a net basis,
without any brokerage commission being paid by the Fund. Trading does, however,
involve transaction costs. Transactions with dealers serving as primary market
makers reflect the spread between the bid and asked prices. Purchases of
underwritten issues may be made that will include an underwriting fee paid to
the underwriter. Portfolio transactions in debt securities may also be placed on
an agency basis, with a commission being charged.
When it can be done consistently with the policy of obtaining the most favorable
net results, it is the Manager's practice to place such orders with
broker-dealers who supply research, market and statistical information to the
Fund. The term "research market and statistical information" includes 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; and analyses and reports concerning issuers, industries, securities,
economic factors and trends, portfolio strategy and the performance of accounts.
The Manager does not place orders with brokers or dealers because the broker or
dealer has or has not sold shares of the Fund. In effecting transactions in
over-the-counter securities, orders are placed with the principal market makers
for the security being traded unless, after exercising care, it appears that
more favorable results are available elsewhere.
Although certain research, market and statistical information from
broker-dealers may be useful to the Fund and to the Manager, it is the opinion
of the Manager that such information only supplements its own research effort
since the information must still be analyzed, weighed and reviewed by the
Manager's staff. Such information may be useful to the Manager in providing
services to clients other than the Fund and not all such information is used by
the Manager in connection with the Fund. Conversely, such information provided
to the Manager by broker-dealers through whom other clients of the Manager
effect securities transactions may be useful to the Manager in providing
services to the Fund.
NET ASSET VALUE
The net asset value of shares of the Fund is computed as of the close of regular
trading on the New York Stock Exchange (currently 4:00 p.m. Eastern Time) on
each day the Exchange is open for trading. The Exchange is scheduled to be
closed on the following holidays: New Year's Day, Dr. Martin Luther King, Jr.
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas, and on the preceding Friday or subsequent Monday
when one of these holidays falls on a Saturday or Sunday, respectively. Net
asset value per share is determined by dividing the value of the total assets of
the Fund, less all liabilities, by the total number of shares outstanding.
Securities traded on a national securities exchange or on the NASDAQ National
Market System are valued at the last reported sale price that day. Lacking any
sales, the security is valued at the calculated mean between the most recent bid
quotation and the most recent asked quotation (the "Calculated Mean") on such
exchange. An exchange traded option or futures contract and other financial
instruments are valued at the last reported sale price prior to 4:00 p.m.
(Eastern Time) as quoted on the principal exchange or board of trade on which
such option or contract is traded. Lacking any sales, the option or futures
contract is valued at the Calculated Mean.
Debt securities, other than short-term securities, are valued at bid prices
supplied by the Fund's pricing agent(s) which reflect broker/dealer supplied
valuations and electronic data processing techniques. Short-term securities with
remaining maturities of sixty days or less shall be valued by the amortized cost
method, which the Board believes approximates market value.
If, in the opinion of the Fund's Valuation Committee, the value of a portfolio
asset as determined in accordance with these procedures does not represent the
fair market value of the portfolio asset, the value of the portfolio asset is
taken to be an amount which, in the opinion of the Valuation Committee,
represents fair market value on the basis of all available information. The
value of other portfolio holdings owned by the Fund is determined in a manner
which, in the discretion of the Valuation Committee most fairly reflects fair
market value of the property on the valuation date.
INDEPENDENT ACCOUNTANTS
Tait, Weller & Baker has been appointed to serve as the Fund's independent
accountants for the fiscal year ending December 31, 1999. The services to be
performed by Tait, Weller & Baker include audits of the Fund's annual financial
statements and preparation of the Fund's federal and state income tax returns.
FINANCIAL STATEMENTS
The Fund's Statement of Assets and Liabilities as of June 28,1999 and the Notes
thereto are attached to this Statement of Additional Information as Appendix B.
ADDITIONAL INFORMATION
Dechert Price & Rhoads, Ten Post Office Square--South, Boston, MA 02109 serves
as counsel to the Trust and the Fund.
<PAGE>
APPENDIX A
DESCRIPTION OF STANDARD & POOR'S RATINGS GROUP ("S&P") AND
MOODY'S INVESTORS SERVICE, INC. ("MOODY'S") CORPORATE
BOND AND COMMERCIAL PAPER RATINGS
[From "Moody's Bond Record," November 1994 Issue (Moody's Investors Service, New
York, 1994), and "Standard & Poor's Municipal Ratings Handbook," October 1997
Issue (McGraw Hill, New York, 1997).]
MOODY'S:
(a) CORPORATE BONDS. Bonds rated Aaa by Moody's are judged by Moody's
to be of the best quality, carrying the smallest degree of investment risk.
Interest payments are protected by a large or 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. Bonds rated Aa are judged by Moody's to be of
high quality by all standards. Aa bonds are rated lower than Aaa bonds because
margins of protection may not be as large as those of Aaa bonds, or fluctuations
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
those applicable to Aaa securities. Bonds which are rated A by Moody's 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. Bonds rated Baa by Moody's are considered
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. Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered 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. Bonds which are rated B generally
lack characteristics of the desirable investment. Assurance of interest and
principal payments of or maintenance of other terms of the contract over any
long period of time may be small. Bonds which are rated Caa are of poor
standing. Such issues may be in default or there may be present elements of
danger with respect to principal or interest. Bonds which are rated Ca represent
obligations which are speculative in a high degree. Such issues are often in
default or have other marked shortcomings. Bonds which are rated C are the
lowest rated class of bonds and issues so rated can be regarded as having
extremely poor prospects of ever attaining any real investment standing.
(b) COMMERCIAL PAPER. The Prime rating is the highest commercial paper
rating assigned by Moody's. Among the factors considered by Moody's in assigning
ratings are the following: (1) evaluation of the management of the issuer; (2)
economic evaluation of the issuer's industry or industries and an appraisal of
speculative-type risks which may be inherent in certain areas; (3) evaluation of
the issuer's products in relation to competition and customer acceptance; (4)
liquidity; (5) amount and quality of long-term debt; (6) trend of earnings over
a period of ten years; (7) financial strength of a parent company and the
relationships which exist with the issuer; and (8) recognition by management of
obligations which may be present or may arise as a result of public interest
questions and preparations to meet such obligations. Issuers within this Prime
category may be given ratings 1, 2 or 3, depending on the relative strengths of
these factors. The designation of Prime-1 indicates the highest quality
repayment capacity of the rated issue. Issuers rated Prime-2 are deemed to have
a strong ability for repayment while issuers voted Prime-3 are deemed to have an
acceptable ability for repayment. Issuers rated Not Prime do not fall within any
of the Prime rating categories.
S&P:
(a) CORPORATE BONDS. An S&P corporate debt rating is a current
assessment of the creditworthiness of an obligor with respect to a specific
obligation. The ratings are based on current information furnished by the issuer
or obtained by S&P from other sources it considers reliable. The ratings
described below may be modified by the addition of a plus or minus sign to show
relative standing within the major rating categories.
Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong. Debt rated AA is judged by S&P
to have a very strong capacity to pay interest and repay principal and differs
from the highest rated issues only in small degree. Debt rated A by S&P has a
strong capacity to pay interest and repay principal, although it is somewhat
more susceptible to the adverse effects of changes in circumstances and economic
conditions than debt in higher rated categories.
Debt rated BBB by S&P is regarded by S&P as having an adequate capacity
to pay interest and repay principal. Although such bonds 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 than debt in higher rated categories.
Debt rated BB, B, CCC, CC and C is regarded as having predominately
speculative characteristics with respect to capacity to pay interest and repay
principal. BB indicates the least degree of speculation and C the highest. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or exposures to adverse conditions. Debt
rated BB has less near-term vulnerability to default than other speculative
issues. However, it faces major ongoing uncertainties or exposure to adverse
business, financial or economic conditions which could lead to inadequate
capacity to meet timely interest and principal payments. The BB rating category
is also used for debt subordinated to senior debt that is assigned an actual or
implied BBB- rating. Debt rated B has a greater vulnerability to default but
currently has the capacity to meet interest payments and principal repayments.
Adverse business, financial, or economic conditions will likely impair capacity
or willingness to pay interest and repay principal. The B rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied BB or BB- rating. Debt rated CCC has a currently identifiable
vulnerability to default, and is dependent upon favorable business, financial,
and economic conditions to meet timely payment of interest and repayment of
principal. In the event of adverse business, financial or economic conditions,
it is not likely to have the capacity to pay interest and repay principal. The
CCC rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied B or B- rating. The rating CC typically is applied
to debt subordinated to senior debt which is assigned an actual or implied CCC
debt rating. The rating C typically is applied to debt subordinated to senior
debt which is assigned an actual or implied CCC- debt rating. The C rating may
be used to cover a situation where a bankruptcy petition has been filed, but
debt service payments are continued.
The rating CI is reserved for income bonds on which no interest is
being paid. Debt rated D is in payment default. The D rating category is used
when interest payments or principal payments are not made on the date due, even
if the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period. The D rating also will be used
upon the filing of a bankruptcy petition if debt service payments are
jeopardized.
(b) COMMERCIAL PAPER. An S&P commercial paper rating is a current
assessment of the likelihood of timely payment of debt considered short-term in
the relevant market.
The commercial paper rating A-1 by S&P indicates that the degree of
safety regarding timely payment is strong. Those issues determined to possess
extremely strong safety characteristics are denoted with a plus sign (+)
designation. For commercial paper with an A-2 rating, the capacity for timely
payment on issues is satisfactory, but not as high as for issues designated A-1.
Issues rated A-3 have adequate capacity for timely payment, but are more
vulnerable to the adverse effects of changes in circumstances than obligations
carrying higher designations.
Issues rated B are regarded as having only speculative capacity for
timely payment. The C rating is assigned to short-term debt obligations with a
doubtful capacity for payment. Debt rated D is in payment default. The D rating
category is used when interest payments or principal payments are not made on
the date due, even if the applicable grace period has not expired, unless S&P
believes such payments will be made during such grace period.
<PAGE>
APPENDIX B
WEISS MILLENNIUM OPPORTUNITY FUND
STATEMENT OF ASSETS AND LIABILITIES
June 28, 1999
ASSETS
Cash $20.00
------
LIABILITIES ------
NET ASSETS $20.00
------
Class A Shares:
Net assets
(unlimited shares of beneficial interest authorized,
$.01 par value, 1 share outstanding) $10.00
Net asset value, offering and redemption price per share $10.00
Class S Shares:
Net assets
(unlimited shares of beneficial interest authorized,
$.01 par value, 1 share outstanding) $10.00
Net asset value and redemption price per share $10.00
At June 28, 1999 the components of net assets were as follows: $20.00
======
Paid-in capital
See notes to statement of assets and liabilities
WEISS MILLENNIUM OPPORTUNITY FUND
NOTES TO STATEMENT OF ASSETS AND LIABILITIES
June 28, 1999
1) ORGANIZATION
The Weiss Fund (the "Trust"), is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. The Trust was organized as a
Massachusetts trust on August 10, 1995. The Trust is a series fund that
is authorized to issue shares of beneficial interest in the following
funds: Weiss Treasury Only Money Market Fund and Weiss Millennium
Opportunity Fund (the "Fund"). The Fund currently offers two classes of
shares of beneficial interest. The Fund has had no operations from the
date of organization to June 28, 1999 other than those relating to
organization matters and the registration of its shares under
applicable securities laws. The investment adviser purchased the
initial 1 share of Class A and the initial 1 share of Class S of the
Fund at $10 a share on June 28, 1999.
(2) START-UP COST
The investment adviser has assumed all start-up costs associated with
the organization of the Fund.
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees of
Weiss Millennium Opportunity Fund
Palm Beach Gardens, Florida
We have audited the accompanying statement of assets and liabilities of the
Weiss Millennium Opportunity Fund, a series of The Weiss Fund. This financial
statement is the responsibility of the Fund's management. Our responsibility is
to express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of assets and liabilities is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of assets and
liabilities. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit of the statement of
assets and liabilities provides a reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of the Weiss
Millennium Opportunity Fund, a series of The Weiss Fund, as of June 28, 1999, in
conformity with generally accepted accounting principles.
Philadelphia, Pennsylvania
June 28, 1999
PART C. OTHER INFORMATION
Item 23: Exhibits:
(a) Articles of Incorporation:
(1) Declaration of Trust of the Registrant dated
August 10,1995, filed with Registrant's initial
Registration Statement on Form N-1A and incorporated
by reference herein.
(2) Establishment and Designation of Shares of
Beneficial Interest, $.01 Par Value Per Share, filed
with Registrant's initial Registration Statement on
Form N-1A and incorporated by reference herein.
(3) Trustee's Certificate dated February 9, 1998,
pertaining to termination of Weiss Intermediate
Treasury Fund, filed with Post-Effective Amendment
No. 4 to Registrant's Registration Statement on Form
N-1A and incorporated by reference herein.
(4) Redesignation of Series of Shares of Beneficial
Interest (Weiss Treasury Bond Fund redesignated as
Weiss Millennium Opportunity Fund) and Establishment
and Designation of Classes of Shares of Beneficial
Interest (Class A and Class S shares of Weiss
Millennium Opportunity Fund established), filed
herein.
(b) By-laws:
(1) By-Laws of the Registrant dated August 10, 1995,
filed with Registrant's initial Registration
Statement on Form N-1A and incorporated by reference
herein.
(c) Instruments Defining the Rights of Security Holders:
Not applicable.
(d) Investment Advisory Contracts:
(1) Investment Advisory Agreement between the
Registrant, on behalf of Weiss Treasury Only Money
Market Fund, and Weiss Money Management, Inc., filed
with Post-Effective Amendment No. 3 to Registrant's
Registration Statement on Form N-1A and incorporated
by reference herein.
(2) Investment Advisory Agreement between the
Registrant, on behalf of Weiss Millennium Opportunity
Fund, and Weiss Money Management, Inc, filed herein.
(3) Sub-Advisory Agreement between Weiss Money
Management, Inc., with respect to Weiss Millennium
Opportunity Fund, and Harvest Advisors, Inc., filed
herein.
(e) Underwriting Contracts:
(1) Distribution Agreement between the Registrant and
Weiss Funds, Inc., filed with Post-Effective
Amendment No. 3 to Registrant's Registration
Statement on Form N-1A and incorporated by reference
herein.
(2) Addendum to the Distribution Agreement between
the Registrant and Weiss Funds, Inc., filed herein.
(f) Bonus or Profit Sharing Contracts: Not applicable.
(g) Custodian Agreements:
(1) Custodian Agreement between the Registrant and
PNC Bank, filed with Post-Effective Amendment No. 3
to Registrant's Registration Statement on Form N-1A
and incorporated by reference herein.
(2) Letter Agreement to Custodian Agreement between
the Registrant and PNC Bank, filed with
Post-Effective Amendment No. 3 to Registrant's
Registration Statement on Form N-1A and incorporated
by reference herein.
(3) Amendment to Custodian Agreement between the
Registrant and PNC Bank, filed herein.
(h) Other Material Contracts:
(1) Transfer Agency and Service Agreement between the
Registrant and PFPC, Inc., filed with Post-Effective
Amendment No. 3 to Registrant's Registration
Statement on Form N-1A and incorporated by reference
herein.
(2) Letter Agreement to Transfer Agency and Service
Agreement between the Registrant and PFPC, Inc.,
filed with Post-Effective Amendment No. 3 to
Registrant's Registration Statement on Form N-1A and
incorporated by reference herein.
(3) Administration and Accounting Services Agreement
between the Registrant and PFPC, Inc., filed with
Post-Effective Amendment No. 3 to Registrant's
Registration Statement on Form N-1A and incorporated
by reference herein.
(4) Letter Agreement to Administration and Accounting
Services Agreement between the Registrant and PFPC,
Inc., filed with Post-Effective Amendment No. 3 to
Registrant's Registration Statement on Form N-1A and
incorporated by reference herein.
(5) Letter Agreement to Transfer Agency and Service
Agreement between the Registrant and PFPC, Inc.,
filed herein.
(6) Amendment to Transfer Agency and Service
Agreement between the Registrant and PFPC, Inc.,
filed herein.
(7) Letter Agreement to Administration and Accounting
Services Agreement between the Registrant and PFPC,
Inc., filed herein.
(8) Amendment to Administration and Accounting
Services Agreement between the Registrant and PFPC,
Inc., filed herein.
(i) Legal Opinion:
(1) Opinion and Consent of Dechert Price &
Rhoads, filed herein.
(j) Other Opinions:
(1) Consent and Report of Independent Accountants to the Trust, filed herein.
(k) Omitted Financial Statements: Not applicable.
(l) Initial Capital Agreements:
(1) Copy of Investment Representation Letter from
Initial Shareholder, filed with Pre-Effective
Amendment No. 1 to Registrant's Registration
Statement on Form N-1A and incorporated by reference
herein.
(m) Rule 12b-1 Plan: Filed herein.
(n) Financial Data Schedules: Not Applicable.
(o) Rule 18f-3 Plan: Filed herein.
Item 24. Persons Controlled by or Under Common Control with the Fund: Not
applicable.
Item 25. Indemnification:
A policy of insurance covering Weiss Money Management, Inc.
and the Registrant will insure the Registrant's trustees and
officers and others against liability arising by reason of an
alleged breach of duty caused by any negligent act, error or
accidental omission in the scope of their duties.
Reference is made to Article IV of the Registrant's
Declaration of Trust, dated August 10, 1995, filed with the
Registrant's initial Registration Statement on Form N-1A and
incorporated by reference herein.
Item 26. Business and Other Connections of Investment Adviser:
Reference is made to the Form ADV dated August 21, 1998 of
Weiss Money Management, Inc. (SEC File No. 801-33726),
investment adviser to Registrant's series. The information
required by this Item 26 is incorporated by reference to such
Form ADV.
Anthony L. Sagami is the sole shareholder and officer of
Harvest Advisors, Inc., the sub-adviser to Weiss Millennium
Opportunity Fund. Harvest Advisors' investment strategies are
based upon proprietary trading systems developed by Mr.
Sagami. Mr. Sagami has also been hired to author several
mutual fund advisory newsletters that are published by Weiss
Research, Inc., an affiliate of Registrant's investment
adviser.
Item 27. Principal Underwriters:
(a) Not applicable.
(b) Name,
Business Positions and Offices Positions and Offices
Address(1) with Underwriter with Registrant
John N. Breazeale President Chairman of the Board
and President
Martin D. Weiss Director Trustee
Sharon A. Parker Vice President Secretary
(1) 4176 Burns Road
Palm Beach Gardens, FL 33410.
(c) Not applicable.
Item 28. Location of Accounts and Records:
Weiss Money Management Inc., 4176 Burns Road, Palm Beach
Gardens, Florida 33410; PFPC, Inc., Bellevue Park Corporate
Center, 103 Bellevue Parkway, Wilmington, Delaware 19809; PNC
Bank, 200 Stevens Drive, Lester, Pennsylvania 19113.
Item 29. Management Services: Not applicable.
Item 30. Undertakings: Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Post Effective Amendment No. 8 to its
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Post-Effective Amendment No. 8 to its Registration
Statement to be signed on its behalf by the undersigned, duly authorized, in the
City of Boston, and the Commonwealth of Massachusetts, on the 29th day of June,
1999.
THE WEISS FUND
By: *
John N. Breazeale
President
*By: /S/ JOSEPH R. FLEMING
Joseph R. Fleming
Attorney-in-fact
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 8 to its Registration Statement has been signed
below by the following persons in the capacities and on the dates indicated.
Signatures Title Date
* Chairman of the Board June 29, 1999
John N. Breazeale and President (Chief
Executive Officer)
/S/ DAVID D. MARKY Treasurer (Chief June 29, 1999
David D. Marky Financial Officer)
* Trustee June 29, 1999
Esther S. Gordon
* Trustee June 29, 1999
Robert Z. Lehrer
<PAGE>
* Trustee June 29, 1999
Martin D. Weiss
* Trustee June 29, 1999
Donald Wilk
*By: /S/ JOSEPH R. FLEMING
Joseph R. Fleming
Attorney-in-fact
* Executed pursuant to powers of attorney filed with Registrant's
Pre-Effective Amendment No. 2 to its Registration Statement.
EXHIBIT INDEX
Exhibit a(4) Redesignation of Series of Shares of Beneficial Interest
Exhibit d(2) Investment Advisory Agreement
Exhibit d(3) Sub-Advisory Agreement
Exhibit e(2) Addendum to the Distribution Agreement
Exhibit g(3) Amendment to Custodian Agreement
Exhibit h(5) Letter Agreement to Transfer Agency and Service Agreement
Exhibit h(6) Amendment to Transfer Agency and Service Agreement
Exhibit h(7) Letter Agreement to Administration and Accounting Services
Agreement
Exhibit h(8) Amendment to Administration and Accounting Services
Agreement
Exhibit i(1) Opinion and Consent of Dechert Price & Rhoads
Exhibit j(1) Consent and Report of Independent Accountants
Exhibit m Rule 12b-1 Plan
Exhibit o Rule 18f-3 Plan
Exhibit a(4)
WEISS TREASURY FUND
Redesignation of Series and
Establishment and Designation of Classes
of Shares of Beneficial Interest,
$.01 Par Value Per Share,
and
Change of Trust Name
I, John N. Breazeale, being a duly elected, qualified and acting
Trustee of Weiss Treasury Fund (the "Trust"), a business trust formed under the
laws of the Commonwealth of Massachusetts pursuant to a Declaration of Trust
dated August 10, 1995 (the "Declaration of Trust"), DO HEREBY CERTIFY that, by
written consent, the Trustees of the Trust (the "Trustees"), acting pursuant to
Article IV, Section 1 of the Trust's By-Laws, duly approved, adopted and
consented to the following resolutions as actions of the Trustees of the Trust:
RESOLVED, that "Weiss Treasury Bond Fund" be, and it hereby is,
redesignated as "Weiss Millennium Opportunity Fund," with the Fund
being subject to all provisions of the Declaration of Trust relating to
shares of the Trust generally, and having the following special and
relative rights;
FURTHER RESOLVED, that, pursuant to Section 5.13 of the Declaration of
Trust, the shares of beneficial interest of the Fund are hereby divided
into two classes, $.01 par value per share, to be designated as
follows: (i) "Class A" and (ii) "Class S."
FURTHER RESOLVED, that the number of authorized shares of each class of
the Fund shall be unlimited. The Fund and each of its classes of shares
shall be subject to all provisions of the Declaration of Trust relating
to shares of the Trust generally, and shall have the following special
and relative rights:
1. The Fund shall be authorized to hold cash and invest in securities and
instruments and use investment techniques as described in the Trust's
registration statement under the Securities Act of 1933 and the Investment
Company Act of 1940, as amended from time to time ("Registration
Statement"). Each share of beneficial interest, $.01 par value per share,
of the Fund shall be redeemable as provided in the Declaration of Trust,
shall be entitled to one vote (or fraction thereof in respect of a
fractional share) on matters on which shares of the Fund shall be entitled
to vote and shall represent a pro rata beneficial interest in the assets
allocated to the Fund. The proceeds of sales of shares of the Fund,
together with any income and gain thereon, less any diminution or expenses
thereof, shall irrevocably belong to the Fund, unless otherwise required by
law. Each share of the Fund shall be entitled to receive its pro rata share
of net assets of the Fund upon liquidation of the Fund. Upon redemption of
a shareholder's shares, or indemnification for liabilities incurred by
reason of a shareholder being or having been a shareholder of the Fund,
such shareholder shall be paid solely out of the property of the Fund.
2. Shareholders of the Fund shall vote separately as a Series on any matter to
the extent required by applicable federal or state law. Shareholders of
each class of the Fund shall have (i) exclusive voting rights with respect
to matters on which the holders of each such class shall be entitled to
exclusive voting rights under applicable federal or state law, and (ii) no
voting rights with respect to matters on which the holders of another class
of shares of the Fund (or class thereof) shall be entitled to exclusive
voting rights under applicable federal or state law.
3. The assets and liabilities of the Trust existing as of the end of the day
immediately preceding the date on which the Registration Statement for the
Fund becomes effective shall be allocated among the Series other than the
Fund in accordance with Article V of the Declaration of Trust, and
thereafter the assets and liabilities of the Trust shall be allocated among
all Series thereof in accordance with Article V of the Declaration of
Trust, except as provided below:
(a) Costs incurred by the Trust on behalf of the Fund in connection with the
organization, registration and public offering of shares of the Fund shall
be allocated to the Fund and shall be amortized by the Fund in accordance
with applicable law and generally accepted accounting principles.
(b) The Trustees may from time to time in particular
cases make specific allocations of assets or
liabilities among the Series.
4. The Trustees (including any successor Trustees) shall have the
right at any time and from time to time to reallocate assets
and expenses, or to change the designation of any Series (or
class thereof) now or hereafter created, or to otherwise
change the special and relative rights of any such Series (or
class), provided that such change shall not adversely affect
the rights of shareholders of that Series (or class).
5. The dividends and distributions with respect to each class of
shares shall be in such amount as may be declared from time to
time by the Trust's Board of Trustees in accordance with the
Declaration of Trust and applicable law.
FURTHER RESOLVED, that the officers of the Trust be, and they hereby
are, authorized to file an amendment to the Trust's Declaration of
Trust, as amended, with the Secretary of the Commonwealth of
Massachusetts, to change the name of the Trust from "Weiss Treasury
Fund" to "The Weiss Fund", so that Sections 1.1 and 1.2(p) of Article I
indicated below read in their entirety as follows:
Section 1.1. Name. The name of the Trust created hereby is "The Weiss Fund."
Section 1.2. (p) The "Trust" means The Weiss Fund.
FURTHER RESOLVED, that the preceding resolutions shall constitute an
Amendment to the Declaration of Trust, effective as of the date that
the post-effective amendment to the Trust's Registration Statement
applicable to the Fund described in the following resolution is filed
with the Securities and Exchange Commission ("SEC"), and that the
officers of the Trust be, and they hereby are, authorized to file such
Amendment to the Declaration of Trust in the offices of the
Commonwealth of Massachusetts.
IN WITNESS WHEREOF, I have signed this Amendment this 18th day of May,
1999.
/S/ JOHN N. BREAZEALE
John N. Breazeale, as Trustee
The above signature is the true and correct signature of John N. Breazeale,
Trustee of the Trust.
/S/ SHARON A. PARKER
Sharon A. Parker, Secretary
Weiss Treasury Fund
Exhibit d(2)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 29th day of June, 1999 between WEISS FUND, a Massachusetts
business trust (the "Trust"), on behalf of the Weiss Millennium Opportunity
Fund, and Weiss Money Management, Inc., a corporation organized under the laws
of Florida (the "Adviser").
W I T N E S S E T H:
WHEREAS, the Trust is an open-end management investment company registered under
the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Trust is authorized to issue shares of beneficial interest
(hereafter referred to as "Shares") in separate series with each such series
representing the interests in a separate portfolio of securities and other
assets;
WHEREAS, the Trust has established and presently offers (or intends to offer)
Shares of beneficial interest in a portfolio currently known as the Weiss
Millennium Opportunity Fund (the "Fund"); and
WHEREAS, the Trust desires to retain the Adviser to render investment advisory
services to the Trust with respect to the Fund as indicated herein and the
Adviser is willing to so render such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter set forth, the parties hereto agree as follows:
1. Appointment of Adviser. The Trust hereby appoints the Adviser
to act as investment adviser to the Trust and the Fund for the
periods and on the terms herein set forth. The Adviser accepts
such appointment and agrees to render the services herein set
forth, for the compensation herein provided.
2. Delivery of Documents. The Trust has delivered (or will
deliver as soon as is possible) to the Adviser copies properly
certified or authenticated of each of the following documents:
(a) Agreement and Declaration of Trust of the Trust dated
as of August 10, 1995 (such Agreement and Declaration
of Trust, as presently in effect and as amended from
time to time, is herein called the "Trust
Agreement"), copies of which are also on file with
the Secretary of the Commonwealth of Massachusetts;
(b) By-Laws of the Trust (such By-Laws, as presently in
effect and as amended from time to time, are herein
called the "By-Laws");
(c) Certified resolutions of the Shareholder(s) and the
Trustees of the Trust approving the terms of this
Agreement;
(d) Custodian Agreement (including related fee schedule)
dated January 15, 1996 between the Trust and PFPC
Trust Company (formerly PNC Bank) (such Agreement, as
presently in effect and as amended and/or superseded
from time to time, is herein called the "Custodian
Agreement");
(e) Prospectuses and Statements of Additional Information
of the Trust with respect to the Fund as currently in
effect (such Prospectuses and Statements of
Additional Information, as currently in effect and as
amended, supplemented and/or superseded from time to
time, is herein called the "Prospectus"); and
(f) Registration Statement of the Trust under the
Securities Act of 1933 (the "1933 Act"), and the 1940
Act on Form N-1A as filed with the Securities and
Exchange Commission (the "Commission") on August 10,
1995, and as amended on Form N-1A (such Registration
Statement, as presently in effect and as amended from
time to time, is herein called the "Registration
Statement").
The Trust agrees to promptly furnish the Adviser from time to time with copies
of all amendments of or supplements to or otherwise current versions of any of
the foregoing documents not heretofore furnished.
3. Name of Trust or Fund. The Trust and the Fund may use any name
derived from the name "Weiss Money Management, Inc.", if the Trust elects to do
so, only for so long as this Agreement, any other investment advisory or
management agreement between the Adviser and the Trust or any extension, renewal
or amendment hereof or thereof remains in effect, including any similar
agreement with any organization which shall have succeeded to the Adviser's
business as investment adviser. At such time as such an agreement shall no
longer be in effect, the Fund (to the extent the Corporation has the legal power
to cause it to be done) cease to use such a name or any other name indicating
that it is advised or managed by or otherwise connected with the Adviser or any
organization which shall have so succeeded to the Adviser's business.
4. Duties of Adviser.
(a) Subject to the general supervision of the Trustees of
the Trust, the Adviser shall manage the investment
operations of the Fund and the composition of the
Fund's assets, including the purchase, retention and
disposition thereof. In this regard, the Adviser:
(i) shall provide supervision of the Fund's
assets, furnish a continuous investment
program for the Fund, determine from time to
time what investments or securities will be
purchased, retained or sold by the Fund, and
what portion of the assets will be invested
or held uninvested as cash;
(ii) shall place orders with broker-dealers,
foreign currency dealers, futures
commissions merchants or others pursuant to
the Adviser's determinations in accordance
with the Fund's policies as expressed in the
Registration Statement; and
(iii) may, on occasions when it deems the
purchase or sale of a security to be in the
best interests of the Fund as well as its
other customers (including any other Fund or
any other investment company or trust or
advisory account for which the Adviser acts
as adviser), aggregate, to the extent
permitted by applicable laws and regulations,
the securities to be sold or purchased in
order to obtain the best net price and the
most favorable execution. In such event,
allocation of the securities so purchased or
sold, as well as the expenses incurred in the
transaction, will be made by the Adviser in
the manner it considers to be the most
equitable and consistent with its fiduciary
obligations to the Fund and to such other
customers.
(b) The Adviser, in the performance of its
duties hereunder, shall act in conformity
with the Trust Agreement, By-Laws,
Registration Statement and Prospectus and
with the instructions and directions of the
Trustees of the Trust, and will use its best
efforts to conform to the requirements of the
1940 Act, the Investment Advisers Act of 1940
(to the extent applicable), the Internal
Revenue Code of 1986, as amended (the
"Code"), relating to regulated investment
companies and all rules and regulations
thereunder, the Insider Trading and
Securities Fraud Enforcement Act of 1988 (to
the extent applicable), and all other
applicable federal and state laws,
regulations and rulings, subject always to
policies and instructions adopted by the
Trust's Board of Trustees. In connection
therewith, the Adviser shall use reasonable
efforts or manage the Fund so that it will
qualify as a regulated investment company
under Subchapter M of the Code and
regulations issued thereunder.
(c) The Adviser shall render to the Trustees
of the Trust such periodic and special
reports as the Trustees may reasonably
request.
(d) The Adviser shall notify the Trust of any
material change in the management of the
Adviser within a reasonable time after such
change.
(e) The Adviser shall immediately notify the
Trust in the event that the Adviser or any of
its affiliates: (1) becomes aware that it is
subject to a statutory disqualification that
prevents the Adviser from serving as
investment adviser pursuant to this
Agreement; or (2) becomes aware that it is
the subject of an administrative proceeding
or enforcement action by the Securities and
Exchange Commission or other regulatory
authority. The Adviser further agrees to
notify the Trust immediately of any material
fact known to the Adviser respecting or
relating to the Adviser that is not contained
in the Trust's Registration Statement
regarding the Trust, or any amendment or
supplement thereto, but that is required to
be disclosed therein, and of any statement
contained therein that becomes untrue in any
material respect.
(f) The services of the Adviser hereunder are not deemed
exclusive and the Adviser shall be free to render
similar services to others so long as its services
under this Agreement are not impaired thereby.
5. Allocation of Charges and Expenses. Except as otherwise specifically
provided in this section 5, the Adviser shall pay the compensation and expenses
of all trustees, officers and executive employees of the Trust (including the
Fund's share of payroll taxes) who are affiliated persons of the Adviser, and
the Adviser shall make available, without expense to the Fund, the services of
such of its directors, officers and employees as may duly be elected officers of
the Trust, subject to their individual consent to serve and to any limitations
imposed by law. The Adviser shall provide at its expense the portfolio
management services described in section 4 hereof, other than the cost
(including taxes and brokerage commissions, if any) of securities purchased for
the Fund.
The Adviser shall not be required to pay any expenses of the Fund other
than those specifically allocated to it in this section 5.
6. Management Fee. For all services to be rendered, payments to be made
and costs to be assumed by the Adviser as provided in sections 4 and 5 hereof,
the Trust on behalf of the Fund shall pay the Adviser an annual fee equal to
1.50% of the average daily net assets of the Fund (as defined below). Such fee
shall be payable monthly on the last day of each month.
The "average daily net assets" of the Fund shall mean the average of
the values placed on the Fund's net assets as of 4:00 p.m. (Eastern time) on
each day of the subject month on which the net asset value of the Fund is
determined consistent with the provisions of Rule 22c-1 under the 1940 Act or,
if the Fund lawfully determines the value of its net assets as of some other
time on each day, as of such time. The value of the net assets of the Fund shall
always be determined pursuant to the applicable provisions of the Trust
Agreement and the Registration Statement. If the determination of net asset
value does not take place for any particular day, then for the purposes of this
section 6, the value of the net assets of the Fund as last determined shall be
deemed to be the value of its net assets as of 4:00 p.m. (Eastern time), or as
of such other time as the value of the net assets of the Fund's portfolio may be
lawfully determined on that day. If the Fund determines the value of the net
assets of its portfolio more than once on any day, then the last such
determination thereof on that day shall be deemed to be the sole determination
thereof on that day for the purposes of this section 6.
The Adviser may waive all or a portion of its fees provided for
hereunder and such waiver shall be treated as a reduction in purchase price of
its services. The Adviser shall be contractually bound hereunder by the terms of
any publicly announced waiver of its fee, or any limitation of the Fund's
expenses, as if such waiver or limitation were fully set forth herein.
7. Avoidance of Inconsistent Position; Services Not Exclusive. In
connection with purchases or sales of portfolio securities and other investments
for the account of the Fund, neither the Adviser nor any of its directors,
officers or employees shall act as a principal or agent or receive any
commission. The Adviser or its agent shall arrange for the placing of all orders
for the purchase and sale of portfolio securities and other investments for the
Fund's account with brokers or dealers selected by the Adviser in accordance
with Fund policies as expressed in the Registration Statement. If any occasion
should arise in which the Adviser gives any advice to its clients concerning the
Shares of the Fund, the Adviser shall act solely as investment counsel for such
clients and not in any way on behalf of the Fund.
The Adviser's services to the Fund pursuant to this Agreement are not
be deemed to be exclusive and it is understood that the Adviser may render
investment advice, management and services to others. In acting under this
Agreement, the Adviser shall be an independent contractor and not an agent of
the Trust.
8. Limitation of Liability of Manager. As an inducement to the
Adviser's undertaking to render services pursuant to this Agreement, the Trust
agrees that the Adviser shall not be liable under this Agreement for any error
of judgment or mistake of law or for any loss suffered by the Fund in connection
with the matters to which this Agreement relates, provided that nothing in this
Agreement shall be deemed to protect or purport to protect the Adviser against
any liability to the Trust, the Fund or its shareholders to which the Adviser
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 hereunder. Any person, even though also
employed by the Adviser, who may be or become an employee of and paid by the
Fund shall be deemed when acting within the scope of his or her employment by
the Fund, to be acting in such employment solely for the Fund and not as the
Adviser's employee or agent.
9. Duration and Termination of This Agreement. This Agreement shall
remain in force until June 29, 2001, and continue in force from year to year
thereafter, but only so long as such continuance is specifically approved at
least annually (a) by the vote of a majority of the Trustees who are not parties
to this Agreement or interested persons of any party to this agreement, cast in
person at a meeting called for the purpose of voting on such approval and (b) by
the Trustees of the Trust, or by the vote of a majority of the outstanding
voting securities of the Fund. The aforesaid requirement that continuance of
this Agreement be "specifically approved at least annually" shall be construed
in a manner consistent with the 1940 Act and the rules and regulations
thereunder.
This Agreement may be terminated with respect to the Fund at any time,
without the payment of any penalty, by the vote of a majority of the outstanding
voting securities of the Fund or by the Trust's Board of Trustees on 60 days'
written notice to the Adviser, or by the Adviser on 60 days' written notice to
the Fund.
This Agreement shall terminate automatically in the event of its assignment.
10. Retention of Sub-Advisers. Subject to the Fund's obtaining any
initial and periodic approvals that are required under Section 15 of the 1940
Act, the Adviser may retain a sub-adviser or sub-advisers with respect to the
Fund, at the Adviser's own cost and expense.
11. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought, and no amendment of this Agreement shall be
effective until approved by the vote of a majority of the Trustees who are not
parties to this Agreement or interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on such approval.
12. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
In interpreting the provisions of this Agreement, the definitions
contained in Section 2(a) of the 1940 Act (particularly the definitions of
"affiliated person," "assignment" and "majority of the outstanding voting
securities"), as from time to time amended, shall be applied, subject, however,
to such exemptions as may be granted by the SEC by any rule, regulation or
order.
This Agreement shall be construed in accordance with the laws of the
Commonwealth of Massachusetts, provided that nothing herein shall be construed
in a manner inconsistent with the 1940 Act, or in a manner which would cause the
Fund to fail to comply with the requirements of Subchapter M of the Code.
It is understood that the Fund is a series of the Trust, which was
organized as a Massachusetts business trust under the Trust Agreement, that the
Trust Agreement refers to the Trustees collectively as trustees and not as
individuals personally, and that the Trust Agreement provides that no
shareholder, Trustee, officer, employee or agent shall be subject to any claims
against or obligations of the Trust to any extent whatsoever, but that the Trust
estate only shall be liable. No series of the Trust shall be liable for the
obligations of any other series.
This Agreement shall supersede all prior investment advisory or
management agreements entered into between the Adviser and the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed as of the day and year first above written.
WEISS FUND,
on behalf of Weiss Millennium Opportunity Fund
Attest:
/S/CLARA A. MAXCY By: /S/ JOHN N. BREAZEALE
Title: President
WEISS MONEY MANAGEMENT, INC.
Attest:
/S/CLARA A. MAXCY By: /S/ JOHN N. BREAZEALE
Title: President
Exhibit d(3)
SUBADVISORY AGREEMENT
AGREEMENT made as of the 29th day of June, 1999, between WEISS MONEY
MANAGEMENT, INC., 4176 Burns Road, Palm Beach Gardens, Florida 33410
(hereinafter called the "Manager"), and HARVEST ADVISORS, INC., 11612 Bee Cave
Road, Suite 110, Austin, Texas 78733 (hereinafter called the "Subadviser").
WHEREAS, The Weiss Fund (the "Trust") is a Massachusetts business trust
organized with one or more series of shares, and is registered as an investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Manager has entered into Investment Advisory Agreement(s)
(the "Advisory Agreement"), with the Trust, pursuant to which the Manager acts
as investment adviser to the portfolio assets of certain series of the Trust
listed on Schedule A hereto, as amended from time to time (each a "Fund" and,
collectively, the "Funds"); and
WHEREAS, the Manager desires to utilize the services of the Subadviser
as investment subadviser with respect to each Fund; and
WHEREAS, the Subadviser is willing to perform such services on the
terms and conditions hereinafter set forth:
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:
1. Duties of the Subadviser. The Subadviser will serve the
Manager as investment subadviser with respect to each Fund.
(a) As investment subadviser to the Funds, the Subadviser is hereby authorized
and directed and hereby agrees, in accordance with the Subadviser's best
judgment and subject to the stated investment objectives, policies and
restrictions of the Funds as set forth in the current prospectuses and
statements of additional information of the Trust (including amendments)
and in accordance with the Trust's Declaration of Trust, as amended, and
By-laws governing the offering of its shares (collectively, the "Trust
Documents"), the 1940 Act and the provisions of the Internal Revenue Code
of 1986, as amended (the "Internal Revenue Code"), relating to regulated
investment companies, and subject to such resolutions as from time to time
may be adopted by the Trust's Board of Trustees, to render continuous
investment advice to the Manager as to the investment of each Fund's assets
in common or preferred stocks, corporate or government bonds or notes,
options, warrants, rights and other securities, based upon computer model
portfolios constructed to be compatible with the investment objectives,
policies and restrictions of the Funds as stated in the aforesaid
prospectuses. The Subadviser shall have no discretion regarding nor
responsibility for the implementation or execution of transactions which it
recommends to the Manager for any Fund, such discretion and responsibility
being solely with the Manager in the exercise of its independent judgment
regarding the appropriateness of Subadviser's investment recommendations
for the Fund in light of its investment objectives, policies and
restrictions.
(b) The Subadviser shall (i) comply with all reasonable
requests of the Trust for information, including
information required in connection with the Trust's
filings with the Securities and Exchange Commission
(the "SEC") and state securities commissions, and
(ii) provide such other services as the Subadviser
shall from time to time determine to be necessary or
useful to the administration of the Funds.
(c) The Subadviser shall furnish to the Trust's Board of
Trustees periodic reports on the performance of its
obligations under this Agreement and shall supply
such additional reports and information as the
Trust's officers or Board of Trustees shall
reasonably request.
(d) The investment advisory services provided by the
Subadviser under this Agreement are not to be deemed
exclusive and the Subadviser shall be free to render
similar services to others, as long as such services
do not impair the services rendered to the Manager or
the Trust.
2. Delivery of Documents to the Manager. The Subadviser has
furnished the Manager with copies of each of the following
documents:
(a) The Subadviser's current Form ADV and any amendments thereto;
(b) The Subadviser's most recent balance sheet; and
(c) The Code of Ethics of the Subadviser as currently in effect.
The Subadviser will furnish the Manager from time to time with
copies, properly certified or otherwise authenticated, of all
material amendments of or supplements to the foregoing, if
any. Additionally, the Subadviser will provide to the Manager
such other documents relating to its services under this
Agreement as the Manager may reasonably request on a periodic
basis. Such amendments or supplements as to items (a) through
(c) above will be provided within 30 days of the time such
materials became available to the Subadviser.
3. Expenses. The Subadviser shall pay all of its expenses arising
from the performance of its obligations under Section 1.
4. Compensation. The Manager shall pay to the Subadviser for its
services hereunder, and the Subadviser agrees to accept as
full compensation therefor, a fee with respect to each Fund as
set forth on Schedule B. If the Subadviser shall serve
hereunder for less than the whole of any payment period, the
fee hereunder shall be prorated accordingly.
5. Independent Contractor. In the performance of its duties
hereunder, the Subadviser is and shall be an independent
contractor and except as expressly provided herein or
otherwise authorized in writing, shall have no authority to
act for or represent the Trust, the Funds, any other series of
the Trust or the Manager in any way or otherwise be deemed to
be an agent of the Trust, the Funds, any other series of the
Trust or the Manager.
6. Term of Agreement. This Agreement shall continue in full force and effect
until June 29, 2001, and from year to year thereafter if such continuance
is approved in the manner required by the 1940 Act if the Subadviser shall
not have notified the Manager in writing at least 60 days prior to such
June 29 or prior to June 29 of any year thereafter that it does not desire
such continuance. This Agreement may be terminated at any time, without
payment of penalty by a Fund, by vote of the Trust's Board of Trustees or a
majority of the outstanding voting securities of the applicable Fund (as
defined by the 1940 Act), or by the Manager or by the Subadviser upon 60
days' written notice. This Agreement will automatically terminate in the
event of its assignment (as defined by the 1940 Act) or upon the
termination of the Advisory Agreement.
7. Amendments. This Agreement may be amended by consent of the parties hereto
provided that the consent of the applicable Fund is obtained in accordance
with the requirements of the 1940 Act.
8. Confidential Treatment. It is understood that any information or
recommendation supplied by the Subadviser in connection with the
performance of its obligations hereunder is to be regarded as confidential
and for use only by the Manager, the Trust or such persons as the Manager
may designate in connection with the Funds. It is also understood that any
information supplied to the Subadviser in connection with the performance
of its obligations hereunder, particularly, but not limited to, any list of
securities which, on a temporary basis, may not be bought or sold for the
Funds, is to be regarded as confidential and for use only by the Subadviser
in connection with its obligation to provide investment advice and other
services to the Funds.
9. Representations and Warranties. The Subadviser hereby represents and warrants
as follows:
(a) The Subadviser is registered with the SEC as an
investment adviser under the Investment Advisers Act
of 1940, as amended (the "Advisers Act"), and such
registration is current, complete and in full
compliance with all material applicable provisions of
the Advisers Act and the rules and regulations
thereunder;
(b) The Subadviser has all requisite authority to enter
into, execute, deliver and perform the Subadviser's
obligations under this Agreement;
(c) The Subadviser's performance of its obligations under
this Agreement does not conflict with any law,
regulation or order to which the Subadviser is
subject; and
(d) The Subadviser has reviewed the portion of (i) the registration statement
filed with the SEC, as amended from time to time, for the Funds
("Registration Statement"), and (ii) each Fund's prospectuses and
statements of additional information (including amendments) thereto, in
each case in the form received from the Manager with respect to the
disclosure about the Subadviser and the Funds of which the Subadviser has
knowledge ("Subadviser and Fund Information") and except as advised in
writing to the Manager such Registration Statement, prospectuses and
statements of additional information (including amendments) contain, as of
their respective dates, no untrue statement of any material fact of which
the Subadviser has knowledge and do not omit any statement of a material
fact of which the Subadviser has knowledge which was required to be stated
therein or necessary to make the statements contained therein not
misleading.
10. Covenants. The Subadviser hereby covenants and agrees that, so
long as this Agreement shall remain in effect:
(a) The Subadviser shall maintain the Subadviser's
registration as an investment adviser under the
Advisers Act, and such registration shall at all
times remain current, complete and in full compliance
with all material applicable provisions of the
Advisers Act and the rules and regulations
thereunder;
(b) The Subadviser's performance of its obligations under
this Agreement shall not conflict with any law,
regulation or order to which the Subadviser is then
subject;
(c) The Subadviser shall at all times comply with the
Advisers Act and the 1940 Act, and all rules and
regulations thereunder, and all other applicable laws
and regulations, and the Registration Statement,
prospectuses and statements of additional information
(including amendments) and with any applicable
procedures adopted by the Trust's Board of Trustees,
provided that such procedures are identified in
writing to the Subadviser;
(d) The Subadviser shall promptly notify the Manager and the Funds upon the
occurrence of any event that might disqualify or prevent the Subadviser
from performing its duties under this Agreement. The Subadviser shall
promptly notify the Manager and the Funds if there are any changes to its
organizational structure or the Subadviser has become the subject of any
adverse regulatory action imposed by any regulatory body or self-regulatory
organization. The Subadviser further agrees to notify the Manager of any
changes relating to it or the provision of services by it that would cause
the Registration Statement, prospectuses or statements of additional
information (including amendments) for the Funds to contain any untrue
statement of a material fact or to omit to state a material fact which is
required to be stated therein or is necessary to make the statements
contained therein not misleading, in each case relating to Subadviser and
Fund Information; and
(e) The Subadviser will render advice to the Manager
regarding the investment of each Fund's assets which
is consistent with maintaining the Fund's status as a
regulated investment company under Subchapter M of
the Internal Revenue Code.
11. Use of Names.
(a) The Subadviser acknowledges and agrees that the names "The Weiss Fund" and
"Weiss Money Management, Inc.," and abbreviations or logos associated with
those names, are the valuable property of the Manager and its affiliates;
that the Funds, the Manager and their affiliates have the right to use such
names, abbreviations and logos; and that the Subadviser shall use the names
"The Weiss Fund" and "Weiss Money Management, Inc.," and associated
abbreviations and logos, only in connection with the Subadviser's
performance of its duties hereunder. Further, in any communication with the
public and in any marketing communications of any sort, Subadviser agrees
to obtain prior written approval from Manager before using or referring to
"The Weiss Fund" and "Weiss Money Management, Inc.," or the Funds or any
abbreviations or logos associated with those names.
(b) The Manager acknowledges that "Harvest" and "Harvest Advisors" and
abbreviations or logos associated with those names are valuable property of
Harvest Advisors, Inc. and are distinctive in connection with investment
advisory and related services provided by the Subadviser, the "Harvest"
name is a property right of the Subadviser, and the "Harvest" and "Harvest
Advisors" names are understood to be used by each Fund upon the conditions
hereinafter set forth; provided that each Fund may use such names only so
long as the Subadviser shall be retained as the investment subadviser of
the Fund pursuant to the terms of this Agreement.
(c) The Subadviser acknowledges that each Fund and its agents may use the
"Harvest" and "Harvest Advisors" names in connection with accurately
describing the activities of the Fund, including use with marketing and
other promotional and informational material relating to the Fund with the
prior written approval always of the Subadviser. In the event that the
Subadviser shall cease to be the investment subadviser of a Fund, then the
Fund at its own or the Manager's expense, upon the Subadviser's written
request: (i) shall cease to use the Subadviser's name for any commercial
purpose; and (ii) shall use its best efforts to cause the Fund's officers
and trustees to take any and all actions which may be necessary or
desirable to effect the foregoing and to reconvey to the Subadviser all
rights which a Fund may have to such name. Manager agrees to take any and
all reasonable actions as may be necessary or desirable to effect the
foregoing and Subadviser agrees to allow the Funds and their agents a
reasonable time to effectuate the foregoing.
(d) The Subadviser hereby agrees and consents to the use
of the Subadviser's name upon the foregoing terms and
conditions.
12. Reports by the Subadviser and Records of the Funds. The
Subadviser shall furnish the Manager information and reports
necessary to the operation of the Funds, including information
required to be disclosed in the Trust's Registration
Statement, in such form as may be mutually agreed. The
Subadviser shall immediately notify and forward to both the
Manager and legal counsel for the Trust any legal process
served upon it on behalf of the Manager or the Trust.
In compliance with the requirements of Rule 31a-3 under the
1940 Act, the Subadviser agrees that all records it maintains
for the Trust are the property of the Trust and further agrees
to surrender promptly to the Trust or the Manager any such
records upon the Trust's or the Manager's request. The
Subadviser further agrees to maintain for the Trust the
records the Trust is required to maintain under Rule 31a-1(b)
insofar as such records relate to the investment affairs of
each Fund. The Subadviser further agrees to preserve for the
periods prescribed by Rule 31a-2 under the 1940 Act the
records it maintains for the Trust.
13. Indemnification. The Subadviser agrees to indemnify and hold harmless the
Manager, any affiliated person within the meaning of Section 2(a)(3) of the
1940 Act ("affiliated person") of the Manager and each person, if any, who,
within the meaning of Section 15 of the Securities Act of 1933, as amended
(the "1933 Act"), controls ("controlling person") the Manager, against any
and all losses, claims, damages, liabilities or litigation (including
reasonable legal and other expenses), to which the Manager, the Trust or
such affiliated person or controlling person may become subject under the
1933 Act, the 1940 Act, the Advisers Act, under any other statute, at
common law or otherwise, arising out of Subadviser's responsibilities as
subadviser of the Funds (1) to the extent of and as a result of the willful
misconduct, bad faith, or gross negligence of the Subadviser, any of the
Subadviser's employees or representatives or any affiliate of or any person
acting on behalf of the Subadviser, or (2) as a result of any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, prospectuses or statements of additional
information covering the Funds or the Trust or any amendment thereof or any
supplement thereto or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statement therein not misleading, if such a statement or omission was made
in reliance upon written information furnished by the Subadviser to the
Manager, the Trust or any affiliated person of the Manager or the Trust
expressly for use in the Trust's Registration Statement, or upon verbal
information confirmed by the Subadviser in writing expressly for use in the
Trust's Registration Statement; provided, however, that in no case is the
Subadviser's indemnity in favor of the Manager or any affiliated person or
controlling person of the Manager deemed to protect such person against any
liability to which any such person would otherwise be subject by reason of
willful misconduct, 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 Manager agrees to indemnify and hold harmless the
Subadviser, any affiliated person of the Subadviser and each
controlling person of the Subadviser, against any and all
losses, claims, damages, liabilities or litigation (including
reasonable legal and other expenses), to which the Subadviser
or such affiliated person or controlling person may become
subject under the 1933 Act, the 1940 Act, the Advisers Act,
under any other statute, at common law or otherwise, arising
out of the Manager's responsibilities as investment manager of
the Funds (1) to the extent of and as a result of the willful
misconduct, bad faith, or gross negligence of the Manager, any
of the Manager's employees or representatives or any affiliate
of or any person acting on behalf of the Manager, or (2) as a
result of any untrue statement or alleged untrue statement of
a material fact contained in the Registration Statement,
prospectuses or statements of additional information covering
the Funds or the Trust or any amendment thereof or any
supplement thereto or the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statement therein not misleading, if
such a statement or omission was made by the Trust other than
in reliance upon written information furnished by the
Subadviser, or any affiliated person of the Subadviser,
expressly for use in the Trust's Registration Statement or
other than upon verbal information confirmed by the Subadviser
in writing expressly for use in the Trust's Registration
Statement; provided, however, that in no case is the Manager's
indemnity in favor of the Subadviser or any affiliated person
or controlling person of the Subadviser deemed to protect such
person against any liability to which any such person would
otherwise be subject by reason of willful misconduct, 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.
14. Notices. All notices or other communications required or
permitted to be given hereunder shall be in writing and shall
be delivered or sent by pre-paid first class letter post to
the following addresses or to such other address as the
relevant addressee shall hereafter specify for such purpose to
the others by notice in writing and shall be deemed to have
been given at the time of delivery.
If to the Manager: WEISS MONEY MANAGEMENT, INC.
4176 Burns Road
Palm Beach Gardens, FL 33410
Attention: John Breazeale
If to the Trust: THE WEISS FUND
4176 Burns Road
Palm Beach Gardens, FL 33410
Attention: John Breazeale
If to the Subadviser: HARVEST ADVISORS, INC.
11612 Bee Cave Road, Suite 110
Austin, Texas 78733
Attention: Anrhony L. Sagami
15. Limitation of Liability of the Trust, its Trustees, and Shareholders. It is
understood and expressly stipulated that none of the trustees, officers,
agents, or shareholders of any series of the Trust shall be personally
liable hereunder. It is understood and acknowledged that all persons
dealing with any series of the Trust must look solely to the property of
such series for the enforcement of any claims against that series as
neither the trustees, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of any series of the
Trust. No series of the Trust shall be liable for the obligations or
liabilities of any other series of the Trust.
16. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of
Massachusetts. Anything herein to the contrary
notwithstanding, this Agreement shall not be construed to
require, or to impose any duty upon either of the parties, to
do anything in violation of any applicable laws or
regulations.
17. Severability. Should any part of this Agreement be held
invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors.
18. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and
all such counterparts shall constitute a single instrument.
<PAGE>
IN WITNESS WHEREOF, WEISS MONEY MANAGEMENT, INC. AND HARVEST ADVISORS, INC.
have each caused this instrument to be signed in duplicate on its behalf by
the officer designated below thereunto duly authorized.
WEISS MONEY MANAGEMENT, INC.
By: /S/ JOHN N. BREAZEALE
Title: President
HARVEST ADVISORS, INC.
By: /S/ ANTHONY L. SAGAMI
Title: President
<PAGE>
SCHEDULE A
TO SUBADVISORY AGREEMENT BETWEEN
WEISS MONEY MANAGEMENT, INC. AND HARVEST ADVISORS, INC.
DATED AS OF JUNE 29, 1999
-----------------------------------
Funds:
Weiss Millennium Opportunity Fund
<PAGE>
SCHEDULE B
TO SUBADVISORY AGREEMENT BETWEEN
WEISS MONEY MANAGEMENT, INC. AND HARVEST ADVISORS, INC.
DATED AS OF JUNE 29, 1999
----------------------------------
Fee schedule:
Weiss Millennium Opportunity Fund: The Adviser shall pay the Subadviser as
compensation for Subadviser's services to be rendered hereunder a quarterly fee
in arrears at the rate of 10% of all fees payable during the same quarter by the
Fund to the Adviser for investment advisory services provided pursuant to the
Advisory Agreement, net of any fee waivers or expense reimbursements made by the
Adviser with respect to the Fund relating to such quarter.
Exhibit e(2)
THE WEISS FUND
ADDENDUM TO
DISTRIBUTION AGREEMENT
Weiss Millennium Opportunity Fund
Class A and Class S Shares
AGREEMENT made as of the 29th day of June, 1999, by and between The
Weiss Fund (the "Trust") and Weiss Funds, Inc. (the "Distributor").
WHEREAS, the Trust is registered as an open-end investment company
under the Investment Company Act of 1940, as amended, and consists of one or
more separate investment portfolios, as may be designated from time to time; and
WHEREAS, the Distributor serves as the Trust's distributor pursuant to
a Distribution Agreement dated as of January 16, 1996 (the "Agreement"); and
WHEREAS, the Trustees of the Trust, at a meeting held on April 27,
1999, duly approved an amendment to the Agreement to include the Class A and
Class S shares (the "Shares") of Weiss Millennium Opportunity Fund (the "Fund");
and
WHEREAS, the Shares were established and designated by the Board of
Trustees of the Trust by written consent made effective as of the date that the
Registration Statement for the Fund was filed with the Securities and Exchange
Commission in accordance with Rule 485(a)(1) under the Securities Act of 1933.
NOW THEREFORE, the Trust and the Distributor hereby agree as follows:
Effective as of June 29, 1999, the Agreement shall relate in
all respects to the Shares, in addition to the classes of
shares of the Funds and any other series of the Trust
specifically identified in the Agreement and any other Addenda
thereto.
IN WITNESS WHEREOF, the Trust and the Distributor have adopted this
Addendum as of the date first set forth above.
THE WEISS FUND
By: /S/ JOHN N. BREAZEALE
John N. Breazeale, President
WEISS FUNDS, INC.
By: /S/ JOHN N. BREAZEALE
John N. Breazeale, President
Exhibit g(3)
EXHIBIT A
THIS EXHIBIT A, dated as of April 13, 1999 is Exhibit A to that certain
Custodian Services Agreement dated as of June 20, 1996 between PFPC Trust
Company and The Weiss Fund (formerly, Weiss Treasury Fund).
PORTFOLIOS
Weiss Treasury Only Money Market Fund
Weiss Millennium Opportunity Fund
PFPC TRUST COMPANY
By: /S/ JOSEPH GRAMLICH
Title: Senior Vice President
THE WEISS FUND
By: /S/ JOHN N. BREAZEALE
Title: President
Exhibit h(5)
June 15, 1999
THE WEISS FUND
Re: Transfer Agency Service Fees
Dear Sir/Madam:
This letter represents a revision to our agreement with respect to
compensation to be paid to PFPC Inc. ("PFPC") under the terms of a Transfer
Agency Services Agreement dated June 20, 1996 between The Weiss Fund, formerly,
Weiss Treasury Fund ("you" or the "Fund") and PFPC (the "Agreement"). Pursuant
to Paragraph 11 of that Agreement, and in consideration of the services to be
provided to each of the Fund's investment portfolios listed on Exhibit A of the
Agreement, as such Exhibit A may be amended from time to time (each, a
"Portfolio"), you will pay PFPC the following:
1) Account Fee:
Annual, Semi-Annual Dividend: $10.00 per account per annum
Quarterly Dividend: $12.00 per account per annum
Monthly Dividend: $15.00 per account per annum
Daily Accrual Dividend: $18.00 per account per annum
Inactive Account: $ .30 per account per month
For contingent deferred sales charge funds, our per account fees will
increase by 12% per account.
Fees shall be calculated and paid monthly based on one-twelfth (1/12th)
of the annual fee. An inactive account is defined as having a zero
balance with no dividend payable. Inactive accounts are purged annually
after year-end tax reporting.
2) Transaction Charges:
Master/Omnibus Account: $1.25 per purchase/redemption
Wire order desk: $6.00 per broker call to place transactions
New Account Opening: $ .40 per account (electronic interface)
$3.50 per account (paper)
Checkwriting: $1.85 per account per year
$ .50 per check (returned)
$ .10 per check (not returned)
Commission Cycle: $ .25 per account per calculation
12b-1 Calculation: $ .25 per account per calculation
3) FundSERV/Networking:
NSCC Direct Out-of-Pocket Charges1
Participant Fee: $50.00 per month
CPU Access Fee: $40.00 per month
Transaction Fee: $ .50 each
PNC System Access Charges2
Base Facility Use Fee: $500.00 per month per fund family.
Transaction Fees per month per transaction based on total transactions
each month as follows:
$ .50 per transaction for 1 to 1000 transactions
$ .46 per transaction for 1001 to 2000 transactions
$ .40 per transaction for over 2000 transactions
4) NSCC Networking:
NSCC Direct Out-of-Pocket Charges1
Membership Fee: $250.00 per month
Sub-Account Fee: $ .045 per month per sub-account-
Daily/Monthly Dividend
$ .03 per month per sub-account-
Other
Position File Fee: $100.00 per position file per CUSIP for
more than 2 positions per CUSIP
per month
PNC System Access Charges2:
Base Facility Use Fee: $325.00 per month per fund family
Sub-Account Fees: $ .05 per month per sub-account
Position File Fee: $100.00 per position file per CUSIP for
more than 2 position files per
CUSIP per month
5) Additional Out-of-Pocket Expenses
a. Toll-free lines (if required)
b. Forms, envelopes, checks, checkbooks
c. Postage
d. Federal Express, delivery, courier services
e. Hardware/phone lines for remote terminal(s) (if required)
f. Microfiche/microfilm
g. Wire fee for receipt or disbursement: $10.00 per wire
h. ACH Transaction Charge: $.20 per item
i. Mailing fee: Approximately $.08 per item for standard
inserts; $.015 each additional insert
j. Cost of proxy solicitation, mailing and tabulation:
$350.00 base fee
$ .30 per proxy issued (5,000 account end up)
$ .45 per proxy issued (less than 5,000 accounts)
$100.00 plus travel expenses for judge of elections
$ postage and Federal Express as incurred
k. Certificate issuance fee: $2.00 per certificate
l. Audio response (if applicable)
m. Record retention storage
n. "B"/"C" notice mailing and IRS levies: $3.00 per item
o. Locating lost shareholders in anticipation of escheating:
$7.50 per name
p. Individual state tax filings
q. Development/programming costs: negotiated time and material
r. Consolidated statements: one annual statement included in
pricing; additional production $.25
per page, per production
s. Sales tracking system interfaces: negotiated time and expenses
t. Fulfillment
u. Creation of user tapes: $100 per occurrence
v. Labels: $.06 each; $100 minimum
w. Non-PFPC reruns: time and material cost
x. Ad hoc reports: Standard $.01 per record processed - plus
$100.00 set up fee; same day
turnaround additional $100.00 set up fee
y. Retroactive record dates: $100.00 plus $.025 per account
6) Additional Expenses (Which May be Paid by Shareholders):
a. IRA/Keough Processing: $10.00 per account per annum
$ 5.50 new account set up fee
$10.00 per transfer out
b. Exchange Fee: $5.00
c. Stop Payments: $ 9.50 each
Non-Sufficient Funds: $25.00 each
Check Copies: $ 2.50 each
d. Account Transcripts: $35.00 each
(within 3 most recent years)
(if older than 5 years) $50.00 each
7) Monthly Base Fee:
$3,000 per Portfolio/class, plus per account charges; excluding
transaction charges and out-of -pocket expenses.
The monthly base fee for each Portfolio/class with respect to such
Portfolio/class' first year of operations, exclusive of out-of-pocket expenses,
shall be waived for start-up portfolios in accordance with the following step-in
schedule:
Month Number Minimum Monthly
(from start of operations) Fee Waivers
1-2 100%
3 90%
4 80%
5 70%
6 60%
7 50%
8 40%
9 30%
10 20%
11 10%
12 0%
If during the next three years, PFPC is removed from the Transfer
Agency Services Agreement referenced above, the Fund shall pay any costs of time
and material associated with the deconversion and PFPC will recoup 100% of the
fees waived during the first two years.
The fee for the period from the date hereof until the end of the year
shall be prorated according to the proportion which such period bears to the
full annual period.
If the foregoing accurately sets forth our agreement and you intend to
be legally bound thereby, please execute a copy of this letter and return it to
us.
<PAGE>
Very truly yours,
PFPC INC.
By: /S/ JOSEPH GRAMLICH
Name: Joseph Gramlich
Title: Senior Vice President
Agreed and Accepted:
THE WEISS FUND
By: /S/ JOHN N. BREAZEALE
Name: John N. Breazeale
Title: President
53141.1.49
- --------
1 NSCC will deduct its monthly fee on the 15th of each month from PNC's cash
settlement that day. PNC will include these charges on its next bill as
out-of-pocket expenses.
2 Plus: out-of-pocket expenses for settlements; wire charges; NSCC pickup
charges; hardware, CRT's, modems; line (if required); etc.
Exhibit h(6)
EXHIBIT A
THIS EXHIBIT A, dated as of April 13, 1999 is Exhibit A to that certain
Transfer Agency Services Agreement dated as of June 20, 1996 between PFPC Inc.
and The Weiss Fund (formerly, Weiss Treasury Fund).
PORTFOLIOS
Weiss Treasury Only Money Market Fund
Weiss Millennium Opportunity Fund
PFPC INC.
By: /S/ JOSEPH GRAMLICH
Title: Senior Vice President
THE WEISS FUND
By: /S/ JOHN N. BREAZEALE
Title: President
Exhibit h(7)
March 15, 1999
THE WEISS FUND
Re: Administration and Accounting Services Fees
Dear Sir/Madam:
This letter represents a revision to the Administration and Accounting
Services Fees dated June 20, 1996. Pursuant to Paragraph 11 of the
Administration and Accounting Services Agreement between PFPC Inc ("PFPC") and
The Weiss Fund, formerly, Weiss Treasury Fund, ("you" or the "Fund") dated June
26, 1996, and with respect to Weiss Treasury Only Money Market Fund only, you
will pay PFPC the following:
1. An annual administration and accounting services fee, calculated daily and
payable monthly based upon the following: .10% of the first $200 million of
average net assets; .075% of the next $200 million of average net assets; .05%
of the next $200 million of average net assets; and .03% of average net assets
in excess of $600 million. PFPC agrees to cap total annual administration and
accounting services fees with respect to Weiss Treasury Only Money Market Fund
only at .09% of average net assets for such portfolio.
2. PFPC's out-of-pocket expenses including, but not limited to, overnight
express charges, outside independent pricing service charges, and travel
expenses incurred for board meeting attendance.
3. A minimum monthly fee of $4,617, exclusive of out-of-pocket expenses.
The fee for the period from the date hereof until the end of that year
shall be prorated according to the proportion which such period bears to the
full annual period.
If the foregoing accurately sets forth our agreement and you intend to
be legally bound thereby, please execute a copy of this letter and return it to
us.
Very truly yours,
PFPC INC.
By: /S/ JOSEPH GRAMLICH
Title: Senior Vice President
Accepted:
THE WEISS FUND
By: /S/ JOHN N. BREAZEALE
Title: President
Exhibit h(8)
EXHIBIT A
THIS EXHIBIT A, dated as of April 13, 1999 is Exhibit A to that certain
Administration and Accounting Services Agreement dated as of June 20, 1996
between PFPC Inc. and The Weiss Fund (formerly, Weiss Treasury Fund).
PORTFOLIOS
Weiss Treasury Only Money Market Fund
Weiss Millennium Opportunity Fund
PFPC INC.
By: /S/ JOSEPH GRAMLICH
Title: Senior Vice President
THE WEISS FUND
By: /S/ JOHN N. BREAZEALE
Title: President
Exhibit i(1)
DECHERT PRICE & RHOADS
TEN POST OFFICE SQUARE -- SOUTH
SUITE 1230
BOSTON, MA 02109-4603
June 29, 1999
The Weiss Fund
4176 Burns Road
Palm Beach Gardens, FL 33410
Dear Sirs:
As counsel for The Weiss Fund (the "Trust"), we are familiar with the
registration of the Trust under the Investment Company Act of 1940, as amended
(the "1940 Act") (File No. 811-09084), and Post-Effective Amendment No. 8 to the
Trust's registration statement relating to the shares of beneficial interest
(the "Shares") of Weiss Millennium Opportunity Fund (the "Fund") being filed
under the Securities Act of 1933, as amended (File No. 33-95688)
("Post-Effective Amendment No. 8"). We have also examined such other records of
the Trust, agreements, documents and instruments as we deemed appropriate.
Based upon the foregoing, it is our opinion that the Shares have been
duly authorized and, when issued and sold at the public offering price
contemplated by the Prospectus for the Fund and delivered by the Trust against
receipt of the net asset value of the Shares, will be issued as fully paid and
nonassessable Shares of the Trust.
We consent to the filing of this opinion on behalf of the Trust with
the Securities and Exchange Commission in connection with the filing of
Post-Effective Amendment No. 8.
Very truly yours,
/s/ DECHERT PRICE & RHOADS
Exhibit j(1)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the reference to our firm in the Pre-Effective Amendment to the
Registration Statement on Form N-1A of the Weiss Millennium Opportunity Fund and
to the use of our report dated June 28, 1999 on the statement of assets and
liabilities of the Weiss Millennium Opportunity Fund. Such statement of assets
and liabilities appears in the Fund's Statement of Additional Information.
/S/ TAIT, WELLER & BAKER
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
June 28, 1999
Exhibit m
DISTRIBUTION PLAN
FOR THE WEISS FUND CLASS S SHARES
WHEREAS, The Weiss Fund (the "Trust") is registered as an
open-end investment company under the Investment Company Act of 1940 (the "Act")
and consists of one or more separate investment portfolios (the "Funds") as may
be established and designated from time to time;
WHEREAS, the Trust and Weiss Funds, Inc. (the "Distributor"),
a broker-dealer registered under the Securities Exchange Act of 1934, have
entered into a Distribution Agreement pursuant to which the Distributor acts as
a distributor of shares of the Funds for sale to the public;
WHEREAS, the Board of Trustees of the Trust has determined to
adopt a Plan (the "Plan") in accordance with the requirements of the Act and has
determined that there is a reasonable likelihood that the Plan will benefit the
Trust and its shareholders;
NOW, THEREFORE, the Trust hereby adopts the Plan with respect
to Class S shares on the following terms and conditions:
1. The Plan will pertain to the Class S shares of Weiss Millennium Opportunity
Fund; and to the Class S shares of such Funds as shall be designated from time
to time by the Board of Trustees in any supplement to the Plan ("Supplement").
2. The Trust shall pay the Distributor a fee relating to the distribution and/or
service of the Class S shares of each Fund at the annual rate of 0.25% of the
average daily net assets attributable to that Fund's Class S shares. Such fee
shall be calculated and accrued daily and paid monthly or at such other
intervals as the Trustees shall determine, subject to any applicable restriction
imposed by rules of the National Association of Securities Dealers, Inc. If this
Plan is terminated, the Trust will owe no payments to the Distributor other than
any portion of the distribution fee accrued through the effective date of
termination but then unpaid.
3. The amount set forth in paragraph 2 of this Plan shall be paid for the
Distributor's services as distributor of the Class S shares of a Fund in
connection with any activities or expenses primarily intended to result in the
sale of the Class S shares of that Fund and/or for account maintenance and
personal service to shareholders, including, but not limited to, compensation to
broker-dealers that have entered into a dealer and/or shareholder or
administrative services agreement with the Distributor; compensation to and
expenses of employees of the Distributor who engage in or support distribution
and/or shareholder servicing of a Fund's Class S shares; compensation to banks,
investment advisers, financial institutions and other entities (including the
Distributor itself) for rendering certain shareholder liaison and/or
administrative services; telephone expenses; interest expenses; printing of
prospectuses and reports for other than existing shareholders; preparation,
printing and distribution of sales literature and advertising materials; and
profit on the foregoing.
4. The Plan shall not take effect with respect to Class S shares of a Fund until
it has been approved by a vote of at least a majority (as defined in the Act) of
the outstanding voting securities of Class S of that Fund. With respect to the
submission of the Plan for such a vote, it shall have been effectively approved
with respect to a Fund if a majority of the outstanding voting securities of
Class S of the Fund votes for approval of the Plan, notwithstanding that the
matter has not been approved by a majority of the outstanding voting securities
of the Trust or of any other Fund or class.
5. The Plan shall not take effect until it has been approved, together with any
related agreements and supplements, by votes of a majority of both (a) the Board
of Trustees of the Trust, and (b) those Trustees of the Trust who are not
"interested persons" (as defined in the Act) and have no direct or indirect
financial interest in the operation of the Plan or any agreements related to it
(the "Plan Trustees"), cast in person at a meeting (or meetings) called for the
purpose of voting on the Plan and such related agreement.
6. The Plan shall continue in effect so long as such continuance is specifically
approved at least annually in the manner provided for approval of the Plan in
paragraph 5 hereof.
7. Any person authorized to direct the disposition of monies paid or payable by
the Trust pursuant to the Plan or any related agreements shall provide to the
Trust's Board of Trustees, and the Board shall review, at least quarterly, a
written report of the amounts so expended and the purposes for which such
expenditures were made.
8. Any agreement related to the Plan shall be in writing and shall provide: (a)
that such agreement may be terminated at any time as to a Fund, without payment
of any penalty, by vote of a majority of the Plan Trustees or by vote of a
majority of the outstanding voting securities of Class S of the Fund, on not
more than sixty (60) days' written notice to any other party to the agreement;
and (b) that such agreement shall terminate automatically in the event of its
assignment.
9. The Plan may be terminated at any time with respect to a Fund, without
payment of any penalty, by vote of a majority of the Plan Trustees, or by vote
of a majority of the outstanding voting securities of Class S of the Fund.
10. The Plan may be amended at any time with respect to a Fund by the Board of
Trustees, provided that (a) any amendment to increase materially the costs which
the Fund may bear pursuant to the Plan shall be effective only upon approval by
a vote of a majority of the outstanding voting securities of Class S of the
Fund, and (b) any material amendments of the terms of the Plan shall become
effective only upon approval as provided in paragraph 5 hereof.
11. While the Plan is in effect, the selection and nomination of Trustees who
are not interested persons (as defined in the Act) of the Trust shall be
committed to the discretion of the Trustees who are not interested persons.
12. The Fund shall preserve copies of the Plan, any related agreement and any
report made pursuant to paragraph 7 hereof, for a period of not less than six
(6) years from the date of the Plan, such agreement or report, as the case may
be, the first two (2) years of which shall be in an easily accessible place.
13. It is understood and expressly stipulated that neither the holders of shares
of the Trust nor any Trustee, officer, agent or employees of the Trust shall be
personally liable hereunder, nor shall any resort be had to other private
property for the satisfaction of any claim or obligation hereunder, but the
Trust only shall be liable.
IN WITNESS WHEREOF, the Trust has adopted this Distribution
Plan effective as of the 29th day of June, 1999.
THE WEISS FUND
By: /S/ JOHN N. BREAZEALE
John N. Breazeale, President
Exhibit o
THE WEISS FUND
PLAN PURSUANT TO RULE 18F-3
UNDER THE
INVESTMENT COMPANY ACT OF 1940
I. INTRODUCTION
In accordance with Rule 18f-3 under the Investment Company Act of 1940,
as amended (the "1940 Act"), this Plan describes the multi-class structure that
will apply to certain series of The Weiss Fund (each a "Fund" and, collectively,
the "Funds"), including the separate class arrangements for the service and
distribution of shares, the method for allocating the expenses and income of
each Fund among its classes, and any related exchange privileges and conversion
features that apply to the different classes.
II. THE MULTI-CLASS STRUCTURE
The following Fund is authorized to issue two classes of shares identified as
Class A and Class S: Weiss Millennium Opportunity Fund.
Shares of each class of the Fund represent an equal pro rata interest
in the underlying assets of that Fund, and generally have identical voting,
dividend, liquidation, and other rights, preferences, powers, restrictions,
limitations, qualifications and terms and conditions, except that: (a) each
class shall have a different designation; (b) each class shall bear certain
class-specific expenses, as described more fully in Section III.C.2., below; (c)
each class shall have exclusive voting rights on any matter submitted to
shareholders that relates solely to its arrangement; and (d) each class shall
have separate voting rights on any matter submitted to shareholders in which the
interests of one class differ from the interests of any other class. Each class
of shares shall also have the distinct features described in Section III, below.
III. CLASS ARRANGEMENTS
A. FRONT-END SALES CHARGES AND CONTINGENT DEFERRED SALES
CHARGES
Class A shares shall be offered at net asset value plus a front-end
sales charge. The front-end sales charge shall be in such amount as is disclosed
in the Fund's current prospectus and shall be subject to reductions for larger
purchases and such waivers or reductions as are determined or approved by the
Board of Trustees. Class A shares generally will not be subject to a contingent
deferred sales charge (a "CDSC"), although a CDSC may be imposed in certain
limited cases as disclosed in the Fund's current prospectus or prospectus
supplement.
Class S shares are not subject to a front-end sales charge or a CDSC.
<PAGE>
B. RULE 12B-1 PLAN
The Fund has adopted a service and distribution plan pursuant to Rule
12b-1 under the 1940 Act (a "12b-1 plan") under which it pays to Weiss Funds,
Inc. (the "Distributor") a fee accrued daily and paid monthly at the annual rate
of 0.25% of the average daily net assets value of the Fund's outstanding Class S
shares.1 The foregoing amount is paid for the Distributor's services as
distributor of the Class S shares of a Fund in connection with any activities or
expenses primarily intended to result in the sale of the Class S shares of that
Fund and/or for account maintenance and personal service to shareholders,
including, but not limited to, compensation to broker-dealers that have entered
into a dealer and/or shareholder or administrative services agreement with the
Distributor; compensation to and expenses of employees of the Distributor who
engage in or support distribution and/or shareholder servicing of a Fund's Class
S shares; compensation to banks, investment advisers, financial institutions and
other entities (including the Distributor itself) for rendering certain
shareholder liaison and/or administrative services; telephone expenses; interest
expenses; printing of prospectuses and reports for other than existing
shareholders; preparation, printing and distribution of sales literature and
advertising materials; and profit on the foregoing.
C. ALLOCATION OF EXPENSES AND INCOME
1. "TRUST" AND "FUND" EXPENSES
The gross income, realized and unrealized capital gains and losses and
expenses (other than "Class Expenses," as defined below) of the Fund shall be
allocated to each class on the basis of its net asset value relative to the net
asset value of the Fund. Expenses so allocated include expenses of Weiss Fund
that are not attributable to a particular Fund or class of a Fund ("Trust
Expenses") and expenses of the Fund not attributable to a particular class of
the Fund ("Fund Expenses"). Trust Expenses include, but are not limited to,
Trustees' fees and expenses; insurance costs; certain legal fees; expenses
related to shareholder reports; and printing expenses. Fund Expenses include,
but are not limited to, certain registration fees (i.e., state registration fees
imposed on a Fund-wide basis and SEC registration fees); custodial fees;
transfer agent fees; advisory fees; fees related to the preparation of separate
documents of a particular Fund, such as a separate prospectus; and other
expenses relating to the management of the Fund's assets.
2. "CLASS" EXPENSES
The types of expenses attributable to a particular class ("Class
Expenses") include: (a) payments pursuant to the Rule 12b-1 plan for that
class;2 (b) transfer agent fees attributable to a particular class; (c) printing
and postage expenses related to preparing and distributing shareholder reports,
prospectuses and proxy materials; (d) registration fees (other than those set
forth in Section C.1. above); (e) the expense of administrative personnel and
services as required to support the shareholders of a particular class; (f)
litigation or other legal expenses relating solely to a particular class; (g)
Trustees' fees incurred as a result of issues relating to a particular class;
and (h) the expense of holding meetings solely for shareholders of a particular
class. Expenses described in subpart (a) of this paragraph must be allocated to
the class for which they are incurred. All other expenses described in this
paragraph may (but need not) be allocated as Class Expenses, but only if The
Weiss Fund's Board of Trustees determines, or The Weiss Fund's President and
Secretary/Treasurer have determined, subject to ratification by the Board of
Trustees, that the allocation of such expenses by class is consistent with
applicable legal principles under the 1940 Act and the Internal Revenue Code of
1986, as amended.
In the event that a particular expense is no longer reasonably
allocable by class or to a particular class, it shall be treated as a Trust
Expense or Fund Expense, and in the event a Trust Expense or Fund Expense
becomes reasonably allocable as a Class Expense, it shall be so allocated,
subject to compliance with Rule 18f-3 and to approval or ratification by the
Board of Trustees.
3. WAIVERS OR REIMBURSEMENTS OF EXPENSES
Expenses may be waived or reimbursed by any adviser to The Weiss Fund,
by the Distributor or any other provider of services to The Weiss Fund without
the prior approval of The Weiss Fund's Board of Trustees.
D. EXCHANGE PRIVILEGES
Shareholders of each Fund have exchange privileges with the other Funds.3
1. CLASS A:
INITIAL SALES CHARGE SHARES. Class A shareholders may exchange their
Class A shares ("outstanding Class A shares") for Class A shares of another Fund
(or for shares of another Fund that currently offers only a single class of
shares) ("new Class A Shares") on the basis of the relative net asset value per
Class A share, plus an amount equal to the difference, if any, between the sales
charge previously paid on the outstanding Class A shares and the sales charge
payable at the time of the exchange on the new Class A shares. Incremental sales
charges are waived for outstanding Class A shares that have been invested for 12
months or longer.
2. CLASS S:
Class S shareholders may exchange their Class S shares ("outstanding
Class S shares") for Class S shares of another Fund ("new Class S Shares") on
the basis of the relative net asset value per Class S share.
3. GENERAL:
Shares resulting from the reinvestment of dividends and other
distributions will not be charged a sales charge when exchanged into another
Fund.
IV. BOARD REVIEW
A. INITIAL APPROVAL
The Board of Trustees of The Weiss Fund, including a majority of the
Trustees who are not interested persons of The Weiss Fund, as defined under the
1940 Act (the "Independent Trustees"), at a meeting held on April 27, 1999,
initially approved this Plan based on a determination that the Plan, including
the expense allocation, is in the best interests of each class of shares of the
Fund individually and The Weiss Fund as a whole.
B. APPROVAL OF AMENDMENTS
Before any material amendments to this Plan, The Weiss Fund's Board of
Trustees, including a majority of the Independent Trustees, must find that the
Plan, as proposed to be amended (including any proposed amendments to the method
of allocating Class and/or Fund Expenses), is in the best interests of each
class of shares of the Fund individually and The Weiss Fund as a whole. In
considering whether to approve any proposed amendment(s) to the Plan, the
Trustees of The Weiss Fund shall request and evaluate such information as they
consider reasonably necessary to evaluate the proposed amendment(s) to the Plan.
Such information shall address the issue of whether any waivers or
reimbursements of advisory or administrative fees could be considered a
cross-subsidization of one class by another, and other potential conflicts of
interest between classes.
C. PERIODIC REVIEW
The Board of Trustees of The Weiss Fund shall review the Plan as
frequently as it deems necessary, consistent with applicable legal requirements.
V. EFFECTIVE DATE
The Plan first became effective as of April 27, 1999.
1 Fees for services in connection with the Rule 12b-1 plan will be
consistent with any applicable restriction imposed by the National
Association of Securities Dealers, Inc.
2 Class A shares bear no distribution or service fees.
3 Other exchange privileges, not described herein, exist under certain
other circumstances, as described in each Fund's current prospectus or
prospectus supplement.