As filed electronically with the Securities and Exchange Commission on
April 28, 2000
(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. 9 [x]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 11 [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 will become effective
on May 1, 2000 pursuant to paragraph (b) of Rule 485.
<PAGE>
THIS POST-EFFECTIVE AMENDMENT NO. 9 TO THE REGISTRATION STATEMENT OF THE WEISS
FUND (THE "REGISTRANT") IS FILED FOR THE PURPOSES OF UPDATING CERTAIN FINANCIAL
INFORMATION FOR WEISS TREASURY ONLY MONEY MARKET FUND AND WEISS MILLENNIUM
OPPORTUNITY FUND, EACH A SEPARATE SERIES OF THE REGISTRANT (EACH A "FUND"), AND
MAKING OTHER NON-MATERIAL CHANGES TO THE FUNDS' DISCLOSURE DOCUMENTS.
<PAGE>
THE WEISS FUND
CROSS REFERENCE SHEET
Post-Effective Amendment No. 9 contains the Prospectus and Statement of
Additional Information for Weiss Treasury Only Money Market Fund and Class A
shares of Weiss Millennium Opportunity Fund, each a series of The Weiss Fund,
and the Prospectus and Statement of Additional Information for Class S shares of
Weiss Millenium Opportunity Fund.
ITEMS REQUIRED BY FORM N-1A:
WEISS TREASURY ONLY MONEY MARKET FUND AND CLASS A SHARES OF WEISS MILLENNIUM
OPPORTUNITY FUND PART A:
ITEM 1 FRONT AND BACK COVER PAGES: Front and back cover pages
ITEM 2 RISK/RETURN SUMMARY: INVESTMENTS, RISKS AND PERFORMANCE: Fund Goals,
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 Funds' Investments 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; Redeeming Fund Shares; Exchanging Fund Shares;
Transaction Information; Shareholder Services; Additional Information
ITEM 8 DISTRIBUTION ARRANGEMENTS: Not Applicable
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;
Investment Advisory and Other Services
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
CLASS S SHARES OF WEISS MILLENNIUM OPPORTUNITY FUND
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; Redeeming Fund Shares; Transaction Information
ITEM 8 DISTRIBUTION ARRANGEMENTS: How to Invest in the Fund
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;
Investment Advisory and Other Services
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
<PAGE>
<PAGE> 1
Prospectus
May 1, 2000
THE WEISS FUND
WEISS TREASURY ONLY MONEY MARKET FUND
WEISS MILLENNIUM OPPORTUNITY FUND
4176 Burns Road
Palm Beach Gardens, FL 33410
(800) 289-8100
- -- Weiss Treasury Only Money Market Fund seeks maximum current income consistent
with preservation of capital.
- -- 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> 2
<TABLE>
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
TABLE OF CONTENTS
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Weiss Treasury Only Money Market Fund......... 1
Fund Goals, Principal Strategies, Performance
and Principal Risks......................... 1
Fees and Expenses............................. 3
Weiss Millennium Opportunity Fund............. 4
Fund Goals, Principal Strategies, Performance
and Principal Risks......................... 4
Fees and Expenses............................. 6
More Information About the Funds' Investments
and Risks................................... 7
Fund Management............................... 9
Dividends and Distributions................... 10
Taxes......................................... 11
Financial Highlights.......................... 13
How to Invest in the Funds.................... 15
Opening an Account............................ 15
Adding to Your Investment..................... 17
Redeeming Fund Shares......................... 17
Exchanging Fund Shares........................ 18
Transaction Information....................... 19
Shareholder Services.......................... 21
Additional Information...................Back Cover
</TABLE>
<PAGE> 3
WEISS TREASURY ONLY MONEY MARKET FUND
- ------------------------------------------------------
FUND GOALS, PRINCIPAL STRATEGIES, PERFORMANCE AND PRINCIPAL RISKS
- ------------------------------------------------------
GOAL Weiss Treasury Only Money Market Fund ("Money Market Fund") seeks maximum
current income consistent with preservation of capital. This objective may be
changed without the approval of the Fund's shareholders.
PRINCIPAL STRATEGY Money Market Fund pursues its objective by investing
exclusively in U.S. Treasury securities, which are direct obligations of the
U.S. Treasury, and repurchase agreements secured by such obligations. The Fund
maintains a dollar-weighted average maturity of 90 days or less. In selecting
portfolio investments, the Fund's investment adviser, Weiss Money Management,
Inc. (which we refer to as "Weiss" or the "Manager"), identifies securities that
present minimum credit risk and, from this group, makes an investment decision
after assessing factors such as the trend in interest rates, the shape of the
Treasury yield curve, and tax rates, and then selects from available yields and
maturities. A security is typically sold if it ceases to be rated or its rating
is reduced below the minimum required for purchase by Money Market Fund, unless
the Fund's Board determines that selling the security would not be in the best
interests of the Fund.
PRINCIPAL RISKS
- An investment in Money Market Fund is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
the Fund seeks to preserve the value of your investment at $1.00 per share, it
is possible to lose money by investing in the Fund.
- As with most money market funds, the major factor affecting Money Market
Fund's performance is short-term interest rates. If short-term interest rates
fall, the Fund's yield is also likely to fall.
- Money Market Fund can also be affected by the credit quality of the
securities in its portfolio. The credit quality of a security is based upon the
ability of the issuer to repay the security. Money market funds attempt to
minimize this risk by investing in securities with high credit quality.
- U.S. TREASURY SECURITIES Because short-term interest rates can fluctuate
substantially over short periods, income risk to shareholders (i.e., the
potential for a decline in the Fund's income due to falling interest rates) with
respect to Money Market Fund's investments in short-term U.S. Treasury
securities is expected to be high. As interest rates change, the values of such
securities will also fluctuate.
- REPURCHASE AGREEMENTS If the seller of the securities under a repurchase
agreement fails to pay the agreed resale price on the agreed delivery date,
Money Market Fund may incur costs in disposing of the collateral and be subject
to higher losses to the extent such disposal is delayed.
1
<PAGE> 4
PERFORMANCE The chart and table below provide some indication of the risks of
investing in Money Market Fund by showing performance changes year to year and
by showing average annual returns over time. Keep in mind that past performance
is no guarantee of future performance.
Annual Total Returns as of 12/31 Each Year
[Bar Chart]
<TABLE>
<CAPTION>
ANNUAL TOTAL RETURNS(%)
-----------------------
<S> <C>
1997 4.71
1998 4.67
1999 4.35
</TABLE>
<TABLE>
<S> <C>
BEST QUARTER: 5.00% (September 30, 1998)
WORST QUARTER: 4.17% (March 31, 1999)
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS (For periods ended December 31, 1999)
<TABLE>
<S> <C>
One Year 4.35%
Since Inception 4.58%*
</TABLE>
* Money Market Fund commenced operations on June 28, 1996.
<TABLE>
<S> <C>
7 Day Yield (as of December 31, 1999) 4.72%
</TABLE>
Money Market Fund's return and yield are after deduction of expenses. The Fund's
return and yield would have been lower had certain expenses not been waived and
reimbursed.
2
<PAGE> 5
- --------------------------------------------------------------------------------
FEES AND EXPENSES
- --------------------------------------------------------------------------------
The table below describes the fees and expenses that you may pay if you buy and
hold shares of Money Market Fund.
SHAREHOLDER FEES (Fees paid directly from your investment)
<TABLE>
<S> <C>
Redemption Fee(1) None
(as a percentage of amount redeemed)
Exchange Fee $5.00
</TABLE>
(1)A $15 service fee may be charged for redemptions by wire.
ANNUAL FUND OPERATING EXPENSES (Expenses that are deducted from Fund assets)
<TABLE>
<S> <C>
Management Fee 0.50%
Other Expenses 0.42%
Total Annual Fund Operating Expenses 0.92%
Expenses Waived or Reimbursed 0.32%
Net Fund Operating Expenses* 0.60%
</TABLE>
* Money Market Fund's investment manager has agreed to waive fees and/or
reimburse the Fund's expenses to the extent necessary to ensure that the
Fund's Annual Fund Operating Expenses do not exceed 0.60%. This waiver expires
on April 30, 2001. For the fiscal year ended 1999, the Fund's investment
manager voluntarily waived fees and reimbursed the Fund's expenses such that
the Fund's actual operating expenses amounted to 0.50%.
EXAMPLE:
This example is intended to help you compare the cost of investing in Money
Market 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:
<TABLE>
<S> <C>
1 Year $61
3 Years $261
5 Years $478
10 Years $1,102
</TABLE>
3
<PAGE> 6
WEISS MILLENNIUM OPPORTUNITY FUND
- ------------------------------------------------------
FUND GOAL, PRINCIPAL STRATEGIES, PERFORMANCE AND PRINCIPAL RISKS
- ------------------------------------------------------
GOAL Weiss Millennium Opportunity Fund ("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, Millennium Opportunity 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 Manager will use both fundamental analysis and
proprietary computer models to identify those securities to be purchased, sold
or sold short. The Manager makes such determinations based, in part, upon its
assessment of whether or not it believes a company is positioned to benefit
from, or contribute to, contemporary trends. Under normal conditions, the Fund
will invest at least 65% of its assets in long and/or short equity positions.
Millennium Opportunity 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 global deflation or a domestic recession, 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 Millennium Opportunity 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 Millennium Opportunity Fund will fluctuate over time
and it is possible to lose money invested in the Fund.
- STOCK MARKET Stock market movements will affect Millennium Opportunity
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
4
<PAGE> 7
if there is a stock market decline when the Fund has a significant "long" equity
position.
- EQUITY INVESTING An investment in the common stock of a company represents
a proportionate ownership interest in that company. Therefore, Millennium
Opportunity 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.
- SHORT INVESTING If Millennium Opportunity 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
Millennium Opportunity 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.
- PORTFOLIO STRATEGY The Manager's skill in choosing appropriate investments
for Millennium Opportunity 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.
- DEBT SECURITIES Investing in debt securities involves both interest rate
and credit risk. The value of debt instruments generally increases as interest
rates decline. In addition, the risk of prepayment could adversely impact
Millennium Opportunity 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.
- PORTFOLIO TURNOVER Portfolio turnover generally involves some expense to
Millennium Opportunity 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 relatively new fund, no past performance data are
presented.
5
<PAGE> 8
- --------------------------------------------------------------------------------
FEES AND EXPENSES
- --------------------------------------------------------------------------------
The table below describes the fees and expenses that you may pay if you buy and
hold Class A shares of Millennium Opportunity Fund.
SHAREHOLDER FEES (Fees paid directly from your investment)
<TABLE>
<S> <C>
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
</TABLE>
(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)
<TABLE>
<S> <C>
Management Fee 1.50%
Other Expenses* 1.06%
Total Annual Fund Operating Expenses** 2.56%
</TABLE>
* "Other Expenses" are based on estimated amounts for the current fiscal year.
** The Manger has voluntarily agreed to waive fees and/or reimburse the Fund's
expenses to the extent necessary to ensure that the Fund's total operating
expenses (excluding interest, taxes, brokerage commissions, litigation,
indemnification, and extraordinary expenses) do not exceed 2.50%. This
expense limitation may be terminated or revised at any time.
EXAMPLE:
This example is intended to help you compare the cost of investing in Millennium
Opportunity 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:
<TABLE>
<S> <C>
1 Year $332
3 Years $866
</TABLE>
6
<PAGE> 9
- ------------------------------------------------------
MORE INFORMATION ABOUT THE FUNDS' INVESTMENTS AND RISKS
- ------------------------------------------------------
WEISS TREASURY ONLY MONEY MARKET FUND
PRINCIPAL INVESTMENTS
Money Market Fund's investments will comply with applicable rules governing the
quality, maturity and diversification of securities held by money market funds.
- --U.S. TREASURY SECURITIES. Money Market Fund invests primarily in U.S.
Treasury securities, which are direct obligations of the U.S. Treasury. U.S.
Treasury securities differ only in their interest rates, maturities and times of
issuance. For example, Treasury bills have initial maturities of one year or
less; Treasury notes have initial maturities of one to ten years; and Treasury
bonds generally have initial maturities of greater than ten years. The payment
of principal and interest on U.S. Treasury securities is unconditionally
guaranteed by the U.S. Government, and therefore they are of the highest
possible credit quality.
- --REPURCHASE AGREEMENTS. As a means of earning income for periods as short as
overnight, Money Market Fund may enter into repurchase agreements secured by
U.S. Treasury securities that mature within seven days or less with selected
banks and broker-dealers. When the Fund enters into a repurchase agreement, it
buys securities for a specified price and agrees to resell the securities to the
seller at a higher price at some future date, normally one to seven days from
the time of initial purchase.
OTHER INVESTMENTS
OTHER INVESTMENT COMPANIES. Money Market Fund may also invest in the securities
of other mutual funds investing primarily in U.S. Treasury securities subject to
applicable securities regulations. 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.
WEISS MILLENNIUM OPPORTUNITY FUND
PRINCIPAL STRATEGIES
The Manager uses a variety of investments and investment techniques in seeking
to achieve Millennium Opportunity 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
- --FUNDAMENTAL ANALYSIS. Companies are evaluated for their fundamental ability
to withstand, or even take advantage of, adverse economic conditions, such 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.
- --SECTOR ANALYSIS. A proprietary computer model evaluates various market
sectors to aid the Manager in selecting for purchase securities from sectors of
7
<PAGE> 10
the economy that are showing strength or, conversely, selling securities short
in sectors that are showing weakness.
- --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:
- --A Buy Candidates List is created containing stocks in sectors ranked high.
- --A Short-Sale Candidates List is created with stocks in sectors ranked low.
PORTFOLIO STRUCTURE
Millennium Opportunity 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.
- --Approximately 30% of Millennium Opportunity 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.
- --Approximately 50% of Millennium Opportunity 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.
- --Approximately 20% of Millennium Opportunity Fund's assets will be invested in
debt securities issued or guaranteed by the U.S. Government and its agencies or
instrumentalities, investment-grade debt securities of 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), Millennium Opportunity 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). Millennium Opportunity 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
8
<PAGE> 11
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:
--CREDIT QUALITY RISK. The possibility that an issuer will be unable to
make timely payments of either principal or interest.
--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, Millennium
Opportunity Fund may be required to invest the proceeds from such
investments at lower interest rates.
- --TEMPORARY DEFENSIVE INVESTMENTS. Millennium Opportunity 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, Millennium
Opportunity 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).
- ------------------------------------------------------
FUND MANAGEMENT
- ------------------------------------------------------
INVESTMENT MANAGER
Weiss Money Management, Inc., 4176 Burns Road, Palm Beach Gardens, Florida
33410, is the investment adviser to each Fund, and is responsible for the
day-to-day management of the portfolio. The Manager has been providing
investment advisory services to The Weiss Fund since the Trust's inception in
1996 and to individual clients since its inception in 1980.
Under separate investment advisory agreements with the Funds, the Manager
provides continuous advice and recommendations concerning each Fund's
investments.
WEISS TREASURY ONLY MONEY MARKET FUND. Money Market Fund has agreed to
compensate the Manager for its services by the monthly payment of a fee at the
annual rate of 0.50% of the Fund's average net assets. For the fiscal year ended
December 31, 1999, Money Market Fund paid the Manager a fee equal to 0.08% the
Fund's average net assets, since the Manager waived a portion of its fee in
order to limit the Fund's expenses.
9
<PAGE> 12
Currently, the Manager contractually limits total operating expenses (excluding
interest, taxes, brokerage commissions, litigation, indemnification, and
extraordinary expenses) to an annual rate of 0.60% of the average net assets of
Money Market Fund, which lowers the Fund's expenses and increases its yield.
This expense limitation may be terminated or revised each year, at which point
Money Market Fund's expenses may increase and its yield may be reduced.
WEISS MILLENNIUM OPPORTUNITY FUND. Millennium Opportunity 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.
Currently, the Manager voluntarily limits total operating expenses (excluding
interest, taxes, brokerage commissions, litigation, indemnification, and
extraordinary expenses) to an annual rate of 2.50% of the average net assets of
Millennium Opportunity Fund, which lowers the Fund's expenses and increases its
return. This expense limitation may be terminated or revised at any time, at
which point Millennium Opportunity Fund's expenses may increase and its return
may be reduced.
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 Millennium
Opportunity 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
Millennium Opportunity 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
Millennium Opportunity Fund.
PORTFOLIO MANAGER
JOHN N. BREAZEALE. Mr. Breazeale, President of Weiss Money Management, Inc.,
and President and Chairman of the Board of Trustees of The Weiss Fund, has been
the portfolio manager for Money Market Fund since its inception. In addition,
Mr. Breazeale is primarily responsible for implementing Millennium Opportunity
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 29
years' experience in the securities industry.
- ------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS
- ------------------------------------------------------
WEISS TREASURY ONLY MONEY MARKET FUND. Money Market Fund intends to distribute
substantially all of its net investment income and any net
10
<PAGE> 13
realized capital gains. Net investment income for the Fund consists of all
interest income accrued on the Fund's assets, less all actual and accrued
expenses. Interest income included in the daily computation of net investment
income is comprised of original issue discount earned on discount paper accrued
to the date of maturity as well as accrued interest. The Fund's expenses,
including the management fee payable to the Manager, are accrued each day.
Distributions by Money Market 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. Dividends are
declared daily. The Fund intends to distribute dividends on the last business
day of each month. The Fund may make an additional distribution of income and
gains if necessary to satisfy a calendar year excise tax distribution
requirement.
WEISS MILLENNIUM OPPORTUNITY FUND. Millennium Opportunity 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 Millennium Opportunity 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 a 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. If a portion of Millennium Opportunity
Fund's income consists of dividends from U.S. corporations, a portion of the
dividends paid by the Fund may be eligible for the dividends-received deduction
for corporate shareholders. Distributions are taxable to you in the same manner
whether received in cash or reinvested in additional Fund shares.
If shares of a 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 a 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.
If you purchase Fund shares shortly before a distribution, you will be taxed on
the distribution, even though it represents a return of your investment. To
avoid this result, check a Fund's distribution schedule before you invest.
11
<PAGE> 14
Each year the applicable 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. Fund distributions may also be subject to state, local and
foreign taxes. With respect to Money Market Fund, in many states Fund
distributions which are derived from interest on U.S. Treasury securities are
exempt from taxation. You should consult your own tax adviser regarding the
particular tax consequences of an investment in a Fund.
12
<PAGE> 15
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand each Fund's
financial performance for the fiscal periods indicated. Certain information
reflects financial results for a single Fund share. Information presented for
Millennium Opportunity Fund pertains to the Fund's Class A shares. The total
returns in the table represent the rate that an investor would have earned (or
lost) on an investment in the applicable Fund (assuming reinvestment of all
dividends and distributions). This information has been audited by Tait, Weller
& Baker, whose report, along with the Fund's financial statements, is included
in the annual report, which is available upon request.
THE WEISS FUND
For a share outstanding throughout each period.
<TABLE>
<CAPTION>
WEISS
MILLENNIUM
OPPORTUNITY
WEISS TREASURY ONLY MONEY MARKET FUND FUND
------------------------------------------------------------ ---------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE PERIOD FOR THE PERIOD
ENDED ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997 1996* 1999*
------------ ------------ ------------ --------------- ---------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of
period: $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 10.00
-------- ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.04 0.05 0.05 0.02 0.01
Net realized and unrealized
gain (loss) on
investments -- -- -- -- 0.19
-------- ------- ------- ------- -------
Net Investment Income 0.04 0.05 0.05 0.02 0.20
-------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
From net investment income: (0.04) (0.05) (0.05) (0.02) (0.01)
-------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD: $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 10.19
======== ======= ======= ======= =======
TOTAL RETURN 4.35% 4.67% 4.71% 4.67%(3) 2.04%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000) $118,930 $69,049 $33,361 $11,127 $16,767
Ratio of expenses to average
net assets(1) 0.50% 0.53% 0.50% 0.50%(3) 2.55%(3)
Ratio of net income to average
net assets(2) 4.24% 4.55% 4.60% 4.54%(3) 1.24%(3)
Portfolio Turnover NA NA NA NA 82%
</TABLE>
13
<PAGE> 16
- ---------------
(1) Weiss Treasury Only Money Market Fund's annualized expense ratios before
waivers and reimbursement of expenses for the years ended December 31, 1999,
1998 and 1997 and the period ended December 31, 1996 would have been 0.92%,
1.14%, 1.69%, and 7.69%, respectively.
Weiss Millennium Opportunity Fund's annualized expense ratio before waivers
and reimbursement of expenses for the period ended December 31, 1999, would
have been 6.27%, which included the margin and dividend expenses. Without
the margin and dividend expenses, the ratio would have been 6.22%.
Weiss Millennium Opportunity Fund's annualized expense ratio after waivers
and reimbursement of expenses for the period ended December 31, 1999,
excluding the margin and dividend expenses would have been 2.50%.
(2) Weiss Treasury Only Money Market Fund's annualized net investment income
ratios before waivers and reimbursement of expenses for the years ended
December 31, 1999, 1998 and 1997 and the period ended December 31, 1996
would have been 3.82%, 3.94%, 3.41% and (2.65)%, respectively.
Weiss Millennium Opportunity Fund's annualized net investment income ratio
before waivers and reimbursement of expenses for the period ended December
31, 1999 would have been (2.43)%, with the margin and dividend expenses
excluded.
(3) Annualized.
* Commencement of operations of Weiss Treasury Only Money Market Fund and Weiss
Millennium Opportunity Fund was June 28, 1996 and September 21, 1999,
respectively.
14
<PAGE> 17
- ------------------------------------------------------
HOW TO INVEST IN THE FUNDS
- ------------------------------------------------------
BUYING SHARES
WEISS TREASURY ONLY MONEY MARKET FUND. Purchase orders for shares of Money
Market Fund which are received by the transfer agent on any business day prior
to 12:00 noon eastern time, receive the net asset value per share next
determined after receipt of the order by the transfer agent and are executed
that day. Purchase orders received after 12:00 noon eastern time receive the net
asset value per share next determined after receipt of the order by the transfer
agent and are executed the following business day. 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 New York Stock Exchange or the
Federal Reserve is closed.
Money Market Fund shares may be purchased without a sales charge if you purchase
them through the Fund's distributor. Broker-dealers other than the distributor
may assess transaction charges in connection with purchases of Fund shares.
WEISS MILLENNIUM OPPORTUNITY FUND. Purchase orders for shares of Millennium
Opportunity 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 calculated for that day,
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 Millennium
Opportunity 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 applicable Fund.
Please see "Transaction Information" later in this Prospectus for additional
information on buying, redeeming and exchanging Fund shares.
- ------------------------------------------------------
OPENING AN ACCOUNT
- ------------------------------------------------------
MINIMUM INVESTMENT
The minimum initial investment is $1,000 for Money Market Fund and $5,000 for
Millennium Opportunity Fund.
15
<PAGE> 18
BY MAIL
Complete an account application and mail it along with a check payable to the
applicable Fund to:
The Weiss Fund
P.O. Box 8969
Wilmington, DE 19899-8969
or by overnight mail to:
The Weiss Fund
c/o PFPC Trust Company
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 applicable 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 Funds'
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.
WEISS MILLENNIUM OPPORTUNITY FUND
FRONT-END SALES CHARGE
The offering price of Millennium Opportunity 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) Millennium Opportunity Fund shares
purchased with reinvested dividends or distributions, (ii) subsequent
investments in Millennium Opportunity 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
Millennium Opportunity 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 Millennium Opportunity Fund shares purchased:
- - in connection with shares purchased through the cross reinvestment privilege;
- - by persons repurchasing shares they redeemed within the last 30 days (see
"Repurchase of Millennium Opportunity Fund Shares");
- - by directors, officers and employees and members of their immediate families
of the Manager, the Sub-Adviser and their affiliates and dealers that
16
<PAGE> 19
enter into agreements with Millennium Opportunity Fund's distributor;
- - by Trustees and officers of The Weiss Fund;
- - through wrap fee and asset allocation programs and financial institutions
that, under their dealer agreements with Millennium Opportunity Fund's
distributor or otherwise, do not receive any or receive a reduced portion of
the front-end sales charge; and
- - by persons purchasing shares of Millennium Opportunity Fund through a payroll
deduction plan or a qualified retirement plan which permits purchases of
shares of the Fund.
REPURCHASE OF MILLENNIUM OPPORTUNITY FUND SHARES
Investors may repurchase any amount of Millennium Opportunity 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.
- ------------------------------------------------------
ADDING TO YOUR INVESTMENT
- ------------------------------------------------------
MINIMUM INVESTMENT
The minimum amount required to make subsequent investments in either Fund is
$100.
BY MAIL
Make a check payable to the applicable 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 Funds'
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."
- ------------------------------------------------------
REDEEMING FUND SHARES
- ------------------------------------------------------
Each 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. A
17
<PAGE> 20
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."
- ------------------------------------------------------
EXCHANGING FUND SHARES
- ------------------------------------------------------
Shareholders of each Fund have an exchange privilege with other Weiss funds.
Each Fund reserves the right to reject any exchange order. Shareholders of a
Fund may exchange their outstanding shares for shares of another Weiss fund on
the basis of relative net asset value per share, as more fully described below.
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
18
<PAGE> 21
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, Millennium Opportunity Fund's sales charge is not assessed on
exchanges from another Weiss fund whose shares were purchased through a previous
exchange from Millennium Opportunity 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
WEISS TREASURY ONLY MONEY MARKET FUND. For purposes of processing purchase and
redemption orders, the net asset value per share of Money Market Fund is
calculated as of 12:00 noon and 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.
Money Market 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. The Fund's assets are valued at amortized cost in
accordance with the Fund's procedures pursuant to Rule 2a-7 under the Investment
Company Act of 1940.
WEISS MILLENNIUM OPPORTUNITY FUND. For purposes of processing purchase and
redemption orders, the net asset value per share of Millennium Opportunity 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.
Millennium Opportunity 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
19
<PAGE> 22
method that The Weiss 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.
On those days where the Funds' custodian or the Exchange closes early as a
result of such day being a partial holiday or otherwise, each Fund reserves the
right to advance on that day the time by which purchase and redemption requests
must be received.
TELEPHONE TRANSACTIONS
Shareholders automatically receive the Telephone Transaction Privilege. The
Telephone Transaction Privilege allows a shareholder to effect exchanges from a
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 a 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. Each 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. A 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 Fund Shares" and/or "Redeeming Fund 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 applicable Fund's books; or (iii) an
amount of $50,000 or less if the address of record has been changed on the
applicable 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.
20
<PAGE> 23
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 a 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. Each 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. Each Fund also reserves the right to
redeem shares from accounts without such information upon 30 days' notice.
Shareholders may avoid redemption by providing the applicable Fund with a tax
identification number during the notice period.
SUBMINIMUM ACCOUNTS
Each 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 $500
minimum for Money Market Fund or a $2,500 minimum for Millennium Opportunity
Fund 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, a Fund may make payment in readily marketable
portfolio securities at their market value equal to the redemption price.
SHORT-TERM TRADING
Each 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
- ------------------------------------------------------
CHECKWRITING PRIVILEGES (MONEY MARKET FUND ONLY)
You may elect to redeem shares by writing checks against your account balance in
Money Market Fund for at least $50 by completing a signature card of The Weiss
Fund. Your Money Market Fund investments will continue to earn dividends until
your purchase check is presented to the Fund for payment. Checks will be
returned by Money Market Fund's transfer agent if there are insufficient shares
to meet the withdrawal amount. You should not attempt to close an account by
check because the exact balance at the time the check clears will not be known
when the check is written. For additional information call (800) 430-9617.
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
21
<PAGE> 24
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(s) 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 shares of the
applicable Fund 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 a 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
Each Fund offers Individual Retirement Account ("IRA"), Roth IRA and Education
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 Funds' IRA, Roth IRA and
Educational IRA plans, charges certain nominal fees for the annual maintenance
of such accounts. Please call (800) 430-9617 for additional information and
account materials.
22
<PAGE> 25
- ----------------------
ADDITIONAL INFORMATION
- ----------------------
The following documents contain further details about the Funds and are
available upon request and without charge.
ANNUAL AND SEMI ANNUAL REPORTS - Additional information about each Fund's
investments is available in the Funds' annual and semi-annual reports to
shareholders. In the Funds' annual reports you will find a discussion of the
market conditions and investment strategies that significantly affected each
Fund's performance during its last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION ("SAI") - The SAI contains more detailed
disclosure on features, investments and policies of the Funds. 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 to the Funds, obtain the above documentation free of
charge and request other information about the Funds by contacting:
THE WEISS FUND
4176 Burns Road
Palm Beach Gardens, FL 33410
(800) 289-8100
These documents can be reviewed and copied at the SEC's Public Reference Room
in Washington, D.C., and information on the operation of the Public Reference
Room may be obtained by calling the SEC at 1-202-942-8090. Reports and other
information about the Funds are available on the EDGAR database on the SEC's
Internet site at http://www.sec.gov, and copies of this information may be
obtained, after paying a duplicating fee, by electronic request at the following
e-mail address: [email protected], or by writing to the following address:
U.S. SECURITIES AND EXCHANGE COMMISSION
Public Reference Room
450 Fifth Street NW
Washington, D.C. 20549-0102
Investment Company Act
File Number 811-09084
[THE WEISS FUND LOGO]
[WEISS MILLENNIUM LOGO]
[WEISS TREASURY LOGO]
PROSPECTUS
(ENCLOSED)
<PAGE> 26
WEISS MILLENNIUM OPPORTUNITY FUND
Prospectus
May 1, 2000
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> 27
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Fund Goal, Principal Strategies, Performance
and Principal Risks......................... 1
Fees and Expenses............................. 3
More Information about the Fund's Principal
Strategies and Risks........................ 4
Fund Management............................... 6
Dividends and Distributions................... 6
Taxes......................................... 7
Financial Highlights.......................... 7
How to Invest in the Fund..................... 9
Redeeming Fund Shares......................... 9
Transaction Information....................... 9
Additional Information.................. Back Cover
</TABLE>
<PAGE> 28
- ------------------------------------------------------
FUND GOAL, PRINCIPAL STRATEGIES, PERFORMANCE AND PRINCIPAL RISKS
- ------------------------------------------------------
- --GOAL. 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. The Manager makes such determinations based, in part, upon its
assessment of whether or not it believes a company is positioned to benefit
from, or contribute to, contemporary trends. 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
global deflation or a domestic recession, 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.
- --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.
1
<PAGE> 29
- --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.
- --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.
- --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.
- --DEBT SECURITIES. Investing in debt securities involves both interest rate and
credit risk. The value of debt instruments generally increases 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.
- --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 relatively new fund, no past performance data are presented.
2
<PAGE> 30
- --------------------------------------------------------------------------------
FEES AND EXPENSES
- --------------------------------------------------------------------------------
The table below describes the fees and expenses that you may pay if you buy and
hold Class S shares of the Fund.
SHAREHOLDER FEES (Fees paid directly from your investment)
<TABLE>
<S> <C>
Redemption Fee(1)
(as a percentage of amount redeemed) None
</TABLE>
(1)A $15 service fee may be charged for redemptions by wire.
ANNUAL FUND OPERATING EXPENSES (Expenses that are deducted from Fund assets)
<TABLE>
<S> <C>
Management Fee 1.50%
Distribution and/or Service (12b-1) Fees 0.25%
Other Expenses* 1.06%
Total Annual Fund Operating Expenses** 2.81%
</TABLE>
* "Other Expenses" are based on estimated amounts for the current fiscal year.
** The Manager has voluntarily agreed to waive fees and/or reimburse the Fund's
expenses to the extent necessary to ensure that the Fund's total operating
expenses (excluding Rule 12b-1 fees, interest, taxes, brokerage commissions,
litigation, indemnification, and extraordinary expenses) do not exceed 2.50%.
This expense limitation may be terminated or revised at any time.
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:
<TABLE>
<S> <C>
1 Year $284
3 Years $871
</TABLE>
3
<PAGE> 31
- ------------------------------------------------------
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
- --FUNDAMENTAL ANALYSIS. Companies are evaluated for their fundamental ability
to withstand, or even take advantage of, adverse economic conditions, such 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.
- --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.
- --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:
- --A Buy Candidates List is created containing stocks in sectors ranked high.
- --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.
- --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.
- --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.
- --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, investment-grade debt securities of 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
4
<PAGE> 32
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:
--CREDIT QUALITY RISK. The possibility that an issuer will be unable to
make timely payments of either principal or interest.
--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).
5
<PAGE> 33
- ------------------------------------------------------
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.
Currently, the Manager voluntarily limits total operating expenses (excluding
Rule 12b-1 fees, interest, taxes, brokerage commissions, litigation,
indemnification, and extraordinary expenses) to an annual rate of 2.50% of the
Fund's average net assets, which lowers the Fund's expenses and increases its
return. This expense limitation may be terminated or revised at any time, at
which point the Fund's expenses may increase and its return may be reduced.
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 The Weiss Fund, and portfolio
manager of the Weiss Treasury Only Money Market Fund, a separate series of The
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 29 years'
experience in the securities industry.
- ------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS
- ------------------------------------------------------
The Fund intends to distribute to shareholders substantially all of its net
investment income annually.
6
<PAGE> 34
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. If a portion of the
Fund's income consists of dividends from U.S. corporations, a portion of the
dividends paid by the Fund may be eligible for the dividends-received deduction
for corporate shareholders. 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.
If you purchase Fund shares shortly before a distribution, you will be taxed on
the distribution, even though it represents a return of your investment. To
avoid this result, check the Fund's distribution schedule before you invest.
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. Fund distributions may also be subject to state, local and
foreign taxes. You should consult your own tax adviser regarding the particular
tax consequences of an investment in the Fund.
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------
The financial highlights table is intended to help you understand the Fund's
financial performance for the fiscal period indicated. Certain information
reflects financial results for a single Class S share of the Fund. The total
returns in the table represent the rate that an investor would have earned (or
lost) on an investment in the Fund's Class S shares (assuming reinvestment of
all dividends and distributions). This information has been audited by Tait,
Weller & Baker, whose report, along with the Fund's financial statements, is
included in the annual report, which is available upon request.
7
<PAGE> 35
WEISS MILLENNIUM OPPORTUNITY FUND
FOR A CLASS S SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
FOR THE PERIOD ENDED
DECEMBER 31, 1999*
--------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD: $10.00
------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income..................................... 0.01
Net realized and unrealized gain (loss) on investments.... 0.19
------
Net Investment Income.................................. 0.20
------
LESS DISTRIBUTIONS:
From net investment income................................ (0.01)
------
NET ASSET VALUE, END OF PERIOD: $10.19
======
TOTAL RETURN................................................ 2.04%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period................................... $31.00
Ratio of expenses to average net assets(1).................. 2.55%(3)
Ratio of net income to average net assets(2)................ 1.24%(3)
Portfolio turnover.......................................... 82%
</TABLE>
- ---------------
(1) Weiss Millennium Opportunity Fund's annualized expense ratio before waivers
and reimbursement of expenses for the period ended December 31, 1999, would
have been 6.27%, which included the margin and dividend expenses. Without
the margin and dividend expenses, the ratio would have been 6.22%.
Weiss Millennium Opportunity Fund's annualized expense ratio after waivers
and reimbursement of expenses for the period ended December 31, 1999,
excluding the margin and dividend expenses would have been 2.50%.
(2) Weiss Millennium Opportunity Fund's annualized net investment income ratio
before waivers and reimbursement of expenses for the period ended December
31, 1999 would have been (2.43)%, with the margin and dividend expenses
excluded.
(3) Annualized.
* Commencement of operations was September 21, 1999.
8
<PAGE> 36
- ------------------------------------------------------
HOW TO INVEST IN THE FUND
- ------------------------------------------------------
BUYING SHARES
The minimum initial investment in the Fund is $5,000. The minimum amount
required to make subsequent investments is $100.
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. You
will also generally have to address your correspondence or questions regarding
the Fund to your institution.
The Fund has adopted a Rule 12b-1 distribution plan for its Class S shares that
allows the Fund to pay fees for the sale and distribution of its Class S shares
and for services provided to shareholders. Because these fees are paid out of
the Fund's assets on an ongoing basis, over time they will increase the cost of
your investment and may cost you more than paying other types of sales charges.
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
calculated for that day. 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.
- ------------------------------------------------------
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. Your broker or
institution may charge a fee in connection with your redemption of Fund shares.
- ------------------------------------------------------
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.
9
<PAGE> 37
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.
10
<PAGE> 38
- -----------------------
ADDITIONAL INFORMATION
- -----------------------
The following documents contain further details about the Fund's Class S shares
and are available upon request and without charge:
ANNUAL AND SEMI ANNUAL REPORTS - Additional information about the Fund's
investments is available in the Fund's annual and semi-annual reports to
shareholders. In the Fund's annual reports you will find a discussion of the
market conditions and investment strategies that significantly affected the
Fund's performance during its last fiscal year.
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 to the Fund, obtain the above documentation free of
charge and request other information about the Fund by contacting:
THE WEISS FUND
4176 Burns Road
Palm Beach Gardens, FL 33410
(800) 289-8100
These documents can be reviewed and copied at the SEC's Public Reference Room
in Washington, D.C., and information on the operation of the Public Reference
Room may be obtained by calling the SEC at 1-202-942-8090. Reports and other
information about the Fund are available on the EDGAR database on the SEC's
Internet site at http://www.sec.gov, and copies of this information may be
obtained, after paying a duplicating fee, by electronic request at the
following e-mail address: [email protected], or by writing to the following
address:
U.S. SECURITIES AND EXCHANGE COMMISSION
Public Reference Room
450 Fifth Street NW
Washington, DC 20549-0102
Investment Company Act
File Number 811-09084
[WEISS FUND LOGO]
WEISS MILLENNIUM
OPPORTUNITY FUND
CLASS S SHARES
PROSPECTUS
(ENCLOSED)
<PAGE>
THE WEISS FUND
4176 Burns Road
Palm Beach Gardens, FL 33410
(800) 289-8100
Statement of Additional Information
May 1, 2000
Weiss Treasury Only Money Market Fund
Weiss Millennium Opportunity Fund
This Statement of Additional Information pertains to the Weiss Treasury Only
Money Market Fund (the "Money Market Fund") and Class A shares of Weiss
Millennium Opportunity Fund (the "Millennium Opportunity Fund") (each a "Fund"
and, collectively, the "Funds"), each of which is a separate, diversified series
of The Weiss Fund, a Massachusetts business trust (the "Trust") that currently
consists of two portfolios. Each Fund is managed by Weiss Money Management, Inc.
(the "Manager").
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the Prospectus for the Funds dated May 1, 2000, 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.
The financial statements contained in the Funds' December 31, 1999 Annual Report
to Shareholders are incorporated by reference into and are hereby deemed to be
part of this Statement of Additional Information.
<PAGE>
TABLE OF CONTENTS
INVESTMENT OBJECTIVE, RESTRICTIONS AND TECHNIQUES.............................1
Weiss Treasury Only Money Market Fund
Investment Objective.................................................1
Investments..........................................................1
Weiss Millennium Opportunity Fund
Investment Objective.................................................3
Investments..........................................................4
Investment Restrictions.............................................15
ORGANIZATION OF THE FUNDS....................................................19
TRUSTEES AND OFFICERS........................................................21
MANAGEMENT COMPENSATION......................................................22
INVESTMENT ADVISORY AND OTHER SERVICES.......................................23
Investment Manager..................................................23
Sub-Adviser.........................................................24
Distributor.........................................................24
Code of Ethics......................................................25
Administrator.......................................................25
Transfer Agent, Dividend Disbursing Agent and Custodian.............25
PERFORMANCE INFORMATION......................................................26
Average Annual Total Return.........................................26
Cumulative Total Return.............................................27
Total Return........................................................27
Capital Change......................................................27
Yield...............................................................27
Comparison of Portfolio Performance.................................28
BUYING SHARES................................................................29
REDEMPTIONS..................................................................30
DIVIDENDS AND DISTRIBUTIONS..................................................30
TAXES ....................................................................31
BROKERAGE ALLOCATION.........................................................35
NET ASSET VALUE..............................................................36
INDEPENDENT ACCOUNTANTS......................................................37
FINANCIAL STATEMENTS.........................................................37
ADDITIONAL INFORMATION.......................................................37
APPENDIX A...................................................................38
<PAGE>
INVESTMENT OBJECTIVE, RESTRICTIONS AND TECHNIQUES
Each Fund is a diversified series of the Trust, an open-end, management
investment company. Each Fund's investment objective is discussed in the
Prospectus and summarized below. There is no assurance that either Fund will
achieve its objective. The investment objective of each Fund is not fundamental
and may be changed by the Trustees without shareholder approval. Unless
otherwise stated, each Fund's policies are not fundamental.
WEISS TREASURY ONLY MONEY MARKET FUND
Investment Objective
The investment objective of Money Market Fund is to seek maximum current income
consistent with preservation of capital. The Fund pursues its objective by
investing exclusively in U.S. Treasury securities and repurchase agreements
secured by such obligations. Money Market Fund seeks to maintain a constant net
asset value of $1.00 per share and declares dividends daily. Under certain
circumstances the Fund may not be able to maintain a stable net asset value.
Investments
U.S. Treasury Securities
Money Market Fund invests primarily 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.
In general, investing in debt securities involves both interest rate and credit
risk. As a rule, the value of debt instruments rises and falls inversely with
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. Debt securities with longer maturities generally
are more volatile than those with shorter maturities.
Repurchase Agreements
Money Market 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., Money Market 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 Money Market 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 Money Market Fund
is unrelated to the interest rate on the Obligation subject to the repurchase
agreement.
Repurchase agreements pose certain risks for all entities, including Money
Market 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 Investment Company Act of 1940, as amended (the "1940 Act"),
a repurchase agreement is deemed to be a loan from Money Market 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 Money Market 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, Money Market 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, Money Market 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), Money Market 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.
Money Market Fund currently intends to limit its investments in repurchase
agreements to those with maturities of less than seven days.
Money Market 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.
Zero Coupon Securities. Money Market Fund may invest up to 10% of its assets 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, Money Market 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.
Money Market 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.
Other Investment Companies. For temporary defensive or emergency purposes, Money
Market Fund may invest up to 100% of its assets in cash or in the securities of
other mutual funds investing primarily in U.S. Treasury securities and
repurchase agreements subject to applicable securities regulations. 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 Money Market Fund
pays in connection with its own operations.
When-Issued Securities. When Money Market 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 Money
Market 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
Money Market 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, Money Market 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.
WEISS MILLENNIUM OPPORTUNITY FUND
Investment Objective
The investment objective of Millennium Opportunity Fund is to seek capital
appreciation.
Investments
Millennium Opportunity 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 global deflation or a domestic
recession, and/or (3) operate in sectors of the market that show accelerating
momentum and strong relative strength. At the same time, Millennium Opportunity
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 Millennium Opportunity 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 Millennium Opportunity 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 Millennium
Opportunity 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 Millennium Opportunity
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 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:
Millennium Opportunity 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 Millennium Opportunity 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 Millennium Opportunity 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 Millennium Opportunity 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.
Millennium Opportunity 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 Millennium Opportunity 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 Millennium Opportunity 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 Millennium Opportunity 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
Millennium Opportunity 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
Millennium Opportunity 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, Millennium Opportunity
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,
Millennium Opportunity 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. Millennium Opportunity Fund also will incur transaction
costs in effecting short sales.
Millennium Opportunity 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 Millennium Opportunity 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. Millennium Opportunity 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. Millennium Opportunity 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. Millennium Opportunity 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. Millennium Opportunity 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, Millennium Opportunity
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. Millennium Opportunity 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 Millennium
Opportunity 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 Millennium Opportunity 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
Millennium Opportunity 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 Millennium Opportunity 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, Millennium
Opportunity 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
Millennium Opportunity 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 Millennium Opportunity Fund were not exercised by the date of its
expiration, the Fund would lose the entire purchase price of the warrant.
Repurchase Agreements
Millennium Opportunity 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 Millennium Opportunity Fund's
custodian. The repurchase price may be higher than the purchase price, the
difference being income to Millennium Opportunity 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 Millennium
Opportunity Fund, that utilize them. Such risks are not unique to the Fund but
are inherent in repurchase agreements. Millennium Opportunity 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
Millennium Opportunity 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 Millennium Opportunity 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, Millennium Opportunity 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, Millennium Opportunity 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), Millennium
Opportunity 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.
Millennium Opportunity Fund currently intends to limit its investments in
repurchase agreements to those with maturities of less than seven days.
Millennium Opportunity 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 Millennium Opportunity 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 Millennium Opportunity Fund pays in connection with its own
operations.
Options
Millennium Opportunity 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. Millennium Opportunity 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,
Millennium Opportunity 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. Millennium Opportunity 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.
Millennium Opportunity 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. Millennium Opportunity 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, Millennium Opportunity 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.
Millennium Opportunity 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, Millennium Opportunity Fund
may also write covered put and call options to attempt to enhance its current
return.
Purchasing Put and Call Options. Millennium Opportunity 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. Millennium Opportunity Fund may
also purchase put options to attempt to enhance its current return. 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.
Millennium Opportunity 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. Millennium Opportunity Fund may also purchase call options to attempt to
enhance its current return. 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.
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 Millennium Opportunity 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, Millennium Opportunity 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 Millennium Opportunity 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 Millennium Opportunity Fund's use of
options.
Futures Contracts
Index Futures Contracts and Options. Millennium Opportunity 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 Millennium Opportunity 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, Millennium Opportunity 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, Millennium Opportunity 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."
Millennium Opportunity 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 Millennium Opportunity
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, Millennium Opportunity 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 Millennium Opportunity 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 Millennium Opportunity 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 Millennium Opportunity 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 Millennium Opportunity 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, Millennium Opportunity 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 Millennium
Opportunity 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 Millennium
Opportunity 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 Millennium Opportunity 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. Millennium Opportunity 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, Millennium Opportunity 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
Each 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.
WEISS TREASURY ONLY MONEY MARKET FUND
As a matter of fundamental policy, Money Market Fund may not:
(1) with respect to 75% of its total assets taken at market value purchase more
than 10% of the voting securities of any one issuer; or invest more than 5%
of the value of its total assets in the securities of any one issuer,
except obligations issued or guaranteed by the U.S. Government and
securities of other investment companies;
(2) borrow money, except as a temporary measure for extraordinary or emergency
purposes, or except in connection with reverse repurchase agreements,
provided that the Fund maintains asset coverage of 300% for all borrowings;
(3) purchase any securities which would cause 25% or more of the market value
of its total assets at the time of such purchase to be invested in the
securities of one or more issuers having their principal business
activities in the same industry, provided that there is no limitation with
respect to investments in obligations issued or guaranteed by the U.S.
Government. (For purposes of this restriction, telephone companies are
considered to be in a separate industry from gas and electric public
utilities, and wholly-owned finance companies are considered to be in the
industry of their parents if their activities are primarily related to
financing the activities of their parents.)
(4) purchase or sell real estate (except that the Fund may invest in (i)
securities of companies which deal in real estate or mortgages, and (ii)
securities secured by real estate or interest therein, and 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); or purchase or sell physical
commodities or contracts relating to physical commodities;
(5) act as an underwriter of securities issued by others, except to the extent
that it may be deemed an underwriter in connection with the disposition of
portfolio securities of the Fund;
(6) make loans to other persons, except (a) loans of portfolio securities, and
(b) to the extent the entry into repurchase agreements and the purchase of
debt securities in accordance with its investment objective and investment
policies may be deemed to be loans; and
(7) issue senior securities, except as appropriate to evidence indebtedness
which the Fund is permitted to incur and except for shares of the separate
classes or series of the Trust.
Nonfundamental policies may be changed by the Trustees of the Trust and without
shareholder approval. As a matter of nonfundamental policy, Money Market Fund
may not:
(1) purchase or retain securities of any open-end investment company or
securities of closed-end investment companies except by purchase in the
open market where no commission or profit to a sponsor or dealer results
from such purchases, or except when such purchase, though not made in the
open market, is part of a plan of merger, consolidation, reorganization or
acquisition of assets; in any event, the Fund may not purchase more than 3%
of the outstanding voting securities of another investment company, may not
invest more than 5% of its assets in another investment company, and may
not invest more than 10% of its assets in other investment companies;
(2) pledge, mortgage or hypothecate its assets in excess, together with
permitted borrowings, of 1/3 of its total assets;
(3) purchase or retain securities of an issuer any of whose officers,
directors, trustees or security holders is an officer, director or trustee
of the Fund or a member, officer, director or trustee of the investment
adviser of the Fund if one or more of such individuals owns beneficially
more than one-half of one percent (.5%) of the outstanding shares or
securities or both (taken at market value) of such issuer and such
individuals owning more than one-half of one percent (.5%) of such shares
or securities together own beneficially more than 5% of such shares or
securities or both;
(4) purchase securities on margin, make short sales or maintain a short
position, unless, by virtue of its ownership of other securities, it has
the right to obtain securities equivalent in kind and amount to the
securities sold and, if the right is conditional, the sale is made upon the
same conditions, except in connection with arbitrage transactions and
except that the Fund may obtain such short-term credits as may be necessary
for the clearance of purchase and sales of securities;
(5) invest more than 10% of its net assets in securities which are not readily
marketable, the disposition of which is restricted under federal securities
laws, or in repurchase agreements not terminable within 7 days; or invest
more than 5% of its total assets in restricted securities;
(6) with the exception of U.S. Government securities, purchase securities of
any issuer with a record of less than three years of continuous operations,
including predecessors, if such purchase would cause the investments of the
Fund in all such issuers to exceed 5% of the total assets of the Fund taken
at market value;
(7) purchase more than 10% of the voting securities of any one issuer, except
securities issued by the U.S. Government;
(8) purchase or sell any put or call options or any combination thereof;
(9) enter into futures contracts or purchase options thereon;
(10) invest in oil, gas or other mineral leases, or exploration or development
programs (although it may invest in issuers which own or invest in such
interests);
(11) borrow money (including reverse repurchase agreements), except as a
temporary measure for emergency purposes, and not in excess of 5% of its
total assets taken at market value, or borrow other than from banks;
however, in the case of reverse repurchase agreements, the Fund may invest
in such agreements with entities other than banks subject to total asset
coverage of 300% for such agreements and all borrowings;
(12) purchase warrants;
(13) purchase or sell real estate limited partnership interests; and
(14) lend securities, if the value of securities loaned exceeds 30% of the value
of the Fund's total assets at the time any loan is made, provided that the
loans are fully collateralized and marked to market daily, and provided
further that the entry of the Fund into repurchase agreements and the
purchase of debt instruments are not deemed to be loans for purposes of
this restriction. The Fund does not currently intend to make loans of
portfolio securities that would amount to greater than 5% of the Fund's
total assets in the coming year.
With respect to fundamental policy (2), Money Market Fund may not purchase
securities when borrowing exceeds 5% of the Fund's total assets. With respect to
nonfundamental policy (a), above, to the extent that Money Market Fund invests
in securities of other investment companies, the Trust and the Manager will
ensure that there will be no duplication of advisory fees. Further, no sales
load will be paid by Money Market Fund in connection with such investments.
WEISS MILLENNIUM OPPORTUNITY FUND
As a matter of fundamental policy, Millennium Opportunity 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, Millennium
Opportunity Fund does not currently intend to:
(1) 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 relevant 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 applicable 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 FUNDS
Each 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 Millennium Opportunity
Fund. The Board of Trustees of the Trust oversees the business affairs of the
Trust and is responsible for significant decisions relating to each Fund's
investment objective and policies. The Trustees delegate the day-to-day
management of the Funds 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. Under the Trust's Declaration of Trust, 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 Millennium Opportunity Fund, Class A and
Class S shares. This SAI relates to Money Market Fund and Class A shares of
Millennium Opportunity Fund. 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. Pursuant to the
Declaration of Trust, the Trustees have the authority to terminate a Fund. This
might occur, for example, if a Fund does not reach an economically viable size.
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 Millennium
Opportunity Fund. The key features of the Rule 18f-3 plan are as follows: (i)
shares of each class of Millennium Opportunity 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
Millennium Opportunity 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 Funds are not required to and do 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>
<TABLE>
<CAPTION>
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:
<S> <C>
Principal Occupation(s)
Name, Address and Age Position with the Trust during past 5 years
- --------------------- ----------------------- -------------------
John N. Breazeale(1), 53 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, 34 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).
Clara A. Maxcy(1), 42 Secretary Operations Manager, Compliance
Administrator and Corporate
Secretary, Weiss Money Management,
Inc. (August 1996 - present).
Financial/Operations Principal,
Weiss Funds, Inc. (January 1996 -
present). Operations
Manager/Research Assistant, Weiss
Research, Inc. (November 1993 -
August 1996).
Joseph R. Fleming, 45 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, 58 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, 62 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
</TABLE>
*Indicates persons who are "interested" Trustees of the Trust.
As of March 31, 2000, all Trustees and officers of the Trust as a group
owned beneficially less than 1% of the shares of (i) Money Market Fund and (ii)
each class of Millennium Opportunity Fund outstanding on such date. As of March
31, 2000, to the best of the Trust's knowledge, no person owned of record or
beneficially more than 5% of Money Market Fund, except National Financial
Services Corp. (for the exclusive benefit of its customers), One World Financial
Center - Attn: Mutual Funds, 5th Floor, 200 Liberty Street, New York, New York
10281, which held of record 7.09% of the outstanding shares of the Fund in an
omnibus account. As of March 31, 2000, to the best of the Trust's knowledge, no
person owned of record or beneficially more than 5% of Millennium Opportunity
Fund's Class A shares outstanding on that date.
<TABLE>
<CAPTION>
MANAGEMENT COMPENSATION*
(Fiscal Year Ended December 31, 1999)
<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)
Clara A. Maxcy** None None None None
(Secretary)
Joseph R. Fleming None None None None
(Assistant Secretary)
Esther S. Gordon $2,000 None None $2,000
(Trustee)
Robert Z. Lehrer $2,000 None None $2,000
(Trustee)
Donald Wilk $2,000 None None $2,000
(Trustee)
Martin D. Weiss None None None None
(Trustee)
* For the fiscal year ended December 31, 1999, each non-interested Trustee
received an annual fee of $2,000 plus reimbursement for out-of-pocket expenses.
During such fiscal year the Trust was comprised of two series: Money Market Fund
and Millennium Opportunity Fund, the latter of which commenced operations on
September 21, 1999. For the fiscal year ending December 31, 2000, each
non-interested Trustee will receive an annual fee of $1,500, $500 for each Board
meeting attended, $250 for each Audit Committee or other meeting attended, plus
reimbursement for out-of-pocket expenses for serving in that capacity.
** Ms. Maxcy replaced Sharon A. Parker as Secretary of the Trust effective
February 11, 2000.
</TABLE>
INVESTMENT ADVISORY AND OTHER SERVICES
Investment Manager
As stated in the Prospectus, the Trust, on behalf of each Fund, has entered into
separate Investment Advisory Agreements with the Manager, Weiss Money
Management, Inc. Under each Advisory Agreement, the Manager provides continuing
investment management for the applicable 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.
Money Market Fund. Money Market Fund has agreed to compensate the Manager for
its services by the monthly payment of a fee at the annual rate of .50% of the
Fund's average net assets. Currently, the Manager contractually limits Money
Market Fund's total operating expenses (excluding interest, taxes, brokerage
commissions, litigation, indemnification, and extraordinary expenses) to an
annual rate of .60% of the Fund's average net assets, which lowers the Fund's
expenses and increase its yield. This contractual expense limitation may be
terminated or revised each year, at which point Money Market Fund's expenses may
increase and its yield may be reduced. For the fiscal year ended December 31,
1997, the Manager voluntarily waived all of its advisory fees, which waivers
amounted to $112,410. For the same period, the Manager agreed to reimburse Money
Market Fund $139,388 in order to maintain total Fund operating expenses at 0.50%
of the Fund's average net assets. For the fiscal year ended December 31, 1998,
the Manager of the Fund voluntarily waived all of its advisory fees, which
waivers amounted to $217,822. In addition, the Manager voluntarily agreed to
reimburse Money Market Fund to the extent required to maintain expenses at no
more than 0.65% from January 1 through April 1, 1998 and 0.50% thereafter of the
Fund's average daily net assets. Accordingly, for the fiscal year ended December
31, 1998, the Manager agreed to reimburse the Fund $50,389. For the fiscal year
ended December 31, 1999, the Manager received advisory fees of $73,445 from
Money Market Fund after waiving fees of $385,307 in order to maintain total Fund
operating expenses at .50% of the Fund's average net assets.
Millennium Opportunity Fund. Millennium Opportunity 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. For the period from
September 21, 1999 (commencement of operations) to December 31, 1999, the
Manager received advisory fees of $4,022 from Millennium Opportunity Fund after
voluntarily waiving fees of $25,249 in order to maintain total Fund operating
expenses at 2.50% of the Fund's average net assets.
Currently, the Manager voluntarily limits total operating expenses (excluding
interest, taxes, brokerage commissions, litigation, indemnification, and
extraordinary expenses) to an annual rate of 2.50% of the average net assets of
Millennium Opportunity Fund, which lowers the Fund's expenses and increases its
return. This expense limitation may be terminated or revised at any time, at
which point Millennium Opportunity Fund's expenses may increase and its return
may be reduced.
The Manager is responsible for fees and expenses of Trustees, officers and
employees of the Trust who are affiliated with the Manager. Each 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. Each 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 (Millennium Opportunity Fund)
Harvest Advisors, Inc., 11612 Bee Cave Road, Suite 110, Austin, Texas 78733 has
been retained by the Manager to provide sub-advisory services to Millennium
Opportunity Fund. Under its agreement with the Manager, the Sub-Adviser renders
continuous investment advice to the Manager with respect to investment and
reinvestment of Millennium Opportunity 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
Millennium Opportunity 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 Millennium
Opportunity Fund. The Sub-Adviser is controlled (as that term is defined in the
1940 Act) by Anthony L. Sagami, its sole shareholder and officer. For the period
from September 21, 1999 (commencement of operations) to December 31, 1999, the
Sub-Adviser received a sub-advisory fee of $375 from the Manager with respect to
the Millennium Opportunity Fund.
Distributor
Each Fund's shares are sold on a continuous 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.
Code of Ethics
The Trust, the Manager and the Distributor have adopted a Code of
Ethics pursuant to Rule 17j-1 under the 1940 Act, as has the Sub-Adviser,
designed to identify and address certain conflicts of interest between personal
investment activities and the interests of investment advisory clients such as
the Funds. The Code of Ethics applicable to the Trust, the Manager and the
Distributor, which applies to portfolio managers, research analysts and others
involved in the investment advisory process, permits personal securities
transactions, including securities that may be purchased or held by the Funds,
subject to certain restrictions. For instance, the Code imposes time periods
during which personal transactions may not be made in certain securities, and
requires, among other things, the submission of duplicate broker confirmations
and quarterly reporting of securities transactions. The Sub-Adviser's Code of
Ethics prohibits the purchase of all securities except shares of mutual funds,
and requires employees to comply with the reporting requirements of Rule 17j-1.
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: .09% of average net assets for Money Market Fund; and, for Millennium
Opportunity Fund, .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 or
a minimum of $100,000 annually, plus any out-of-pocket expenses.
Money Market Fund. For the fiscal year ended December 31, 1997, PFPC received
$57,914 from Money Market Fund after voluntarily waiving $10,791. During the
1997 fiscal year, PFPC's fee, payable monthly, was calculated as follows: from
January 1 to April 14, at a rate of .1 of 1% (.10%) per annum of the average
daily net assets of Money Market Fund; from April 15 to June 19, at an annual
rate of $65,000; and, from June 20 to December 31, at an annual rate of $50,000;
plus, in each case, reimbursement for out-of-pocket expenses. For the fiscal
years ended December 31, 1998 and 1999, PFPC received $51,827 and $79,965,
respectively, from Money Market Fund.
Millennium Opportunity Fund. For the period from September 21, 1999
(commencement of operations) to December 31, 1999, PFPC received fees of $3,479
from Millennium Opportunity Fund for administrative services after voluntarily
waiving fees of $25,277.
Transfer Agent, Dividend Disbursing Agent and Custodian
PFPC serves as the Fund's transfer agent, dividend disbursing agent and
registrar. In its capacity as transfer agent, dividend disbursing agent and
registrar, PFPC performs bookkeeping, data processing and administrative
services incidental to the maintenance of shareholder accounts.
PFPC Trust Company, 8800 Tinicum Boulevard, Philadelphia, Pennsylvania 19153,
serves as custodian for each Fund's portfolio securities and cash.
PERFORMANCE INFORMATION
From time to time, quotations of each Fund's performance may be included in
advertisements, sales literature or reports to shareholders or prospective
investors. These 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 a Fund's shares and assume that all dividends and capital gains
distributions during the respective periods were reinvested in Fund shares.
Average annual total return 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, in the case of Millennium Opportunity Fund, to
deduct the applicable sales charge.
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.
Average annual total return of Money Market Fund for the one-year period ended
December 31, 1999 and for the period from June 28, 1996 (commencement of
operations) through December 31, 1999 was 4.35% and 4.58%, respectively. The
average annual total return percentage reflects voluntary fee waivers and
expense reimbursements by Money Market Fund's service providers. Without the
voluntary waivers and reimbursements, Money Market Fund's average annual total
return for the same periods would have been 3.80% and (0.52)%, respectively.
Average annual total return of Millennium Opportunity Fund's Class A shares for
the period from September 21, 1999 (commencement of operations) through December
31, 1999 was 7.50%. The average annual total return percentage reflects
voluntary fee waivers and expense reimbursements by Millennium Opportunity
Fund's service providers. Without the voluntary waivers and reimbursements,
average annual total return of Millennium Opportunity Fund's Class A shares
would have been 5.62% for the same period.
Millennium Opportunity 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.
Non-Standardized Return of Millennium Opportunity Fund's Class A shares for the
period from September 21, 1999 (commencement of operations) through December 31,
1999 was 4.64%. The Non-Standardized Return percentage reflects voluntary fee
waivers and expense reimbursements by Millennium Opportunity Fund's service
providers. Without the voluntary waivers and reimbursements, Non-Standardized
Return of Millennium Opportunity Fund's Class A shares would have been 2.82% for
the same period.
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
fund shares. Cumulative total return 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.
P = a hypothetical initial investment of $1,000
adjusted, in the case of Millennium Opportunity Fund, to
deduct the applicable sales charge.
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.
Cumulative total return of Money Market Fund for the one-year period ended
December 31, 1999 and for the period from June 28, 1996 (commencement of
operations) through December 31, 1999 was 4.35% and 17.03%, respectively.
Without the voluntary waivers and reimbursements, Money Market Fund's cumulative
total return for the same periods would have been 3.80% and (1.83)%,
respectively.
Cumulative total return of Millennium Opportunity Fund's Class A shares for the
period from September 21, 1999 (commencement of operations) through December 31,
1999 was 2.04%. The cumulative total return percentage reflects voluntary fee
waivers and expense reimbursements by Millennium Opportunity Fund's service
providers. Without the voluntary waivers and reimbursements, cumulative total
return of Millennium Opportunity Fund's Class A shares would have been 1.54% for
the same 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. The total return
percentage reflects voluntary fee waivers and expense reimbursements by the
Funds' service providers.
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.
Yield (Money Market Fund Only)
Current Yield: Current yield is the net annualized yield based on a specified 7
calendar-days calculated at simple interest rates. Current yield is calculated
by determining the net change, exclusive of capital changes and income other
than investment income, in the value of a hypothetical pre-existing account
having a balance of one share at the beginning of the period and dividing such
change by the value of the account at the beginning of the base period to obtain
the base-period return. The base-period return is then annualized by multiplying
it by 365/7; the resultant product equals net annualized current yield.
The current yield of Money Market Fund for the seven-day period ended December
31, 1999 was 4.72%. The current yield percentage reflects voluntary fee waivers
and expense reimbursements by Money Market Fund's service providers. Without the
voluntary waivers and reimbursements, Money Market Fund's current yield for the
same seven-day period would have been 4.28%.
Effective Yield: Effective yield for Money Market Fund is the net annualized
yield for a specified 7 calendar-days assuming a reinvestment in Fund shares of
all dividends during the period (i.e., compounding). Effective yield is
calculated by using the same base-period return used in the calculation of
current yield, except that the base-period return is compounded by adding 1,
raising the sum to a power equal to 365 divided by 7, and subtracting 1 from the
result, according to the following formula:
Effective Yield = [(Base Period Return + 1)365/7] - 1
Money Market Fund's effective yield for the seven-day period ended December 31,
1999 was 4.83%. The effective yield percentage reflects voluntary fee waivers
and expense reimbursements by Money Market Fund's service providers. Without the
voluntary waivers and reimbursements, Money Market Fund's effective yield for
the same seven-day period would have been 4.37%.
As described above, current yield and effective yield are based on historical
earnings, show the performance of a hypothetical investment and are not intended
to indicate future performance. Current yield and effective yield will vary
based on changes in market conditions and the level of Fund expenses.
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 a 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, each 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, each 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 Trust, a 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 applicable 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 applicable Fund, including reprints of, or
selections from, editorials or articles about the Fund.
BUYING SHARES
Money Market Fund. Share purchases are executed at the net asset value next
calculated after a purchase order is received by Money Market Fund's transfer
agent in good order as described in the Prospectus under "Opening an Account"
and "Adding to Your Investment". Purchases are made in full and fractional
shares.
Fund shares may be purchased without a sales charge if you purchase them through
the Fund's Distributor. Broker-dealers other than the Distributor may assess
transaction charges in connection with purchases of Fund shares.
Shares generally begin to earn dividends on the day your purchase order is
executed. Purchases by check are executed on the day the check is received in
good order by the transfer agent and begin earning income on the day the
purchase order is executed. Money Market Fund may accept third party checks in
payment for Fund shares subject to the Fund's operating procedures.
Millennium Opportunity Fund. 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 Millennium Opportunity 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. Purchases are made in full and
fractional shares.
A front-end sales charge of 1.50% is assessed on purchases of Millennium
Opportunity Fund's Class A 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
Millennium Opportunity Fund's Class A Prospectus under "Opening an Account -
Waiver of Front-End Sales Charge."
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 each 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 each 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 applicable 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
Money Market Fund. Money Market Fund intends to distribute substantially all of
its investment income and any net realized capital gains. Net investment income
for Money Market Fund consists of all interest income accrued on the Fund's
assets, less accrued expenses. Interest income included in the daily computation
of net investment income is comprised of original issue discount earned on
discount paper accrued to the date of maturity as well as accrued interest.
Money Market Fund's expenses, including the management fee payable to the
Manager, are accrued each day.
Distributions by Money Market Fund are reinvested in 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. Dividends are declared daily. Money
Market Fund intends to distribute dividends on the last business day of each
month.
The net income of Money Market Fund is determined as of the close of regular
trading on the Exchange, usually 4:00 p.m. New York time, on each day the
Exchange is open for trading.
Millennium Opportunity Fund. Millennium Opportunity Fund intends to distribute
to shareholders substantially all of its net investment income annually. Net
investment income for Millennium Opportunity Fund consists of all income accrued
on the Fund's assets, less all actual and accrued expenses. Millennium
Opportunity Fund intends to distribute to shareholders net realized capital
gains after utilization of capital loss carryforwards, if any, at least
annually.
Distributions by Millennium Opportunity 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 Funds. 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 Funds.
General. Each Fund intends to qualify annually and elect to be treated as a
regulated investment company under Subchapter M of the Code. To qualify, a 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, each 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. Eah 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, each 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 a 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. Because
it is not anticipated that any portion of Money Market Fund's gross income will
consist of dividends from domestic corporations, no portion of the dividends
paid by the Fund to its corporate shareholders is expected to qualify for the
dividends received deduction. If a portion of Millennium Opportunity Fund's
income consists of dividends from U.S. corporations, a portion of the dividends
paid by the Fund may be eligible for the dividends-received deduction for
corporate shareholders. 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 a Fund's shares. Such distributions are not eligible for
the dividends received deduction. The tax treatment of distributions from a 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 applicable Fund on the reinvestment date. 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 a 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 a 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.
In some cases, shareholders of Millennium Opportunity Fund will not be permitted
to take all or portion of their sales loads into account for purposes of
determining the amount of gain or loss realized on the disposition of their
shares. This prohibition generally applies where (1) the shareholder incurs a
sales load in acquiring the shares of the Fund, (2) the shares are disposed of
before the 91st day after the date on which they were acquired, and (3) the
shareholder subsequently acquires shares in the Fund or another regulated
investment company and the otherwise applicable sales charge is reduced under a
"reinvestment right" received upon the initial purchase of Fund shares. The term
"reinvestment right" means any right to acquire shares of one or more regulated
investment companies without the payment of a sales load or with the payment of
a reduced sales charge. Sales charges affected by this rule are treated as if
they were incurred with respect to the shares acquired under the reinvestment
right. This provision may be applied to successive acquisitions of Fund shares.
Discount. Certain of the bonds purchased by a 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 a 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 a 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 a 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 a 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 a Fund
at a constant rate over the time remaining to the bond's maturity.
Hedging Transactions (Millennium Opportunity Fund Only). 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 Millennium
Opportunity 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 Millennium Opportunity 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 Millennium Opportunity 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 Millennium Opportunity 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 Millennium Opportunity 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 Millennium Opportunity 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 Millennium
Opportunity Fund which is taxed as ordinary income when distributed to
shareholders.
Millennium Opportunity 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, Millennium Opportunity 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,
Millennium Opportunity 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, Millennium Opportunity 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 Millennium Opportunity 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. A 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 a 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 a
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 a 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
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. For the initial fiscal period ended
December 31, 1996 and the fiscal years ended December 31, 1997 and 1998, Money
Market Fund did not pay any brokerage commissions in connection with portfolio
transactions. For the period from September 21, 1999 through December 31, 1999,
Millennium Opportunity Fund paid $24,862 in brokerage commissions.
Each 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 a
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 is not authorized when placing portfolio transactions for a Fund to
pay a brokerage commission (to the extent applicable) in excess of that which
another broker might charge for executing the same transaction solely on account
of the receipt of research, market or statistical information. The Manager does
not place orders with brokers or dealers because the broker or dealer has or has
not sold shares of a 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 a 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 a
Fund.
The Board of Trustees has authorized the Manager to enter into directed
brokerage arrangements on behalf of Millennium Opportunity Fund. Under this type
of arrangement, the Manager places portfolio transactions with a particular
broker in exchange for the broker's payment of certain Fund expenses. In certain
instances, execution, clearance and settlement capabilities of the directed
brokerage firm may not be as favorable as those otherwise obtainable. Millennium
Opportunity Fund may also lose the possible advantage of aggregation of orders
for several clients as a single transaction for the purchase or sale of a
particular security and the ability to negotiate the commission rate.
NET ASSET VALUE
Money Market Fund. The net asset value per share of Money Market Fund is
determined by dividing the value of the total assets of the Fund, less all
liabilities, by the total number shares of the Fund outstanding. For purposes of
processing purchase and redemption orders, the net asset value per share of
Money Market Fund is calculated as of 12:00 noon and as of the close of regular
trading on the Exchange on each business day except those holidays which the
Exchange or the Federal Reserve Bank observe. The Exchange is normally closed on
New Year's Day, Martin Luther King, Jr.'s Birthday, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. On those days when Money Market Fund's Custodian or the Exchange
close 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.
Money Market Fund uses the amortized cost method of security valuation, as
permitted under Rule 2a-7 under the 1940 Act. Under this method, securities
acquired by Money Market Fund are valued at cost on the date of acquisition and
thereafter assume a constant accretion of discount or amortization of premium to
maturity, regardless of the impact of fluctuating interest rates on the market
value of the instruments.
Millennium Opportunity Fund. The net asset value of shares of Millennium
Opportunity 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. Millennium Opportunity Fund's
liabilities, if not identifiable as belonging to a particular class of the Fund,
are allocated among that Fund's classes based on their relative net asset size.
Liabilities attributable to a particular class are charged to that class
directly. The total liabilities for a class are then deducted from the class's
proportionate interest in Millennium Opportunity Fund's assets, and the
resulting amount is divided by the number of shares of the class outstanding to
produce its net asset value per share.
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 Millennium Opportunity 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 Millennium Opportunity 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 Millennium
Opportunity 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 Funds' independent
accountants for the fiscal year ending December 31, 2000. The services to be
performed by Tait, Weller & Baker include audits of the Funds' annual financial
statements and preparation of the Funds' federal and state income tax returns.
FINANCIAL STATEMENTS
The audited financial statements contained in the Funds' December 31, 1999
annual report, including the Report of Independent Accountants, Financial
Highlights and Notes to Financial Statements, are incorporated herein by
reference, and are hereby deemed to be a part of this Statement of Additional
Information. The Financial Statements incorporated by reference herein have been
so included in reliance on the report of Tait, Weller & Baker, the Funds'
independent accountants, and given on the authority of that firm as experts in
accounting and auditing.
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>
THE WEISS FUND
4176 Burns Road
Palm Beach Gardens, FL 33410
(800) 289-8100
Statement of Additional Information
May 1, 2000
Weiss Millennium Opportunity Fund
Class S Shares
This Statement of Additional Information ("SAI") pertains to the 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's Class S shares dated May 1, 2000 (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.
The financial statements contained in the Fund's December 31, 1999 Annual Report
to Shareholders are incorporated by reference into and are hereby deemed to be
part of this Statement of Additional Information.
<PAGE>
TABLE OF CONTENTS
INVESTMENT OBJECTIVE, RESTRICTIONS AND TECHNIQUES..........................1
Investment Objective..............................................1
Investments.......................................................1
Investment Restrictions..........................................12
ORGANIZATION OF THE FUND..................................................13
TRUSTEES AND OFFICERS.....................................................16
MANAGEMENT COMPENSATION...................................................17
INVESTMENT ADVISORY AND OTHER SERVICES....................................18
Investment Manager...............................................18
Sub-Adviser......................................................18
Distributor......................................................19
Rule 12b-1 Distribution Plan.....................................19
Code of Ethics...................................................20
Administrator....................................................20
Transfer Agent, Dividend Disbursing Agent and Custodian..........20
PERFORMANCE INFORMATION...................................................20
Average Annual Total Return......................................21
Cumulative Total Return..........................................21
Total Return.....................................................22
Capital Change...................................................22
Comparison of Portfolio Performance..............................22
BUYING SHARES.............................................................23
REDEMPTIONS...............................................................24
DIVIDENDS AND DISTRIBUTIONS...............................................24
TAXES .................................................................24
BROKERAGE ALLOCATION......................................................28
NET ASSET VALUE...........................................................29
INDEPENDENT ACCOUNTANTS...................................................30
FINANCIAL STATEMENTS......................................................30
ADDITIONAL INFORMATION....................................................30
APPENDIX A................................................................31
<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 global deflation or a domestic recession, 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 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 Investment Company Act of 1940, as amended (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. The Fund may also purchase put options to attempt
to enhance its current return. 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. The Fund
may also purchase call options to attempt to enhance its current return. 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.
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:
(1) 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 Millennium Opportunity
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. Under the Trust's Declaration of Trust, 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 S 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. Pursuant to
the Declaration of Trust, the Trustees have the authority to terminate the Fund.
This might occur, for example, if the Fund does not reach an economically viable
size.
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>
Position with Principal Occupation(s)
Name, Address and Age the Trust during past 5 years
- --------------------- -------------- -------------------
John N. Breazeale(1), 53 President and President, Weiss Money Management,
Chairman of Inc. (1995 - present). Director of
Board of Trustees* Investments, Weiss Money Management,
Inc. (1994 - 1995). Portfolio
Manager, Mackenzie Investment
Management Inc. (1988 - 1994).
David D. Marky, 34 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).
Clara A. Maxcy(1), 42 Secretary Operations Manager, Compliance
Administrator and Corporate
Secretary, Weiss Money Management,
Inc. (August 1996 - present).
Financial/Operations Principal,
Weiss Funds, Inc. (January 1996 -
present). Operations
Manager/Research Assistant, Weiss
Research, Inc. (November 1993 -
August 1996).
Joseph R. Fleming, 45 Assistant Partner, Dechert Price & Rhoads
Ten Post Office Square - South Secretary (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, 58 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, 62 Trustee President, Donald Wilk Corporation
6044 Petaluma Drive (1990 - present). Computer sales and
Boca Raton, FL 33433 credit card processing.
</TABLE>
(1) 4176 Burns Road
Palm Beach Gardens, FL 33410
*Indicates persons who are "interested" Trustees of the Trust.
As of March 31, 2000, all Trustees and officers of the Trust as a group
owned beneficially less than 1% of the shares of each class of the Fund
outstanding on such date. As of March 31, 2000, to the best of the Trust's
knowledge, no person owned of record or beneficially more than 5% of either
class of the Fund, except George E. Campsen Jr., 9 19th Ave., Isle of Palms,
South Carolina 29451, who held of record 8.59% of the outstanding Class S shares
of the Fund.
<TABLE>
<CAPTION>
MANAGEMENT COMPENSATION
Fiscal Year Ended December 31, 1999*
<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)
Clara A. Maxcy** None None None None
(Secretary)
Joseph R. Fleming None None None None
(Assistant Secretary)
Esther S. Gordon $2,000 None None $2,000
(Trustee)
Robert Z. Lehrer $2,000 None None $2,000
(Trustee)
Donald Wilk $2,000 None None $2,000
(Trustee)
Martin D. Weiss None None None None
(Trustee)
* For the fiscal year ended December 31, 1999, each non-interested Trustee
received an annual fee of $2,000 plus reimbursement for out-of-pocket expenses.
During such fiscal year the Trust was comprised of two series: Weiss Treasury
Only Money Market Fund and the Fund, the latter of which commenced operations on
September 21, 1999. For the fiscal year ending December 31, 2000, each
non-interested Trustee will receive an annual fee of $1,500, $500 for each Board
meeting attended, $250 for each Audit Committee or other meeting attended, plus
reimbursement for out-of-pocket expenses for serving in that capacity.
** Ms. Maxcy replaced Sharon A. Parker as Secretary of the Trust effective
February 11, 2000.
</TABLE>
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.
For the period from September 21, 1999 (commencement of operations) to December
31, 1999, the Manager received advisory fees of $4,022 from the Fund after
voluntarily waiving fees of $25,249 in order to maintain total Fund operating
expenses at 2.50% of the Fund's average net assets.
Currently, the Manager voluntarily limits total operating expenses (excluding
Rule 12b-1 fees, interest, taxes, brokerage commissions, litigation,
indemnification, and extraordinary expenses) to an annual rate of 2.50% of the
average net assets of the Fund, which lowers the Fund's expenses and increases
its return. This expense limitation may be terminated or revised at any time, at
which point the Fund's expenses may increase and its return may be reduced.
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. For the period
from September 21, 1999 (commencement of operations) to December 31, 1999, the
Sub-Adviser received a sub-advisory fee of $375 from the Manager with respect to
the Fund.
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.
The Fund paid no Rule 12b-1 fees for the period from September 21, 1999
(commencement of operations) to December 31, 1999.
Code of Ethics
The Trust, the Manager and the Distributor have adopted a Code of
Ethics pursuant to Rule 17j-1 under the 1940 Act, as has the Sub-Adviser,
designed to identify and address certain conflicts of interest between personal
investment activities and the interests of investment advisory clients such as
the Fund. The Code of Ethics applicable to the Trust, the Manager and the
Distributor, which applies to portfolio managers, research analysts and others
involved in the investment advisory process, permits personal securities
transactions, including securities that may be purchased or held by the Fund,
subject to certain restrictions. For instance, the Code imposes time periods
during which personal transactions may not be made in certain securities, and
requires, among other things, the submission of duplicate broker confirmations
and quarterly reporting of securities transactions. The Sub-Adviser's Code of
Ethics prohibits the purchase of all securities except shares of mutual funds,
and requires employees to comply with the reporting requirements of Rule 17j-1.
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, or
a minimum of $100,000 annually, plus any out-of-pocket expenses. For the period
from September 21, 1999 (commencement of operations) to December 31, 1999, PFPC
received fees of $3,479 from the Fund for administrative services after
voluntarily waiving fees of $25,277.
Transfer Agent, Dividend Disbursing Agent and Custodian
PFPC serves as the Fund's transfer agent, dividend disbursing agent and
registrar. In its capacity as transfer agent, dividend disbursing agent and
registrar, PFPC performs bookkeeping, data processing and administrative
services incidental to the maintenance of shareholder accounts.
PFPC Trust Company, 8800 Tinicum Boulevard, Philadelphia, Pennsylvania 19153,
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 Class S shares, including
Rule 12b-1 fees, will affect the performance of that class. 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 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.
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.
Average annual total return of the Fund's Class S shares for the period from
September 21, 1999 (commencement of operations) through December 31, 1999 was
6.97%. The average annual total return percentage reflects voluntary fee waivers
and expense reimbursements by the Fund's service providers. Without the
voluntary waivers and reimbursements, average annual total return of Millennium
Opportunity Fund's Class S shares would have been 5.10% for the same 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").
Non-Standardized Return of the Fund's Class S shares for the period from
September 21, 1999 (commencement of operations) through December 31, 1999 was
4.12%. The Non-Standardized Return percentage reflects voluntary fee waivers and
expense reimbursements by the Fund's service providers. Without the voluntary
waivers and reimbursements, Non-Standardized Return of the Fund's Class S shares
would have been 2.31% for the same period.
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 S 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
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.
Cumulative total return of the Fund's Class S shares for the period from
September 21, 1999 (commencement of operations) through December 31, 1999 was
1.90%. The cumulative total return percentage reflects voluntary fee waivers and
expense reimbursements by the Fund's service providers. Without the voluntary
waivers and reimbursements, cumulative total return of the Fund's Class S shares
would have been 1.40% for the same 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 Trust, 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 after a
purchase order is received by the Fund's transfer agent in good order as
described under "Buying Shares" in the Fund's Class S Prospectus. Purchases are
made in full and fractional shares.
The Trust, with respect to the Fund's Class S shares, has authorized the
Distributor to accept purchase and redemption orders on its behalf. The
Distributor is also authorized to designate other intermediaries to accept
purchase and redemption orders on the Fund's behalf. The Fund will be deemed to
have received a purchase or redemption order when an authorized intermediary or,
if applicable, an intermediary's authorized designee, accepts the order. Client
orders will be priced at the Fund's net asset value next computed after an
authorized intermediary or the intermediary's authorized designee accepts them.
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. If a
portion of the Fund's income consists of dividends from U.S. corporations, a
portion of the dividends paid by the Fund may be eligible for the
dividends-received deduction for corporate shareholders. 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. 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
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. For the period from September 21, 1999
through December 31, 1999, Millennium Opportunity Fund paid $24,862 in brokerage
commissions.
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.
The Board of Trustees has authorized the Manager to enter into directed
brokerage arrangements on behalf of the Fund. Under this type of arrangement,
the Manager places portfolio transactions with a particular broker in exchange
for the broker's payment of certain Fund expenses. In certain instances,
execution, clearance and settlement capabilities of the directed brokerage firm
may not be as favorable as those otherwise obtainable. The Fund may also lose
the possible advantage of aggregation of orders for several clients as a single
transaction for the purchase or sale of a particular security and the ability to
negotiate the commission rate.
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. The
Fund's liabilities, if not identifiable as belonging to a particular class of
the Fund, are allocated among that Fund's classes based on their relative net
asset size. Liabilities attributable to a particular class are charged to that
class directly. The total liabilities for a class are then deducted from the
class's proportionate interest in the Fund's assets, and the resulting amount is
divided by the number of shares of the class outstanding to produce its net
asset value per share.
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, 2000. 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 audited financial statements contained in the Fund's December 31, 1999
annual report, including the Report of Independent Accountants, Financial
Highlights and Notes to Financial Statements, are incorporated herein by
reference, and are hereby deemed to be a part of this Statement of Additional
Information. The Financial Statements incorporated by reference herein have been
so included in reliance on the report of Tait, Weller & Baker, the Fund's
independent accountants, and given on the authority of that firm as experts in
accounting and auditing.
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>
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 with
Post-Effective Amendment No. 8 to Registrant's Registration
Statement on Form N-1A and incorporated by reference 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 with Post-Effective Amendment No. 8 to Registrant's
Registration Statement on Form N-1A and incorporated by reference
herein.
(3) Sub-Advisory Agreement between Weiss Money Management, Inc., with
respect to Weiss Millennium Opportunity Fund, and Harvest
Advisors, Inc., filed with Post-Effective Amendment No. 8 to
Registrant's Registration Statement on Form N-1A and incorporated
by reference 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 with Post-Effective Amendment No. 8 to
Registrant's Registration Statement on Form N-1A and incorporated
by reference herein.
(3) Amendment to Distribution Agreement between the Registrant and
Weiss Funds, Inc., is 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 with Post-Effective Amendment No. 8 to Registrant's
Registration Statement on Form N-1A and incorporated by reference
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) Amendment to Transfer Agency and Service Agreement between the
Registrant and PFPC, Inc., filed with Post-Effective Amendment
No. 8 to Registrant's Registration Statement on Form N-1A and
incorporated by reference herein.
(6) Amendment to Administration and Accounting Services Agreement
between the Registrant and PFPC, Inc., filed with Post-Effective
Amendment No. 8 to Registrant's Registration Statement on Form
N-1A and incorporated by reference herein.
(7) Letter Agreement to Administration and Accounting Services
Agreement between the Registrant and PFPC, Inc., filed with
Post-Effective Amendment No. 8 to Registrant's Registration
Statement on Form N-1A and incorporated by reference herein.
(8) Amendment to Administration and Accounting Services Agreement
between the Registrant and PFPC, Inc., filed with Post-Effective
Amendment No. 8 to Registrant's Registration Statement on Form
N-1A and incorporated by reference herein.
(i) Legal Opinion: Opinion and Consent of Dechert Price & Rhoads filed
herein.
(j) Other Opinions: 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 with Post-Effective Amendment No. 8 to
Registrant's Registration Statement on Form N-1A and incorporated by
reference herein.
(n) Rule 18f-3 Plan: Filed with Post-Effective Amendment No. 8 to
Registrant's Registration Statement on Form N-1A and incorporated by
reference herein.
(p) Code of Ethics:
(1) Code of Ethics of Registrant, Weiss Money Management, Inc. and
Weiss Funds, Inc. filed herein.
(2) Code of Ethics of Harvest Advisors, Inc. 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, Positions Positions
Business and Offices and Offices
Address(1) with Underwriter with Registrant
John N. Breazeale Director, President Chairman of the Board,
and Treasurer Trustee and President
Sharon A. Parker Director, Vice None
President and
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; PFPC Trust Company, 8800
Tinicum Boulevard, Philadelphia, Pennsylvania 19153.
Item 29. Management Services: Not applicable.
Item 30. Undertakings: Not applicable.
<PAGE>
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. 9 to its
Registration Statement under Rule 485(b) under the Securities Act and has duly
caused this Post-Effective Amendment No. 9 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 28th day of April, 2000.
THE WEISS FUND
By: _________*________
John N. Breazeale
President
*By: JOSEPH R. FLEMING
__________________
Joseph R. Fleming
Attorney-in-fact
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 9 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 April 28, 2000
______________________ and President (Chief
John N. Breazeale Executive Officer)
DAVID D. MARKY Treasurer (Chief April 28, 2000
______________________ Financial Officer)
David D. Marky
* Trustee April 28, 2000
_____________________
Esther S. Gordon
* Trustee April 28, 2000
_____________________
Robert Z. Lehrer
<PAGE>
* Trustee April 28, 2000
_____________________
Martin D. Weiss
* Trustee April 28, 2000
_____________________
Donald Wilk
*By: 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.
<PAGE>
EXHIBIT INDEX
(e)(3) Amendment to Distribution Agreement
(i) Opinion and Consent of Dechert Price & Rhoads
(j) Consent and Report of Independent Accountants
(p)(1) Code of Ethics of Registrant, Weiss Money Management, Inc. and Weiss
Funds, Inc.
(p)(2) Code of Ethics of Harvest Advisors, Inc.
Exhibit (i)
[Dechert Price & Rhoads letterhead]
April 28, 2000
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. 9 to the
Trust's registration statement relating to the shares of beneficial interest
(the "Shares") of Weiss Treasury Only Money Market Fund and Weiss Millennium
Opportunity Fund (the "Funds") being filed under the Securities Act of 1933, as
amended (File No. 33-95688) ("Post-Effective Amendment No. 9"). 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 Prospectuses for the Funds 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. 9.
Very truly yours,
DECHERT PRICE & RHOADS
Exhibit (j)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the references to our firm in the Post-Effective
Amendment #9 to the Registration Statement on Form N-1A of The Weiss Fund and to
the use of our report dated January 20, 2000 on the financial statements and
financial highlights of Weiss Treasury Only Money Market Fund and Weiss
Millennium Opportunity Fund, each a series of The Weiss Fund. Such financial
statements, financial highlights and report of independent certified public
accountants appear in the 1999 Annual Report to Shareholders and are
incorporated by reference in the Registration Statement and Prospectus.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
April 26, 2000
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of
Trustees of The Weiss Fund
We have audited the accompanying statements of net assets of Weiss
Treasury Only Money Market Fund and Weiss Millennium Opportunity Fund (the
"Funds"), a series of The Weiss Fund, as of December 31, 1999, and the related
statements of operations, the statements of changes in net assets and the
financial highlights for the periods indicated thereon. These financial
statements and financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1999 by correspondence with the custodian. 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Weiss Treasury Only Money Market Fund and Weiss Millennium
Opportunity Fund as of December 31, 1999, the results of their operations, the
changes in their net assets and the financial highlights for the periods
presented, in conformity with generally accepted accounting principles.
TAIT WELLER & BAKER
Philadelphia, Pennsylvania
January 14, 2000
Exhibit (p)(1)
WEISS MONEY MANAGEMENT, INC.
THE WEISS FUND
WEISS FUNDS, INC.
Amended and Restated
Code of Ethics
Effective April 27, 2000
I. Legal Requirement
Rule 17j-l under the Investment Company Act of 1940 (the "1940 Act") makes
it unlawful for any director, trustee, officer or employee of any series (a
"Fund") of THE WEISS FUND (the "Trust") or of its investment adviser,(1) WEISS
MONEY MANAGEMENT, INC. (the "Adviser"), or principal underwriter, WEISS FUNDS,
INC. (the "Distributor"), (as well as other persons), in connection with the
purchase and sale, directly or indirectly, by such person of a security "held or
to be acquired" by the Trust:
1. To employ any device, scheme or artifice to defraud the Trust;
2. To make any untrue statement of a material fact to the Trust or omit to
state a material fact necessary in order to make the statements made to the
Trust, in light of the circumstances under which they are made, not
misleading;
3. To engage in any act, practice or course of business that operates or would
operate as a fraud or deceit on the Trust; or
4. To engage in any manipulative practice with respect to the Trust.
A security(2) "held or to be acquired" by a Fund means (a) that within
the most recent 15 days it (i) is or has been held by a Fund, or (ii) is being
[FN]
1 The code of ethics, trading restrictions, and preauthorization and
reporting procedures of the investment advisory firm listed below shall
govern in the case of the individuals identified in the right-hand
column:
Harvest Advisors, Inc. Any employee of Harvest who in connection with his or
("Harvest") her regular functions or duties makes, participates in,
or obtains information regarding the purchase or sale
of securities by Weiss Millennium Opportunity Fund.
2 For purposes of this Code of Ethics, the term "security" does not
include: (i) direct obligations of the Government of the United States;
(ii) bankers' acceptances, bank certificates of deposit, commercial
paper and high quality short-term debt instruments, including
repurchase agreements; and (iii) shares issued by open-end investment
companies registered under the 1940 Act.
</FN>
<PAGE>
or has been considered by a Fund or by the Adviser for purchase by the Fund; and
(b) any option to purchase or sell, and any security convertible into or
exchangeable for a security.
To assure compliance with these restrictions, the Trust, the Adviser
and the Distributor shall adopt and agree to be governed by the provisions
contained in this Code of Ethics. In the case of the Adviser, the restrictions
and obligations under this Code of Ethics apply to its management of the Trust
and to all other client accounts under its management, and (except where
otherwise indicated) references to the Trust herein shall be interpreted to
include such other accounts as well.
II. General Principles
The Trust, the Adviser and the Distributor shall be governed by the
following principles and shall apply them to their trustees, directors,
officers, employees and Access Persons, as applicable:3
A. No Access Person shall engage in any act, practice or course of conduct
that would violate the provisions of Rule 17j-l set forth above.
B. The interests of the Funds and their shareholders are paramount and come
before the interests of any Access Person or employee.
C. Personal investing activities of all Access Persons and employees shall be
conducted in a manner that shall avoid actual or potential conflicts of
interest with the Funds and their shareholders.
D. Access Persons shall not use such positions, or any investment
opportunities presented by virtue of such positions, to the detriment of
the Funds and their shareholders.
III. Substantive Restrictions
A. The price paid or received by a Fund for any security should not be
affected by buying or selling activity on the part of an Access Person, or
otherwise result in an inappropriate advantage to the Access Person. To
that end:
(a) no Access Person shall enter an order for the purchase or sale of a
security which a Fund is, or is considering, purchasing or selling
until the day after the Fund's transactions in that security have been
completed, unless the Compliance Officer(4) determines that it is
clear that, in view of the nature of the security and the market for
[FN]
3 "Access Person" includes (i)(a) any trustee, director or officer of the
Trust or the Adviser, or any employee of the Trust or the Adviser (or
of any company in a control relationship to a Fund or the Adviser) who,
in connection with his or her regular functions or duties, makes,
participates in, or obtains information regarding the purchase or sale
of securities by a Fund, or whose functions relate to the making of any
recommendations with respect to the purchases or sales; and (b) any
natural person in a control relationship to a Fund or the Adviser who
obtains information concerning recommendations made to the Fund with
regard to the purchase or sale of securities by the Fund; and (ii) any
director or officer of the Distributor who, in the ordinary course of
business, makes, participates in or obtains information regarding, the
purchase or sale of securities for a Fund for which the Distributor
acts, or whose functions or duties in the ordinary course of business
relate to the making of any recommendation to the Fund regarding the
purchase or sale of securities.
For purposes of this Code, "control" has the same meaning as in
Section 2(a)(9) of the 1940 Act.
4 For purposes of this Code, the "Compliance Officer" refers to the
designated compliance officer of the Trust, the Adviser and the
Distributor.
</FN>
<PAGE>
such security, the order of the Access Person will not affect the
price paid or received by the Fund, provided that the provisions of
this paragraph III.A shall not apply to any trustee of the Trust who
is not an "interested person" of the Fund (as defined in Section
2(a)(19) of the 1940 Act) (an "Independent Trustee") except with
respect to securities transactions where such trustee knew or, in the
ordinary course of fulfilling his or her official duties as a trustee
of the Trust, should have known, that such security was being
purchased or sold by that Trust or a purchase or sale of such security
was being considered by or with respect to the Trust; and
(b) a Portfolio Manager of a Fund may not buy or sell a security within
seven days before or after any Fund trades in the security.(5)
B. No Investment Person may acquire any securities issued as part of an
initial public offering of an issuer.(6)
C. Each Investment Person must seek prior approval from the Compliance Officer
before directly or indirectly acquiring Beneficial Ownership(7) in private
placement transactions.(8) Such approval shall take into account, among
other factors, whether the investment opportunity should be reserved for a
Fund and whether the opportunity is being offered to such person because of
his or her position with a Fund. Any such Investment Person who has been
authorized to acquire securities in a private placement must disclose his
or her interest if he or she is involved in a Fund's consideration of an
investment in such issuer. Any decision to acquire such issuer's securities
on behalf of a Fund shall be subject to review by Investment Persons with
no personal interest in the issuer.
[FN]
5 The term "Portfolio Manager" includes each employee of the Trust, the
Adviser or the Distributor authorized to make investment decisions on
behalf of any Fund.
6 "Investment Person" means (i) any employee of the Trust, the Adviser or
the Distributor (or of any company in a control relationship to the
relevant entity) who, in connection with his or her regular functions
or duties, makes or participates in making recommendations regarding
the purchase or sale of securities by a Fund; and (ii) any natural
person who controls a Fund, the Adviser or the Distributor and who
obtains information concerning recommendations made to a Fund regarding
the purchase or sale of securities by the Fund. An Investment Person
includes, for example, any Portfolio Manager or employee of the Trust,
the Adviser or the Distributor, and individuals who advise Portfolio
Managers or execute trading decisions, such as a securities analyst or
trader.
7 "Beneficial Ownership" generally means having a direct or indirect
pecuniary interest in a security and is legally defined to be
beneficial ownership as used in Rule 16a-1(a)(2) under Section 16 of
the Securities Exchange Act of 1934, as amended. Beneficial ownership
is presumed regarding securities and accounts held in the name of a
spouse or any other family member living in the same household.
Beneficial ownership also extends to transactions by entities over
which a person has ownership, voting or investment control, including
corporations (and similar entities), trusts and foundations.
8 The term "private placement" shall include offerings that are exempt
from registration under the Securities Act of 1933, as amended (the
"1933 Act"), pursuant to section 4(2) or section 4(6) or pursuant to
rule 504, rule 505, or rule 506 under the 1933 Act.
</FN>
<PAGE>
D. An Investment Person may not profit from the purchase and sale or sale and
purchase of the same or equivalent securities within sixty calendar days.
Nothing in this restriction shall be deemed to prohibit avoidance of loss
through trading within a period shorter than sixty calendar days.
E. Any profits derived from securities transactions in violation of paragraphs
A, B, C or D, above, shall be forfeited and paid to the Trust for the
benefit of its shareholders, to private account holders and/or to charity,
as appropriate and practicable, and/or dealt with in any other manner
deemed appropriate and in the best interests of the Trust and its
shareholders and/or private account holders.
F. No Associated Person shall accept or receive any gift of more than de
minimis value from any person or entity that does business with or on
behalf of the Adviser, the Distributor or the Trust.(9) Gifts of a de
minimis value (i.e., gifts whose reasonable value is no more than $100
annually from a single giver), customary business lunches, dinners and
entertainment (e.g., sporting events), and promotional items (e.g., pens
and mugs) may be accepted. Extraordinary or extravagant gifts are not
permissible and must be declined or returned. If a gift is received that
might be prohibited by this Code, the Associated Person shall inform the
Compliance Officer immediately. All solicitations of gifts or gratuities
are unprofessional and are strictly prohibited. Gifts accepted in violation
of this paragraph shall be forfeited, if practicable, and/or dealt with in
any manner deemed appropriate and in the best interests of the Trust and
its shareholders and/or private account holders.
G. An Investment Person shall not serve on the boards of directors of publicly
traded companies, or in any similar capacity, absent the prior approval of
such service by the Compliance Officer, following the receipt of a written
request for such approval. In the event such a request is approved,
procedures shall be developed to avoid potential conflicts of interest.
H. The restrictions of this Section III shall not apply to the following
transactions, unless the Compliance Officer determines that such
transactions violate the General Principles of this Code:
1. reinvestments of dividends pursuant to a plan;
2. transactions in: direct obligations of the Government of the United
States; bankers' acceptances; bank certificates of deposit; commercial
paper; high quality short-term debt instruments;(10) and shares of
registered open-end investment companies;
3. transactions in which direct or indirect beneficial ownership is not
acquired or disposed of;
4. transactions in accounts as to which an Access Person has no
investment control, subject, as applicable, to Section III.H.5;
[FN]
9 An "Associated Person" includes each director, trustee, officer or
employee of the Trust, the Adviser or the Distributor.
10 "High quality short-term debt instrument" means any instrument that has
a maturity at issuance of less than 366 days and that is rated in one
of the two highest rating categories by a Nationally Recognized
Statistical Rating Organization (NRSRO).
</FN>
<PAGE>
5. transactions in accounts of an Access Person for which investment
discretion is not maintained by the Access Person, but is granted to
any of the following that are unaffiliated with the Adviser: a
registered broker-dealer, registered investment adviser or other
investment manager acting in a similar fiduciary capacity, provided
the following conditions are satisfied:
(a) The terms of the account agreement ("Agreement") must be in
writing and filed with the Compliance Officer prior to any
transactions;
(b) Any amendment to the Agreement must be filed with the Compliance
Officer prior to its effective date;
(c) The Agreement must require the account manager to comply with the
reporting provisions of sub-paragraph 4 of Section IV.A;
(d) The Agreement shall prohibit: acquisitions of securities in
initial public offerings; acquisitions of securities in private
placements unless prior approval is obtained by the Access Person
from the Compliance Officer; and transactions at a profit from
the purchase and sale or sale and purchase of the same or
equivalent securities within sixty calendar days;
(e) The exemption provided by this Section III.H.5 shall not be
available for a transaction or class of transactions which is
suggested or directed by the Access Person or as to which the
Access Person acquires advance information; and
6. transactions in securities in connection with an employer sponsored or
other tax qualified plan, such as a 401(k) plan, an IRA, or ESOP, in
an amount not exceeding $1,000 in any calendar month.
IV. Procedures
A. In order to determine with reasonable assurance that the provisions of Rule
17j-l and this Code of Ethics are being observed by personnel of the Trust,
the Adviser and the Distributor:
1. The Compliance Officer shall create and thereafter maintain a list of
all Access Persons. The Compliance Officer shall notify each Access
Person that he or she is subject to the reporting requirements
described herein, and shall deliver a copy of this Code to each Access
Person. The Compliance Officer shall annually obtain written
assurances from each Access Person that he or she is aware of his or
her obligations under this Code of Ethics and has complied with the
Code and with its reporting requirements.
2. Initial and Annual Holdings Reports:
(a) No later than 10 days after commencement of employment by the
Trust, the Adviser or the Distributor, or otherwise assuming the
status of "Access Person", and annually thereafter, each Access
Person shall disclose in a written initial holdings report, in a
<PAGE>
form acceptable to the Compliance Officer (the "Initial Holdings
Report"), all direct or indirect Beneficial Ownership interests
of such Access Person in Reportable Securities,(11) which report
shall contain:
i) The title, number of shares and principal amount of each
Reportable Security in which the Access Person has any
direct or indirect Beneficial Ownership when the person
becomes an Access Person;
ii) The name of any broker, dealer or bank with whom the Access
Person maintains an account in which any Reportable
Securities are held for the direct or indirect benefit of
the Access Person as of the date the person becomes as
Access Person; and
iii) The date that the report is submitted by the Access Person.
(b) Each Access Person annually shall provide the following
information (which information must be current as of a date no
more than 30 days before the report is submitted) (the "Annual
Holdings Report"):
i) The title, number of shares and principal amount of each
Reportable Security in which the Access Person had any
direct or indirect Beneficial Ownership;
ii) The name of any broker, dealer or bank with whom the Access
Person maintains an account in which any securities are held
for the direct or indirect benefit of the Access Person; and
iii) The date the report is submitted by the Access Person.
Any person who has become an Access Person before March 1,
2000 need not file an Initial Holdings Report, but must file
the first of his or her Annual Holdings Reports no later than
September 1, 2000.
3. Each Access Person shall obtain the prior approval of the Compliance
Officer of all personal securities transactions in Reportable
Securities. Prior to participating in any such personal securities
transaction, an Access Person shall provide written notice to the
Compliance Officer describing in detail the proposed transaction and
the person's proposed role therein and stating whether he or she has
received or may receive selling compensation in connection with the
transaction. No transaction in Reportable Securities may be effected
without the prior written approval of the Compliance Officer.
4. Each Access Person shall notify the Compliance Officer of all
brokerage accounts in which he or she has any beneficial interest
within 10 days (a) of receipt of this Code or (b) after the later
opening of any such account.
[FN]
11 "Reportable Securities" include generally all securities, and financial
instruments related to securities (including options, warrants and
other securities convertible into or exchangeable for a security),
except the securities referred to in Section III.H.2.
</FN>
<PAGE>
5. Each Access Person, with respect to each brokerage account in which
such Access Person has any beneficial interest, shall arrange for the
broker to mail directly to the Compliance Officer at the same time
they are mailed or furnished to such Access Person (a) duplicate
copies of confirmations covering each transaction in Reportable
Securities in such account and (b) copies of periodic statements with
respect to the account. If such broker trade confirmations or account
statements with respect to an Access Person contain all of the
information required in that Access Person's Quarterly Transaction
Report (as defined below) and are received by the Compliance Officer
within the specified time period, the Access Person need not make the
Quarterly Transaction Report.
6. The provisions of this Section IV.A shall not apply to any Independent
Trustee of the Trust, except with respect to reporting of securities
transactions where such trustee knew or, in the ordinary course of
fulfilling his or her official duties as a trustee of the Trust,
should have known that, during the 15-day period immediately preceding
or after the date of a transaction in a Reportable Security by the
trustee, such Reportable Security was purchased or sold by the Trust
or a purchase or sale of such Reportable Security was being considered
by the Trust or the Adviser.
B. Access Persons shall comply with the following additional reporting
obligations:
1. Each Access Person shall file a report with the Compliance Officer of
all transactions during a calendar quarter in Reportable Securities in
which the person has, or by reason of such transaction acquires, any
direct or indirect Beneficial Ownership (the "Quarterly Transaction
Report"). The Compliance Officer shall submit confidential Quarterly
Transaction Reports with respect to his or her own personal securities
transactions to an officer designated to receive his or her reports,
who shall act in all respects in the manner prescribed herein for the
Compliance Officer. Report forms will be sent to all Access Persons by
the Compliance Officer prior to the end of each quarter.
2. Every Quarterly Transaction Report shall be made not later than 10
days after the end of the calendar quarter in which the transaction to
which the Report relates was effected, and shall contain the following
information:
(a) With respect to any transaction during the quarter in a
Reportable Security in which the Access Person had any direct or
indirect Beneficial Ownership:
i) The date of the transaction, the title, the interest rate
and maturity date (if applicable), the number of shares and
the principal amount of each security involved;
ii) The nature of the transaction (i.e., purchase, sale or any
other type of acquisition or disposition);
iii) The price at which the transaction was effected;
iv) The name of the broker, dealer or bank with or through whom
the transaction was effected; and
v) The date that the report is submitted by the Access Person.
(b) With respect to any account established by the Access Person in
which any securities were held during the quarter for the direct
or indirect benefit of the Access Person:
i) The name of the broker, dealer or bank with or through whom
the transaction was effected;
ii) The date the account was established; and
iii) The date that the report is submitted by the Access Person.
3. Any such Quarterly Transaction Report, as well as any Initial and
Annual Holdings Reports, may contain a statement that the Report shall
not be construed as an admission by the person making such Report that
he has any direct or indirect Beneficial Ownership in the Reportable
Security to which the Report relates. In addition, a person need not
make Initial and Annual Holdings Reports or Quarterly Transaction
Reports with respect to transactions effected for, and Reportable
Securities held in, any account over which the person has no direct or
indirect influence or control.
4. In the event that no reportable transactions occurred during the
quarter, the Quarterly Transaction Report should so note and be
returned.
5. The provisions of this Section IV.B shall not apply to any Independent
Trustee of the Trust, except with respect to reporting of securities
transactions where such trustee knew or, in the ordinary course of
fulfilling his or her official duties as a trustee of the Trust,
should have known that, during the 15-day period immediately preceding
or after the date of a transaction in a Reportable Security by the
trustee, such Reportable Security was purchased or sold by the Trust
or a purchase or sale of such Reportable Security was being considered
by the Trust or the Adviser.
C. The Compliance Officer shall revise, to the extent necessary, the system of
monitoring personal investment activity by Access Persons designed to
identify abusive or inappropriate trading patterns or other practices of
Access Persons to incorporate procedures for reviewing the Initial Holdings
Reports, Quarterly Transaction Reports and Annual Holdings Reports. The
Compliance Officer shall report to the Board of Trustees of the Trust on
the workings and effectiveness of this system in connection with the annual
review of this Code referred to in paragraph IV.H, below.
D. The Compliance Officer shall report to the Board of Trustees at each
meeting (except as indicated below) regarding the following matters not
previously reported:
1. Any information pursuant to Sections IV.A and B with respect to each
reported transaction in a security which was held by or acquired by
the Trust within 15 days before or after the date of the reported
transaction or at a time when, to the knowledge of the individual
responsible for monitoring compliance with the Code of Ethics, the
Trust or the Adviser was considering the purchase or sale of such
security, unless the transaction was a reinvestment of dividends
pursuant to a plan.
2. With respect to any transaction not required to be reported to the
Board of Trustees by the operation of subparagraph (1) that he or she
believes nonetheless may evidence violation of this policy.
3. Apparent violations of the reporting requirements.
4. Other material violations of this Code of Ethics of which the
Compliance Officer has become aware since the previous report pursuant
to this Section IV.D.
5. The results of monitoring of personal investment activities of
Associated Persons in accordance with the procedures referred to in
herein.
E. The Compliance Officer shall have discretion not to make a report to the
Board of Trustees under paragraph IV.D if he or she finds that by reason of
the size of the transaction, the circumstances or otherwise, no fraud or
deceit or manipulative practice could reasonably be found to have been
practiced on this Trust in connection with its holding or acquisition of
the security or that no other material violation of this Code has occurred.
A written memorandum of any such finding shall be filed with reports made
pursuant to this Code.
F. The Board of Trustees shall consider reports made to it hereunder and upon
discovering that a violation of this Code has occurred, the Board of
Trustees may impose such sanctions, in addition to any forfeitures imposed
pursuant to Section III.E and F hereof, as it deems appropriate, including,
among other things, a letter of sanction or suspension or termination of
the employment of the violator.
G. The Compliance Officer shall report to the Board of Trustees on an annual
basis concerning existing personal investing procedures and any recommended
changes in existing restrictions or procedures, and shall provide a written
report for the Board's consideration concerning any issues arising under
the Code or related procedures since the last report to the Board,
including, but not limited to, (i) information about any significant
conflicts of interest that arose involving personal investment policies,
any material violations of the Code during the prior year and any sanctions
imposed in response to those violations, and (ii) a certification that the
Adviser has adopted procedures reasonably necessary to prevent Access
Persons from violating the Code.
H. In addition to any other requirements imposed under this Code, the Board of
Trustees has the following initial and continuing obligations:
1. The Board, including a majority of the Independent Trustees, must
approve this Code of Ethics and any material changes thereto based on
a determination that the Code contains provisions reasonably necessary
to prevent access persons from engaging in any conduct prohibited by
Rule 17j-1(b) under the 1940 Act.
2. Before approving this Code or any amendments to it, the Board must
receive a certification from the Adviser that it has adopted
procedures reasonably necessary to prevent access persons from
violating the Code.
3. The Board must approve a material change to this Code no later than
six months after adoption of the change.
4. Before retaining the services of an investment adviser or principal
underwriter for a Fund, the Board must approve that entity's code of
ethics.
5. The Board of Trustees shall review the Code and its operation at least
once a year.
I. The Adviser will maintain records in the manner and to the extent set forth
below at its principal place of business, and will make these records
available to the Securities and Exchange Commission ("SEC") or any
representative of the SEC at any time and from time to time for reasonable
periodic, special or other examination:
1. A copy of this Code of Ethics, or any version that at any time within
the past five years was in effect, will be maintained in an easily
accessible place.
2. A record of any violation of this Code, and of any action taken as a
result of the violation, will be maintained in an easily accessible
place for at least five years after the end of the fiscal year in
which the violation occurs.
3. A copy of each report made by an Access Person pursuant to this Code,
including any information provided in lieu of the reports, will be
maintained for at least five years after the end of the fiscal year in
which the report is made or the information is provided, the first two
years in an easily accessible place.
4. A record of all Access Persons, currently or within the past five
years, who are or were required to make reports under this Code, or
who are or were responsible for reviewing these reports, must be
maintained in an easily accessible place.
5. A copy of each report provided annually to the Board of Trustees
regarding the administration of this Code must be maintained for at
least five years after the end of the fiscal year in which it is made,
the first two years in an easily accessible place.
6. A record of any decision, and the reasons supporting the decision, to
approve any transaction requiring preclearance under this Code, for at
least five years after the end of the fiscal year in which the
approval is granted.
Dated:___April 29, 1997, as amended and restated on
April 27, 2000
<PAGE>
WEISS MONEY MANAGEMENT, INC.
THE WEISS FUND
WEISS FUNDS, INC.
CODE OF ETHICS
CERTIFICATE / ACKNOWLEDGMENT
1. I hereby acknowledge receipt of the Weiss Code of Ethics dated February 11,
2000 (the "Code").
2. I hereby certify that I have read, understand and am in full compliance
with the Code and agree to abide by its requirements and procedures.
3. I hereby acknowledge that failure to comply fully with the Code may subject
me to disciplinary action, including, but not limited to, immediate
dismissal.
Signed: ________________________________ Date:____________
Name: ________________________________
(please print)
Position with Weiss Money Management, Inc.: ________________________________
Position with The Weiss Fund: _______________________________
Position with Weiss Funds, Inc.: ________________________________
<PAGE>
WEISS MONEY MANAGEMENT, INC.
THE WEISS FUND
WEISS FUNDS, INC.
CODE OF ETHICS
Request for Authorization of Securities Transaction(s)
TO: [Compliance Officer] (or his or her duly appointed designee)
FROM: _____________________
DATE: _____________________
Pursuant to Section IV.A.3 of Weiss' Code of Ethics (the "Code"), I hereby
request that you authorize my purchase and/or sale of the following Reportable
Securities (as defined in the Code):
- --------------- --------------- --------- ---------------- -----------
Title Nature of # of Price Per Broker/
of Security Transaction Shares Share Bank
- --------------- --------------- --------- ---------------- -----------
- --------------- --------------- --------- ---------------- -----------
- --------------- --------------- --------- ---------------- -----------
- --------------- --------------- --------- ---------------- -----------
- --------------- --------------- --------- ---------------- -----------
Affirmation: I affirm that I (a) do not possess material non-public
information relating to any of the above-listed securities; (b)
am not aware of any proposed trade or investment program relating
to the securities by any of the Funds (as defined in the Code);
and (c) believe the proposed trade is available to any market
participant on the same terms. Further, insofar as I am
considered under the Code to be an "Investment Person" I affirm
that I have considered the security for the Fund(s) that I manage
and the reason I decided not to purchase the security for the
Fund(s) is: ______________________________________
________________________________________________________________.
Signature:__________________________ Authorized:
Note: This request may be communicated via E-mail, provided that this format
is duplicated.
_______________________________________________________________________________
Compliance Department Use
Your trade request has been approved and is valid for 24 hours from the date and
time shown below.
By: ____________________________ Date:______________________, ______[am/pm].
Compliance Officer
<PAGE>
WEISS MONEY MANAGEMENT, INC.
THE WEISS FUND
WEISS FUNDS, INC.
CODE OF ETHICS
Initial Securities Holdings Report by Access Persons
(Date on which the undersigned became an Access Person)
1. Statement of holdings: Please identify in the following table all
Reportable Securities* in which you had, or by reason of which you had
acquired, any direct or indirect Beneficial Interest* as of the date
noted above. (If you held no such securities, answer "None".)
Note: In lieu of entering the information requested below, you may
attach a copy of an account statement received from a broker, dealer or
bank; indicate the number of statements attached.
Title of Security Number of Shares Principal Amount
-------------------- ------------------------ -----------------------
-------------------- ------------------------ -----------------------
-------------------- ------------------------ -----------------------
-------------------- ------------------------ -----------------------
2. Account information: Please identify in the space provided below the
name of any broker, dealer or bank with whom you maintain a brokerage
account.
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
* As defined in Weiss' Code of Ethics.
Signed: ________________________________ Date:____________
Name: ________________________________
(please print)
Position with Weiss Money Management, Inc.: ________________________________
Position with The Weiss Fund: _______________________________
Position with Weiss Funds, Inc.: ________________________________
<PAGE>
WEISS MONEY MANAGEMENT, INC.
THE WEISS FUND
WEISS FUNDS, INC.
CODE OF ETHICS
Annual Securities Holdings Report by Access Persons
January 31, 200__
1. Statement of holdings: Please identify in the following table all
Reportable Securities* in which you had, or by reason of which you had
acquired, any direct or indirect Beneficial Interest* as of the date
noted above. (If you held no such securities, answer "None".)
Note: In lieu of entering the information requested below, you may
attach a copy of an account statement received from a broker, dealer or
bank; indicate the number of statements attached.
Title of Security Number of Shares Principal Amount
----------------------- ----------------------- -----------------------
----------------------- ----------------------- -----------------------
----------------------- ----------------------- -----------------------
----------------------- ----------------------- -----------------------
2. Account information: Please identify in the space provided below the
name of any broker, dealer or bank with whom you maintain a brokerage
account.
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
* As defined in Weiss' Code of Ethics.
Signed: ________________________________ Date:____________
Name: ________________________________
(please print)
Position with Weiss Money Management, Inc.: ________________________________
Position with The Weiss Fund: _______________________________
Position with Weiss Funds, Inc.: ________________________________
<PAGE>
CONFIDENTIAL
WEISS MONEY MANAGEMENT, INC.
THE WEISS FUND
WEISS FUNDS, INC.
CODE OF ETHICS
Quarterly Report of Securities Transactions
Pursuant to Rule 17j-1 under
the Investment Company Act of 1940
For the Quarter Ended (check one):
March ___/ June ___/ September ___/ December ___, 200__
Section I
____ (If applicable, place checkmark on line and sign below; otherwise
complete Section II and sign below.) Although I have Beneficial
Ownership* of Reportable Securities*, I do not vote, or direct the
voting of, such Securities, and do not dispose of, or direct the
disposition of, such Securities. In other words, I do not have any
direct or indirect influence or control over such Securities.
Therefore, it is my understanding that transactions in such Securities
need not be reported.
Section II
1. All Securities Transactions for Calendar Quarter. If no reportable
transactions have occurred, answer "None". (Note: In lieu of entering the
information requested below, you may attach a copy of each confirmation
statement or a copy of each account statement received from a broker,
dealer, or bank for the period that includes all of the required
information (indicating the number and type of such statements attached).
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Interest Rate Broker, Dealer
Date of Title of and Maturity Number of Principal Nature of Purchase or or Bank Effecting
Transaction Security Date Shares Amount Transaction Sale Price Transaction
- ------------ -------- ------------ -------- ------ ----------- ---------- -----------
</TABLE>
2. Account information. Please identify in the following table the name of
any broker, dealer or bank with whom you established an Account in
which any Reportable Securities* were held during the quarter noted
above for your direct or indirect beneficial interest.
--------------------------------------- -----------------------------
Broker, dealer or bank: Date Account established:
--------------------------------------- -----------------------------
--------------------------------------- -----------------------------
--------------------------------------- -----------------------------
--------------------------------------- -----------------------------
3. Exempt Transactions. If a transaction in a Reportable Security* is exempt
from reporting, provide a brief statement of the exemption relied on and
the circumstances of the transaction.
* As defined in Weiss' Code of Ethics.
Signed: ________________________________ Date:___________
Name: ________________________________
(please print)
Position with Weiss Money Management, Inc.: ________________________________
Position with The Weiss Fund: _______________________________
Position with Weiss Funds, Inc.: ________________________________
<PAGE>
INSTRUCTIONS
Section I: If you beneficially own securities, but do not have any direct or
indirect influence or control over all such securities, place a checkmark on the
line and sign the report at the end. Otherwise, proceed to Section II.
Section II:
1. Transactions Required to be Reported
You should report every transaction in which you acquired or disposed
of any beneficial ownership of any security during the calendar quarter. For
reporting purposes, beneficial ownership of securities may be regarded as
including securities held:
i) For your benefit by others (e.g., brokers, custodians and pledges).
ii) For the benefit of your spouse or minor children (or any other relative who
shares your home).
iii) By a partnership of which you are a partner.
iv) By a company of which you alone, or in conjunction with others, have the
power to exercise a controlling influence over the management or policies
and which (a) is used by you alone, or with a small group, as a medium for
investing or trading in securities, and (b) has no other substantial
business.
v) By a trust over which you have direct or indirect influence or control and
under which either you or any member of your immediate family (i.e., your
spouse, children, grandchildren, parents, and grandparents) is a
beneficiary.
vi) By a trust over which you alone, or in conjunction with someone not having
a substantial interest adverse to yours, have the power to revoke and vest
or revest title to yourself at once or at some future time.
Notwithstanding the foregoing, none of the following transactions need to be
reported:
a) Transactions in securities which are direct obligations of the United
States.
b) Transactions in bankers' acceptances, bank certificates of deposit,
commercial paper and high quality short-term debt instruments;(12).
c) Transactions effected in any account over which you do not have any direct
or indirect influence or control.
[FN]
12 "High quality short-term debt instrument" means any instrument that has
a maturity at issuance of less than 366 days and that is rated in one
of the two highest rating categories by a Nationally Recognized
Statistical Rating Organization (NRSRO).
</FN>
<PAGE>
d) Stock dividends, stock splits, or stocks acquired through an automatic
dividend reinvestment plan.
e) Transactions in "shares of an open-end investment company." Transactions in
shares of an open-end investment company include transactions in the shares
of the Trust.
Date of Transaction
In the case of a market transaction, state the trade date (not the
settlement date).
Title of Security
State the name of the issuer and the class of the security (e.g.,
common stock or designated issue of debt securities or preferred
stock). In the case of the acquisition or disposition of a put, call,
option or other rights (hereinafter referred to as "options"), state
the title of the security subject to the option and the expiration date
of the option. Stock options granted to you by your company should be
reported only at the time such options are exercised.
Interest Rate and Maturity Date
In the case of debt securities, state security's interest rate and
maturity date.
Number of Shares
State the number of shares of stocks, the face amount of the debt
securities or other units of other securities. For an option, state the
amount of securities subject to the option. If your ownership interest
was through a spouse, relative or other natural person or through a
partnership, corporation, trust or other entity, state the entire
amount of securities involved in the transaction. In such cases, you
may also indicate, if you wish, the extent of your interest in the
transaction.
Principal Amount
State the principal amount of the transaction.
Nature of Transaction
State the character of the transaction (e.g., purchase or sale of
security, gift, inheritance, purchase or sale of option, or exercise of
option).
Purchase or Sale Price
State the purchase or sale price per share or other unit, exclusive of
brokerage commissions, or other costs of execution. In the case of an
option, state the price at which it is currently exercisable. No price
need be reported for transactions not involving cash.
Broker, Dealer or Bank Effecting Transactions
State the name of the broker, dealer or bank with or through whom the
transaction was effected.
2. Account Information
<PAGE>
Identify the name of any broker, dealer or bank with whom you
established an account in which any securities were held during the calendar
quarter for your direct or indirect beneficial interest.
3. Exempt Transactions
If a transaction in a security is exempt from reporting, provide a
brief statement of the exemption relied on and the circumstances of the
transaction.
Signature
Sign the second page of the report.
Filing of Report
A report should be filed Not Later Than 10 Days after the end of each
calendar quarter with [Compliance Officer]
<PAGE>
TO: _________The Board of Trustees of The Weiss Fund
FROM: _________[Compliance Officer]
DATE: _________________, 200__
RE: _________Quarterly Report of Rule 17j-1 Securities Transactions
- ------------------------------------------------------------------------------
As Compliance Officer of The Weiss Fund, Weiss Money Management, Inc. and Weiss
Funds, Inc., pursuant to Rule 204-2 under the Investment Advisers Act of 1940
and Rule 17j-1 under the Investment Company Act of 1940 for the quarter ending
______________________, I have distributed quarterly reports of securities
transactions. These forms were distributed to all access persons.
This is to advise that I have received the completed forms no later than 10 days
after the end of the calendar quarter in which the transactions to which the
report relates were effected, and that after reviewing these reports, there were
no violations of the above rules.
___________________
Compliance Officer
Exhibit (p)(2)
HARVEST ADVISORS
CODE OF ETHICS
The following codes of ethics apply to all employees, their spouses, and
dependents under the age of 21.
PERSONAL INVESTMENTS
1. The purchase of individual securities (including private placements) is
expressly forbidden. This prohibition includes individual stocks,
individual bonds, and/or any other security that is substantially tied to
the performance of any single publicly traded company.
2. The purchase or sale of any commodity, options, or futures contract is
expressly forbidden.
3. Mutual funds are excluded from these restrictions. Employees, their
spouses, and dependents may invest in mutual funds without restrictions.
4. Employees, spouses, and dependents may not invest in any security,
including mutual funds, in advance of clients of Harvest Advisors. This
practice is commonly referred to as "front running." Employees, spouses,
and dependents are allowed to buy the same funds as Harvest Advisors
clients, but must do so simultaneously or after the client orders have been
placed.
5. Employees are required to report all their securities transactions to
Harvest Advisers. Accordingly, employees are required to have duplicate
copies of all brokerage and mutual fund statements and trade confirmations
sent to the President of Harvest Advisors.
6. All employees are required to comply with the reporting requirements of
Rule 17j-1 under the Investment Company Act of 1940. These requirements
include the filing of initial and annual holdings reports, as well as
quarterly transaction reports, within the time periods specified in the
rule. The President is required to monitor these reports for compliance and
accuracy.
GIFTS
1. Employees, spouses, and dependents of Harvest Advisors are prohibited from
accepting any gifts greater than $30 in retail value from any investment
company, brokerage firm, or any other company that could or may benefit
from doing business with Harvest Advisors. This exception is intended to
exempt gifts that are commonly given during the holiday season.
2. In no case may an employee, spouse, or dependent accept any gift that may
be construed as an inducement to gather Harvest Advisors' business or
direct Harvest Advisors' investment decisions.
3. Employees, spouses, and dependents may not accept any kickbacks,
commissions, rebates, or remuneration of any kind from any company in which
Harvest Advisors has, may, or is currently invested.