N-CSRS 1 wz50117-ncsrs.htm WEITZ FUNDS wz50117-ncsrs.htm
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM N-CSR
 
CERTIFIED SEMI-ANNUAL SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
 
Investment Company Act file number 811-21410
 
The Weitz Funds
 (Exact name of registrant as specified in charter)
 
 
Suite 200
1125 South 103 Street
Omaha, NE 68124-1071
(Address of principal executive offices) (Zip code)
 
 
Wallace R. Weitz & Company
The Weitz Funds
Suite 200
1125 South 103 Street
Omaha, NE 68124-1071
(Name and address of agent for service)
 
Registrant’s telephone number, including area code: 1-402-391-1980
 
Date of fiscal year end: March 31
Date of reporting period: September 30, 2010
 
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
 
 
 
 
 
Item 1. Report to Stockholders.
 

 
 
 
 
 
WEITZ INVESTMENT PHILOSOPHY
 
 
Over the 25+ year history of Weitz Funds, we have seen many changes. Advancements in technology combined with economic, political and global events have continued to shape investors’ thoughts and actions.
 
Our mission has remained constant— we have an unwavering commitment to our shareholders and a focus on finding strong, well-managed companies priced significantly below their true business value.
 
We “eat our own cooking.”
We believe in putting our money where our mouth is. All of our employees and trustees have significant personal investments in our “family” of funds. This does not guarantee that the Funds will go up, but it does mean that we win or lose together and that shareholders definitely have our full attention.
 
We are patient, long-term investors.
When we analyze potential equity investments, we think about the business behind the stock. We buy shares only when we believe they are selling at a large discount to the company’s underlying business value. Ideally, the business value rises over time, and the stock price follows. This often allows us to hold the stock for many years.
 
Knowing what you don’t know is important in all aspects of life, but it is crucial in investing.
We think our odds of investment success are much higher when we invest in securities of companies we understand and where we may have an edge over other investors. As a result, our portfolios are not diversified among all the various sectors of the economy. Instead, we expect to have a deeper knowledge and understanding of the industries and companies in which we do invest. Our experienced research team has a broad “circle of competence,” and we believe in staying within it.
 
We worry about permanent loss of capital-not price volatility.
Our Funds are designed for long-term shareholders. We believe concentrating our portfolios in the most attractive investment ideas, although it may cause short-term price volatility, is the best way to earn consistent returns over the long term.
 
We believe in being flexible and using common sense.
We are often contrarian and do not pay attention to benchmarks when making investment decisions. We also believe that cash is sometimes the most attractive investment.
 
Our goal is to earn good absolute investment returns over long
periods of time without exposing our clients’ and our own
capital to undue risk.
 
2          Weitz Funds

 
 
 
 
 
TABLE OF CONTENTS
 
 
 
The management of Weitz Funds has chosen paper for the 80 page body of this financial report from a paper manufacturer certified under the Sustainable Forestry Initiative standard.
 
Portfolio composition is subject to change at any time and references to specific securities, industries, and sectors referenced in this report are not recommendations to purchase or sell any particular security. Current and future portfolio holdings are subject to risk. See the Schedules of Investments included in this report for the percent of assets in each of the Funds invested in particular industries or sectors.
 
weitzfunds.com          3

 
 
 
 
 
SEPTEMBER 30, 2010
 
 
       
Total Returns
  
Average Annual Total Returns
 
Fund Name
  
Inception
Date
  
3 Mos.
  
1 Year
  
3 Year
  
5 Year
  
10 Year
  
15 Year
  
20 Year
  
25 Year
  
Since
Inception
  
Value
  
5/09/86
    
8.9
%
  
12.9
%
  
-8.3
%
  
-1.5
%
  
1.8
%
  
8.7
%
  
10.6
%
  
—
%
  
9.9
%
Russell 1000**(a)
        
11.6
    
10.8
    
-6.8
    
0.9
    
-0.2
    
6.6
    
N/A
    
—
    
N/A
  
Russell 1000 Value**(b)
        
10.1
    
8.9
    
-9.4
    
-0.5
    
2.6
    
7.4
    
N/A
    
—
    
N/A
  
Partners Value*
  
6/01/83
    
8.6
    
16.6
    
-4.3
    
1.6
    
2.9
    
9.7
    
11.8
    
11.4
    
12.3
  
Partners III*
  
6/01/83
    
-9.5
    
22.0
    
1.0
    
3.9
    
8.0
    
11.8
    
13.1
    
12.6
    
13.0
  
Russell 3000**(c)
        
11.5
    
11.0
    
-6.6
    
0.9
    
0.1
    
6.6
    
N/A
    
N/A
    
N/A
  
Russell 3000 Value**(d)
        
10.1
    
9.2
    
-9.0
    
-0.4
    
3.0
    
7.4
    
N/A
    
N/A
    
N/A
  
Hickory
  
4/01/93
    
10.7
    
25.4
    
-3.0
    
1.6
    
2.7
    
9.0
    
—
    
—
    
9.7
  
Russell 2500**(e)
        
12.2
    
15.9
    
-3.6
    
2.4
    
5.1
    
8.5
    
—
    
—
    
N/A
  
Russell 2500 Value**(f)
        
11.4
    
14.7
    
-4.0
    
1.4
    
8.0
    
9.8
    
—
    
—
    
N/A
  
S&P 500**(g)
        
11.3
    
10.2
    
-7.1
    
0.6
    
-0.4
    
6.4
    
9.0
    
10.2
    
—
  
Balanced
  
10/01/03
    
5.2
    
10.4
    
-0.8
    
2.4
    
—
    
—
    
—
    
—
    
3.8
  
Blended Index**(h)
        
7.9
    
9.2
    
-1.5
    
2.8
    
—
    
—
    
—
    
—
    
4.3
  
Short-Intermediate Income
  
12/23/88
    
1.5
    
5.4
    
6.7
    
5.7
    
5.5
    
5.6
    
6.0
    
—
    
6.3
  
Barclays Intermediate Credit**(i)
        
2.8
    
7.8
    
6.9
    
5.9
    
6.1
    
6.1
    
6.7
    
—
    
7.0
  
NebraskaTax-Free Income*
  
10/01/85
    
1.9
    
3.7
    
4.6
    
4.0
    
4.6
    
4.7
    
5.1
    
—
    
5.5
  
Barclays 5-Year Muni. Bond**(j)
        
2.5
    
5.6
    
6.7
    
5.4
    
5.3
    
5.1
    
5.8
    
—
    
—
  
 
These performance numbers reflect the deduction of each Fund’s annual operating expenses. The current annual operating expenses for the Value, Partners Value, Partners III, Hickory, Balanced, Short-Intermediate Income and Nebraska Tax-Free Income Funds, as stated in the most recent Prospectus are 1.25%, 1.26%, 1.80%, 1.33%, 1.19%, 0.71% and 0.78%, respectively, of each Fund’s net assets. The returns assume redemption at the end of each period and reinvestment of dividends. This information represents past performance and past performance does not guarantee future results. The investment return and the principal value of an investment in any of the Funds will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. Current performance may be higher or lower than the performance data quoted above. Performance data current to the most recent month end may be obtained at www.weitzfunds.com/performance/monthly.asp.
 
*
See pages 15, 21 and 45 for additional performance disclosures.
**
Index performance is hypothetical and is shown for illustrative purposes only.
(a)
The Russell 1000 is an unmanaged index of large capitalization common stocks. It consists of the 1,000 largest companies in the Russell 3000 Index.
(b)
The Russell 1000 Value is an unmanaged index of large capitalization common stocks. It consists of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values.
(c)
The Russell 3000 is an unmanaged index of the 3,000 largest U.S. companies based on market capitalization.
(d)
The Russell 3000 Value is an unmanaged index of the largest capitalization common stocks. It consists of those Russell 3000 companies with lower price-to-book ratios and lower forecasted growth values.
(e)
The Russell 2500 is an unmanaged index of small to mid-capitalization common stocks. It consists of the 2,500 smallest companies in the Russell 3000 Index.
(f)
The Russell 2500 Value is an unmanaged index of small to mid-capitalization common stocks. It consists of those Russell 2500 companies with lower price-to-book ratios and lower forecasted growth values.
(g)
The S&P 500 is an unmanaged index consisting of 500 companies generally representative of the market for the stocks of large-size U.S. companies.
(h)
The Blended Index is a blend of 60% S&P 500 and 40% Barclays Capital Intermediate U.S. Government/Credit Index.
(i)
Barclays Capital Intermediate U.S. Government/Credit Index is a total return performance benchmark consisting of government securities and publicly issued corporate debt with maturities from one to ten years and rated at least BBB by Standard & Poor’s or Baa by Moody’s Investor Service.
(j)
Barclays Capital 5-Year Municipal Bond Index is an unmanaged index of long-term, fixed-rate, investment-grade, tax-exempt bonds representative of the municipal bond market.
N/A
Indicates information is not available.
 
4          Weitz Funds

 
 
 
 
 
OCTOBER 7, 2010
 
 
Dear Fellow Shareholder:
 
The third quarter and the first nine months of 2010 have been very good for our Funds. Smaller company stocks have continued to lead the market this year and many of the major contributors to our results were small- and mid-caps. This helps explain the variations in returns among our stock funds.
 
The small/mid-cap Hickory Fund showed the best year-to-date results (+23.3%), followed by the “go anywhere” funds, Partners III (+19.3%) and Partners Value (+15.2%). The large-cap Value Fund returned “only” +9.3% but still exceeded the S&P 500 return (+3.9%) by a wide margin. As we wrote last quarter, we are finding more and more bargains among the “lagging” large-cap universe, so we suspect that Value will eventually have its turn to lead the others.
 
The table below shows results for the stock funds and the S&P 500 through the first nine months of 2010.
 
   
2010 YTD
Value
  
9.4
%
Partners Value
  
15.2
%
Partners III
  
19.3
%
Hickory
  
23.3
%
       
S&P 500
  
3.9
%
 
The Balanced Fund is up +7.9% for the first nine months, handily beating its “blended” index return of +5.3%. With stocks appearing relatively more attractive than bonds, Brad has over-weighted stocks in recent quarters and the results have been very good.
 
The Short-Intermediate Income Fund (+4.7%) and the Nebraska Tax-Free Income Fund (+4.1%), managed by Tom Carney, have also earned good returns this year. Finally, although the yields available on Treasury bills remained microscopic, our Government Money Market Fund has generated a positive, albeit tiny, return and fulfilled its mission as a safe haven for cash.
 
The table on the page opposite this letter shows investment results over a number of different time frames, along with various relevant market indices. We enjoy reporting strong short-term returns, especially when they compare favorably to those of the market and other funds, but we hope shareholders will focus more on the longer-term results.
 
Market Commentary and Portfolio Review
Over the past ten years (through 9/30/10), the S&P 500 has traded (very roughly) between 1600 and 800. It currently stands just under 1200 and, adjusted for dividends, has produced an annualized negative total return of -0.4% for the ten-year period. (Our stock funds’ returns ranged from +1.8% to +8.0% per year during that decade.)
 
The 2000 peak of the “tech bubble” and the 2007 peak of the “housing bubble” were followed by bear markets that cut the S&P 500 (roughly) in half. The rebound that began in March of 2009 recovered about half of the lost ground by April of 2010 and the market has been bouncing sideways ever since.
 
The causes and dimensions of the latest boom and bust have been well-chronicled. What is not clear is how long the repair work will take in the U.S. and how global economic crosscurrents of emerging nation growth and Euro-zone financial crisis will play out. There are a number of factors contributing to the slow and uneven pace of the current recovery.
 
Yet, at the same time, individual businesses are finding ways to cope. Corporate profits are rising and many of the individual companies we talk to and read about are doing quite well. This paradox is causing investors fits and the “up one month, down the next” market behavior is the result.
 
We are not inclined to take extreme positions—either positive or negative. Rather, we are trying to take advantage of the opportunities that the market offers. Generally, we are finding the best “bargains” in large, high quality companies. We wrote about nine of them in our last quarterly letter, but there are many others suffering from similar disregard.
 
The volatility of the market has also presented many trading opportunities as several of our favorite, very stable companies have seen their stock prices move up and down through 25-50% ranges. We are not “traders” by nature, but we are willing to accept those
 
weitzfunds.com          5

 
 
 
 
 
 
 
 
“gifts” (especially when we have realized losses available to offset taxable gains). Taking advantage of this volatility has increased our portfolio turnover somewhat in recent quarters, but it is still low by mutual fund standards and we would expect the change to be temporary.
 
Following this letter are several pages of specific information on each of our Funds. Also, since our Funds have a March fiscal year, this is our “Semi-Annual” report and contains supplemental information on expense ratios, turnover, etc. We hope shareholders will find the report useful and we invite you to call one of our client service representatives if you have questions.
 
A Word about Bonds
We offer three bond funds that are managed by Tom Carney. The largest, by far, is the Short-Intermediate Income Fund, which Morningstar designates as a five-star fund. We are proud of Tom’s stewardship of the Fund over the past 16 years, and we welcome the large number of new shareholders who have invested in the Fund over the past year or two.
 
There is a place for short-term, high quality bonds in many portfolios and we believe our Funds are excellent versions of what they are. (I own shares in each of the bond funds and they provided important “sleep well at night” comfort during the chaos of 2008-9.) We expect all three bond funds to accomplish their missions of preserving capital and earning modest income over the years.
 
On the other hand, in the aftermath of the “Great Recession” and the resulting bear market in stocks, it seems that many stock investors have taken refuge in bonds. Bonds have enjoyed a 30-year bull market and now offer very low yields (and very modest prospects). Interest rates on longer bonds could fall slightly further if the economy relapses into recession, but we believe that stocks are significantly more attractive for those with a five, ten or twenty-year investment horizon.
 
Outlook
The economic news is alternately encouraging and discouraging. It is no wonder investors are confused and anxious (especially since the news is often reported with breathless hysteria by the financial media). We are wary, but as we look at the companies we follow, we are encouraged. For all the personal, municipal, federal and global financial issues that make a citizen feel uncertain, lots of companies are finding ways to grow their businesses, cut costs, buy in shares and, generally, increase their per share values. We are happy to own these companies’ stocks when the price is right.
 
One of these days, the “digestion” or “deleveraging” period will be over and a new bull market will begin. In the meantime, we will work at staying out of trouble and preparing for it. Thanks again to our patient shareholders who have shown confidence in our Funds over the years.
 
Sincerely,
  
Wallace R. Weitz
  
Bradley P. Hinton
wally@weitzfunds.com
  
brad@weitzfunds.com
 
Portfolio composition is subject to change at any time and references to specific securities, industries, and sectors referenced in this letter are not recommendations to purchase or sell any particular security. Current and future portfolio holdings are subject to risk. See the Schedules of Investments included in this report for the percent of assets in each of the Funds invested in particular industries or sectors.
 
6          Weitz Funds

 
 
 

 
A PERSPECTIVE ON TEXAS INSTRUMENTS
 
 
By Barton Hooper
Texas Instruments is the fourth largest manufacturer of integrated circuit semiconductors (generally known as “semiconductors”) and is the largest manufacturer of analog semiconductors. Known for many products, including the famous handheld calculators which bear its name, Texas Instruments was founded in 1930 as a supplier of seismic equipment to the oil industry and has a long history of innovation. The company’s most famous and important invention, the integrated circuit, was created by employee Jack St. Clair Kilby in 1958. Mr. Kilby eventually was awarded a Nobel Prize for this invention which arguably is one of the most significant in the history of the modern world.
 
While most people are aware that a semiconductor powers their computer, less appreciated is that semiconductors are the foundation of all modern electronics and are found in just about every modern electrical device including toys, cars, appliances, solar panels and industrial machinery. Broadly speaking, semiconductors are either analog or digital and while Texas Instruments competes in both segments of the industry we highlight the company’s analog business below.
 
Analog Opportunity
The analog segment of Texas Instruments represents 40% of company sales and this percentage is expected to increase over time. Unlike computer processors, analog semiconductors do not need the very latest manufacturing technologies, go into a wide range of products and can have product lives lasting from 12 months to 15 years. A key to excellence within analog semiconductors is design expertise making analog semiconductor engineers a premium resource. Texas Instruments has a long history of training and retaining engineers and has design centers across the world. In addition, the company possesses the industry’s largest sales force which allows for a broader distribution of analog designs and therefore increased sales.
 
During the recession of 2007-2009, the company was able to purchase next generation manufacturing equipment in a bankruptcy sale that substantially expanded its analog capacity for a price that was approximately 15% of what it would have had to pay if it had purchased such equipment new. The expansion of capacity and technology provided Texas Instruments with at least $2 billion of incremental revenue capacity. The company expanded capacity while its competitors were in many cases permanently reducing their manufacturing footprint. With the demand for analog semiconductors continuing to expand, we believe the company acquired a significant share of market at a large discount.
 
Share Repurchases and Dividend
The company has been an exemplary steward of shareholder capital. Since 2004, Texas Instruments has repurchased approximately 31% of its outstanding shares and recently announced a buyback which, if completed, will result in a further 25% reduction in the outstanding share count. On top of share repurchases, Texas Instruments has a dividend yield of 1.4% and since 2004 has increased the dividend by a factor of almost 5x. Aggressive share repurchases, increasing dividends and calculated purchases of market-changing assets at a significant discount demonstrate that management is focused on protecting and growing shareholder value.
 
Valuation and Margin of Safety
Texas Instruments operates in an industry with attractive long-term prospects and has a clear strategy to exploit its competitive advantages. With a price of just over $27, it trades for approximately 11.5x our estimate of 2010 earnings. Our estimate of intrinsic value is between $37 and $46 and as such we believe the company’s shares represent an attractive investment for our shareholders.
 
Barton Hooper, CFA, joined Weitz in 2007. He graduated from the University of Missouri and received his MBA from Washington University. Barton brings to Weitz 13 years of accounting & investment management experience and a deep understanding of the Technology, Insurance, Consumer Staples and Industrials sectors.
 
weitzfunds.com          7

 
 
 
 
 
PORTFOLIO MANAGERS’ DISCUSSION & ANALYSIS
 
 
Co-Portfolio Managers:
Wallace R. Weitz & Bradley P. Hinton
 
The Value Fund returned +8.9% in the third calendar quarter, compared to a +11.3% return for the S&P 500. For the calendar year-to-date, the Fund increased 9.4% compared to a 3.9% gain for the S&P 500. Liberty Media – Interactive (+31%) was the largest contributor to the Fund’s quarterly results. Waffling investor sentiment has caused the stock to be far more volatile than QVC’s business, which continues to add customers and churn out free cash flow. Mega caps Google, ConocoPhillips and United Parcel Service all rose 18% during the quarter, as did European cable operator Liberty Global. Texas Instruments, profiled by Barton Hooper in this report’s Analyst Corner, gained 17% as the chip maker increased its share repurchase program and boosted its dividend.
 
Rocks and gravel weighed down the Fund’s results during the quarter and for the year-to-date. While the volume trough has been deeper and longer than our original forecasts, our view is that the long-term competitive advantages of these businesses remain firmly intact. We think Martin Marietta Materials (-9% for the quarter) and Vulcan Materials (-15%) have the potential for outsized multi-year investment returns from today’s depressed prices.
 
We purchased one new stock during the quarter. Baxter International is a leading medical technology company whose core products treat chronic, life-threatening diseases. Baxter’s hemophilia franchise holds a dominant position globally, while the company’s plasma, vaccine and renal businesses also hold enviable market positions. We were able to purchase the stock at a meaningful discount to our $60 business value estimate, in part because of cyclical headwinds in the plasma business. We think the company may grow more slowly than management expects, and our margin outlook is more sanguine, as well, due to medium-term pricing and reimbursement concerns. Still, Baxter’s diverse product portfolio should generate a healthy, growing stream of free cash flow. The company pays a solid dividend, and share repurchases should continue to enhance per share value creation.
 
Portfolio activity was heavy in response to the market’s “see-saw” pattern -- up strongly in July, down in August, and then back up again in September. On balance we increased our stock exposure, as we continued to find bargains among large company stocks. We built larger positions in Texas Instruments (now 4.8% of net assets) and Omnicom Group (2.5%), while adding to out-of-favor stocks like Dell and Apollo Group. On the sale side we eliminated our remaining managed care holdings to focus on higher conviction ideas. Finally, we sold all of our Potash Corp. shares at large gains after BHP Billiton made a hostile takeover bid for the company.
 
The Value Fund tilts toward our best larger company ideas. Seventy percent of the Fund’s stock investments are in companies with market caps above $10 billion. The Fund also remains relatively concentrated, with the ten largest positions representing 47% of net assets. As a result of the activity described above, the Fund’s residual cash position fell from 14% of net assets to 10% at quarter end.
 
In the table below we have included comparative returns for two established large-cap indices, the Russell 1000 and the Russell 1000 Value. As a reminder, we do not and will not manage our Funds to any specific benchmark. Even so, investors may find the supplemental information useful in evaluating the Fund’s longer-term results.
 
   
Total Returns
  
Average Annual Total Returns
  
   
3 Mos.
YTD
1 Year
3 Year
5 Year
10 Year
15 Year
20 Year
Value
  
8.9
%
9.4
%
12.9
%
-8.3
%
-1.5
%
1.8
%
8.7
%
10.6
%
S&P 500
  
11.3
  
3.9
  
10.2
  
-7.1
  
0.6
  
-0.4
  
6.4
  
9.0
  
Russell 1000
  
11.6
  
4.4
  
10.8
  
-6.8
  
0.9
  
-0.2
  
6.6
  
N/A
  
Russell 1000 Value
  
10.1
  
4.5
  
8.9
  
-9.4
  
-0.5
  
2.6
  
7.4
  
N/A
  
 
See pages 4 and 9 for additional performance disclosures.
 
8          Weitz Funds

 
 
 
 
 
VALUE FUND
PERFORMANCE • (UNAUDITED)
 
 
The following table summarizes performance information for the Value Fund as compared to the S&P 500 over the periods indicated.
 
       Year
  
Value
(1)
S&P 500
(2)
Relative
Results (1)-(2)
               
1986 (5/9/86)
    
3.5
%
  
4.1
%
  
-0.6
%
1987
    
-0.5
    
5.1
    
-5.6
  
1988
    
16.4
    
16.6
    
-0.2
  
1989
    
22.1
    
31.7
    
-9.6
  
1990
    
-5.2
    
-3.1
    
-2.1
  
1991
    
27.6
    
30.5
    
-2.9
  
1992
    
13.6
    
7.6
    
6.0
  
1993
    
20.0
    
10.1
    
9.9
  
1994
    
-9.8
    
1.3
    
-11.1
  
1995
    
38.4
    
37.6
    
0.8
  
1996
    
18.7
    
23.0
    
-4.3
  
1997
    
38.9
    
33.4
    
5.5
  
1998
    
28.9
    
28.6
    
0.3
  
1999
    
21.0
    
21.0
    
0.0
  
2000
    
19.6
    
-9.1
    
28.7
  
2001
    
0.2
    
-11.9
    
12.1
  
 
        Year
  
Value
(1)
S&P 500
(2)
Relative
Results (1)-(2)
               
2002
    
-17.1
%
  
-22.1
%
  
5.0
%
2003
    
28.7
    
28.7
    
0.0
  
2004
    
15.7
    
10.9
    
4.8
  
2005
    
-2.8
    
4.9
    
-7.7
  
2006
    
21.8
    
15.8
    
6.0
  
2007
    
-10.3
    
5.5
    
-15.8
  
2008
    
-40.7
    
-37.0
    
-3.7
  
2009
    
27.6
    
26.5
    
1.1
  
2010 (9/30/10)
    
9.4
    
3.9
    
5.5
  
                     
Since Inception:
                    
Cumulative Return
    
907.2
    
744.4
    
162.8
  
Avg. Annual Return
    
9.9
    
9.1
    
0.8
  
 
Growth of $10,000
This chart depicts the change in the value of a $10,000 investment in the Value Fund for the period March 31, 2000, through September 30, 2010, as compared with the growth of the Standard & Poor’s 500 Index during the same period. Index performance is hypothetical and is shown for illustrative purposes only.
  
 
 
 
 
The Fund’s average annual total return for the one, five and ten year periods ended September 30, 2010 was 12.9%, –1.5% and 1.8%, respectively. These performance numbers reflect the deduction of the Fund’s annual operating expenses, which as stated in its most recent Prospectus are 1.25% of the Fund’s net assets. The returns assume redemption at the end of each period and reinvestment of dividends. This information represents past performance and past performance does not guarantee future results. The investment return and the principal value of an investment in this Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month-end may be obtained at www.weitzfunds.com/performance/monthly.asp.
 
Performance information does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
 
weitzfunds.com          9

 
 
 
 
 
 
 

 
 
 
 
This page has been left blank intentionally.
 
 
10          Weitz Funds

 
 
 

 
VALUE FUND
PORTFOLIO PROFILE • (UNAUDITED)
 
  
Top Ten Stocks
  
Liberty Media - Interactive
    
5.4
%
Berkshire Hathaway
    
5.1
  
Microsoft
    
4.9
  
Texas Instruments
    
4.8
  
Dell
    
4.7
  
Omnicare
    
4.5
  
ConocoPhillips
    
4.5
  
Accenture
    
4.3
  
Liberty Global
    
4.3
  
United Parcel Service
    
4.1
  
% of Net Assets
    
46.6
%
 
Industry Sectors
  
Information Technology
    
22.0
%
Consumer Discretionary
    
20.2
  
Financials
    
12.3
  
Industrials
    
9.1
  
Materials
    
8.3
  
Health Care
    
6.3
  
Consumer Staples
    
5.9
  
Energy
    
4.5
  
Telecommunication Services
    
1.4
  
Short-Term Securities/Other
    
10.0
  
Net Assets
    
100.0
%
 
Largest Net Purchases and Sales for Quarter Ended September 30, 2010
  
Net Purchases ($mil)     Net Sales ($mil)  
Texas Instruments
  
$
20.0
    
WellPoint (eliminated)
  
$
17.5
  
Baxter International (new)
    
14.4
    
Liberty Global
    
11.7
  
Omnicom Group
    
10.0
    
Potash Corp. (eliminated)
    
9.8
  
Dell
    
4.8
    
Mohawk Bond 6.5% 1/15/11 (eliminated)
    
8.1
  
Omnicare
    
4.5
    
Tyco
    
7.6
  
   
$
53.7
    
Other (net)
    
6.6
  
               
$
61.3
  
 
          
Net Portfolio Sales
  
$
7.6
  
 
Largest Net Contributions to Investment Results for Quarter Ended September 30, 2010
  
Positive ($mil)     Negative ($mil)  
Liberty Media - Interactive
  
$
11.4
    
Vulcan Materials
  
$
(2.8
)
Liberty Global
    
6.8
    
Martin Marietta Materials
    
(2.1
)
ConocoPhillips
    
6.2
    
Lockheed Martin
    
(0.6
)
United Parcel Service
    
5.6
        
$
(5.5
)
Texas Instruments
    
5.4
              
Other (net)
    
47.5
              
   
$
82.9
              
Net Portfolio Gains
  
$
77.4
              
 
weitzfunds.com           11

 
 
 
 
 
VALUE FUND
SCHEDULE OF INVESTMENTS • SEPTEMBER 30, 2010 • (UNAUDITED)
 
 
COMMON STOCKS — 90.0%
    
Shares
    
Value
  
InformationTechnology — 22.0%
              
Software & Services — 12.6%
              
Microsoft Corp.
    
1,800,000
  
$
44,082,000
  
Accenture plc - CL A
    
900,000
    
38,241,000
  
Google, Inc. - CL A*
    
58,000
    
30,495,820
  
     
 
    
112,818,820
  
Technology Hardware & Equipment — 9.4%
              
Texas Instruments, Inc.
    
1,575,000
    
42,745,500
  
Dell, Inc.*
    
3,250,000
    
42,120,000
  
     
 
    
84,865,500
  
     
 
    
197,684,320
  
Consumer Discretionary — 20.2%
              
Broadcasting & Cable TV — 7.6%
              
Liberty Global, Inc. - Series C*
    
1,250,000
    
38,200,000
  
Comcast Corp. - CL A Special
    
1,750,000
    
29,767,500
  
     
 
    
67,967,500
  
Retailing — 7.0%
              
Liberty Media Corp. -
              
Interactive - Series A*
    
3,550,000
    
48,670,500
  
AutoZone, Inc.*
    
60,000
    
13,734,600
  
     
 
    
62,405,100
  
Education Services — 3.1%
              
Apollo Group, Inc. - CL A*
    
550,000
    
28,242,500
  
Media — 2.5%
              
Omnicom Group, Inc.
    
575,000
    
22,701,000
  
     
 
    
181,316,100
  
 
     
Shares
    
Value
  
Financials — 12.3%
              
Insurance — 8.5%
              
Berkshire Hathaway, Inc. - CL B*
    
550,000
  
$
45,474,000
  
Aon Corp.
    
800,000
    
31,288,000
  
           
76,762,000
  
               
Mortgage REIT’s — 3.8%
              
Redwood Trust, Inc.*
    
2,359,790
    
34,122,563
  
           
110,884,563
  
Industrials — 9.1%
              
Transportation — 4.1%
              
United Parcel Service, Inc. - CL B
    
550,000
    
36,679,500
  
Industrial Conglomerates — 2.8%
              
Tyco International Ltd.
    
700,000
    
25,711,000
  
Aerospace & Defense — 2.2%
              
Lockheed Martin Corp.
    
275,000
    
19,602,000
  
           
81,992,500
  
Materials — 8.3%
              
Construction Materials — 4.5%
              
Martin Marietta Materials, Inc.
    
325,000
    
25,015,250
  
Vulcan Materials Co.
    
420,000
    
15,506,400
  
           
40,521,650
  
               
Fertilizers & Agricultural Chemicals — 2.4%
              
Monsanto Co.
    
450,000
    
21,568,500
  
Industrial Gases — 1.4%
              
Praxair, Inc.
    
135,000
    
12,185,100
  
           
74,275,250
  
 
12           Weitz Funds
The accompanying notes form an integral part of these financial statements.

 
 
 
 
 
 
 

 
     
Shares
    
Value
  
Health Care — 6.3%
              
Health Care Equipment & Services — 6.3%
              
Omnicare, Inc.
    
1,700,000
  
$
40,596,000
  
Baxter International, Inc.
    
325,000
    
15,505,750
  
           
56,101,750
  
Consumer Staples — 5.9%
              
Hypermarkets & Super Centers — 3.0%
              
Wal-Mart Stores, Inc.
    
500,000
    
26,760,000
  
Household & Personal Products — 1.5%
              
The Procter & Gamble Co.
    
220,000
    
13,193,400
  
Food Beverage & Tobacco — 1.4%
              
Diageo plc - Sponsored ADR
    
190,000
    
13,111,900
  
           
53,065,300
  
Energy — 4.5%
              
Energy — 4.5%
              
ConocoPhillips
    
700,000
    
40,201,000
  
Telecommunication Services — 1.4%
              
Telecommunication Services — 1.4%
              
Telephone and Data Systems, Inc. -
              
Special
    
456,469
    
12,940,896
  
Other — 0.0%
              
Other — 0.0%
              
Adelphia Recovery Trust,
              
Series ACC-7*#
    
3,535,000
    
—
  
Total Common Stocks
              
(Cost $797,001,311)
          
808,461,679
  
 
SHORT-TERM
SECURITIES — 10.0%
    
Principal
amount
or shares
    
Value
  
Wells Fargo Advantage Government Money Market Fund - Institutional Class 0.05%(a)
    
8,514,794
  
$
8,514,794
  
U.S. Treasury Bills, 0.12% to 0.14%,
              
11/04/10 to 11/18/10(b)
  
$
81,000,000
    
80,989,644
  
Total Short-Term Securities
              
(Cost $89,504,404)
          
89,504,438
  
Total Investments in Securities
              
(Cost $886,505,715)
          
897,966,117
  
Other Assets Less Other Liabilities — 0.0%
          
399,501
  
Net Assets — 100.0%
        
$
898,365,618
  
Net Asset Value Per Share
        
$
25.94
  
 
*
Non-income producing
#
Illiquid and/or restricted security that has been fair valued.
(a)
Rate presented represents the annualized 7-day yield at September 30, 2010.
(b)
Interest rate presented represents the yield to maturity at the date of purchase.
 
The accompanying notes form an integral part of these financial statements.
weitzfunds.com           13

 
 
 
 
 
PORTFOLIO MANAGERS’ DISCUSSION & ANALYSIS
 
 
Co-Portfolio Managers:
Wallace R. Weitz & Bradley P. Hinton
 
The Partners Value Fund returned +8.6% in the third calendar quarter, compared to a +11.3% return for the S&P 500. For the calendar year-to-date, the Fund increased 15.2% compared to a 3.9% gain for the S&P 500. A trio of Liberty companies chaired by John Malone topped the contribution list this quarter (Liberty Media – Interactive +31%, Liberty Media – Starz +25% and Liberty Global +18%). Waffling investor sentiment has caused LINTA’s stock in particular to be far more volatile than QVC’s business, which continues to add customers and churn out cash flow. Cabela’s (+34%) is another retailer whose stock rebounded as late summer fears of a severe double-dip recession waned. Among our larger “battleship” companies, ConocoPhillips, Google and Texas Instruments all gained 17-18% for the quarter.
 
For-profit education companies remained in the headlines. Timely purchases of Grand Canyon Education shares more than offset market value declines in Strayer Education (-16%) during the quarter. Our education holdings are heavily weighted to Grand Canyon, which has several distinguishing characteristics. First, the university’s student mix is tilted to graduate students and bachelor’s degree students with previous college experience, which has led to better-quality outcomes. Second, tuition levels are lower than most peers, making the programs relatively more affordable. Third, the school’s program mix is anchored by nursing and education, two in-demand fields where Grand Canyon has a long history of successfully preparing students for careers. Fourth, the university benefits from an experienced and highly capable management team led by Brian Mueller. Finally, the school’s Phoenix-based, traditional campus and Christian heritage are unique attributes that help draw students to Grand Canyon over competitors. We think Grand Canyon’s controlled online growth strategy will fuel both academic and business success over the coming years.
 
Rocks, gravel and cement weighed down the Fund’s results during the quarter and for the year-to-date. While the volume trough has been deeper and longer than our original forecasts, our view is that the long-term competitive advantages of these businesses remain firmly intact. We think Martin Marietta Materials (-9% for the quarter), Eagle Materials (-8%) and Vulcan Materials (-15%) have the potential for outsized multi-year investment returns from today’s depressed prices.
 
We did not buy any new stocks this quarter. Still, portfolio activity was heavy in response to the market’s “see-saw” pattern — up strongly in July, down in August, and then back up again in September. We continued to find value in larger, high quality companies such as Aon Corporation and Texas Instruments. We also increased the Fund’s holdings of SandRidge Energy and Live Nation Entertainment. While these smaller companies face muted near-term outlooks, both have valuable asset bases with bright long-range prospects. AutoZone was our largest sale in the quarter. The company’s recent results have been terrific, but we eliminated the stock as it approached our growing value estimate.
 
Partners Value is a flexible fund with a go-anywhere mandate. Larger companies with market caps over $10 billion represent a third of net assets. Another third is invested in medium-sized companies with market caps between $2.5 and $10 billion. Smaller companies with market caps below $2.5 billion account for 24% of net assets. Finally, the Fund’s residual cash position is 10% of net assets at quarter end.
 
In the table below we have included comparative returns for two established all-cap indices, the Russell 3000 and the Russell 3000 Value. As a reminder, we do not and will not manage our funds to any specific benchmark. Even so, investors may find the supplemental information useful in evaluating the Fund’s longer-term results.
 
                                                                               Total Returns
    
Average Annual Total Returns
  
   
3 Mos.
YTD
1 Year
3 Year
5 Year
10 Year
15 Year
20 Year
25 Year
  
Partners Value
    
8.6
%
  
15.2
%
  
16.6
%
  
-4.3
%
  
1.6
%
  
2.9
%
  
9.7
%
  
11.8
%
  
11.4
%
  
S&P 500
    
11.3
    
3.9
    
10.2
    
-7.1
    
0.6
    
-0.4
    
6.4
    
9.0
    
10.2
    
Russell 3000
    
11.5
    
4.8
    
11.0
    
-6.6
    
0.9
    
0.1
    
6.6
    
N/A
    
N/A
    
Russell 3000 Value
    
10.1
    
4.8
    
9.2
    
-9.0
    
-0.4
    
3.0
    
7.4
    
N/A
    
N/A
    
 
See pages 4 and 15 for additional performance disclosures.
 
14          Weitz Funds

 
 
 

 
PARTNERS VALUE FUND
PERFORMANCE • (UNAUDITED)
 
 
The following table summarizes performance information for the Partners Value Fund as compared to the S&P 500 over the periods indicated.
 
     Year   Year
    
Partners Value
(1)
  
S&P 500
(2)
  
Relative Results
(1)-(2)
1983 (6/1/83)
    
9.9
%
  
4.2
%
  
5.7
%
1984
    
14.5
    
6.1
    
8.4
  
1985
    
40.7
    
31.6
    
9.1
  
1986
    
11.1
    
18.6
    
-7.5
  
1987
    
4.3
    
5.1
    
-0.8
  
1988
    
14.9
    
16.6
    
-1.7
  
1989
    
20.3
    
31.7
    
-11.4
  
1990
    
-6.3
    
-3.1
    
-3.2
  
1991
    
28.1
    
30.5
    
-2.4
  
1992
    
15.1
    
7.6
    
7.5
  
1993
    
23.0
    
10.1
    
12.9
  
1994
    
-9.0
    
1.3
    
-10.3
  
1995
    
38.7
    
37.6
    
1.1
  
1996
    
19.1
    
23.0
    
-3.9
  
1997
    
40.6
    
33.4
    
7.2
  
1998
    
29.1
    
28.6
    
0.5
  
 
     Year
    
Partners Value
(1)
  
S&P 500
(2)
  
Relative Results
(1)-(2)
1999
    
22.1
%
  
21.0
%
  
1.1
%
2000
    
21.1
    
-9.1
    
30.2
  
2001
    
-0.9
    
-11.9
    
11.0
  
2002
    
-17.0
    
-22.1
    
5.1
  
2003
    
25.4
    
28.7
    
-3.3
  
2004
    
15.0
    
10.9
    
4.1
  
2005
    
-2.4
    
4.9
    
-7.3
  
2006
    
22.5
    
15.8
    
6.7
  
2007
    
-8.5
    
5.5
    
-14.0
  
2008
    
-38.1
    
-37.0
    
-1.1
  
2009
    
31.3
    
26.5
    
4.8
  
2010 (9/30/10)
    
15.2
    
3.9
    
11.3
  
Since Inception:
                    
Cumulative Return
    
2,261.0
    
1,302.3
    
958.7
  
Avg. Annual Return
    
12.3
    
10.1
    
2.2
  
 
Growth of $10,000
This chart depicts the change in the value of a $10,000 investment in the Partners Value Fund for the period March 31, 2000, through September 30, 2010, as compared with the growth of the Standard & Poor’s 500 Index during the same period. Index performance is hypothetical and is shown for illustrative purposes only.		    
 
The Fund’s average annual total return for the one, five and ten year periods ended September 30, 2010 was 16.6%, 1.6% and 2.9%, respectively. These performance numbers reflect the deduction of the Fund’s annual operating expenses which as stated in its most recent Prospectus are 1.26% of the Fund’s net assets. The returns assume redemption at the end of each period and reinvestment of dividends. This information represents past performance and past performance does not guarantee future results. The investment return and the principal value of an investment in this Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month-end may be obtained at www.weitzfunds.com/performance/monthly.asp.
 
Performance information does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
 
Performance of the Partners Value Fund (the “Fund”) is measured from June 1, 1983, the inception of Weitz Partners II Limited Partnership (the “Partnership”). As of December 31, 1993, the Fund succeeded to substantially all of the assets of the Partnership. The investment objectives, policies and restrictions of the Fund are materially equivalent to those of the Partnership and the Partnership was managed at all times with full investment authority by Wallace R. Weitz & Company. The performance information includes performance for the period before the Fund became an investment company registered with the Securities and Exchange Commission. During this period, the Partnership was not registered under the Investment Company Act of 1940 and, therefore, was not subject to certain investment restrictions imposed by the 1940 Act. If the Partnership had been registered under the 1940 Act during this period, the Partnership’s performance might have been adversely affected.
 
weitzfunds.com           15

 
 
 
 
 
 
 
 

 
 
This page has been left blank intentionally.
 
 
 
16          Weitz Funds

 
 
 

 
PARTNERS VALUE FUND
PORTFOLIO PROFILE • (UNAUDITED)
 
 
Top Ten Stocks
Liberty Media - Interactive
    
5.2
%
Berkshire Hathaway
    
4.8
  
Omnicare
    
4.4
  
Microsoft
    
4.1
  
Dell
    
4.1
  
Liberty Global
    
4.0
  
Redwood Trust
    
3.8
  
Accenture
    
3.6
  
Grand Canyon Education
    
3.5
  
SandRidge Energy
    
3.0
  
% of Net Assets
    
40.5
%
 
Industry Sectors
  
Consumer Discretionary
    
33.1
%
Information Technology
    
19.3
  
Financials
    
13.8
  
Health Care
    
7.3
  
Materials
    
6.5
  
Energy
    
5.8
  
Industrials
    
2.2
  
Telecommunication Services
    
1.4
  
Consumer Staples
    
0.6
  
Short-Term Securities/Other
    
10.0
  
Net Assets
    
100.0
%
 
Largest Net Purchases and Sales for Quarter Ended September 30, 2010
  
Net Purchases ($mil)
    
Net Sales ($mil)
  
Grand Canyon Education
  
$
10.8
    
AutoZone (eliminated)
  
$
11.6
  
SandRidge Energy
    
7.1
    
Willis Group Holdings
    
7.2
  
Live Nation Entertainment
    
6.2
    
Weight Watchers
    
5.1
  
Aon
    
5.7
    
Tyco
    
5.1
  
Texas Instruments
    
5.7
    
United Parcel Service (eliminated)
    
4.6
  
   
$
35.5
    
Other net
    
7.2
  
               
$
40.8
  
           
Net Portfolio Sales
  
$
5.3
  
 
Largest Net Contributions to Investment Results for Quarter Ended September 30, 2010
  
Positive ($mil)
    
Negative ($mil)
  
Liberty Media - Interactive
  
$
7.4
    
Martin Marietta Materials
  
$
(1.2
)
Liberty Global
    
4.1
    
Eagle Materials
    
(1.1
)
Liberty Media - Starz
    
4.1
    
Vulcan Materials
    
(0.7
)
Cabela’s
    
2.9
    
Strayer Education
    
(0.5
)
ConocoPhillips
    
2.8
    
Washington Post
    
(0.1
)
Other (net)
    
32.0
        
$
(3.6
)
   
$
53.3
              
Net Portfolio Gains
  
$
49.7
              
 
weitzfunds.com           17

 
 
 

 
PARTNERS VALUE FUND
SCHEDULE OF INVESTMENTS • SEPTEMBER 30, 2010 • (UNAUDITED)
 
 
COMMON STOCKS — 90.0%
    
Shares
    
Value
  
Consumer Discretionary — 33.1%
              
Broadcasting & Cable TV — 8.5%
              
Liberty Global, Inc. - Series C*
    
800,000
  
$
24,448,000
  
Liberty Media Corp. - Starz - Series A*
    
240,000
    
15,571,200
  
Comcast Corp. - CL A Special
    
700,000
    
11,907,000
  
           
51,926,200
  
Retailing — 7.1%
              
Liberty Media Corp. -
              
Interactive - Series A*
    
2,300,000
    
31,533,000
  
Cabela’s, Inc. - CL A*
    
600,000
    
11,388,000
  
           
42,921,000
  
Education Services — 5.9%
              
Grand Canyon Education, Inc.*
    
966,995
    
21,206,201
  
Apollo Group, Inc. - CL A*
    
230,000
    
11,810,500
  
Strayer Education, Inc.
    
15,000
    
2,617,500
  
           
35,634,201
  
Consumer Services — 4.9%
              
Coinstar, Inc.*
    
302,300
    
12,995,877
  
Interval Leisure Group, Inc.*
    
730,000
    
9,833,100
  
Weight Watchers International, Inc.
    
220,000
    
6,861,800
  
           
29,690,777
  
Media — 4.5%
              
Live Nation Entertainment, Inc.*
    
1,300,000
    
12,844,000
  
Liberty Media Corp. - Capital - Series A*
    
160,000
    
8,329,600
  
The Washington Post Co. - CL B
    
15,000
    
5,991,150
  
           
27,164,750
  
Consumer Durables & Apparel — 2.2%
              
Mohawk Industries, Inc.*
    
250,000
    
13,325,000
  
           
200,661,928
  
 
 
     
Shares
    
Value
  
Information Technology — 19.3%
              
Software & Services — 12.5%
              
Microsoft Corp.
    
1,020,000
  
$
24,979,800
  
Accenture plc - CL A
    
510,000
    
21,669,900
  
Google, Inc. - CL A*
    
26,000
    
13,670,540
  
ACI Worldwide, Inc.*
    
350,000
    
7,836,500
  
The Knot, Inc.*
    
800,000
    
7,304,000
  
           
75,460,740
  
Technology Hardware & Equipment — 6.8%
              
Dell, Inc.*
    
1,925,000
    
24,948,000
  
Texas Instruments, Inc.
    
600,000
    
16,284,000
  
           
41,232,000
  
           
116,692,740
  
Financials — 13.8%
              
Insurance — 10.0%
              
Berkshire Hathaway, Inc. - CL B*
    
350,000
    
28,938,000
  
Aon Corp.
    
460,000
    
17,990,600
  
Willis Group Holdings Ltd.
    
300,000
    
9,246,000
  
Brown & Brown, Inc.
    
200,000
    
4,038,000
  
           
60,212,600
  
Mortgage REIT’s — 3.8%
              
Redwood Trust, Inc.*
    
1,605,885
    
23,221,097
  
           
83,433,697
  
Health Care — 7.3%
              
Health Care Equipment & Services — 7.3%
              
Omnicare, Inc.
    
1,125,000
    
26,865,000
  
Laboratory Corp. of America Holdings*
    
225,000
    
17,646,750
  
           
44,511,750
  
Materials — 6.5%
              
Construction Materials — 4.8%
              
Eagle Materials, Inc.
    
550,000
    
13,035,000
  
Martin Marietta Materials, Inc.
    
160,000
    
12,315,200
  
Vulcan Materials Co.
    
100,000
    
3,692,000
  
           
29,042,200
  
               
Fertilizers & Agricultural Chemicals — 1.2%
              
Monsanto Co.
    
155,000
    
7,429,150
  
Metals & Mining — 0.5%
              
Compass Minerals International, Inc.
    
40,700
    
3,118,434
  
           
39,589,784
  
 
18           Weitz Funds
The accompanying notes form an integral part of these financial statements.

 
 
 
 
 
 
 

 
     
Shares
    
Value
  
Energy — 5.8%
              
Energy — 5.8%
              
SandRidge Energy, Inc.*
    
3,200,000
  
$
18,176,000
  
ConocoPhillips
    
300,000
    
17,229,000
  
           
35,405,000
  
Industrials — 2.2%
              
Industrial Conglomerates — 2.2%
              
Tyco International Ltd.
    
365,000
    
13,406,450
  
Telecommunication Services — 1.4%
              
Telecommunication Services — 1.4%
              
Telephone and Data Systems, Inc. -
              
Special
    
295,589
    
8,379,948
  
Consumer Staples — 0.6%
              
Household & Personal Products — 0.6%
              
Energizer Holdings, Inc.*
    
50,000
    
3,361,500
  
Other — 0.0%
              
Other — 0.0%
              
Adelphia Recovery Trust,
              
Series ACC-7* #
    
2,310,000
    
—
  
Total Common Stocks
              
(Cost $524,299,583)
          
545,442,797
  
 
SHORT-TERM SECURITIES — 9.8%
    
Principal
amount
or shares
    
Value
  
Wells Fargo Advantage Government Money Market Fund - Institutional Class 0.05%(a)
    
7,208,761
  
$
7,208,761
  
U.S. Treasury Bills, 0.12% to 0.13%,
              
10/07/10 to 11/18/10(b)
  
$
52,000,000
    
51,995,008
  
Total Short-Term Securities
              
(Cost $59,203,789)
          
59,203,769
  
Total Investments in Securities
              
(Cost $583,503,372)
          
604,646,566
  
Other Assets Less Other Liabilities — 0.2%
          
1,230,202
  
Net Assets — 100.0%
        
$
605,876,768
  
Net Asset Value Per Share
        
$
18.60
  
 
*
Non-income producing
#
Illiquid and/or restricted security that has been fair valued.
(a)
Rate presented represents the annualized 7-day yield at September 30, 2010.
(b)
Interest rate presented represents the yield to maturity at the date of purchase.
   
 
The accompanying notes form an integral part of these financial statements.
weitzfunds.com           19

 
 
 
 
 
PORTFOLIO MANAGER’S DISCUSSION & ANALYSIS
 
 
Portfolio Manager: Wallace R. Weitz
 
The Partners III Opportunity Fund returned +9.5% in the third calendar quarter, compared to a +11.3% return for the S&P 500. For the calendar year-to-date, the Fund increased 19.3% compared to a 3.9% gain for the S&P 500. Hewitt Associates started the quarter off on a strong note when the company agreed to merge with Aon Corporation in mid-July. We sold our Hewitt stock (+36% to our sale price) and bought more shares of suitor Aon shortly after the announcement. The combined company has a terrific business with a cheap stock, and Aon is now among the Fund’s larger holdings.
 
A trio of Liberty Media companies chaired by John Malone enjoyed strong gains this quarter (Liberty Media – Interactive +31%, Liberty Media – Starz +25% and Liberty Media –Capital +24%). Waffling investor sentiment has caused LINTA’s stock in particular to be far more volatile than QVC’s business, which continues to add customers and churn out cash flow. Smaller consumer stocks rebounded as fears of a severe double-dip recession waned. Cabela’s (+34%), Weight Watchers (+22%) and Energizer Holdings (+34%) were notable contributors. Among our larger “battleship” companies, ConocoPhillips, Texas Instruments and Google all gained 17-18% for the quarter. The Fund’s short positions detracted modestly from the quarter’s results, which is typical in a rising stock market.
 
We purchased one new stock during the quarter. Ascent Media provides a range of services to the media and entertainment industries in content creation, management and distribution. The company was spun out of Discovery Holding Company in 2008. Ascent’s stock trades at $27 per share, while the company holds more than $25 per share of cash and marketable securities with no debt. The existing business may itself be a hidden gem, but the primary attraction is the cash hoard in highly capable hands. John Malone recently joined the Board of Directors, solidifying our confidence that Ascent will deploy this excess capital wisely.
 
Portfolio activity was heavy in response to the market’s “see-saw” pattern -- up strongly in July, down in August, and then back up again in September. We built larger positions in Omnicare (now 5.5% of net assets), Texas Instruments (4.5%) and SandRidge Energy (4.3%), while adding to out-of-favor stocks like Grand Canyon Education and Live Nation Entertainment. We trimmed Willis Group shares during the quarter, in part because we find competitor Aon’s risk-reward more compelling. We also sold AutoZone and Monsanto. While Autozone’s recent results have been terrific, we eliminated the stock as it approached our growing value estimate. We viewed Monsanto as an opportunistic trade for PIII, using puts and calls to enhance the position’s total return.
 
The Fund is roughly 84% “net long” at quarter end, up from 82% at June 30, 2010. Long positions are just below 100% of net assets, while short positions are slightly more than 15% of net assets. The Fund’s short positions remain tilted to broad-based small and mid-cap stock ETF’s. In the table below we have included comparative returns for two established all-cap indices, the Russell 3000 and the Russell 3000 Value. As a reminder, we do not and will not manage our funds to any specific benchmark. Even so, investors may find the supplemental information useful in evaluating the Fund’s longer-term results.
 
                                                                                                            Total Returns
    
Average Annual Total Returns
     
3 Mos.
  
YTD
  
1 Year
  
3 Year
  
5 Year
  
10 Year
  
15 Year
  
20 Year
  
25 Year
Partners III
    
9.5
%
  
19.3
%
  
22.0
%
  
1.0
%
  
3.9
%
  
8.0
%
  
11.8
%
  
13.1
%
  
12.6
%
S&P 500
    
11.3
    
3.9
    
10.2
    
-7.1
    
0.6
    
-0.4
    
6.4
    
9.0
    
10.2
  
Russell 3000
    
11.5
    
4.8
    
11.0
    
-6.6
    
0.9
    
0.1
    
6.6
    
N/A
    
N/A
  
Russell 3000 Value
    
10.1
    
4.8
    
9.2
    
-9.0
    
-0.4
    
3.0
    
7.4
    
N/A
    
N/A
  
 
See pages 4 and 21 for additional performance disclosures.
 
20          Weitz Funds

 
 
 
 
 
PARTNERS III OPPORTUNITY FUND
PERFORMANCE • (UNAUDITED)
 
 
The following table summarizes performance information for the Partners III Opportunity Fund (“Partners III”) and its predecessor, Weitz Partners III-Limited Partnership (the “Partnership”).
 
     Year
    
Partner III (1)
  
S&P 500 (2)
  
Relative Results (1)-(2)
1983 (6/1/83)
    
8.6
%
  
4.2
%
  
4.4
%
1984
    
11.2
    
6.1
    
5.1
  
1985
    
38.6
    
31.6
    
7.0
  
1986
    
8.5
    
18.6
    
-10.1
  
1987
    
-1.4
    
5.1
    
-6.5
  
1988
    
19.5
    
16.6
    
2.9
  
1989
    
19.4
    
31.7
    
-12.3
  
1990
    
-5.5
    
-3.1
    
-2.4
  
1991
    
23.2
    
30.5
    
-7.3
  
1992
    
13.5
    
7.6
    
5.9
  
1993
    
32.3
    
10.1
    
22.2
  
1994
    
-11.1
    
1.3
    
-12.4
  
1995
    
43.3
    
37.6
    
5.7
  
1996
    
25.0
    
23.0
    
2.0
  
1997
    
37.1
    
33.4
    
3.7
  
1998
    
10.9
    
28.6
    
-17.7
  
 
     Year
    
Partner III (1)
  
S&P 500 (2)
  
Relative Results (1)-(2)
1999
    
10.6
%
  
21.0
%
  
-10.4
%
2000
    
32.4
    
-9.1
    
41.5
  
2001
    
6.6
    
-11.9
    
18.5
  
2002
    
-16.1
    
-22.1
    
6.0
  
2003
    
42.6
    
28.7
    
13.9
  
2004
    
22.1
    
10.9
    
11.2
  
2005
    
-0.7
    
4.9
    
-5.6
  
2006
    
20.4
    
15.8
    
4.6
  
2007
    
-12.9
    
5.5
    
-18.4
  
2008
    
-34.4
    
-37.0
    
2.6
  
2009
    
42.0
    
26.5
    
15.5
  
2010 (9/30/10)
    
19.3
    
3.9
    
15.4
  
Since Inception:
                    
Cumulative Return
    
2,751.8
    
1,302.3
    
1,449.50
  
Avg. Annual Return
    
13.0
    
10.1
    
2.9
  
 
Growth of $10,000
This chart depicts the change in the value of a $10,000 investment in Partners III for the period March 31, 2000, through September 30, 2010 as compared with the growth of the Standard & Poor’s 500 Index during the same period. Index performance is hypothetical and is shown for illustrative purposes only.		    
 
The average annual total return of Partners III for the one, five and ten year periods ended September 30, 2010 was 22.0%, 3.9% and 8.0%, respectively. These performance numbers reflect the deduction of the Fund’s annual operating expenses which as stated in its most recent Prospectus are 1.80% of the Fund’s net assets. The returns assume redemption at the end of each period and reinvestment of dividends. This information represents past performance and past performance does not guarantee future results. The investment return and the principal value of an investment in Partners III will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month-end may be obtained at www.weitzfunds.com/performance/monthly.asp.
 
Performance information does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
 
Performance of Partners III is measured from June 1, 1983, the inception of the Partnership. As of December 30, 2005, Partners III succeeded to substantially all of the assets of the Partnership. The investment objectives, policies and restrictions of Partners III are materially equivalent to those of the Partnership and the Partnership was managed at all times with full investment authority by Wallace R. Weitz & Company. The performance information includes performance for the period before Partners III became an investment company registered with the Securities and Exchange Commission. During this period, the Partnership was not registered under the Investment Company Act of 1940 and, therefore, was not subject to certain investment restrictions imposed by the 1940 Act. If the Partnership had been registered under the 1940 Act during this period, the Partnership’s performance might have been adversely affected.
 
weitzfunds.com           21

 
 
 
 
 
 
 

 
 
This page has been left blank intentionally.
 
 
 
22          Weitz Funds

 
 
 
 
 
PARTNERS III OPPORTUNITY FUND
PORTFOLIO PROFILE • (UNAUDITED)
 
 
Top Ten Stocks
Liberty Media - Interactive
    
5.7
%
Omnicare
    
5.5
  
Berkshire Hathaway
    
5.2
  
Texas Instruments
    
4.5
  
SandRidge Energy
    
4.3
  
Discovery Communications
    
4.3
  
Redwood Trust
    
4.1
  
Microsoft
    
4.0
  
Liberty Global
    
4.0
  
Dell
    
3.9
  
% of Net Assets
    
45.5
%
 
Industry Sectors
  
Consumer Discretionary
    
39.5
%
Information Technology
    
23.2
  
Financials
    
14.2
  
Health Care
    
8.1
  
Energy
    
8.1
  
Materials
    
3.6
  
Industrials
    
1.7
  
Consumer Staples
    
0.9
  
Telecommunication Services
    
0.3
  
Total Long Positions
    
99.6
  
Securities Sold Short
    
(15.3
)
Net Long Positions
    
84.3
  
Short Proceeds/Other
    
15.7
  
Net Assets
    
100.0
%
 
Largest Net Purchases and Sales for Quarter Ended September 30, 2010
Net Purchases ($mil)
    
Net Sales ($mil)
  
Ascent Media (new)
  
$
6.9
    
Hewitt Associates (eliminated)
  
$
7.0
  
SandRidge Energy
    
5.0
    
Willis Group Holdings
    
4.2
  
Grand Canyon Education
    
4.7
    
Liberty Media - Starz
    
4.0
  
Texas Instruments
    
4.5
    
Weight Watchers
    
4.0
  
Laboratory Corp. of America
    
4.4
    
Monsanto (eliminated)
    
3.5
  
Other (net)
    
2.6
        
$
22.7
  
   
$
28.1
              
Net Portfolio Purchases
  
$
5.4
              
 
Largest Net Contributions to Investment Results for Quarter Ended September 30, 2010
Positive ($mil)
    
Negative ($mil)
  
Liberty Media - Interactive
  
$
4.0
    
Short Positions
  
$
(5.9
)
Liberty Media - Starz
    
3.0
    
Intelligent Systems
    
(0.6
)
Discovery Communications
    
2.5
    
Eagle Materials
    
(0.4
)
Liberty Global
    
2.0
    
Martin Marietta Materials
    
(0.4
)
Hewitt Associates
    
1.8
    
Ascent Media
    
(0.2
)
Other (net)
    
20.6
        
$
(7.5
)
   
$
33.9
              
Net Portfolio Gains
    
26.4
              
 
                           weitzfunds.com        23

 
 
 
 
 
PARTNERS III OPPORTUNITY FUND
SCHEDULE OF INVESTMENTS • SEPTEMBER 30, 2010 • (UNAUDITED)
 
 
COMMON STOCKS — 99.6%
    
Shares
    
Value
  
Consumer Discretionary — 39.5%
              
Broadcasting & Cable TV — 13.0%
              
Discovery Communications, Inc. - CL C* (a)
    
340,000
  
$
12,984,600
  
Liberty Global, Inc. - Series C* (a)
    
400,000
    
12,224,000
  
Liberty Media Corp. -
              
Starz - Series A*
    
160,000
    
10,380,800
  
Cumulus Media, Inc. - CL A*
    
1,358,000
    
3,815,980
  
           
39,405,380
  
Media — 8.0%
              
Live Nation Entertainment, Inc.*
    
900,000
    
8,892,000
  
Liberty Media Corp. -
              
Capital - Series A* (a)
    
170,000
    
8,850,200
  
Ascent Media Corp. - CL A*
    
250,000
    
6,677,500
  
           
24,419,700
  
Retailing — 7.5%
              
Liberty Media Corp. -
              
Interactive - Series A* (a)
    
1,250,000
    
17,137,500
  
Cabela’s, Inc. - CL A* (a)
    
290,000
    
5,504,200
  
           
22,641,700
  
Education Services — 4.7%
              
Grand Canyon Education, Inc.*
    
505,000
    
11,074,650
  
Apollo Group, Inc. - CL A*
    
60,000
    
3,081,000
  
           
14,155,650
  
Consumer Services — 4.5%
              
Coinstar, Inc.*
    
136,200
    
5,855,238
  
Interval Leisure Group, Inc.*
    
320,000
    
4,310,400
  
Weight Watchers International, Inc.
    
112,043
    
3,494,621
  
           
13,660,259
  
Consumer Durables & Apparel — 1.8%
              
Mohawk Industries, Inc.*
    
100,000
    
5,330,000
  
           
119,612,689
  
 
     
Shares
    
Value
  
Information Technology — 23.2%
              
Software & Services — 14.7%
              
Microsoft Corp.
    
500,000
  
$
12,245,000
  
Accenture plc - CL A
    
240,000
    
10,197,600
  
ACI Worldwide, Inc.*
    
320,000
    
7,164,800
  
The Knot, Inc.*
    
700,000
    
6,391,000
  
Google, Inc. - CL A* (a)
    
12,000
    
6,309,480
  
Intelligent Systems Corp.* # †
    
2,270,000
    
2,270,000
  
           
44,577,880
  
Technology Hardware & Equipment — 8.5%
              
Texas Instruments, Inc.
    
500,000
    
13,570,000
  
Dell, Inc.* (a)
    
920,000
    
11,923,200
  
Continental Resources* #
    
700
    
280,000
  
           
25,773,200
  
           
70,351,080
  
Financials — 14.2%
              
Insurance — 10.1%
              
Berkshire Hathaway, Inc. - CL B* (a)
    
190,000
    
15,709,200
  
Aon Corp.
    
303,050
    
11,852,286
  
Willis Group Holdings Ltd.
    
100,000
    
3,082,000
  
           
30,643,486
  
Mortgage REIT’s — 4.1%
              
Redwood Trust, Inc.* (a)
    
870,000
    
12,580,200
  
           
43,223,686
  
Health Care — 8.1%
              
Health Care Equipment & Services — 8.1%
              
Omnicare, Inc.(a)
    
700,000
    
16,716,000
  
Laboratory Corp. of America Holdings* (a)
    
100,000
    
7,843,000
  
           
24,559,000
  
 
24           Weitz Funds
The accompanying notes form an integral part of these financial statements.

 
 
 
 
 
 
 
 
     
Shares
    
Value
  
Energy — 8.1%
              
Energy — 8.1%
              
SandRidge Energy, Inc.*
    
2,287,550
  
$
12,993,284
  
ConocoPhillips(a)
    
200,000
    
11,486,000
  
           
24,479,284
  
Materials — 3.6%
              
Construction Materials — 3.6%
              
Martin Marietta Materials, Inc.(a)
    
80,000
    
6,157,600
  
Eagle Materials, Inc.
    
200,000
    
4,740,000
  
           
10,897,600
  
Industrials — 1.7%
              
Industrial Conglomerates — 1.7%
              
Tyco International Ltd.
    
140,000
    
5,142,200
  
Consumer Staples — 0.9%
              
Household & Personal Products — 0.9%
              
Energizer Holdings, Inc.*
    
40,000
    
2,689,200
  
Telecommunication Services — 0.3%
              
Telecommunication Services — 0.3%
              
Telephone and Data Systems, Inc. -
              
Special(a)
    
31,829
    
902,352
  
Total Common Stocks
              
(Cost $257,454,879)
          
301,857,091
  
 
SHORT-TERM SECURITIES — 1.4%
    
Shares
    
Value
  
Wells Fargo Advantage Government Money Market Fund -Institutional Class 0.05%(b)
              
(Cost $4,487,279)
    
4,487,279
  
$
4,487,279
  
Total Investments in Securities
              
(Cost $261,942,158)
          
306,344,370
  
Due From Broker(a) — 14.3%
          
43,327,251
  
Securities Sold Short — (15.3%)
          
(46,368,505
)
Other Liabilities in Excess of Other Assets — (0.0%)
          
(117,450
)
Net Assets — 100.0%
        
$
303,185,666
  
Net Asset Value Per Share
        
$
10.44
  
 
SECURITIES SOLD SHORT — (15.3%)
              
Discovery Communications, Inc. - CL A
    
373,100
  
$
(16,248,505
)
Ishares Russell 2000 Fund
    
220,000
    
(14,843,400
)
Ishares Russell 2000 Value Fund
    
130,000
    
(8,047,000
)
Ishares Russell Midcap Fund
    
80,000
    
(7,229,600
)
Total Securities Sold Short
              
(proceeds $49,526,910)
        
$
(46,368,505
)
 
*
Non-income producing
†
Controlled affiliate
#
Illiquid and/or restricted security that has been fair valued.
(a)
Fully or partially pledged as collateral on securities sold short and outstanding written options.
(b)
Rate presented represents the annualized 7-day yield at September 30, 2010.
 
   
The accompanying notes form an integral part of these financial statements.
weitzfunds.com           25

 
 
 
 
 
PORTFOLIO MANAGER’S DISCUSSION & ANALYSIS
 
 
Portfolio Manager: Wallace R. Weitz
 
The Hickory Fund returned +10.7% in the third calendar quarter, compared to a +11.3% return for the S&P 500. For the calendar year-to-date, the Fund increased 23.3% compared to a 3.9% gain for the S&P 500. Hewitt Associates started the quarter off on a strong note when the company agreed to merge with Aon Corporation in mid-July. We sold our Hewitt stock (+36% to our sale price) and bought shares of suitor Aon shortly after the announcement. The combined company has a terrific business with a cheap stock, and Aon is now among the Fund’s largest holdings.
 
Several consumer stocks rebounded as fears of a severe double-dip recession waned. Energizer Holdings (+34%), Cabela’s (+34%), Weight Watchers (+22%) and Mohawk Industries (+16%) were among the largest contributors. A trio of Liberty Media companies chaired by John Malone also enjoyed strong gains this quarter (Liberty Media – Interactive +31%, Liberty Media – Starz +25% and Liberty Media – Capital +24%). Waffling investor sentiment has caused LINTA’s stock in particular to be far more volatile than QVC’s business, which continues to add customers and churn out cash flow.
 
Rocks, gravel and cement weighed down the Fund’s results during the quarter and year-to-date. While the volume trough has been deeper and longer than our original forecasts, our view is that the long-term competitive advantages of these businesses remain firmly intact. We think Martin Marietta Materials (-9% for the quarter), Eagle Materials (-8%) and Vulcan Materials (-15%) have the potential for outsized multi-year investment returns from today’s depressed prices.
 
We added new positions in several companies during the quarter. Knology is a cable operator in smaller markets in the Southeast and Midwest. Prestige Brands owns a collection of well-known personal care, over-the-counter medication and household care brands. Examples include Chloraseptic, Clear Eyes, Compound W, Cutex, Comet and Spic & Span. Iconix Brand Group owns a portfolio of brand names such as Ocean Pacific, Mossimo and Peanuts, which the company licenses to retailers and wholesalers in exchange for predictable royalty cash flow streams. Omaha-based TD Ameritrade is a leading provider of online brokerage and other technology-based financial services. Finally, Kennedy-Wilson Holdings owns and actively manages commercial, multi-family and residential real estate, and provides a broad range of real estate services including auction and commercial brokerage.
 
In other activity, we added significantly to our holdings of SandRidge Energy, Grand Canyon Education, Omnicare and Live Nation, whose stocks were exceptionally volatile for varied reasons. As an example, Omnicare posted disappointing quarterly results and (again) offered a tepid outlook. This time, the Board changed management along with guidance. Under Denny Shelton’s steady hand and capable stewardship, we are confident that Omnicare’s culture and business will improve markedly over the next few years. We reduced the Fund’s Willis Group position during the quarter, in part because we find competitor Aon’s risk-reward more compelling. AutoZone was our other large sale. While the company’s recent results have been terrific, we eliminated the stock as it approached our growing value estimate. On balance we were heavy net buyers during the quarter, and the Fund’s residual cash position declined to 12% of net assets.
 
The Hickory Fund invests in a subset of our firm’s best smaller company ideas. More than 75% of Hickory’s stock investments are in companies with market caps under $5 billion. In the table below we have included comparative returns for the Russell 2500 and the Russell 2500 Value, two indices that represent small and medium sized companies (colloquially known as “smid cap” in industry jargon). As a reminder, we do not and will not manage our funds to any specific benchmark. Even so, investors may find the supplemental information useful in evaluating the Fund’s longer-term results.
 
       Total Returns   Average Annual Total Returns
     
3 Mos.
  
YTD
  
1 Year
  
3 Year
  
5 Year
  
10 Year
  
15 Year
Hickory
    
10.7
%
  
23.3
%
  
25.4
%
  
-3.0
%
  
1.6
%
  
2.7
%
  
9.0
%
S&P 500
    
11.3
    
3.9
    
10.2
    
-7.1
    
0.6
    
-0.4
    
6.4
  
Russell 2500
    
12.2
    
10.3
    
15.9
    
-3.6
    
2.4
    
5.1
    
8.5
  
Russell 2500 Value
    
11.4
    
9.6
    
14.7
    
-4.0
    
1.4
    
8.0
    
9.8
  
 
See pages 4 and 27 for additional performance disclosures.
 
26          Weitz Funds

 
 
 
 
 
HICKORY FUND
PERFORMANCE • (UNAUDITED)
 
 
The following table summarizes performance information for the Hickory Fund as compared to the S&P 500 over the periods indicated.
 
    Year
    
Hickory (1)
  
S&P 500 (2)
  
Relative Results (1)-(2)
1993 (4/1/93)
    
20.3
%
  
5.5
%
  
14.8
%
1994
    
-17.3
    
1.3
    
-18.6
  
1995
    
40.5
    
37.6
    
2.9
  
1996
    
35.3
    
23.0
    
12.3
  
1997
    
39.2
    
33.4
    
5.8
  
1998
    
33.0
    
28.6
    
4.4
  
1999
    
36.7
    
21.0
    
15.7
  
2000
    
-17.2
    
-9.1
    
-8.1
  
2001
    
-4.6
    
-11.9
    
7.3
  
2002
    
-29.3
    
-22.1
    
-7.2
  
2003
    
47.9
    
28.7
    
19.2
  
 
    Year
    
Hickory (1)
  
S&P 500 (2)
  
Relative Results (1)-(2)
2004
    
22.6
%
  
10.9
%
  
11.7
%
2005
    
-0.2
    
4.9
    
-5.1
  
2006
    
22.8
    
15.8
    
7.0
  
2007
    
-13.1
    
5.5
    
-18.6
  
2008
    
-41.6
    
-37.0
    
-4.6
  
2009
    
36.5
    
26.5
    
10.0
  
2010 (9/30/10)
    
23.3
    
3.9
    
19.4
  
Since Inception:
                    
Cumulative Return
    
406.6
    
254.4
    
152.2
  
Avg. Annual Return
    
9.7
    
7.5
    
2.2
  
 
Growth of $10,000  
This chart depicts the change in the value of a $10,000 investment in the Hickory Fund for the period March 31, 2000, through September 30, 2010, as compared with the growth of the Standard & Poor’s 500 Index during the same period. Index performance is hypothetical and is shown for illustrative purposes only.  
 
The Fund’s average annual total return for the one, five and ten year periods ended September 30, 2010 was 25.4%, 1.6% and 2.7%, respectively. These performance numbers reflect the deduction of the Fund’s annual operating expenses which as stated in its most recent Prospectus are 1.33% of the Fund’s net assets. The returns assume redemption at the end of each period and reinvestment of dividends. This information represents past performance and past performance does not guarantee future results. The investment return and the principal value of an investment in this Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month-end may be obtained at www.weitzfunds.com/performance/monthly.asp.
 
Performance information does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
 
weitzfunds.com           27

 
 
 

 
 
 
 
 
 
This page has been left blank intentionally.
 
 
 
28          Weitz Funds

 
 
 

 
 
HICKORY FUND
PORTFOLIO PROFILE • (UNAUDITED)
 
 
Top Ten Stocks
Liberty Media - Interactive
    
6.1
%
Omnicare
    
5.8
  
SandRidge Energy
    
5.1
  
Liberty Global
    
4.6
  
Redwood Trust
    
4.4
  
Grand Canyon Education
    
4.2
  
Laboratory Corp. of America
    
3.8
  
Aon
    
3.8
  
Mohawk Industries
    
3.4
  
Liberty Media - Starz
    
3.4
  
% of Net Assets
    
44.6
%
 
Industry Sectors
Consumer Discretionary
    
43.6
%
Financials
    
11.4
  
Health Care
    
10.1
  
Materials
    
6.4
  
Information Technology
    
5.7
  
Energy
    
5.1
  
Consumer Staples
    
3.4
  
Telecommunication Services
    
2.0
  
Short-Term Securities/Other
    
12.3
  
Net Assets
    
100.0
%
 
Largest Net Purchases and Sales for Quarter Ended September 30, 2010
Net Purchases ($mil)            Net Sales ($mil)        
Aon (new)
  
$
8.6
    
Hewitt Associates (eliminated)
  
$
8.9
  
SandRidge Energy
    
5.6
    
Willis Group Holdings
    
6.1
  
Grand Canyon Education
    
4.3
    
AutoZone (eliminated)
    
5.2
  
Ascent Media
    
4.0
    
Liberty Media - Starz
    
4.8
  
Omnicare
    
3.1
    
Energizer Holdings
    
2.7
  
Other (net)
    
7.6
        
$
27.7
  
   
$
33.2
              
Net Portfolio Purchases
  
$
5.5
              
 
Largest Net Contributions to Investment Results for Quarter Ended September 30, 2010
Positive ($mil)           Negative ($mil)        
Liberty Media - Interactive
  
$
3.5
    
Eagle Materials
  
$
(0.5
)
Liberty Media - Starz
    
2.9
    
Martin Marietta Materials
    
(0.4
)
Hewitt Associates
    
2.3
    
Vulcan Materials
    
(0.3
)
Energizer Holdings
    
2.3
    
Strayer Education
    
(0.2
)
Cabela’s
    
1.9
    
Live Nation Entertainment
    
(0.1
)
Other (net)
    
13.2
        
$
(1.5
)
   
$
26.1
              
Net Portfolio Gains
  
$
24.6
              
 
weitzfunds.com           29

 
 
 
 
 
HICKORY FUND
SCHEDULE OF INVESTMENTS • SEPTEMBER 30, 2010 • (UNAUDITED)
 
 
COMMON STOCKS — 87.7%
  
Shares
  
Value
  
Consumer Discretionary — 43.6%              
Broadcasting & Cable TV — 9.9%
              
Liberty Global, Inc. - Series C*
    
370,000
  
$
11,307,200
  
Liberty Media Corp. - Starz - Series A*
    
130,000
    
8,434,400
  
Knology, Inc.*
    
190,200
    
2,554,386
  
Cumulus Media, Inc. - CL A*
    
562,000
    
1,579,220
  
CIBL, Inc.#
    
1,005
    
502,500
  
           
24,377,706
  
Media — 9.8%
              
Liberty Media Corp. - Capital - Series A*
    
160,000
    
8,329,600
  
Live Nation Entertainment, Inc.*
    
800,000
    
7,904,000
  
Ascent Media Corp. - CL A*
    
245,000
    
6,543,950
  
The Washington Post Co. - CL B
    
4,000
    
1,597,640
  
           
24,375,190
  
Retailing — 8.4%
              
Liberty Media Corp. - Interactive - Series A*
    
1,100,000
    
15,081,000
  
Cabela’s, Inc. - CL A*
    
300,000
    
5,694,000
  
           
20,775,000
  
Consumer Services — 6.4%
              
Weight Watchers International, Inc.
    
188,829
    
5,889,576
  
Coinstar, Inc.*
    
121,500
    
5,223,285
  
Interval Leisure Group, Inc.*
    
350,000
    
4,714,500
  
           
15,827,361
  
Education Services — 4.7%
              
Grand Canyon Education, Inc.*
    
475,000
    
10,416,750
  
Strayer Education, Inc.
    
7,000
    
1,221,500
  
           
11,638,250
  
Consumer Durables & Apparel — 4.4%
              
Mohawk Industries, Inc.*
    
160,000
    
8,528,000
  
Iconix Brand Group, Inc.*
    
130,000
    
2,275,000
  
           
10,803,000
  
           
107,796,507
  
 
   
Shares
  
Value
  
Financials — 11.4%              
Insurance — 6.3%
              
Aon Corp.
    
240,000
  
$
9,386,400
  
Willis Group Holdings Ltd.
    
100,000
    
3,082,000
  
Brown & Brown, Inc.
    
150,000
    
3,028,500
  
           
15,496,900
  
Mortgage REIT’s — 4.4%
              
Redwood Trust, Inc.*
    
750,000
    
10,845,000
  
Investment Banking & Brokerage — 0.5%
              
TD Ameritrade Holding Corp.*
    
80,000
    
1,292,000
  
Thrifts & Mortgage Finance — 0.1%
              
Tree.com, Inc.*
    
50,000
    
327,500
  
Real Estate Services — 0.1%
              
Kennedy-Wilson Holdings, Inc.*
    
20,000
    
212,000
  
Kennedy-Wilson Holdings, Inc. - Warrants, expiration date 11/14/14*
    
10,000
    
15,000
  
           
227,000
  
           
28,188,400
  
Health Care — 10.1%
              
Health Care Equipment & Services — 9.6%
              
Omnicare, Inc.
    
600,000
    
14,328,000
  
Laboratory Corp. of America Holdings*
    
120,000
    
9,411,600
  
           
23,739,600
  
Managed Health Care — 0.5%
              
eHealth, Inc.*
    
100,000
    
1,292,000
  
           
25,031,600
  
 
30          Weitz Funds
The accompanying notes form an integral part of these financial statements.
 
 
 
 
 
 
 
 
 
   
Shares
  
Value
  
Materials — 6.4%
              
Construction Materials — 5.1%
              
Martin Marietta Materials, Inc.
    
80,000
  
$
6,157,600
  
Eagle Materials, Inc.
    
210,000
    
4,977,000
  
Vulcan Materials Co.
    
40,000
    
1,476,800
  
           
12,611,400
  
Metals & Mining — 1.3%
              
Compass Minerals International, Inc.
    
40,600
    
3,110,772
  
           
15,722,172
  
Information Technology — 5.7%
              
Software & Services — 5.4%
              
ACI Worldwide, Inc.*
    
330,000
    
7,388,700
  
The Knot, Inc.*
    
660,000
    
6,025,800
  
           
13,414,500
  
Technology Hardware & Equipment — 0.3%
              
FLIR Systems, Inc.*
    
30,000
    
771,000
  
           
14,185,500
  
Energy — 5.1%
              
Energy — 5.1%
              
SandRidge Energy, Inc.*
    
2,230,050
    
12,666,684
  
Consumer Staples — 3.4%
              
Household & Personal Products — 3.4%
              
Energizer Holdings, Inc.*
    
90,000
    
6,050,700
  
Prestige Brands Holdings, Inc.*
    
240,000
    
2,373,600
  
           
8,424,300
  
 
   
Shares
  
Value
  
Telecommunication Services — 2.0%
              
Telecommunication Services — 2.0%
              
LICT Corp.* #
    
1,005
  
$
2,423,146
  
Telephone and Data Systems, Inc. - Special
    
81,464
    
2,309,504
  
ICTC Group, Inc. - CL A* #
    
13,065
    
146,328
  
           
4,878,978
  
Total Common Stocks (Cost $192,887,769)
          
216,894,141
  
 
SHORT-TERM SECURITIES — 11.3%
  
Principal
amount
or shares
  
Value
  
Wells Fargo Advantage Government Money Market Fund - Institutional Class 0.05%(a)
    
3,034,932
  
$
3,034,932
  
U.S. Treasury Bills, 0.10% to 0.14%, 10/07/10 to 11/18/10(b)
  
$
25,000,000
    
24,997,028
  
Total Short-Term Securities
   (Cost $28,031,530)
          
28,031,960
  
Total Investments in Securities
   (Cost $220,919,299)
          
244,926,101
  
Other Assets Less Other Liabilities — 1.0%
          
2,466,563
  
Net Assets — 100.0%
        
$
247,392,664
  
Net Asset Value Per Share
        
$
33.76
  
 
*
Non-income producing
#
Illiquid and/or restricted security that has been fair valued.
(a)
Rate presented represents the annualized 7-day yield at September 30, 2010.
(b)
Interest rate presented represents the yield to maturity at the date of purchase.
 
The accompanying notes form an integral part of these financial statements.
weitzfunds.com          31

 
 
 
 
 
PORTFOLIO MANAGER’S DISCUSSION & ANALYSIS
 
 
Portfolio Manager: Bradley P. Hinton
 
The Balanced Fund returned +5.2% in the third calendar quarter, compared to a +7.9% return for the Blended Index. For the calendar year-to-date, the Fund increased 7.9% compared to a 5.3% gain for the Blended Index. Liberty Media – Interactive (+31%) was the largest contributor to the Fund’s quarterly results. Waffling investor sentiment has caused the stock to be far more volatile than QVC’s business, which continues to add customers and churn out free cash flow. Many large companies representing a cross-section of the economy also posted healthy returns. Examples include Praxair +19% (industrial gases), ConocoPhillips +18% (energy), United Parcel Service +18% (air freight and logistics), Omnicom Group +16% (advertising) and Diageo +12% (spirits, wine and beer).
 
For-profit education companies remained in the headlines. Timely purchases of Grand Canyon Education shares offset market value declines in Strayer Education (-16%) during the quarter. Our education holdings are heavily weighted to Grand Canyon, which has several distinguishing characteristics. First, the university’s student mix is tilted to graduate students and bachelor’s degree students with previous college experience, which has led to better-quality outcomes. Second, tuition levels are lower than most peers, making the programs relatively more affordable. Third, the school’s program mix is anchored by nursing and education, two in-demand fields where Grand Canyon has a long history of successfully preparing students for careers. Fourth, the university benefits from an experienced and highly capable management team led by Brian Mueller. Finally, the school’s Phoenix-based, traditional campus and Christian heritage are unique attributes that help draw students to Grand Canyon over competitors. We think Grand Canyon’s controlled online growth strategy will fuel both academic and business success over the coming years.
 
Rocks, gravel and cement weighed down the Fund’s results during the quarter and for the year-to-date. While the volume trough has been deeper and longer than our original forecasts, our view is that the long-term competitive advantages of these businesses remain firmly intact. We think Martin Marietta Materials (-9% for the quarter), Eagle Materials (-8%) and Vulcan Materials (-15%) have the potential for outsized multi-year investment returns from today’s price levels.
 
We purchased three new stocks during the quarter. Texas Instruments is profiled in this report’s Analyst Corner, and Google represents an opportunistic purchase of a dominant growth business at a temporarily depressed price. Baxter International is more traditional value fare. Baxter is a leading medical technology company whose core products treat chronic, life-threatening diseases. The company’s hemophilia franchise holds a dominant position globally, while Baxter’s plasma, vaccine and renal businesses also hold enviable market positions. We were able to purchase the stock at a meaningful discount to our $60 business value estimate, in part because of cyclical headwinds in the plasma business. We think the company may grow more slowly than management expects, and our margin outlook is more sanguine, as well, due to medium-term pricing and reimbursement concerns. Still, Baxter’s diverse product portfolio should generate a healthy, growing stream of free cash flow. The company pays a solid dividend, and share repurchases should continue to enhance per share value creation.
 
We increased the Fund’s equity weighting from 59% to 64% during the quarter. As noted above, we think the stocks of many high quality companies with durable franchises are cheap. Conversely, the bond landscape is barren. Demand remains high as investors continue to pour money into “safe” fixed income investments, while value is scarce. The Fund’s corporate bond exposure is little changed at 11% of net assets, while mortgage-backed securities (MBS) account for another 8% of net assets. After several quarters of price appreciation, we expect future bond returns to be modest and composed mostly of coupon income. The Fund’s residual cash position is 17% of net assets.
 
   
Total Returns
Average Annual Total Returns
     
3 Mos.
  
YTD
  
1 Year
  
3 Year
  
5 Year
  
Since Inception
Balanced Fund
    
5.2
%
  
7.9
%
  
10.4
%
  
-0.8
%
  
2.4
%
  
3.8
%
Blended Index
    
7.9
    
5.3
    
9.2
    
-1.5
    
2.8
    
4.3
  
S&P 500
    
11.3
    
3.9
    
10.2
    
-7.1
    
0.6
    
4.0
  
Barclays Intermediate Credit
    
2.8
    
7.4
    
7.8
    
6.9
    
5.9
    
4.8
  
 
See page 4 for additional performance disclosures.
 
32          Weitz Funds

 
 
 
 
 
BALANCED FUND
PORTFOLIO PROFILE • (UNAUDITED)
 
 
 
Top Ten Stocks
        
Microsoft
    
3.1
%
Omnicare
    
2.8
  
Liberty Media - Interactive
    
2.7
  
Grand Canyon Education
    
2.6
  
United Parcel Service
    
2.4
  
Accenture
    
2.4
  
Laboratory Corp. of America
    
2.3
  
Aon
    
2.3
  
Dell
    
2.2
  
Martin Marietta Materials
    
2.1
  
% of Net Assets
    
24.9
%
 
Industry Sectors
Consumer Discretionary
    
17.2
%
Information Technology
    
10.9
  
Materials
    
8.8
  
Financials
    
8.6
  
Health Care
    
6.2
  
Consumer Staples
    
4.7
  
Energy
    
4.2
  
Industrials
    
3.5
  
Total Common Stocks
    
64.1
  
Short-Term Securities/Other
    
16.9
  
Corporate Bonds
    
10.7
  
Mortgage-Backed Securities
    
7.8
  
Taxable Municipal Bonds
    
0.5
  
Total Bonds & Short-Term Securities
    
35.9
  
Net Assets
    
100.0
%
 
Largest Net Contributions to Investment Results for Quarter Ended September 30, 2010
Positive (000’s)
          
Negative (000’s)
        
Liberty Media - Interactive
  
$
467
    
Martin Marietta Materials
  
$
(143
)
United Parcel Service
    
311
    
Vulcan Materials
    
(117
)
ConocoPhillips
    
222
    
FLIR Systems
    
(85
)
Praxair
    
221
    
Strayer Education
    
(75
)
Liberty Media - Starz
    
180
    
Eagle Materials
    
(74
)
Other (net)
    
3,057
        
$
(494
)
   
$
4,458
              
Net Portfolio Gains
  
$
3,964
              
 
weitzfunds.com          33

 
 
 
 
 
BALANCED FUND
SCHEDULE OF INVESTMENTS • SEPTEMBER 30, 2010 • (UNAUDITED)
 
 
COMMON STOCKS — 64.1%
  
Shares
  
Value
  
Consumer Discretionary — 17.2%
              
Education Services — 4.5%
              
Grand Canyon Education, Inc.*
    
90,000
  
$
1,973,700
  
Apollo Group, Inc. - CL A*
    
15,000
    
770,250
  
Strayer Education, Inc.
    
4,000
    
698,000
  
           
3,441,950
  
Retailing — 4.3%
              
Liberty Media Corp. -
              
Interactive - Series A*
    
150,000
    
2,056,500
  
Target Corp.
    
12,500
    
668,000
  
Cabela’s, Inc. - CL A*
    
30,000
    
569,400
  
           
3,293,900
  
Broadcasting & Cable TV — 2.6%
              
Comcast Corp. - CL A Special
    
70,000
    
1,190,700
  
Liberty Media Corp. - Starz - Series A*
    
12,000
    
778,560
  
           
1,969,260
  
Media — 2.5%
              
Omnicom Group, Inc.
    
25,000
    
987,000
  
Live Nation Entertainment, Inc.*
    
90,000
    
889,200
  
           
1,876,200
  
Consumer Services — 2.2%
              
Coinstar, Inc.*
    
21,000
    
902,790
  
Interval Leisure Group, Inc.*
    
60,000
    
808,200
  
           
1,710,990
  
Consumer Durables & Apparel — 1.1%
              
Mohawk Industries, Inc.*
    
15,000
    
799,500
  
           
13,091,800
  
 
   
Shares
  
Value
  
Information Technology — 10.9%
              
Software & Services — 6.5%
              
Microsoft Corp.
    
95,000
  
$
2,326,550
  
Accenture plc - CL A
    
42,500
    
1,805,825
  
Google, Inc. - CL A*
    
1,500
    
788,685
  
           
4,921,060
  
Technology Hardware & Equipment — 4.4%
              
Dell, Inc.*
    
130,000
    
1,684,800
  
Texas Instruments, Inc.
    
32,500
    
882,050
  
FLIR Systems, Inc.*
    
30,000
    
771,000
  
           
3,337,850
  
           
8,258,910
  
Materials — 8.8%
              
Construction Materials — 4.5%
              
Martin Marietta Materials, Inc.
    
21,000
    
1,616,370
  
Eagle Materials, Inc.
    
50,000
    
1,185,000
  
Vulcan Materials Co.
    
17,500
    
646,100
  
           
3,447,470
  
Industrial Gases — 1.8%
              
Praxair, Inc.
    
15,000
    
1,353,900
  
Fertilizers & Agricultural Chemicals — 1.5%
              
Monsanto Co.
    
24,000
    
1,150,320
  
Metals & Mining — 1.0%
              
Compass Minerals International, Inc.
    
10,000
    
766,200
  
           
6,717,890
  
Financials — 8.6%
              
Insurance — 6.5%
              
Aon Corp.
    
44,000
    
1,720,840
  
Berkshire Hathaway, Inc. - CL B*
    
14,000
    
1,157,520
  
Willis Group Holdings Ltd.
    
35,000
    
1,078,700
  
Brown & Brown, Inc.
    
50,000
    
1,009,500
  
           
4,966,560
  
Mortgage REIT’s — 2.1%
              
Redwood Trust, Inc.*
    
110,000
    
1,590,600
  
           
6,557,160
  
 
34          Weitz Funds
The accompanying notes form an integral part of these financial statements.
 
 
 
 
 
 
 
 
 
   
Shares
  
Value
  
Health Care — 6.2%
              
Health Care Equipment & Services — 6.2%
              
Omnicare, Inc.
    
90,000
  
$
2,149,200
  
Laboratory Corp. of America Holdings*
    
22,000
    
1,725,460
  
Baxter International, Inc.
    
17,500
    
834,925
  
           
4,709,585
  
Consumer Staples — 4.7%
              
Hypermarkets & Super Centers — 2.1%
              
Wal-Mart Stores, Inc.
    
30,000
    
1,605,600
  
Food Beverage & Tobacco — 1.8%
              
Diageo plc - Sponsored ADR
    
20,000
    
1,380,200
  
Household & Personal Products — 0.8%
              
The Procter & Gamble Co.
    
10,000
    
599,700
  
           
3,585,500
  
Energy — 4.2%
              
Energy — 4.2%
              
ConocoPhillips
    
25,000
    
1,435,750
  
EOG Resources, Inc.
    
7,000
    
650,790
  
Apache Corp.
    
6,000
    
586,560
  
Devon Energy Corp.(e)
    
8,500
    
550,290
  
           
3,223,390
  
Industrials — 3.5%
              
Transportation — 2.4%
              
United Parcel Service, Inc. - CL B
    
27,500
    
1,833,975
  
Aerospace & Defense — 1.1%
              
Lockheed Martin Corp.
    
12,000
    
855,360
  
           
2,689,335
  
Total Common Stocks (Cost $44,349,583)
          
48,833,570
  
 
CORPORATE BONDS — 10.7%
  
Principal amount
  
Value
  
American Express Credit Corp.              
7.3% 8/20/13
  
$
650,000
  
$
747,622
  
Berkshire Hathaway Finance Corp.              
4.2% 12/15/10
    
300,000
    
302,408
  
Comcast Corp.              
6.5% 1/15/15
    
300,000
    
352,084
  
4.95% 6/15/16
    
193,000
    
215,426
  
Dell, Inc.              
5.625% 4/15/14
    
250,000
    
284,632
  
Host Hotels & Resorts LP              
6.875% 11/01/14
    
500,000
    
518,750
  
JP Morgan Chase & Co.              
4.75% 5/01/13
    
100,000
    
108,521
  
Level 3 Financing, Inc.              
9.25% 11/01/14
    
750,000
    
708,750
  
Liberty Media LLC 5.              
7% 5/15/13
    
750,000
    
766,875
  
Markel Corp.              
6.8% 2/15/13
    
500,000
    
537,488
  
Mohawk Industries, Inc.              
6.5% 1/15/11
    
400,000
    
405,500
  
QVC, Inc.              
7.125% 4/15/17(d)
    
400,000
    
416,000
  
Time Warner Cable, Inc.              
5.4% 7/02/12
    
250,000
    
267,954
  
7.5% 4/01/14
    
120,000
    
141,548
  
USG Corp.              
6.3% 11/15/16
    
800,000
    
698,000
  
Valmont Industries, Inc.              
6.875% 5/01/14
    
350,000
    
358,750
  
Well Point, Inc.              
6.0% 2/15/14
    
250,000
    
283,333
  
Wells Fargo & Co.              
3.98% 10/29/10
    
250,000
    
250,620
  
4.375% 1/31/13
    
750,000
    
800,854
  
Total Corporate Bonds (Cost $7,313,134)
          
8,165,115
  
 
The accompanying notes form an integral part of these financial statements.
weitzfunds.com           35

 
 
 
 
 
BALANCED FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
 
 
MORTGAGE-BACKED SECURITIES — 7.8%(c)
  
Principal
amount
  
Value
  
Federal Home Loan Mortgage Corporation — 3.6%
              
Collateralized Mortgage Obligations — 3.6%
              
3028 CL MB — 5.0% 2026 (0.1 years)
  
$
35,541
  
$
35,661
  
2975 CL OD — 5.5% 2027 (0.3 years)
    
800,000
    
806,572
  
2945 CL PC — 5.5% 2028 (0.3 years)
    
278,321
    
280,439
  
3200 CL AD — 5.5% 2029 (0.4 years)
    
178,992
    
181,859
  
R001 CL AE — 4.375% 2015 (0.7 years)
    
159,731
    
162,733
  
2542 CL LD — 5.0% 2022 (1.2 years)
    
383,038
    
403,053
  
2831 CL AB — 5.0% 2018 (1.2 years)
    
124,628
    
130,371
  
2926 CL AB — 5.0% 2019 (1.3 years)
    
331,566
    
346,768
  
2627 CL LE — 3.0% 2017 (1.5 years)
    
413,865
    
423,703
  
           
2,771,159
  
Federal National Mortgage Association — 3.5%
              
Collateralized Mortgage Obligations — 3.0%
              
2003-4 CL PD — 5.0% 2016 (0.3 years)
    
171,337
    
172,615
  
2005-59 CL PB — 5.5% 2028 (0.7 years)
    
558,197
    
569,998
  
2003-83 CL VA — 5.5% 2014 (0.8 years)
    
186,828
    
192,197
  
2002-91 CL QG — 5.0% 2018 (2.3 years)
    
700,120
    
762,299
  
2003-9 CL DB — 5.0% 2018 (3.0 years)
    
500,000
    
551,425
  
           
2,248,534
  
Pass-Through Securities — 0.5%
              
995755 — 4.5% 2024 (2.7 years)
    
385,031
    
405,417
  
           
2,653,951
  
Non-Government Agency — 0.7%
              
Collateralized Mortgage Obligations — 0.7%
              
CDMC 2003-7P CL A4 — 3.37% 2017 (Adjustable Rate) (1.0 years)(d)
    
334,777
    
341,994
  
Chase 2004-S1 CL A6 — 4.5% 2019 (3.2 years)
    
216,806
    
201,446
  
           
543,440
  
Total Mortgage-Backed Securities (Cost $5,739,632)
          
5,968,550
  
 
TAXABLE MUNICIPAL BONDS — 0.5%
  
Principal
amount
or shares
  
Value
  
University of California 4.85% 5/15/13 (Cost $298,903)
  
$
300,000
  
$
328,713
  
 
SHORT-TERM SECURITIES — 16.5%
              
Wells Fargo Advantage Government Money Market Fund -
Institutional Class 0.05%(a)
    
541,470
    
541,470
  
U.S. Treasury Bills, 0.12% to 0.14%, 11/04/10 to 12/02/10(b)
  
$
12,000,000
    
11,998,095
  
Total Short-Term Securities (Cost $12,539,519)
          
12,539,565
  
Total Investments in Securities (Cost $70,240,771)
          
75,835,513
  
Options Written — 0.0%
          
(14,100
)
Other Assets Less Other Liabilities — 0.4%
          
312,180
  
Net Assets — 100.0%
        
$
76,133,593
  
Net Asset Value Per Share
        
$
10.66
  
 
OPTIONS WRITTEN*
  
Expiration
date/
Strike price
  
Shares
subject
to option
  
Value
  
Covered Call Options
                    
Devon Energy Corp.
    
Oct. 2010 / $62.50
    
5,000
  
$
(14,100
)
Total Options Written (premiums received $13,625)
  
 
 
 
       $ (14,100
)
 
*
Non-income producing
(a)
Rate presented represents the annualized 7-day yield at September 30, 2010.
(b)
Interest rates presented represent the yield to maturity at the date of purchase.
(c)
Number of years indicated represents estimated average life of mortgage-backed securities.
(d)
Security is exempt from registration under Rule 144A of the Securities Act of 1933. This security may be resold in transactions that are exempt from registration, normally to qualified institutional buyers.
(e)
Fully or partially pledged on outstanding written options.
 
36          Weitz Funds
The accompanying notes form an integral part of these financial statements.

 
 
 
 
 
PORTFOLIO MANAGER’S DISCUSSION & ANALYSIS
 
 
Portfolio Manager: Thomas D. Carney
 
The Short-Intermediate Income Fund returned +1.5% in the third calendar quarter, compared to a +2.8% return for the Barclays Capital Intermediate U.S. Government/ Credit Index (BCIGC), our Fund’s primary benchmark. For the calendar year-to-date, the Fund increased 4.7% compared to a 7.4% gain for the BCIGC. Our defensive positioning of the portfolio cost us some short-term price appreciation, but we believe that our conservatism will be rewarded.
 
Commentary
Domestic credit markets rallied in the third quarter as hints of further monetary stimulus by the Federal Reserve buoyed already strong investor demand for fixed-income assets. Tepid economic data reinforced investors’ animal spirits to buy before any specific details of the Fed’s next move. The result was further declines in interest rates (higher prices) for nearly all fixed-income assets
 
The next installment of monetary stimulus, dubbed QE2 (Quantitative Easing 2), may come as early as the Fed’s scheduled meeting in November. With short-term interest rates at or close to zero, quantitative easing is arguably the only tool left in the Fed’s toolkit to prop up the flagging economy. It involves expanding the Fed’s balance sheet through large scale purchases of securities, most likely U.S. Treasury bonds in this instance.
 
With some of the goals of QE1 having been met (stabilizing the economy and stabilizing credit spreads), the next monetary easing phase may attempt to target real yields (too high), inflation (too low) and lending (too tight). The objective would be to avert a ‘liquidity trap’ where cash and savings build up in the economy and are not put to productive use. The unintended consequences of too much liquidity being injected into the economy are what concern us, however. Namely, excessive risk-taking in the financial system as investors potentially misprice risk in a low nominal interest rate environment and the possibility of allowing inflation to rise too fast.
 
U.S. Treasury bonds are the likely focal point of QE2, and their prices resumed their march back to 2008 crisis levels while certain maturities continued to set new all-time lows in yield. The 2-year Treasury yield, once again, hit new lows during the quarter, declining 18 basis points (a basis point represents one one-hundredth of a percentage point) to 0.42% at September 30. The 10-year Treasury yield fell 42 basis points to yields last seen in January 2009, closing at approximately 2.50% at quarter-end.
 
Corporate bonds also performed well in the quarter as they benefited from both a rising equity market and the rally in U.S. Government bonds, the base rates for corporate bond pricing. A broad measure of corporate bond spreads (the incremental return investors demand above U.S. Treasury bonds for owning corporate debt) composed by Merrill Lynch declined from 209 basis points at June 30 to 184 at September 30.
 
Fund Review
Nearly every investment added to Fund results in the quarter as capital appreciation from declining interest rates enhanced our interest income. Of the top ten contributors to our Fund’s results in the quarter (contributing approximately 34% of the Fund’s quarterly return), 8 were corporate bonds, including Willis 7-year, Expedia 8-year and two QVC bonds maturing respectively in 7 and 9 years.
 
Investment activity in the quarter in the corporate bond portion of our portfolio included additions to existing positions in Expedia, Leucadia National Corp., Markel Corp., Mohawk Industries, Omnicare, and Republic Services. New positions include, for example, 2-year bonds issued by Aon Corp., an insurance services ‘broker’ headquartered in Chicago at a spread to Treasuries and with an absolute yield that we believe adequately compensate us for the company’s low credit risk profile. At quarter-end, corporate bonds represented 34% of Fund assets, down modestly from the previous quarter.
 
The largest incremental investments during the quarter were additions to the Agency-guaranteed MBS (Mortgage-Backed Securities) portion of our portfolio as our weighting increased from 25.6% to 37.6%. As a reminder, MBS are issued when individual mortgages (sometimes thousands) that have similar characteristics (mortgage rate and loan term) are bundled together and sold to investors. A key distinction between MBS and most other bond investments relates to the timing of principal repayment since the homeowner retains the right to prepay or refinance their mortgage at any time. In an environment of declining credit spreads and low nominal returns, we believe select MBS securities offer attractive relative return potential and adequate yield compensation for the risks assumed. Fund investments in MBS during the quarter were concentrated in older or ‘seasoned’ 15-year terms with coupons of 4% or higher that we believe will generate
 
weitzfunds.com           37

 
 
 
 
 
 
 
 
solid cash flows for the Fund should interest rates fall and cause a spike in prepayments, shortening the average life of our investments. More importantly, we have also analyzed and selected investments so we are adequately compensated should interest rates rise, prepayments fall and the average life of our investments rise.
 
Overall portfolio metrics changed modestly during the quarter with the average maturity decreasing to 3.4 from 3.6 years and average duration increasing to 2.2 from 1.7 years. Aside from our MBS holdings, sector weightings were mostly unchanged during the quarter. The overall credit quality of our portfolio remains high with approximately 63% of the portfolio invested in AAA-rated securities, U.S. Treasury, U.S. Government Agency-guaranteed MBS and cash.
 
Outlook
Today’s lower credit spread environment leaves few undiscovered areas of opportunity among various fixed-income sectors. Coupled with the ultra low Treasury interest rates, we once again encourage fixed-income investors to temper future return expectations (please read Wally’s commentary on bonds in his opening letter to this report). While the prospects for inflation, the bond investor’s boogeyman, appear low for the remainder of 2010 and into 2011, we remain wary of the longer-term inflationary implications of the enormous deficit spending to combat the credit crisis. Recent commentary by Federal Reserve representatives about the desire to raise inflation expectations and even possibly manufacture inflation in excess of the Fed’s long-term mandate reinforce our desire to position the Fund defensively relative to interest rate exposure while we patiently seek out areas of opportunity. A quote by a Fed chairman (William McChesney Martin) before a Senate Finance Committee in the 1950s in response to the idea that the Fed should encourage a gradual rise in prices seems worth repeating – “There is no validity whatever in the idea that any inflation, once accepted, can be confined to moderate proportions.” Chairman Martin’s comments proved prescient given our country’s struggle with inflation in the 1970s and 80s. Hopefully we can avoid a replay of the experience. In the meantime, we will continue to invest one security at a time, relying on a fundamental research-based investment approach and are well positioned to take advantage of any market weakness.
 
   
Total
Return
Average Annual Total Returns
     
1 Year
  
     3 Year
  
 5 Year
  
10 Year
  
15 Year
  
20 Year
Short-Intermediate Income Fund
    
5.4
%
  
6.7
%
  
5.7
%
  
5.5
%
  
5.6
%
  
6.0
%
Barclays Capital Indexes:
                                      
Intermediate U.S. Government/Credit
    
7.8
    
6.9
    
5.9
    
6.1
    
6.1
    
6.7
  
1-5 Year U.S. Government/Credit
    
5.1
    
5.7
    
5.3
    
5.3
    
5.5
    
6.1
  
1-3 Year U.S. Government/Credit
    
3.3
    
4.6
    
4.7
    
4.6
    
5.1
    
5.6
  
 
See page 4 for additional performance disclosures.
 
38          Weitz Funds

 
 
 
 
 
SHORT-INTERMEDIATE INCOME FUND
PORTFOLIO PROFILE • (UNAUDITED)
 
 
Credit Quality Ratings
U.S. Treasury
    
5.2
%
U.S. Government Agency Mortgage Related Securities
    
37.2
  
Aaa/AAA
    
6.7
  
Aa/AA
    
3.9
  
A/A
    
5.1
  
Baa/BBB
    
16.2
  
Ba/BB
    
7.7
  
B/B
    
1.8
  
Caa/CCC
    
0.6
  
Common Stocks
    
1.4
  
Short-Term Securities/Other
    
14.2
  
Net Assets
    
100.0
%
 
Sector Breakdown
Mortgage-Backed Securities
    
37.6
%
Corporate Bonds
    
34.0
  
Short-Term Securities/Other
    
14.2
  
Government Agency
    
6.1
  
U.S. Treasury
    
5.2
  
Taxable Municipal Bonds
    
1.5
  
Common Stocks
    
1.4
  
Net Assets
    
100.0
%
 
Financial Attributes
Average Maturity
    
3.4 years
  
Average Duration
    
2.2 years
  
Average Coupon
    
4.3
%
30-Day SEC Yield at 9-30-10
    
2.0
%
 
Maturity Distribution
Short-Term Securities/Other
    
14.2
%
Less than 1 Year
    
6.2
  
1 to 3 Years
    
41.9
  
3 to 5 Years
    
15.5
  
5 to 7 Years
    
11.8
  
7 to 10 Years
    
8.9
  
10 Years or more
    
0.1
  
Common Stock
    
1.4
  
Net Assets
    
100.0
%
 
weitzfunds.com          39

 
 
 
 
 
SHORT-INTERMEDIATE INCOME FUND
SCHEDULE OF INVESTMENTS • SEPTEMBER 30, 2010 • (UNAUDITED)
 
 
CORPORATE BONDS — 34.0%
  
Principal
amount
  
Value
  
American Express Co.
              
Centurion Bank 5.55% 10/17/12
  
$
2,000,000
  
$
2,155,872
  
Credit Corp. 7.3% 8/20/13
    
3,260,000
    
3,749,613
  
FSB Bank 5.55% 10/17/12
    
1,609,000
    
1,734,399
  
FSB Bank 6.0% 9/13/17
    
2,500,000
    
2,855,655
  
8.125% 5/20/19
    
1,000,000
    
1,293,518
  
Anheuser-Busch InBev
              
5.375% 11/15/14(d)
    
4,000,000
    
4,493,976
  
Aon Corp.
              
7.375% 12/14/12
    
10,879,000
    
11,982,076
  
AutoZone, Inc.
              
5.75% 1/15/15
    
1,250,000
    
1,418,955
  
Berkshire Hathaway Finance Corp.
              
4.2% 12/15/10
    
375,000
    
378,011
  
2.125% 2/11/13
    
3,000,000
    
3,093,375
  
4.6% 5/15/13
    
3,000,000
    
3,271,233
  
4.625% 10/15/13
    
2,129,000
    
2,344,001
  
4.85% 1/15/15
    
1,500,000
    
1,689,368
  
5.4% 5/15/18
    
5,000,000
    
5,726,105
  
Boston Properties LP
              
5.625% 4/15/15
    
2,000,000
    
2,233,642
  
5.875% 10/15/19
    
4,000,000
    
4,477,156
  
Comcast Corp.
              
10.625% 7/15/12
    
2,000,000
    
2,312,366
  
6.5% 1/15/15
    
2,081,000
    
2,442,289
  
4.95% 6/15/16
    
675,000
    
753,432
  
5.15% 3/01/20
    
3,000,000
    
3,284,865
  
Dell, Inc.
              
5.625% 4/15/14
    
1,250,000
    
1,423,162
  
Diageo Capital plc
              
4.85% 5/15/18
    
3,941,000
    
4,312,802
  
DIRECTV Holdings
              
4.75% 10/01/14
    
2,000,000
    
2,186,372
  
6.375% 6/15/15
    
8,000,000
    
8,320,000
  
7.625% 5/15/16
    
7,000,000
    
7,813,995
  
Expedia, Inc.
              
7.456% 8/15/18
    
13,000,000
    
14,690,000
  
5.95% 8/15/20(d)
    
1,000,000
    
1,016,250
  
FiServ, Inc.
              
3.125% 10/01/15
    
1,000,000
    
1,016,155
  
Goldman Sachs Group, Inc.
              
5.95% 1/18/18
    
4,000,000
    
4,399,864
  
Host Hotels & Resorts LP
              
6.875% 11/01/14
    
5,000,000
    
5,187,500
  
JP Morgan Chase & Co.
              
5.35% 2/01/12 (Bear Stearns Co., Inc.)
    
2,000,000
    
2,114,594
  
4.75% 5/01/13
    
1,900,000
    
2,061,893
  
5.15% 10/01/15
    
5,500,000
    
6,037,262
  
6.3% 4/23/19
    
2,500,000
    
2,902,047
  
 
   
Principal
amount
  
Value
  
Kraft Foods, Inc.
              
2.625% 5/08/13
  
$
1,000,000
  
$
1,037,080
  
Leucadia National Corp.
              
7.125% 3/15/17
    
9,000,000
    
9,067,500
  
Level 3 Financing, Inc.
              
9.25% 11/01/14
    
2,000,000
    
1,890,000
  
Liberty Media LLC
              
5.7% 5/15/13
    
8,240,000
    
8,425,400
  
Markel Corp.
              
6.8% 2/15/13
    
14,885,000
    
16,001,003
  
7.125% 9/30/19
    
4,566,000
    
5,175,849
  
Mead Johnson Nutrition Co.
              
3.5% 11/01/14
    
2,000,000
    
2,111,520
  
MetLife, Inc.
              
2.375% 2/06/14
    
1,000,000
    
1,011,396
  
Mohawk Industries, Inc.
              
6.5% 1/15/11
    
13,695,000
    
13,883,306
  
6.875% 1/15/16
    
10,905,000
    
11,409,356
  
News America Holdings
              
9.25% 2/01/13
    
2,222,000
    
2,596,034
  
Omnicare, Inc.
              
6.125% 6/01/13
    
11,793,000
    
11,837,224
  
QVC, Inc.
              
7.125% 4/15/17(d)
    
6,600,000
    
6,864,000
  
7.5% 10/01/19(d)
    
4,000,000
    
4,200,000
  
Republic Services, Inc. (Allied Waste)
              
7.125% 5/15/16
    
12,545,000
    
13,454,400
  
6.875% 6/01/17
    
3,050,000
    
3,370,973
  
Swiss Re (General Electric Global Insurance)
              
6.45% 3/01/19
    
5,000,000
    
5,478,840
  
Target Corp.
              
8.6% 1/15/12
    
3,000,000
    
3,262,917
  
Time Warner Cable, Inc.
              
5.4% 7/02/12
    
2,000,000
    
2,143,630
  
7.5% 4/01/14
    
1,700,000
    
2,005,257
  
Time Warner, Inc.
              
3.15% 7/15/15
    
500,000
    
518,839
  
UnitedHealth Group, Inc.
              
4.75% 2/10/14
    
178,000
    
193,280
  
USG Corp.
              
6.3% 11/15/16
    
5,000,000
    
4,362,500
  
Valmont Industries, Inc.
              
6.875% 5/01/14
    
6,240,000
    
6,396,000
  
Vornado Realty Trust
              
4.25% 4/01/15
    
9,315,000
    
9,649,874
  
Washington Post Co.
              
7.25% 2/01/19
    
3,500,000
    
4,208,851
  
 
40          Weitz Funds
The accompanying notes form an integral part of these financial statements.

 
 
 
 
 
 
 

   
Principal
amount
  
Value
  
WellPoint, Inc.
              
5.0% 1/15/11
  
$
1,000,000
  
$
1,011,727
  
6.0% 2/15/14
    
2,000,000
    
2,266,668
  
Wells Fargo & Co.
              
3.98% 10/29/10
    
1,750,000
    
1,754,340
  
4.375% 1/31/13
    
4,000,000
    
4,271,224
  
3.75% 10/01/14
    
6,000,000
    
6,363,714
  
4.875% 2/01/15 (Wachovia Bank)
    
6,070,000
    
6,580,845
  
Whirlpool Corp.
              
8.0% 5/01/12
    
1,000,000
    
1,090,116
  
Willis North America, Inc.
              
6.2% 3/28/17
    
13,576,000
    
14,485,565
  
WM Wrigley Jr. Co.
              
3.05% 6/28/13(d)
    
7,500,000
    
7,713,585
  
3.7% 6/30/14(d)
    
7,500,000
    
7,773,195
  
XTO Energy, Inc.
              
5.75% 12/15/13
    
2,250,000
    
2,588,335
  
Yum! Brands, Inc.
              
4.25% 9/15/15
    
1,000,000
    
1,090,878
  
Total Corporate Bonds (Cost $311,670,289)
          
332,717,024
  
 
MORTGAGE-BACKED SECURITIES — 37.6%(c)
              
Federal Home Loan Mortgage Corporation — 12.3%
              
Collateralized Mortgage Obligations — 8.6%
              
2692 CL QT — 4.5% 2018 (0.0 years)
    
21,713
    
21,704
  
2743 CL HC — 4.5% 2015 (0.2 years)
    
487,333
    
489,882
  
2765 CL JN — 4.0% 2019 (0.2 years)
    
167,485
    
168,250
  
2975 CL OD — 5.5% 2027 (0.3 years)
    
2,700,000
    
2,722,181
  
2945 CL PC — 5.5% 2028 (0.3 years)
    
1,113,284
    
1,121,755
  
3200 CL NA — 5.5% 2032 (0.4 years)
    
744,472
    
754,692
  
3200 CL AD — 5.5% 2029 (0.4 years)
    
3,042,872
    
3,091,606
  
2587 CL UD — 5.5% 2031 (0.5 years)
    
3,518,128
    
3,572,719
  
R001 CL AE — 4.375% 2015 (0.7 years)
    
958,389
    
976,399
  
3098 CL HA — 5.5% 2023 (0.8 years)
    
1,848,894
    
1,905,264
  
2999 CL NB — 4.5% 2017 (0.9 years)
    
3,696,071
    
3,790,990
  
R009 CL AJ — 5.75% 2018 (0.9 years)
    
647,018
    
670,410
  
3036 CL JH — 5.0% 2031 (1.0 years)
    
3,248,201
    
3,338,773
  
2829 CL DJ — 4.5% 2018 (1.0 years)
    
2,938,701
    
3,026,712
  
R010 CL AB — 5.5% 2019 (1.0 years)
    
3,150,093
    
3,272,448
  
2579 CL PC — 5.5% 2032 (1.1 years)
    
2,062,511
    
2,138,938
  
R011 CL AB — 5.5% 2020 (1.1 years)
    
1,230,209
    
1,281,852
  
3042 CL HA — 5.5% 2029 (1.1 years)
    
2,230,717
    
2,314,824
  
 
   
Principal
amount
  
Value
  
2549 CL PD — 5.5% 2031 (1.1 years)
  
$
3,990,504
  
$
4,142,163
  
2906 CL HK — 5.0% 2032 (1.1 years)
    
3,561,252
    
3,683,990
  
2947 CL B — 5.0% 2032 (1.1 years)
    
1,433,982
    
1,482,852
  
2831 CL AB — 5.0% 2018 (1.2 years)
    
498,514
    
521,483
  
2627 CL LE — 3.0% 2017 (1.5 years)
    
724,264
    
741,480
  
3566 CL DB — 4.0% 2022 (1.5 years)
    
7,654,085
    
8,116,601
  
3556 CL MA — 5.0% 2037 (1.7 years)
    
2,622,022
    
2,824,431
  
3229 CL HB — 5.0% 2025 (1.7 years)
    
2,172,046
    
2,301,750
  
2937 CL HJ — 5.0% 2019 (1.8 years)
    
2,905,466
    
3,105,907
  
3562 CL KA — 4.0% 2022 (1.9 years)
    
8,318,156
    
8,678,688
  
2574 CL JM — 5.0% 2022 (1.9 years)
    
1,469,459
    
1,587,975
  
3544 CL KA — 4.5% 2023 (2.0 years)
    
7,356,059
    
8,080,176
  
3170 CL EA — 4.5% 2020 (2.1 years)
    
3,375,257
    
3,568,044
  
           
83,494,939
  
Pass-Through Securities — 3.7%
              
1386 — 5.0% 2018 (2.3 years)
    
225,260
    
240,621
  
18190 — 5.5% 2022 (2.4 years)
    
349,121
    
375,815
  
18296 — 4.5% 2024 (2.6 years)
    
7,100,057
    
7,472,652
  
18306 — 4.5% 2024 (2.7 years)
    
12,215,176
    
12,856,200
  
13300 — 4.5% 2023 (2.9 years)
    
3,394,779
    
3,575,581
  
13517 — 4.0% 2024 (3.0 years)
    
11,379,016
    
11,898,692
  
           
36,419,561
  
           
119,914,500
  
Federal National Mortgage Association — 24.6%
              
Collateralized Mortgage Obligations — 12.1%
              
2003-16 CL PD — 5.0% 2016 (0.6 years)
    
2,114,965
    
2,154,212
  
2004-81 CL KC — 4.5% 2017 (0.6 years)
    
1,236,400
    
1,263,309
  
2005-59 CL PB — 5.5% 2028 (0.7 years)
    
1,717,528
    
1,753,840
  
2005-9 CL A — 5.0% 2031 (0.9 years)
    
2,209,155
    
2,268,130
  
2006-9 CL GA — 5.5% 2033 (0.9 years)
    
3,710,475
    
3,818,411
  
2003-27 CL DW — 4.5% 2017 (0.9 years)
    
1,000,000
    
1,029,708
  
2006-22 CL DA — 5.5% 2033 (1.0 years)
    
1,349,593
    
1,394,384
  
2003-92 CL PD — 4.5% 2017 (1.1 years)
    
2,173,095
    
2,257,724
  
2006-78 CL AV — 6.5% 2017 (1.2 years)
    
1,636,062
    
1,732,376
  
2006-21 CL CA — 5.5% 2029 (1.3 years)
    
1,790,408
    
1,863,143
  
2007-32 CL BA — 5.5% 2034 (1.3 years)
    
5,522,341
    
5,742,276
  
2008-54 CL EC — 5.0% 2035 (1.4 years)
    
5,177,557
    
5,393,312
  
2009-27 CL JA — 5.0% 2036 (1.4 years)
    
2,698,483
    
2,810,405
  
2003-43 CL EX — 4.5% 2017 (1.5 years)
    
402,545
    
420,694
  
2003-86 CL KT — 4.5% 2018 (1.5 years)
    
1,196,866
    
1,236,209
  
 
The accompanying notes form an integral part of these financial statements.
weitzfunds.com           41

 
 
 
 
 
SHORT-INTERMEDIATE INCOME FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
 
 
   
Principal
amount
  
Value
  
2003-39 CL LC — 5.0% 2022 (1.5 years)
  
$
560,873
  
$
597,520
  
2004-40 CL BA — 4.5% 2018 (1.5 years)
    
2,439,030
    
2,549,147
  
2005-9 CL AC — 5.0% 2033 (1.6 years)
    
14,499,146
    
15,191,190
  
2005-1 CL KA — 5.0% 2033 (1.7 years)
    
10,993,487
    
11,528,552
  
2007-42 CL YA — 5.5% 2036 (1.7 years)
    
2,809,190
    
2,995,798
  
2010-9 CL CA — 5.0% 2037 (1.7 years)
    
14,791,783
    
15,648,219
  
2003-37 CL QD — 5.0% 2032 (1.7 years)
    
2,850,409
    
2,994,034
  
2004-78 CL AB — 5.0% 2032 (1.8 years)
    
13,161,789
    
13,861,398
  
2009-52 CL DC — 4.5% 2023 (2.1 years)
    
2,348,754
    
2,464,590
  
2009-44 CL A — 4.5% 2023 (2.1 years)
    
3,002,634
    
3,201,583
  
2005-91 CL DA — 4.5% 2020 (2.2 years)
    
10,754,893
    
11,272,694
  
2003-9 CL DB — 5.0% 2018 (3.0 years)
    
1,000,000
    
1,102,850
  
           
118,545,708
  
Pass-Through Securities — 12.5%
              
254863 — 4.0% 2013 (1.3 years)
    
188,148
    
196,833
  
255291 — 4.5% 2014 (1.6 years)
    
301,504
    
312,120
  
256982 — 6.0% 2017 (2.2 years)
    
651,286
    
704,405
  
251787 — 6.5% 2018 (2.3 years)
    
22,582
    
24,625
  
888439 — 5.5% 2022 (2.4 years)
    
1,522,104
    
1,640,118
  
AE0031 — 5.0% 2025 (2.4 years)
    
10,463,560
    
11,103,401
  
254907 — 5.0% 2018 (2.4 years)
    
736,596
    
786,242
  
888595 — 5.0% 2022 (2.5 years)
    
1,726,110
    
1,835,436
  
AD0629 — 5.0% 2024 (2.6 years)
    
7,315,249
    
7,778,574
  
995960 — 5.0% 2023 (2.6 years)
    
7,271,595
    
7,716,976
  
995692 — 4.5% 2024 (2.6 years)
    
12,073,830
    
12,716,869
  
357414 — 4.0% 2018 (2.6 years)
    
3,043,320
    
3,227,957
  
930667 — 4.5% 2024 (2.7 years)
    
10,210,832
    
10,751,459
  
995755 — 4.5% 2024 (2.7 years)
    
18,866,531
    
19,865,446
  
995693 — 4.5% 2024 (2.8 years)
    
12,745,878
    
13,462,549
  
357985 — 4.5% 2020 (2.8 years)
    
865,266
    
917,433
  
890112 — 4.0% 2024 (3.0 years)
    
9,511,074
    
9,960,302
  
MA0043 — 4.0% 2024 (3.0 years)
    
7,346,877
    
7,682,406
  
AA5510 — 4.0% 2024 (3.1 years)
    
8,240,139
    
8,616,463
  
725232 — 5.0% 2034 (3.1 years)
    
2,759,581
    
2,930,493
  
           
122,230,107
  
           
240,775,815
  
Government National Mortgage Association — 0.3%
              
Collateralized Mortgage Obligations — 0.3%
              
GNR 2004-80 CL GC — 5.0% 2031 (0.5 years)
    
3,000,000
    
3,081,188
  
 
   
Principal
amount
  
Value
  
Non-Government Agency — 0.4%
              
Collateralized Mortgage Obligations — 0.4%
              
CMSI 2003-11 CL 2A1 — 5.5% 2033 (0.4 years)
  
$
262,443
  
$
263,303
  
GMACM 2003-J4 CL 3A1 — 4.75% 2018 (0.8 years)
    
1,348,736
    
1,393,391
  
CDMC 2003-7P CL A4 — 3.37% 2017 (Adjustable Rate) (1.0 years)(d)
    
1,004,331
    
1,025,982
  
WAMU 2003-S7 CL A1 — 4.5% 2018 (2.0 years)
    
577,237
    
591,020
  
Chase 2004-S1 CL A6 — 4.5% 2019 (3.2 years)
    
267,411
    
248,466
  
           
3,522,162
  
Total Mortgage-Backed Securities
  (Cost $362,452,427)
          
367,293,665
  
 
TAXABLE MUNICIPAL BONDS — 1.5%
              
Fond Du Lac Cnty, Wisconsin 3.0% 9/01/12
    
2,900,000
    
2,970,470
  
Stratford, Connecticut 6.55% 2/15/13
    
500,000
    
510,760
  
University of California 4.85% 5/15/13
    
990,000
    
1,084,753
  
Nebraska Public Power District 5.14% 1/01/14
    
1,000,000
    
1,112,280
  
Los Angeles, California Cmty Dev 6.0% 9/01/14
    
2,275,000
    
2,560,444
  
6.0% 9/01/15
    
1,220,000
    
1,380,418
  
Menomonee Falls, Wisconsin 4.25% 11/01/14
    
2,000,000
    
2,150,860
  
Omaha, Nebraska Public Facilities Corp., Lease Revenue, Series B, Refunding
   4.588% 6/01/17
    
815,000
    
864,723
  
4.788% 6/01/18
    
1,000,000
    
1,058,240
  
Iowa State University Revenue 5.8% 7/01/22
    
1,335,000
    
1,369,136
  
Total Taxable Municipal Bonds (Cost $14,186,364)
          
15,062,084
  
 
U.S.TREASURY AND GOVERNMENT AGENCY — 11.3%
              
U.S. Treasury — 5.2%
              
U.S. Treasury Note
              
1.125% 12/15/11
    
15,000,000
    
15,147,075
  
2.625% 4/30/16
    
6,000,000
    
6,365,160
  
3.0% 8/31/16
    
5,000,000
    
5,394,530
  
3.0% 9/30/16
    
6,000,000
    
6,471,564
  
3.125% 10/31/16
    
6,000,000
    
6,513,282
  
3.125% 5/15/19
    
10,000,000
    
10,627,350
  
           
50,518,961
  
 
42          Weitz Funds
The accompanying notes form an integral part of these financial statements.

 
 
 
 
 
 
 
 
 
   
Principal
amount
or shares
  
Value
  
Government Agency — 6.1%
              
Fannie Mae
              
2.0% 6/24/13
  
$
7,000,000
  
$
7,060,501
  
1.5% 6/10/15(e)
    
6,000,000
    
6,008,418
  
1.4% 6/30/15(e)
    
8,000,000
    
8,012,408
  
3.0% 9/16/15
    
6,000,000
    
6,065,952
  
2.0% 12/29/15(e)
    
8,000,000
    
8,021,952
  
2.0% 6/28/18(e)
    
8,000,000
    
8,027,968
  
Freddie Mac
              
5.5% 9/15/11
    
1,000,000
    
1,049,480
  
5.0% 11/13/14
    
3,000,000
    
3,445,320
  
3.0% 3/17/15
    
6,000,000
    
6,075,078
  
3.0% 12/28/18(e)
    
6,000,000
    
6,037,602
  
           
59,804,679
  
Total U.S. Treasury and Government Agency (Cost $106,563,067)
          
110,323,640
  
 
COMMON STOCKS — 1.4%
              
Redwood Trust, Inc.*
    
959,965
    
13,881,094
  
Newcastle Investment Corp.*
    
45,000
    
139,500
  
Total Common Stocks (Cost $14,400,907)
          
14,020,594
  
 
SHORT-TERM SECURITIES — 13.3%
  
Principal
amount
or shares
  
Value
  
Wells Fargo Advantage Government Money Market Fund - Institutional Class 0.05%(a)
    
15,256,682
  
$
15,256,682
  
U.S. Treasury Bills, 0.10% to 0.15%,10/21/10 to 12/30/10(b)
  
$
115,285,000
    
115,259,916
  
Total Short-Term Securities (Cost $130,517,961)
          
130,516,598
  
Total Investments in Securities (Cost $939,791,015)
          
969,933,605
  
Other Assets Less Other Liabilities — 0.9%
          
8,482,759
  
Net Assets — 100.0%
        
$
978,416,364
  
Net Asset Value Per Share
        
$
12.45
  
 
*
Non-income producing
(a)
Rate presented represents the annualized 7-day yield at September 30, 2010.
(b)
Interest rates presented represent the yield to maturity at the date of purchase.
(c)
Number of years indicated represents estimated average life of mortgage-backed securities.
(d)
Security is exempt from registration under Rule 144A of the Securities Act of 1933. This security may be resold in transactions that are exempt from registration, normally to qualified institutional buyers.
(e)
Security is a “step-up” bond where the coupon rate increases or steps up at a predetermined date. Coupon rate presented represents the rate at September 30, 2010.
 
The accompanying notes form an integral part of these financial statements.
weitzfunds.com          43

 
 
 
 
PORTFOLIO MANAGER’S DISCUSSION & ANALYSIS
 
 
Portfolio Manager: Thomas D. Carney
 
The Nebraska Tax-Free Income Fund returned +1.9% in the third calendar quarter, compared to a +2.5% return for the Barclays Capital 5-Year Municipal Bond Index, our Fund’s primary benchmark. For the calendar year-to-date, the Fund increased 4.1% compared to an increase of 5.0% for our Fund’s primary benchmark. Contributors to our Fund’s performance were broad based as nearly all investments added to fund results through modest capital appreciation in addition to routine coupon income.
 
Commentary
Domestic credit markets rallied in the third quarter as hints of further monetary stimulus by the Federal Reserve buoyed already strong investor demand for fixed-income assets. Tepid economic data reinforced investors’ animal spirits to buy before any specific details of the Fed’s next move. The result was further declines in interest rates (higher prices) for nearly all fixed-income assets.
 
The next installment of monetary stimulus, dubbed QE2 (Quantitative Easing 2), may come as early as the Fed’s scheduled meeting in November. With short-term interest rates at or close to zero, quantitative easing is arguably the only tool left in the Fed’s toolkit to prop up the flagging economy. It involves expanding the Fed’s balance sheet through large scale purchases of securities, most likely U.S. Treasury bonds in this instance.
 
With some of the goals of QE1 having been met (stabilizing the economy and stabilizing credit spreads), the next monetary easing phase may attempt to target real yields (too high), inflation (too low) and lending (too tight). The objective would be to avert a ‘liquidity trap’ where cash and savings build up in the economy and are not put to productive use. The unintended consequences of too much liquidity being injected into the economy are what concern us, however. Namely, excessive risk-taking in the financial system as investors potentially misprice risk in  a low nominal interest rate environment and the possibility of allowing inflation to rise too fast.
 
U.S. Treasury bonds are the likely focal point of QE2, and their prices resumed their march back to 2008 crisis levels while certain maturities continued to set new all-time lows in yield. Municipal bonds also performed well in the quarter despite lingering concerns about state and local governments’ budgetary challenges, particularly the magnitude of unfunded pension and other post-retirement liabilities. Overall, municipal bond yields closely followed their counterparts in the Treasury market resulting in price increases that supplemented interest income.
 
Investment activity in the quarter focused on a segment of the municipal marketplace that we believe provides reasonable-to-good value in today’s low absolute return environment. We invested approximately $10 million, about 10% of Fund assets, during the quarter in 5 to 10-year higher coupon bonds that contain a shorter-term call provision. These premium (a bond that has a higher-than-market coupon interest rate) callable bonds are often called ‘cushion’ or ‘kicker’ in industry parlance. They are typically offered in the market at prices which assume it will be redeemed at an upcoming call date in advance of its final maturity. If the call feature is not exercised by the issuer at the call date, the yield we receive increases or ‘kicks up’ based on holding the high coupon bond for a longer time period, possibly to its final maturity. Should interest rates stay low and our investments are redeemed on their shorter-term call dates, we will earn a higher return than we could on other short-term alternatives. If interest rates rise and these investments are not called on their call dates, we will be partially ‘cushioned’ from any rate rise, particularly compared to non-called alternatives, since we will likely receive our higher coupon cash flow for a longer period of time.
 
44          Weitz Funds

 
 
 
 
 
 
 
The average duration of our Fund was unchanged at 3.3 years during the quarter and the average maturity fell to 6.7 from 6.8 years. Overall asset quality of our portfolio remains high as we remain focused on security selection and ongoing review of our investments’ fiscal position.
 
Outlook
Given today’s ultra low interest rate environment, we once again encourage fixed-income investors to temper future return expectations (please read Wally’s commentary on bonds in his opening letter to this report). While the prospects for inflation, the bond investor’s boogeyman, appear low for the remainder of 2010 and into 2011, we remain wary of the longer-term inflationary implications of the enormous deficit spending to combat the credit crisis. Recent commentary by Federal Reserve representatives about the desire to raise inflation expectations and even possibly manufacture inflation in excess of the Fed’s long-term mandate reinforce our desire to position the Fund defensively relative to interest rate exposure while we patiently seek out areas of opportunity. A quote by a Fed chairman (William McChesney Martin) before a Senate Finance Committee in the 1950s in response to the idea that the Fed should encourage a gradual rise in prices seems worth repeating – “There is no validity whatever in the idea that any inflation, once accepted, can be confined to moderate proportions.” Chairman Martin’s comments proved prescient given our country’s struggle with inflation in the 1970s and ‘80s. Hopefully we can avoid a replay of the experience. In the meantime, we will continue to invest one security at a time, relying on a fundamental research-based investment approach and are well positioned to take advantage of any market weakness.
 
   
Total Return
  
Average Annual Total Returns
  
   
1 Year
  
3 Year
  
5 Year
  
10 Year
  
15 Year
  
20 Year
  
NebraskaTax-Free Income Fund
  
3.7
%
  
4.6
%
  
4.0
%
  
4.6
%
  
4.7
%
  
5.1
%
  
Barclays Capital 5-Year Municipal Bond Index
  
5.6
    
6.7
    
5.4
    
5.3
    
5.1
    
5.8
    
 
See page 4 for additional performance disclosures.
 
Performance of the Nebraska Tax-Free Income Fund (“NE Tax-Free”) is measured from October 1, 1985, the inception of Weitz Income Partners Limited Partnership (the “Partnership”). As of December 29, 2006, NE Tax-Free succeeded to substantially all of the assets of the Partnership. The investment objectives, policies and restrictions of NE Tax-Free are materially equivalent to those of the Partnership and the Partnership was managed at all times with full investment authority by Wallace R. Weitz & Company. The performance information includes performance for the period before NE Tax-Free became an investment company registered with the Securities and Exchange Commission. During this period, the Partnership was not registered under the Investment Company Act of 1940 and, therefore, was not subject to certain investment restrictions imposed by the 1940 Act. If the Partnership had been registered under the 1940 Act during this period, the Partnership’s performance might have been adversely affected.
 
weitzfunds.com           45

 
 
 
 
 
NEBRASKA TAX-FREE INCOME FUND
PORTFOLIO PROFILE • (UNAUDITED)
 
 
State Breakdown
        
Nebraska
    
78.6
%
Commonwealth of Puerto Rico
    
3.7
  
Illinois
    
2.5
  
Florida
    
2.3
  
Wisconsin
    
1.7
  
Ohio
    
1.2
  
Virginia
    
1.2
  
Arizona
    
1.1
  
Hawaii
    
1.1
  
District of Columbia
    
0.9
  
North Dakota
    
0.9
  
Minnesota
    
0.0
  
Short-Term Securities/Other
    
4.8
  
Net Assets
    
100.0
%
 
Financial Attributes
       
Average Maturity
    
6.7 years
  
Average Duration
    
3.3 years
  
Average Coupon
    
4.0
%
30-Day SEC Yield at 9-30-10
    
1.8
%
Municipals exempt from federal and Nebraska income taxes
    
Approx. 82
%
Municipals subject to alternative minimum tax
    
Approx. 5
%
 
Sector Breakdown
        
Power
    
21.1
%
Higher Education
    
17.8
  
Water/Sewer
    
9.7
  
Hospital
    
8.7
  
General
    
6.2
  
Lease
    
4.6
  
Airport/Transportation
    
4.6
  
Highway
    
1.1
  
Housing
    
0.9
  
Total Revenue
    
74.7
  
City/Subdivision
    
8.2
  
School District
    
6.6
  
County
    
2.8
  
State/Commonwealth
    
2.6
  
Total General Obligation
    
20.2
  
Escrow/Pre-Refunded
    
0.3
  
Short-Term Securities/Other
    
4.8
  
Net Assets
    
100.0
%
 
46          Weitz Funds

 
 
 
 
 
NEBRASKA TAX-FREE INCOME FUND
SCHEDULE OF INVESTMENTS • SEPTEMBER 30, 2010 • (UNAUDITED)
 
 
MUNICIPAL BONDS — 95.2%
  
Principal
amount
  
Value
  
Arizona — 1.1%
              
Mesa, Highway Project Advancement Notes, Revenue, Series 2009
              
3.5%, 7/01/15
  
$
1,000,000
  
$
1,044,920
  
District of Columbia — 0.9%
              
Metropolitan Washington D.C., Airports Authority, Revenue, Refunding, Series 1999A, AMT
              
5.25%, 10/01/16
    
900,000
    
904,599
  
Florida — 2.3%
              
Greater Orlando, Aviation Authority, Revenue, Series 2009A, AMT
              
6.0%, 10/01/16
    
1,000,000
    
1,174,780
  
Miami, Dade County, Aviation Revenue, Series 2010A
              
4.25%, 10/01/18
    
1,000,000
    
1,075,440
  
           
2,250,220
  
Hawaii — 1.1%
              
State of Hawaii, Airports System Revenue, Refunding, Series 2010B, AMT
              
3.0%, 7/01/12
    
1,000,000
    
1,025,930
  
Illinois — 2.5%
              
Elgin, General Obligation, Refunding, Series 2003
              
5.125%, 12/15/14
    
1,020,000
    
1,127,732
  
Illinois Finance Authority, Revenue, Series 2009A, Northwestern Memorial Hospital
              
5.0%, 8/15/17
    
245,000
    
275,713
  
Illinois Health Facility Authority, Revenue, Series A, Evangelical Hospital Corp., Escrowed to Maturity
              
6.75%, 4/15/12
    
85,000
    
89,921
  
Springfield, Water Revenue, Series 2004
              
5.25%, 3/01/19
    
800,000
    
879,960
  
           
2,373,326
  
Minnesota — 0.0%
              
Minnesota State Housing Financial Agency, Single Family Mortgage, Series D
              
6.0%, 1/01/16
    
15,000
    
15,038
  
Nebraska — 78.6%
              
Adams County, Hospital Authority #1, Revenue, Mary Lanning Memorial Hospital Project, Radian Insured
              
4.25%, 12/15/16
    
250,000
    
269,482
  
4.4%, 12/15/17
    
250,000
    
270,337
  
5.3%, 12/15/18
    
700,000
    
700,686
  
Bellevue, Development Revenue, Bellevue University Project Refunding, Series 2010B,
              
0.7%, 6/01/11
    
600,000
    
600,294
  
Series 2010A, 2.75%, 12/01/15
    
1,000,000
    
1,026,110
  
Blair, Water System Revenue, Bond Anticipation Notes, AMT
              
Series B, 4.65%, 6/15/12
    
500,000
    
501,110
  
Cornhusker Public Power District, Electric Revenue, Refunding, Series 2010
              
0.75%, 7/01/12
    
660,000
    
661,445
  
2.4%, 7/01/17
    
400,000
    
405,392
  
 
   
Principal
        
   
amount
  
Value
  
Dawson County, Lexington Public School District #001,
              
General Obligation, Refunding
              
1.75%, 12/15/12
  
$
355,000
  
$
360,566
  
2.15%, 12/15/13
    
490,000
    
503,338
  
Douglas County, Educational Facility Revenue, Series A,
              
Creighton University Project, FGIC Insured
              
3.5%, 9/01/12
    
255,000
    
266,457
  
Douglas County, Hospital Authority #1, Revenue, Refunding,
              
Alegent Health - Immanuel, AMBAC Insured
              
5.125%, 9/01/17
    
250,000
    
250,217
  
Quality Living Inc. Project
              
4.7%, 10/01/17
    
255,000
    
219,022
  
Douglas County, Hospital Authority #2, Revenue,
              
Boys Town Project
              
4.75%, 9/01/28
    
500,000
    
527,655
  
Children’s Hospital Obligated Group
              
5.25%, 8/15/20
    
1,000,000
    
1,076,310
  
5.5%, 8/15/21
    
1,430,000
    
1,552,565
  
Nebraska Medical Center Project
              
5.0%, 11/15/14
    
380,000
    
415,880
  
5.0%, 11/15/15
    
295,000
    
324,857
  
Douglas County, Hospital Authority #3, Revenue, Refunding Nebraska Methodist Health System
              
5.5%, 11/01/18
    
500,000
    
548,825
  
Douglas County, Elkhorn Public School District #10, Series 2010B
              
3.0%, 6/15/16
    
525,000
    
554,232
  
Douglas County, Millard Public School District #17, Refunding
              
FSA Insured, 4.0%, 11/15/13
    
500,000
    
534,905
  
4.0%, 6/15/17
    
750,000
    
805,215
  
Douglas County, Ralston Public School District #54, FSA Insured
              
5.125%, 12/15/21
    
500,000
    
517,855
  
5.2%, 12/15/26
    
500,000
    
515,260
  
Douglas County, Zoo Facility Revenue, Refunding, Omaha’s Henry Doorly Zoo Project
              
4.2%, 9/01/16
    
600,000
    
642,150
  
4.75%, 9/01/17
    
200,000
    
216,326
  
Grand Island, Electric Revenue, MBIA Insured
              
5.0%, 8/15/14
    
500,000
    
514,980
  
5.125%, 8/15/16
    
500,000
    
515,480
  
Grand Island, Public Safety, Tax Anticipation Bonds, AMBAC Insured
              
4.1%, 9/01/14
    
480,000
    
491,390
  
Grand Island, Sanitary Sewer Revenue, Refunding, FSA Insured
              
3.3%, 4/01/13
    
870,000
    
881,771
  
3.45%, 4/01/14
    
650,000
    
658,411
  
Hastings, Electric System Revenue, Refunding, FSA Insured
              
5.0%, 1/01/19
    
750,000
    
767,677
  
La Vista, General Obligation, Refunding, Series 2009
              
2.5%, 11/15/15
    
415,000
    
423,586
  
3.0%, 11/15/17
    
640,000
    
649,408
  
 
The accompanying notes form an integral part of these financial statements.
weitzfunds.com          47

 
 
 
 
 
NEBRASKA TAX-FREE INCOME FUND
SCHEDULE OF INVESTMENTS • (UNAUDITED) (CONTINUED)
 
 
   
Principal
amount
       Value  
Lancaster County, Hospital Authority #1, Revenue, Refunding, Bryan LGH Medical Center
              
Series A, 5.0%, 6/01/16
  
$
500,000
  
$
536,300
  
Series A, 5.0%, 6/01/17
    
500,000
    
534,425
  
Series B-2, LOC - U.S. Bank, 0.27%, 6/01/31 (Variable Rate Demand Note)
    
250,000
    
250,000
  
Lincoln, Airport Authority Revenue, Refunding
              
5.2%, 7/01/19
    
200,000
    
200,286
  
Lincoln, Certificates of Participation
              
Series 2008, 3.0%, 3/15/11
    
1,085,000
    
1,098,454
  
Series 2010A, 0.5%, 3/15/11
    
280,000
    
280,118
  
Series 2010A, 2.4%, 3/15/17
    
395,000
    
403,963
  
Lincoln, Electric System Revenue, Refunding
              
5.0%, 9/01/18
    
1,000,000
    
1,150,220
  
Lincoln, General Obligation, Highway Allocation Fund
              
4.0%, 5/15/23
    
1,000,000
    
1,072,040
  
Lincoln, Parking Revenue, Refunding, Series A
              
5.375%, 8/15/14
    
205,000
    
205,787
  
Lincoln, Sanitary Sewer Revenue, Refunding, MBIA Insured
              
5.0%, 6/15/16
    
885,000
    
972,447
  
Lincoln, Water Revenue
              
5.0%, 8/15/22
    
800,000
    
831,888
  
Lincoln County, North Platte School District #001,General Obligation, Refunding
              
2.0%, 12/15/13
    
770,000
    
794,224
  
Municipal Energy Agency of Nebraska, Power Supply System Revenue, Refunding, Series A
              
AMBAC Insured, 5.0%, 4/01/13
    
380,000
    
402,264
  
BHAC Insured, 5.0%, 4/01/20
    
500,000
    
587,680
  
Nebraska Educational Financial Authority, Revenue, Refunding
              
Hastings College Project
              
5.05%, 12/01/23
    
500,000
    
512,995
  
Nebraska Wesleyan University Project, Radian Insured
              
5.15%, 4/01/22
    
1,000,000
    
1,011,950
  
Nebraska Investment Finance Authority, Clean Water State Revolving Fund, Series 2010#
              
0.7%, 6/15/11
    
2,085,000
    
2,085,000
  
Nebraska Investment Financial Authority, Revenue, Series A, Drinking Water State Revolving Fund
              
5.15%, 1/01/16
    
200,000
    
201,436
  
Nebraska Investment Financial Authority, Health Facility Revenue, Hospital Revenue, Great Plains Regional Medical Center Project, Radian Insured
              
5.0%, 11/15/14
    
250,000
    
260,448
  
Nebraska Investment Financial Authority, Single Family Housing Revenue, Series C, AMT
              
4.05%, 3/01/12
    
235,000
    
240,325
  
4.05%, 9/01/12
    
285,000
    
293,279
  
4.125%, 3/01/13
    
305,000
    
314,891
  
 
   
Principal
amount
  
Value
  
Nebraska Public Power District, Revenue
              
2003 Series A, 5.0%, 1/01/20
  
$
230,000
  
$
249,221
  
2005 Series B-2, 5.0%, 1/01/16
    
1,000,000
    
1,137,010
  
2007 Series B, 5.0%, 1/01/15
    
885,000
    
1,013,706
  
2007 Series B, 5.0%, 1/01/21
    
1,000,000
    
1,135,120
  
2008 Series B, 5.0%, 1/01/18(b)
    
800,000
    
931,304
  
2010 Series C, 4.25%, 1/01/17
    
500,000
    
558,320
  
Nebraska State Colleges Facility Corp., Deferred Maintenance Revenue, MBIA Insured
              
4.25%, 7/15/15
    
405,000
    
449,996
  
5.0%, 7/15/16
    
200,000
    
231,456
  
4.0%, 7/15/17
    
200,000
    
217,258
  
Nebraska Utilities Corp., Revenue, University of Nebraska Lincoln Project
              
5.25%, 1/01/19
    
750,000
    
787,163
  
Omaha, Douglas County, General Obligation, Public Building Commission
              
5.1%, 5/01/20
    
750,000
    
771,008
  
Omaha, General Obligation, Refunding
              
3.75%, 6/01/14
    
1,000,000
    
1,103,130
  
5.25%, 10/15/19
    
250,000
    
304,888
  
Omaha, Public Facilities Corp., Lease Revenue,
              
Omaha Baseball Stadium Project
              
Series 2009, 5.0%, 6/01/23
    
770,000
    
883,783
  
Series 2010, 4.125%, 6/01/29
    
650,000
    
664,820
  
Rosenblatt Stadium Project, Series C
              
3.9%, 10/15/17
    
235,000
    
258,798
  
3.95%, 10/15/18
    
240,000
    
261,509
  
Omaha Public Power District, Electric Revenue
              
Series A, Escrowed to Maturity
              
7.625%, 2/01/12(b)
    
225,000
    
237,548
  
Series A, 4.25%, 2/01/18
    
1,650,000
    
1,764,395
  
Series A, 4.1%, 2/01/19
    
1,000,000
    
1,099,220
  
Series B, FGIC Insured, 4.75%, 2/01/36
    
1,000,000
    
1,028,890
  
Series C, 5.5%, 2/01/14
    
250,000
    
268,770
  
Omaha, Sanitary Sewer Revenue, MBIA Insured
              
4.0%, 11/15/12
    
520,000
    
558,168
  
4.0%, 11/15/14
    
250,000
    
279,833
  
Omaha, Special Tax, Revenue, Heritage Development Project, Series 2004
              
5.0%, 10/15/17
    
1,090,000
    
1,236,997
  
Papillion-La Vista, Sarpy County School District #27, General Obligation
              
Refunding, Series 2009A,
              
3.15%, 12/01/17
    
930,000
    
977,997
  
Series 2009, 5.0%, 12/01/28
    
500,000
    
549,140
  
Papillion, Water System Revenue, Bond Anticipation Notes
              
Series C, 3.0%, 6/15/11
    
500,000
    
500,985
  
Series 2010, 1.65%, 6/15/13
    
1,000,000
    
1,004,300
  
Plattsmouth, General Obligation, Promissory Notes, Series 2010
              
0.9%, 9/15/12
    
445,000
    
445,565
  
Public Power Generation Agency, Revenue, Whelan Energy Center Unit 2, Series A
              
AGC-ICC AMBAC Insured, 5.0%, 1/01/19
    
1,260,000
    
1,424,884
  
AMBAC Insured, 5.0%, 1/01/18
    
750,000
    
843,098
  
AMBAC Insured, 5.0%, 1/01/26
    
800,000
    
845,184
  
 
48          Weitz Funds
The accompanying notes form an integral part of these financial statements.

 
 
 
 
 
 
 
   
Principal
        
   
amount
  
Value
  
Sarpy County, General Obligation, Sanitary & Improvement District #111, Stoneybrook
              
5.9%, 3/15/13
  
$
300,000
  
$
300,858
  
Southern Nebraska Public Power District, Electric System Revenue, AMBAC Insured
              
4.625%, 9/15/21
    
1,000,000
    
1,089,550
  
State of Nebraska, Certificates of Participation
              
Series 2009B, 2.1%, 8/01/13
    
590,000
    
603,080
  
Series 2009C, 2.0%, 11/01/13
    
700,000
    
707,924
  
Series 2010B, 1.2%, 9/15/14
    
1,230,000
    
1,225,412
  
University of Nebraska, Facilities Corp.
              
Deferred Maintenance Revenue
              
Series 2006, 5.0%, 7/15/18
    
830,000
    
960,933
  
Series 2009, 2.0%, 7/15/11
    
1,000,000
    
1,013,570
  
Lease Rental Revenue
              
UNMC OPPD Exchange Project,
              
2.75%, 2/15/16
    
1,185,000
    
1,256,669
  
UNMC Research Center Project,
              
5.0%, 2/15/15
    
500,000
    
526,880
  
UNMC Sorell Center Project,
              
4.0%, 4/15/11
    
1,000,000
    
1,019,940
  
University of Nebraska, University Revenue,
              
Lincoln Memorial Stadium Project, Refunding, Series 2004A
              
5.0%, 11/01/19
    
2,160,000
    
2,400,559
  
Lincoln Parking Project, Refunding
              
4.0%, 6/01/17
    
1,070,000
    
1,166,621
  
Lincoln Student Fees and Facilities
              
4.6%, 7/01/17
    
570,000
    
604,417
  
5.0%, 7/01/23
    
1,000,000
    
1,102,550
  
Omaha Health & Recreation Project
              
4.05%, 5/15/19
    
390,000
    
433,583
  
5.0%, 5/15/33
    
700,000
    
748,909
  
Omaha Student Facilities Project
              
4.5%, 5/15/16
    
565,000
    
650,920
  
5.0%, 5/15/27
    
800,000
    
881,312
  
Wheat Belt Public Power District, Electric System Revenue, Series 2009B
              
3.2%, 9/01/16
    
330,000
    
339,959
  
3.4%, 9/01/17
    
415,000
    
426,213
  
York County, Hospital Authority #1, Revenue, Refunding, Hearthstone Project
              
2.2%, 6/01/12
    
200,000
    
202,640
  
2.7%, 6/01/13
    
150,000
    
152,828
  
York County, York Public School District #12, Refunding, Series 2010
              
0.75%, 12/15/12
    
220,000
    
219,696
  
           
75,468,101
  
 
   
Principal
        
   
amount
  
Value
  
North Dakota — 0.9%
              
Grand Forks, Sales Tax Revenue, Refunding, Series 2005A
              
5.0%, 12/15/21
  
$
795,000
  
$
883,905
  
Ohio — 1.2%
              
Akron, General Obligation, Series 2003
              
5.0%, 12/01/17
    
1,030,000
    
1,138,356
  
Puerto Rico — 3.7%
              
Commonwealth, General Obligation, Refunding
              
Electric Power Authority Revenue, Series RR, FSA Insured
              
5.0%, 7/01/20
    
1,000,000
    
1,076,440
  
FGIC Insured, 5.5%, 7/01/11
    
990,000
    
1,022,363
  
Municipal Finance Agency, General Obligation, 2002 Series A,
              
FSA Insured, 5.25%, 8/01/16
    
500,000
    
528,505
  
Series A, Assured Guaranty Insured
              
5.0%, 7/01/15
    
845,000
    
950,988
  
           
3,578,296
  
Virginia — 1.2%
              
Chesterfield County, General Obligation, Refunding, Series 2005B
              
5.0%, 1/01/17
    
975,000
    
1,122,888
  
Wisconsin — 1.7%
              
Milwaukee County, General Obligation, Refunding, Series 2005A
              
5.0%, 12/01/20
    
1,405,000
    
1,589,013
  
Total Municipal Bonds
(Cost $87,831,601)
          
91,394,592
  
 
SHORT-TERM SECURITIES — 4.7%
  
Shares
  
Value
  
Wells Fargo National Advantage Tax-Free Money Market Fund — Institutional Class 0.13%(a)
              
(Cost $4,556,834)
    
4,556,834
  
$
4,556,834
  
Total Investments in Securities
   (Cost $92,388,435)
          
95,951,426
  
Other Assets Less Other Liabilities — 0.1%
          
105,365
  
Net Assets — 100.0%
        
$
96,056,791
  
Net Asset Value Per Share
        
$
10.36
  
 
#
Illiquid and/or restricted security that has been fair valued.
(a)
Rate presented represents the annualized 7-day yield at September 30, 2010.
(b)
Security designated to cover a forward purchase commitment.
 
The accompanying notes form an integral part of these financial statements.
weitzfunds.com          49

 
 
 
 
 
PORTFOLIO MANAGER’S DISCUSSION & ANALYSIS
 
 
Portfolio Manager: Thomas D. Carney
 
The Government Money Market Fund closed the third calendar quarter with a 7-day effective yield of 0.06%. (An investment in the Fund is neither insured nor guaranteed by the U.S. Government. There can be no assurance that the Fund will be able to maintain a stable net asset value. 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.)
 
Those familiar with the movie Groundhog Day (1993) might find striking similarities between our Fund’s yield, which remains mired in a near-zero range, and the weatherman in the movie who was forced to relive the same day over and over again. Our Fund’s 7-day effective yield was, once again, unchanged in the third quarter. Seemingly day-after-day, month-after-month, and quarter-after-quarter, returns to savers in investment vehicles like money market funds, bank savings accounts and short-term CDs have remained the same and frustratingly close to zero. The prospects for this low-return environment changing anytime soon are extremely low and the time period for some normalization of short-term interest rates keeps moving further into the future.
 
The economic challenges (high unemployment, low capacity utilization and sagging consumer and business confidence) our economy faces as it struggles to recover from what has been called the ‘Great Recession’ has led the Federal Reserve to keep short-term interest rates “exceptionally low” as a means to promote economic growth. The third quarter provided fresh evidence of that struggle as economic data continued to reflect a sluggish economy suffering from excess supply and low demand for many goods and services. These and other economic data points were, once again, cited by the Fed as reasons to leave the Fed Funds rate low for an “extended period” at both meetings the FOMC (the rate-setting committee for the Federal Reserve) held in the quarter.
 
As we have mentioned in previous letters, the Fed Funds rate affects all investments within the opportunity set of our Fund. We invest in ultra-high quality, short-term investments (e.g. U.S. Treasury bills and government agency discount notes) that have a weighted average maturity of less than 60 days (down from 90 days beginning June 30, 2010). As a result, our yield has invariably followed the path dictated by the Federal Reserve’s monetary policy as we frequently reinvest maturing bills and notes in these short-term instruments.
 
As of September 30, 99.3% of our portfolio was invested in U.S. Treasury bills with the balance in high quality Wells Fargo money market funds. The average life of our portfolio at September 30 was approximately 48 days.
 
It’s inevitable that short-term interest rates will break out of their Groundhog Day-like repetition of low-and-unchanged. The timing of this event, however, continues to exasperate investors like the hero in the movie. It’s now certain that the Fed will keep short-term interest rates at near-zero for the rest of 2010 with some even calling for no change beyond 2012. When the Fed changes from its current course and begins to raise short-term rates is anyone’s guess, but our Fund’s yield will quickly benefit as we frequently reinvest maturing securities. In the meantime, we will continue to seek opportunities to add incremental return to our Fund’s yield while maintaining our focus on high credit quality.
 
Despite today’s low yield environment, our Fund remains a sensible option for those investors whose primary objective is the maintenance of liquidity and the preservation of capital.
 
Commentary on Amendments to the Regulatory Structure Governing Money Market Funds
The Securities and Exchange Commission (SEC) adopted on February 23, 2010, amendments to rules governing the regulation of money market mutual funds. These amendments are intended to accomplish a number of things, including: enhancement of portfolio information disclosure; improvement in fund operations; and strengthening of risk-limiting conditions governing money market mutual funds. The amendments will be implemented over the course of 2010, the most recent being monthly reporting of portfolio holdings for our Fund. Please see the Fund Profile section for the Government Money Market Fund on our website for a detailed listing, updated monthly, of our investments. Aside from the amendment to shorten the maximum dollar-weighted average portfolio maturity of a money fund portfolio to 60 calendar days (from the previous limit of 90 calendar days), the investment adviser anticipates minimal operational impact to Fund shareholders from implementation of the amendments given the current and historical high-quality nature of our investments.
 
50          Weitz Funds

 
 
 
 
 
GOVERNMENT MONEY MARKET FUND
SCHEDULE OF INVESTMENTS • SEPTEMBER 30, 2010 • (UNAUDITED)
 
 
   
Principal
      
U.S. TREASURY — 99.3%†
  
amount
  
Value
  
U.S. Treasury Bill
              
0.12% 11/04/10
  
$
24,000,000
  
$
23,997,348
  
0.14% 11/12/10
    
21,000,000
    
20,996,717
  
0.15% 11/18/10
    
28,000,000
    
27,994,553
  
0.12% 12/02/10
    
26,000,000
    
25,994,627
  
Total U.S. Treasury
          
98,983,245
  
 
SHORT-TERM SECURITIES — 0.6%
  
Shares
  
Value
  
Wells Fargo Advantage Government Money Market Fund - Institutional Class 0.05%(a)
    
555,791
  
$
555,791
  
Wells Fargo Advantage 100% Treasury Money Market Fund - Service Class 0.01%(a)
    
52,554
    
52,554
  
Total Short-Term Securities
          
608,345
  
Total Investments in Securities
(Cost $99,591,590)
          
99,591,590
  
Other Assets Less Other Liabilities — 0.1%
          
122,550
  
Net Assets — 100.0%
        
$
99,714,140
  
Net Asset Value Per Share
        
$
1.00
  
 
†
Interest rates presented represent the yield to maturity at the date of purchase.
(a)
Rate presented represents the annualized 7-day yield at September 30, 2010.
 
The accompanying notes form an integral part of these financial statements.
weitzfunds.com          51

 
 
 
 
SEPTEMBER 30, 2010 • (UNAUDITED)
 
 
   
Value
  
Partners
Value
  
Partners III
  
Hickory
  
Balanced
  
Short -
Intermediate
Income
 
Nebraska
Tax-Free
Income
  
Government
Money
Market
  
Assets:
                                                  
Investments in securities at value:
                                                  
Unaffiliated issuers*
  
$
897,966,117
  
$
604,646,566
  
$
304,074,370
  
$
244,926,101
  
$
75,835,513
  
$
969,933,605
  
$
95,951,426
  
$
99,591,590
  
Controlled affiliates*
    
—
    
—
    
2,270,000
    
—
    
—
    
—
    
—
    
—
  
     
897,966,117
    
604,646,566
    
306,344,370
    
244,926,101
    
75,835,513
    
969,933,605
    
95,951,426
    
99,591,590
  
Accrued interest and dividends receivable
    
1,064,664
    
518,247
    
264,239
    
248,204
    
262,066
    
7,535,833
    
984,526
    
37
  
Due from broker
    
—
    
—
    
43,327,251
    
—
    
—
    
—
    
—
    
—
  
Receivable for securities sold
    
618,227
    
1,344,533
    
1,420,386
    
2,797,081
    
259,639
    
—
    
—
    
—
  
Receivable for fund shares sold
    
62,854
    
209,739
    
103,097
    
182,362
    
14
    
4,910,045
    
50,000
    
170,157
  
Total assets
    
899,711,862
    
606,719,085
    
351,459,343
    
248,153,748
    
76,357,232
    
982,379,483
    
96,985,952
    
99,761,784
  
Liabilities:
                                                  
Due to adviser
    
1,072,405
    
674,559
    
302,515
    
279,094
    
80,595
    
509,689
    
77,899
    
45,740
  
Options written, at value†
    
—
    
—
    
—
    
—
    
14,100
    
—
    
—
    
—
  
Payable for securities purchased
    
—
    
—
    
1,601,548
    
466,650
    
128,944
    
—
    
778,755
    
—
  
Payable for fund shares redeemed
    
273,839
    
167,758
    
—
    
15,340
    
—
    
3,453,430
    
72,507
    
1,500
  
Securities sold short#
    
—
    
—
    
46,368,505
    
—
    
—
    
—
    
—
    
—
  
Other
    
—
    
—
    
1,109
    
—
    
—
    
—
    
—
    
404
  
Total liabilities
    
1,346,244
    
842,317
    
48,273,677
    
761,084
    
223,639
    
3,963,119
    
929,161
    
47,644
  
Net assets applicable to shares outstanding
  
$
898,365,618
  
$
605,876,768
  
$
303,185,666
  
$
247,392,664
  
$
76,133,593
  
$
978,416,364
  
$
96,056,791
  
$
99,714,140
  
Composition of net assets:
                                                  
Paid-in capital
  
$
1,091,311,102
  
$
765,893,030
  
$
271,385,780
  
$
312,570,713
  
$
81,114,414
  
$
947,770,176
  
$
92,466,118
  
$
99,710,712
  
Accumulated undistributed net investment income (loss)
    
(190,991
)
  
(1,554,073
)
  
(1,280,664
)
  
(1,052,161
)
  
354,108
    
(964,515
)
  
29,237
    
—
  
Accumulated net realized gain (loss)
    
(204,214,895
)
  
(179,605,383
)
  
(14,480,067
)
  
(88,132,690
)
  
(10,929,196
)
  
1,468,113
    
(1,555
)
  
3,428
  
Net unrealized appreciation (depreciation) of investments
    
11,460,402
    
21,143,194
    
47,560,617
    
24,006,802
    
5,594,267
    
30,142,590
    
3,562,991
    
—
  
Total net assets applicable to shares outstanding
  
$
898,365,618
  
$
605,876,768
  
$
303,185,666
  
$
247,392,664
  
$
76,133,593
  
$
978,416,364
  
$
96,056,791
  
$
99,714,140
  
Total shares outstanding (indefinite number of no par value shares authorized)
    
34,635,980
    
32,570,446
    
29,049,831
    
7,327,732
    
7,140,045
    
78,602,333
    
9,267,933
    
99,710,712
  
Net asset value, offering and redemption price per share of shares outstanding
  
$
25.94
  
$
18.60
  
$
10.44
  
$
33.76
  
$
10.66
  
$
12.45
  
$
10.36
  
$
1.00
  
* Cost of investments in securities:
                                                  
Unaffiliated issuers
  
$
886,505,715
  
$
583,503,372
  
$
259,042,779
  
$
220,919,299
  
$
70,240,771
  
$
939,791,015
  
$
92,388,435
  
$
99,591,590
  
Controlled affiliates
    
—
    
—
    
2,899,379
    
—
    
—
    
—
    
—
    
—
  
   
$
886,505,715
  
$
583,503,372
  
$
261,942,158
  
$
220,919,299
  
$
70,240,771
  
$
939,791,015
  
$
92,388,435
  
$
99,591,590
  
† Premiums from options written
  
$
—
  
$
—
  
$
—
  
$
—
  
$
13,625
  
$
—
  
$
—
  
$
—
  
# Proceeds from short sales
  
$
—
  
$
—
  
$
49,526,910
  
$
—
  
$
—
  
$
—
  
$
—
  
$
—
  
 
52          Weitz Funds
The accompanying notes form an integral part of these financial statements.

 
 
 

 
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED SEPTEMBER 30, 2010 • (UNAUDITED)
 
 
   
Value
  
Partners
Value
  
Partners III
  
Hickory
  
Balanced
  
Short -
Intermediate
Income
  
Nebraska
Tax-Free
Income
  
Government
Money
Market
  
Investment income:
                                                  
Dividends:
                                                  
Unaffiliated issuers*
  
$
4,833,760
  
$
2,127,165
  
$
830,979
  
$
426,928
  
$
302,381
  
$
—
  
$
—
  
$
—
  
   Interest
    
556,674
    
46,628
    
81,476
    
27,386
    
499,382
    
11,910,863
    
1,425,821
    
64,801
  
Total investment income
    
5,390,434
    
2,173,793
    
912,455
    
454,314
    
801,763
    
11,910,863
    
1,425,821
    
64,801
  
Expenses:
                                                  
Investment advisory fee
    
4,575,872
    
3,061,194
    
1,405,809
    
1,184,309
    
308,413
    
1,677,315
    
175,359
    
186,657
  
Administrative fee
    
517,573
    
372,842
    
184,456
    
169,004
    
71,287
    
549,370
    
79,619
    
83,503
  
Custodial fees
    
12,250
    
9,276
    
7,487
    
6,772
    
2,531
    
5,440
    
1,268
    
1,837
  
Dividend expense on securities sold short
    
—
    
—
    
216,647
    
—
    
—
    
—
    
—
    
—
  
Interest expense
    
—
    
—
    
269,682
    
—
    
—
    
—
    
—
    
—
  
Registration fees
    
26,940
    
22,235
    
12,208
    
11,887
    
10,635
    
87,735
    
6,496
    
11,980
  
Sub-transfer agent fees
    
156,185
    
61,784
    
25,407
    
58,096
    
16,678
    
48,348
    
13,946
    
17,334
  
Trustees fees
    
51,554
    
32,930
    
14,406
    
11,337
    
4,013
    
35,523
    
5,020
    
5,044
  
Other expenses
    
241,051
    
139,785
    
45,577
    
53,698
    
31,698
    
127,599
    
37,805
    
41,946
  
     
5,581,425
    
3,700,046
    
2,181,679
    
1,495,103
    
445,255
    
2,531,330
    
319,513
    
348,301
  
Less expenses reimbursed by investment adviser
    
—
    
—
    
—
    
—
    
—
    
—
    
—
    
(315,636
)
Net expenses
    
5,581,425
    
3,700,046
    
2,181,679
    
1,495,103
    
445,255
    
2,531,330
    
319,513
    
32,665
  
Net investment income (loss)
    
(190,991
)
  
(1,526,253
)
  
(1,269,224
)
  
(1,040,789
)
  
356,508
    
9,379,533
    
1,106,308
    
32,136
  
Realized and unrealized gain (loss) on investments:
                                                  
Net realized gain (loss):
                                                  
Unaffiliated issuers
    
88,911,604
    
29,233,367
    
23,000,872
    
12,896,155
    
2,766,399
    
2,680,967
    
11,608
    
(258
)
Options written
    
2,502,921
    
1,461,298
    
643,806
    
522,742
    
31,957
    
—
    
—
    
—
  
Securities sold short
    
—
    
—
    
4,058,667
    
—
    
—
    
—
    
—
    
—
  
Net realized gain (loss)
    
91,414,525
    
30,694,665
    
27,703,345
    
13,418,897
    
2,798,356
    
2,680,967
    
11,608
    
(258
)
Net unrealized appreciation (depreciation):
                                                  
Unaffiliated issuers
    
(99,340,207
)
  
(19,413,037
)
  
(11,717,457
)
  
493,711
    
(2,567,635
)
  
11,092,996
    
1,818,957
    
—
  
Controlled affiliates
    
—
    
—
    
(522,100
)
  
—
    
—
    
—
    
—
    
—
  
Options written
    
(590,464
)
  
(107,433
)
  
(13,135
)
  
(3,747
)
  
(475
)
  
—
    
—
    
—
  
Securities sold short
    
—
    
—
    
(6,381,579
)
  
—
    
—
    
—
    
—
    
—
  
Net unrealized appreciation (depreciation)
    
(99,930,671
)
  
(19,520,470
)
  
(18,634,271
)
  
489,964
    
(2,568,110
)
  
11,092,996
    
1,818,957
    
—
  
Net realized and unrealized gain (loss) on investments
    
(8,516,146
)
  
11,174,195
    
9,069,074
    
13,908,861
    
230,246
    
13,773,963
    
1,830,565
    
(258
)
Net increase (decrease) in net assets resulting from operations
  
$
(8,707,137
)
$
9,647,942
  
$
7,799,850
  
$
12,868,072
  
$
586,754
  
$
23,153,496
  
$
2,936,873
  
$
31,878
  
* Foreign taxes withheld
  
$
1,650
  
$
—
  
$
—
  
$
—
  
$
—
  
$
—
  
$
—
  
$
—
  
 
The accompanying notes form an integral part of these financial statements.
weitzfunds.com          53

 
 
 
 
 
STATEMENTS OF CHANGES IN NET ASSETS
 
 
   
Value
  
Partners Value
  
Partners III
  
Hickory
  
   
Six months
ended
Sept. 30, 2010
(Unaudited)
  
Year ended
March 31, 2010
  
Six months
ended
Sept. 30, 2010
(Unaudited)
  
Year ended
March 31, 2010
  
Six months
ended
Sept. 30, 2010
(Unaudited)
  
Year ended
March 31, 2010
  
Six months
ended
Sept. 30, 2010
(Unaudited)
  
Year ended
March 31, 2010
  
Increase (decrease) in net assets:
                                                  
From operations:
                                                  
Net investment income (loss)
  
$
(190,991
)
$
(2,691,083
)
$
(1,526,253
)
$
(2,851,516
)
$
(1,269,224
)
$
(2,151,940
)
$
(1,040,789
)
$
(1,367,478
)
Net realized gain (loss)
    
91,414,525
    
(130,524,291
)
  
30,694,665
    
(43,975,020
)
  
27,703,345
    
(6,920,327
)
  
13,418,897
    
(18,045,167
)
Net unrealized appreciation (depreciation)
    
(99,930,671
)
  
524,860,429
    
(19,520,470
)
  
277,100,619
    
(18,634,271
)
  
108,281,364
    
489,964
    
99,341,106
  
Net increase (decrease) in net assets resulting from operations
    
(8,707,137
)
  
391,645,055
    
9,647,942
    
230,274,083
    
7,799,850
    
99,209,097
    
12,868,072
    
79,928,461
  
Distributions to shareholders from:
                                                  
Net investment income
    
—
    
(2,460,543
)
  
—
    
(402,905
)
  
—
    
—
    
—
    
—
  
Net realized gains
    
—
    
—
    
—
    
—
    
—
    
—
    
—
    
—
  
Total distributions
    
—
    
(2,460,543
)
  
—
    
(402,905
)
  
—
    
—
    
—
    
—
  
Fund share transactions:*
                                                  
Proceeds from sales
    
26,628,702
    
54,261,130
    
89,962,727
    
61,041,848
    
44,389,748
    
29,270,519
    
73,990,001
    
15,094,154
  
Payments for redemptions
    
(97,132,344
)
  
(230,303,133
)
  
(115,841,247
)
  
(100,223,215
)
  
(23,796,733
)
  
(8,596,125
)
  
(45,581,300
)
  
(22,719,496
)
Reinvestment of distributions
    
—
    
2,340,752
    
—
    
346,346
    
—
    
—
    
—
    
—
  
Net increase (decrease) from fund share transactions
    
(70,503,642
)
  
(173,701,251
)
  
(25,878,520
)
  
(38,835,021
)
  
20,593,015
    
20,674,394
    
28,408,701
    
(7,625,342
)
Total increase (decrease) in net assets
    
(79,210,779
)
  
215,483,261
    
(16,230,578
)
  
191,036,157
    
28,392,865
    
119,883,491
    
41,276,773
    
72,303,119
  
Net assets:
                                                  
Beginning of period
    
977,576,397
    
762,093,136
    
622,107,346
    
431,071,189
    
274,792,801
    
154,909,310
    
206,115,891
    
133,812,772
  
End of period
  
$
898,365,618
  
$
977,576,397
  
$
605,876,768
  
$
622,107,346
  
$
303,185,666
  
$
274,792,801
  
$
247,392,664
  
$
206,115,891
  
Undistributed net investment income (loss)
  
$
(190,991
)
$
—
  
$
(1,554,073
)
$
(27,820
)
$
(1,280,664
)
$
(11,440
)
$
(1,052,161
)
$
(11,372
)
*Transactions in fund shares:
                                                  
Shares issued
    
1,058,678
    
2,500,036
    
4,964,434
    
3,959,200
    
4,395,441
    
3,355,546
    
2,294,026
    
561,795
  
Shares redeemed
    
(3,818,271
)
  
(10,307,156
)
  
(6,505,943
)
  
(6,495,709
)
  
(2,420,081
)
  
(1,029,772
)
  
(1,454,382
)
  
(859,995
)
Reinvested dividends
    
—
    
119,365
    
—
    
25,392
    
—
    
—
    
—
    
—
  
Net increase (decrease) in shares outstanding
    
(2,759,593
)
  
(7,687,755
)
  
(1,541,509
)
  
(2,511,117
)
  
1,975,360
    
2,325,774
    
839,644
    
(298,200
)
 
54          Weitz Funds
The accompanying notes form an integral part of these financial statements.

 
 
 
 
 
 
 
   
Balanced
  
Short-Intermediate
Income
  
Nebraska
Tax-Free Income
  
Government
Money Market
  
   
Six months
ended
Sept. 30, 2010
(Unaudited)
  
Year ended
March 31, 2010
  
Six months
ended
Sept. 30, 2010
(Unaudited)
  
Year ended
March 31, 2010
  
Six months
ended
Sept. 30, 2010
(Unaudited)
  
Year ended
March 31, 2010
  
Six months
ended
Sept. 30, 2010
(Unaudited)
  
Year ended
March 31, 2010
  
Increase (decrease) in net assets:
                                                  
From operations:
                                                  
Net investment income (loss)
  
$
356,508
  
$
754,691
  
$
9,379,533
  
$
12,795,145
  
$
1,106,308
  
$
2,088,429
  
$
32,136
  
$
93,304
  
Net realized gain (loss)
    
2,798,356
    
(1,904,511
)
  
2,680,967
    
2,164,813
    
11,608
    
51,876
    
(258
)
  
3,686
  
Net unrealized appreciation (depreciation)
    
(2,568,110
)
  
21,847,362
    
11,092,996
    
18,323,578
    
1,818,957
    
1,243,536
    
—
    
—
  
Net increase (decrease) in net assets resulting from operations
    
586,754
    
20,697,542
    
23,153,496
    
33,283,536
    
2,936,873
    
3,383,841
    
31,878
    
96,990
  
Distributions to shareholders from:
                                                  
Net investment income
    
(135,038
)
  
(802,894
)
  
(10,823,736
)
  
(13,111,833
)
  
(1,119,702
)
  
(2,078,079
)
  
(32,136
)
  
(93,304
)
Net realized gains
    
—
    
—
    
—
    
—
    
—
    
—
    
—
    
(74,672
)
Total distributions
    
(135,038
)
  
(802,894
)
  
(10,823,736
)
  
(13,111,833
)
  
(1,119,702
)
  
(2,078,079
)
  
(32,136
)
  
(167,976
)
Fund share transactions:*
                                                  
Proceeds from sales
    
3,781,758
    
12,582,722
    
423,175,387
    
590,503,439
    
16,948,935
    
25,025,504
    
60,636,729
    
58,555,267
  
Payments for redemptions
    
(6,200,705
)
  
(7,437,919
)
  
(139,417,727
)
  
(132,616,357
)
  
(5,453,251
)
  
(6,717,487
)
  
(44,314,264
)
  
(82,660,884
)
Reinvestment of distributions
    
131,401
    
780,979
    
10,304,114
    
11,949,596
    
830,409
    
1,712,320
    
29,011
    
155,428
  
Net increase (decrease) from fund share transactions
    
(2,287,546
)
  
5,925,782
    
294,061,774
    
469,836,678
    
12,326,093
    
20,020,337
    
16,351,476
    
(23,950,189
)
Total increase (decrease) in net assets
    
(1,835,830
)
  
25,820,430
    
306,391,534
    
490,008,381
    
14,143,264
    
21,326,099
    
16,351,218
    
(24,021,175
)
Net assets:
                                                  
Beginning of period
    
77,969,423
    
52,148,993
    
672,024,830
    
182,016,449
    
81,913,527
    
60,587,428
    
83,362,922
    
107,384,097
  
End of period
  
$
76,133,593
  
$
77,969,423
  
$
978,416,364
  
$
672,024,830
  
$
96,056,791
  
$
81,913,527
  
$
99,714,140
  
$
83,362,922
  
Undistributed net investment income (loss)
  
$
354,108
  
$
132,638
  
$
(964,515
)
$
479,688
  
$
29,237
  
$
42,631
  
$
—
  
$
—
  
*Transactions in fund shares:
                                                  
Shares issued
    
359,112
    
1,319,377
    
34,148,208
    
48,857,849
    
1,645,540
    
2,466,888
    
60,636,729
    
58,555,267
  
Shares redeemed
    
(594,577
)
  
(798,960
)
  
(11,228,700
)
  
(10,936,010
)
  
(530,931
)
  
(660,037
)
  
(44,314,264
)
  
(82,660,884
)
Reinvested dividends
    
12,870
    
80,836
    
830,900
    
989,375
    
80,706
    
169,215
    
29,011
    
155,428
  
Net increase (decrease) in shares outstanding
    
(222,595
)
  
601,253
    
23,750,408
    
38,911,214
    
1,195,315
    
1,976,066
    
16,351,476
    
(23,950,189
)
 
The accompanying notes form an integral part of these financial statements.
weitzfunds.com          55

 
 
 
 
 
STATEMENT OF CASH FLOWS
PARTNERS III OPPORTUNITY FUND
 
 
Six Months Ended September 30, 2010
        
(Unaudited)
        
Increase (decrease) in cash:
        
Cash flows from operating activities:
        
Net increase in net assets from operations
  
$
7,799,850
  
Adjustments to reconcile net increase in net assets from operations to net cash used in operating activities:
        
Purchases of investment securities
    
(135,824,728
)
Proceeds from sale of investment securities
    
104,144,644
  
Proceeds from securities sold short
    
7,546,030
  
Short positions covered
    
(11,647,437
)
Sale of short-term investment securities, net
    
14,233,675
  
Decrease in accrued interest and dividends receivable
    
93,944
  
Increase in receivable for securities sold
    
(1,071,586
)
Decrease in receivable for fund shares sold
    
2,195,095
  
Decrease in other liabilities
    
(860
)
Decrease in payable for securities purchased
    
(3,651,497
)
Decrease in payable for fund shares redeemed
    
(20,000
)
Increase in due to adviser
    
5,558
  
Net unrealized depreciation on investments, options and short sales
    
18,634,271
  
Net realized gain on investments, options and short sales
    
(27,703,345
)
Net cash used in operating activities
    
(25,266,386
)
Cash flows from financing activities:
        
Proceeds from sales of fund shares
    
44,389,748
  
Payments for redemptions of fund shares
    
(23,796,733
)
Decrease in due from broker
    
4,673,371
  
Net cash provided by financing activities
    
25,266,386
  
Net increase (decrease) in cash
    
—
  
Cash:
        
Balance, beginning of period
    
—
  
Balance, end of period
  
$
—
  
Supplemental disclosure of cash flow information:
        
Cash payments for interest
  
$
270,542
  
 
56          Weitz Funds
The accompanying notes form an integral part of these financial statements.

 
 
 
 
 
VALUE FUND
FINANCIAL HIGHLIGHTS
 
 
The following financial information provides selected data for a share of the Value Fund outstanding throughout the periods indicated.
 
   
Six months
ended
Sept. 30, 2010
  
Year ended March 31,
  
   
(Unaudited)
  
2010
  
2009
  
2008
  
2007
  
2006
  
Net asset value, beginning of period
  
$
26.14
  
$
16.90
  
$
27.74
  
$
40.09
  
$
36.33
  
$
36.14
  
Income (loss) from investment operations:
                                      
Net investment income (loss)
    
(0.01
)
  
(0.07
)
  
0.07
    
0.28
    
0.28
    
0.29
  
Net gain (loss) on securities (realized and unrealized)
    
(0.19
)
  
9.37
    
(10.72
)
  
(7.94
)
  
6.31
    
1.14
  
Total from investment operations
    
(0.20
)
  
9.30
    
(10.65
)
  
(7.66
)
  
6.59
    
1.43
  
Less distributions:
                                      
Dividends from net investment income
    
—
    
(0.06
)
  
(0.19
)
  
(0.28
)
  
(0.28
)
  
(0.37
)
Distributions from realized gains
    
—
    
—
    
—
    
(4.41
)
  
(2.55
)
  
(0.87
)
Total distributions
    
—
    
(0.06
)
  
(0.19
)
  
(4.69
)
  
(2.83
)
  
(1.24
)
Net asset value, end of period
  
$
25.94
  
$
26.14
  
$
16.90
  
$
27.74
  
$
40.09
  
$
36.33
  
Total return
    
(0.8
%)†
  
55.1
%
  
(38.6
%)
  
(21.2
%)
  
18.3
%
  
4.0
%
Ratios/supplemental data:
                                      
Net assets, end of period ($000)
    
898,366
    
977,576
    
762,093
    
1,767,828
    
3,121,782
    
2,910,225
  
Ratio of expenses to average net assets
    
1.22
%*
  
1.22
%
  
1.20
%
  
1.15
%
  
1.13
%
  
1.12
%
Ratio of net investment income (loss) to average net assets
    
(0.04
%)*
  
(0.29
%)
  
0.20
%
  
0.69
%
  
0.71
%
  
0.64
%
Portfolio turnover rate
    
33
%†
  
19
%
  
19
%
  
22
%
  
29
%
  
40
%
 
*
Annualized
†
Not Annualized
 
The accompanying notes form an integral part of these financial statements.
weitzfunds.com          57

 
 
 
 
 
PARTNERS VALUE FUND
FINANCIAL HIGHLIGHTS
 
 
The following financial information provides selected data for a share of the Partners Value Fund outstanding throughout the periods indicated.
 
   
Six months
ended
Sept. 30, 2010
  
Year ended March 31,
  
   
(Unaudited)
  
2010
  
2009
  
2008
  
2007
  
2006
  
Net asset value, beginning of period
  
$
18.24
  
$
11.77
  
$
17.33
  
$
24.53
  
$
23.52
  
$
22.98
  
Income (loss) from investment operations:
                                      
Net investment income (loss)
    
(0.05
)
  
(0.08
)
  
0.01
    
0.07
    
0.10
    
0.14
  
Net gain (loss) on securities (realized and unrealized)
    
0.41
    
6.56
    
(5.55
)
  
(4.67
)
  
4.24
    
0.95
  
Total from investment operations
    
0.36
    
6.48
    
(5.54
)
  
(4.60
)
  
4.34
    
1.09
  
Less distributions:
                                      
Dividends from net investment income
    
—
    
(0.01
)
  
(0.02
)
  
(0.10
)
  
(0.14
)
  
(0.15
)
Distributions from realized gains
    
—
    
—
    
—
    
(2.50
)
  
(3.19
)
  
(0.40
)
Total distributions
    
—
    
(0.01
)
  
(0.02
)
  
(2.60
)
  
(3.33
)
  
(0.55
)
Net asset value, end of period
  
$
18.60
  
$
18.24
  
$
11.77
  
$
17.33
  
$
24.53
  
$
23.52
  
Total return
    
2.0
%†
  
55.1
%
  
(32.0
%)
  
(20.7
%)
  
19.1
%
  
4.8
%
Ratios/supplemental data:
                                      
Net assets, end of period ($000)
    
605,877
    
622,107
    
431,071
    
1,220,445
    
2,023,837
    
1,881,005
  
Ratio of expenses to average net assets
    
1.21
%*
  
1.21
%
  
1.19
%
  
1.15
%
  
1.14
%
  
1.14
%
Ratio of net investment income (loss) to average net assets
    
(0.50
%)*
  
(0.52
%)
  
0.05
%
  
0.29
%
  
0.39
%
  
0.49
%
Portfolio turnover rate
    
28
%†
  
30
%
  
29
%
  
24
%
  
31
%
  
36
%
 
*
Annualized
†
Not Annualized
 
58          Weitz Funds
The accompanying notes form an integral part of these financial statements.

 
 
 
 
 
PARTNERS III OPPORTUNITY FUND
FINANCIAL HIGHLIGHTS
 
 
The following financial information provides selected data for a share of the Partners III Opportunity Fund outstanding throughout the periods indicated.
 
   
Six months
ended
Sept. 30, 2010
  
Year ended March 31,
  
Three months
ended
March 31,
  
   
(Unaudited)
  
2010
  
2009
  
2008
  
2007
  
2006(a)
  
Net asset value, beginning of period
  
$
10.15
  
$
6.26
  
$
8.55
  
$
11.28
  
$
10.25
  
$
10.00
  
Income (loss) from investment operations:
                                      
Net investment income (loss)
    
(0.04
)
  
(0.08
)
  
(0.04
)
  
0.09
    
0.09
    
0.02
  
Net gain (loss) on securities (realized and unrealized)
    
0.33
    
3.97
    
(2.24
)
  
(2.28
)
  
1.58
    
0.23
  
Total from investment operations
    
0.29
    
3.89
    
(2.28
)
  
(2.19
)
  
1.67
    
0.25
  
Less distributions:
                                      
Dividends from net investment income
    
—
    
—
    
(0.01
)
  
(0.10
)
  
(0.09
)
  
—
  
Distributions from realized gains
    
—
    
—
    
—
    
(0.44
)
  
(0.55
)
  
—
  
Total distributions
    
—
    
—
    
(0.01
)
  
(0.54
)
  
(0.64
)
  
—
  
Net asset value, end of period
  
$
10.44
  
$
10.15
  
$
6.26
  
$
8.55
  
$
11.28
  
$
10.25
  
Total return
    
2.9
%†
  
62.1
%
  
(26.7
%)
  
(20.1
%)
  
16.4
%
  
2.5
%†
Ratios/supplemental data:
                                      
Net assets, end of period ($000)
    
303,186
    
274,793
    
154,909
    
259,079
    
323,238
    
264,621
  
Ratio of net expenses to average net assets(c)
    
1.55
%*
  
1.79
%
  
1.81
%
  
1.54
%
  
1.57
%
  
1.52
%*(b)
Ratio of net investment income (loss) to average net assets
    
(0.90
%)*
  
(1.02
%)
  
(0.43
%)
  
0.86
%
  
0.83
%
  
0.72
%*
Portfolio turnover rate
    
40
%†
  
54
%
  
58
%
  
51
%
  
41
%
  
32
%†
 
*
Annualized
†
Not Annualized
(a)
Fund commenced operations on December 30, 2005.
(b)
Absent expenses assumed by the Adviser, the annualized expense ratio would have been 1.56% for the period ended March 31, 2006.
(c)
Included in the expense ratio is 0.19%, 0.26%, 0.12%, 0.07%, 0.14% and 0.12% related to interest expense and 0.15%, 0.30%, 0.47%, 0.29%, 0.22% and 0.20% related to dividend expense on securities sold short for the periods ended September 30, 2010, March 31, 2010, 2009, 2008, 2007 and 2006, respectively.
 
The accompanying notes form an integral part of these financial statements.
weitzfunds.com          59

 
 
 
 
 
HICKORY FUND
FINANCIAL HIGHLIGHTS
 
 
The following financial information provides selected data for a share of the Hickory Fund outstanding throughout the periods indicated.
 
   
Six months
ended
Sept. 30, 2010
  
Year ended March 31,
  
   
(Unaudited)
  
2010
  
2009
  
2008
  
2007
  
2006
  
Net asset value, beginning of period
  
$
31.77
  
$
19.72
  
$
30.53
  
$
39.69
  
$
34.21
  
$
31.36
  
Income (loss) from investment operations:
                                      
Net investment income (loss)
    
(0.14
)
  
(0.21
)
  
(0.04
)
  
0.30
    
0.27
    
0.09
  
Net gain (loss) on securities (realized and unrealized)
    
2.13
    
12.26
    
(10.74
)
  
(9.11
)
  
5.42
    
2.84
  
Total from investment operations
    
1.99
    
12.05
    
(10.78
)
  
(8.81
)
  
5.69
    
2.93
  
Less distributions:
                                      
Dividends from net investment income
    
—
    
—
    
(0.03
)
  
(0.35
)
  
(0.21
)
  
(0.08
)
Distributions from realized gains
    
—
    
—
    
—
    
—
    
—
    
—
  
Total distributions
    
—
    
—
    
(0.03
)
  
(0.35
)
  
(0.21
)
  
(0.08
)
Net asset value, end of period
  
$
33.76
  
$
31.77
  
$
19.72
  
$
30.53
  
$
39.69
  
$
34.21
  
Total return
    
6.3
%†
  
61.1
%
  
(35.3
%)
  
(22.3
%)
  
16.6
%
  
9.3
%
Ratios/supplemental data:
                                      
Net assets, end of period ($000)
    
247,393
    
206,116
    
133,813
    
256,669
    
386,062
    
329,883
  
Ratio of expenses to average net assets
    
1.26
%*
  
1.29
%
  
1.28
%
  
1.21
%
  
1.20
%
  
1.20
%
Ratio of net investment income (loss) to average net assets
    
(0.88
%)*
  
(0.79
%)
  
(0.16
%)
  
0.77
%
  
0.74
%
  
0.28
%
Portfolio turnover rate
    
36
%†
  
61
%
  
28
%
  
31
%
  
42
%
  
65
%
 
*
Annualized
†
Not Annualized
 
60          Weitz Funds
The accompanying notes form an integral part of these financial statements.

 
 
 
 
 
BALANCED FUND
FINANCIAL HIGHLIGHTS
 
 
The following financial information provides selected data for a share of the Balanced Fund outstanding throughout the periods indicated.
 
   
Six months
ended
Sept. 30, 2010
  
Year ended March 31,
  
   
(Unaudited)
  
2010
  
2009
  
2008
  
2007
  
2006
  
Net asset value, beginning of period
  
$
10.59
  
$
7.71
  
$
10.05
  
$
12.20
  
$
11.30
  
$
11.17
  
Income (loss) from investment operations:
                                      
Net investment income
    
0.05
    
0.11
    
0.13
    
0.23
    
0.16
    
0.14
  
Net gain (loss) on securities (realized and unrealized)
    
0.04
    
2.89
    
(2.33
)
  
(1.65
)
  
1.15
    
0.53
  
Total from investment operations
    
0.09
    
3.00
    
(2.20
)
  
(1.42
)
  
1.31
    
0.67
  
Less distributions:
                                      
Dividends from net investment income
    
(0.02
)
  
(0.12
)
  
(0.14
)
  
(0.24
)
  
(0.15
)
  
(0.12
)
Distributions from realized gains
    
—
    
—
    
—
    
(0.49
)
  
(0.26
)
  
(0.42
)
Total distributions
    
(0.02
)
  
(0.12
)
  
(0.14
)
  
(0.73
)
  
(0.41
)
  
(0.54
)
Net asset value, end of period
  
$
10.66
  
$
10.59
  
$
7.71
  
$
10.05
  
$
12.20
  
$
11.30
  
Total return
    
0.8
%†
  
39.0
%
  
(21.9
%)
  
(12.3
%)
  
11.8
%
  
6.1
%
Ratios/supplemental data:
                                      
Net assets, end of period ($000)
    
76,134
    
77,969
    
52,149
    
76,199
    
87,962
    
64,850
  
Ratio of net expenses to average net assets
    
1.16
%*
  
1.17
%
  
1.17
%
  
1.12
%
  
1.13
%
  
1.15
%
Ratio of net investment income to average net assets
    
0.92
%*
  
1.14
%
  
1.37
%
  
1.97
%
  
1.53
%
  
1.28
%
Portfolio turnover rate
    
24
%†
  
45
%
  
61
%
  
44
%
  
33
%
  
36
%
 
*
Annualized
†
Not Annualized
 
The accompanying notes form an integral part of these financial statements.
weitzfunds.com          61

 
 
 
 
 
SHORT-INTERMEDIATE INCOME FUND
FINANCIAL HIGHLIGHTS
 
 
The following financial information provides selected data for a share of the Short-Intermediate Income Fund outstanding throughout the periods indicated.
 
   
Six months
ended
Sept. 30, 2010
  
Year ended March 31,
  
   
(Unaudited)
  
2010
  
2009
  
2008
  
2007
  
2006
  
Net asset value, beginning of period
  
$
12.25
  
$
11.42
  
$
11.74
  
$
11.42
  
$
11.26
  
$
11.50
  
Income (loss) from investment operations:
                                      
Net investment income
    
0.13
    
0.35
    
0.43
    
0.46
    
0.47
    
0.38
  
Net gain (loss) on securities (realized and unrealized)
    
0.22
    
0.84
    
(0.20
)
  
0.32
    
0.16
    
(0.19
)
Total from investment operations
    
0.35
    
1.19
    
0.23
    
0.78
    
0.63
    
0.19
  
Less distributions:
                                      
Dividends from net investment income
    
(0.15
)
  
(0.36
)
  
(0.45
)
  
(0.46
)
  
(0.47
)
  
(0.39
)
Distributions from realized gains
    
—
    
—
    
(0.10
)
  
—
    
—
    
(0.04
)
Total distributions
    
(0.15
)
  
(0.36
)
  
(0.55
)
  
(0.46
)
  
(0.47
)
  
(0.43
)
Net asset value, end of period
  
$
12.45
  
$
12.25
  
$
11.42
  
$
11.74
  
$
11.42
  
$
11.26
  
Total return
    
2.9
%†
  
10.5
%
  
2.1
%
  
7.0
%
  
5.7
%
  
1.7
%
Ratios/supplemental data:
                                      
Net assets, end of period ($000)
    
978,416
    
672,025
    
182,016
    
127,102
    
121,293
    
156,910
  
Ratio of net expenses to average net assets
    
0.60
%*
  
0.62
%
  
0.69
%
  
0.70
%
  
0.71
%
  
0.74
%
Ratio of net investment income to average net assets
    
2.23
%*
  
3.17
%
  
4.00
%
  
3.94
%
  
3.90
%
  
3.29
%
Portfolio turnover rate
    
19
%†
  
27
%
  
25
%
  
32
%
  
7
%
  
24
%
 
*
Annualized
†
Not Annualized
 
62          Weitz Funds
The accompanying notes form an integral part of these financial statements.

 
 
 
 
 
NEBRASKA TAX-FREE INCOME FUND
FINANCIAL HIGHLIGHTS
 
 
The following financial information provides selected data for a share of the Nebraska Tax-Free Income Fund outstanding throughout the periods indicated.
 
   
Six months
ended
Sept. 30, 2010
  
Year ended March 31,
  
Three months
ended
March 31,
  
   
(Unaudited)
  
2010
  
2009
  
2008
  
2007(a)
  
Net asset value, beginning of period
  
$
10.15
  
$
9.94
  
$
9.95
  
$
10.01
  
$
10.00
  
Income (loss) from investment operations:
                                
Net investment income
    
0.13
    
0.29
    
0.35
    
0.36
    
0.09
  
Net gain (loss) on securities (realized and unrealized)
    
0.21
    
0.21
    
—
 #  
(0.06
)
  
—
 #
Total from investment operations
    
0.34
    
0.50
    
0.35
    
0.30
    
0.09
  
Less distributions:
                                
Dividends from net investment income
    
(0.13
)
  
(0.29
)
  
(0.36
)
  
(0.36
)
  
(0.08
)
Distributions from realized gains
    
—
    
—
    
—
    
—
    
—
  
Total distributions
    
(0.13
)
  
(0.29
)
  
(0.36
)
  
(0.36
)
  
(0.08
)
Net asset value, end of period
  
$
10.36
  
$
10.15
  
$
9.94
  
$
9.95
  
$
10.01
  
Total return
    
3.4
%†
  
5.1
%
  
3.6
%
  
3.0
%
  
0.9
%†
Ratios/supplemental data:
                                
Net assets, end of period ($000)
    
96,057
    
81,914
    
60,587
    
55,685
    
45,460
  
Ratio of net expenses to average net assets(b)
    
0.73
%*
  
0.75
%
  
0.75
%
  
0.75
%
  
0.75
%*
Ratio of net investment income to average net assets
    
2.52
%*
  
2.93
%
  
3.56
%
  
3.69
%
  
3.74
%*
Portfolio turnover rate
    
5
%†
  
13
%
  
17
%
  
8
%
  
2
%†
 
*
Annualized
†
Not Annualized
#
Amount less than $0.01
(a)
Fund commenced operations on December 29, 2006.
(b)
Absent expenses assumed by the Adviser, the expense ratio would have been 0.76%, 0.78%, 0.80% and 1.02% for the periods ended March 31, 2010, 2009, 2008 and 2007, respectively.
 
The accompanying notes form an integral part of these financial statements.
weitzfunds.com          63

 
 
 
 
 
GOVERNMENT MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
 
 
The following financial information provides selected data for a share of the Government Money Market Fund outstanding throughout the periods indicated.
 
   
Six months
ended
Sept. 30, 2010
  
Year ended March 31,
  
   
(Unaudited)
  
2010
  
2009
  
2008
  
2007
  
2006
  
Net asset value, beginning of period
  
$
1.00
  
$
1.00
  
$
1.00
  
$
1.00
  
$
1.00
  
$
1.00
  
Income (loss) from investment operations:
                                      
Net investment income
    
—
 #  
0.002
    
0.013
    
0.042
    
0.047
    
0.030
  
Net realized gain (loss) on securities
    
—
    
—
 #  
—
 #  
—
    
—
    
—
  
Total from investment operations
    
—
    
0.002
    
0.013
    
0.042
    
0.047
    
0.030
  
Less distributions:
                                      
Dividends from net investment income
    
—
 #  
(0.001
)
  
(0.013
)
  
(0.042
)
  
(0.047
)
  
(0.030
)
Distributions from realized gains
    
—
    
(0.001
)
  
—
    
—
    
—
    
—
  
Total distributions
    
—
    
(0.002
)
  
(0.013
)
  
(0.042
)
  
(0.047
)
  
(0.030
)
Net asset value, end of period
  
$
1.00
  
$
1.00
  
$
1.00
  
$
1.00
  
$
1.00
  
$
1.00
  
Total return
    
0.03
%†
  
0.2
%
  
1.4
%
  
4.4
%
  
4.8
%
  
2.9
%
Ratios/supplemental data:
                                      
Net assets, end of period ($000)
    
99,714
    
83,363
    
107,384
    
102,246
    
79,066
    
61,008
  
Ratio of net expenses to average net assets(a)
    
0.07
%*
  
0.08
%
  
0.10
%
  
0.10
%
  
0.22
%
  
0.50
%
Ratio of net investment income to average net assets
    
0.07
%*
  
0.11
%
  
1.31
%
  
4.23
%
  
4.74
%
  
2.96
%
 
*           Annualized
†    Not Annualized
#    Amount less than $0.001
(a)  Absent expenses assumed by the Adviser, the expense ratio would have been 0.75%, 0.76%, 0.75%, 0.71%, 0.78% and 0.89% for the periods ended September 30, 2010, March 31, 2010, 2009, 2008, 2007 and 2006,   respectively.
      
64
Weitz Funds
The accompanying notes form an integral part of these financial statements.
 
 
 
 
 
 
SEPTEMBER 30, 2010 • (UNAUDITED)
 
(1) Organization
The Weitz Funds (the “Trust”) is registered under the Investment Company Act of 1940 as an open-end management investment company issuing shares in series, each series representing a distinct portfolio with its own investment objectives and policies. At September 30, 2010, the Trust had eight series in operation: Value Fund, Partners Value Fund, Partners III Opportunity Fund, Hickory Fund, Balanced Fund, Short-Intermediate Income Fund, Nebraska Tax-Free Income Fund and Government Money Market Fund (individually, a “Fund”, collectively, the “Funds”).
 
The investment objective of the Value, Partners Value, Partners III Opportunity and Hickory Funds (the “Weitz Equity Funds”) is capital appreciation. Each of the Weitz Equity Funds invests principally in common stocks and a variety of securities convertible into common stocks such as rights, warrants, convertible preferred stock and convertible bonds.
 
The investment objectives of the Balanced Fund are regular current income, capital preservation and long-term capital appreciation. The Fund invests principally in a portfolio of U.S. equity and fixed income securities.
 
The investment objective of the Short-Intermediate Income Fund is high current income consistent with the preservation of capital. Under normal market conditions, the Fund will invest at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in fixed income securities such as U.S. Government and agency securities, corporate debt securities and mortgage-backed securities.
 
The investment objective of the Nebraska Tax-Free Income Fund is to provide a high level of current income that is exempt from both federal and Nebraska personal income taxes. The Fund under normal circumstances, invests at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in municipal securities that generate income exempt from Nebraska state income tax and from federal income tax or in open or closed-end mutual funds which in turn invest in such assets.
 
The investment objective of the Government Money Market Fund is current income consistent with the preservation of capital and maintenance of liquidity. The Fund invests substantially all of its assets in debt obligations issued or guaranteed by the U.S. Government, its agencies and instrumentalities and repurchase agreements on such securities with remaining maturities not exceeding thirteen months. The Fund limits its average portfolio maturity to sixty days or less.
 
(2) Significant Accounting Policies
The following accounting policies are in accordance with accounting principles generally accepted in the United States.
 
(a) Valuation of Investments
Weitz Equity, Balanced, Short-Intermediate Income and Nebraska Tax-Free Income Funds
Investments are carried at value determined using the following valuation methods:
   
•
Securities traded on a national or regional securities exchange are valued at the last sales price; if there were no sales on that day, securities are valued at the mean between the latest available and representative bid and ask prices; securities listed on the NASDAQ exchange are valued using the NASDAQ Official Closing Price (“NOCP”). Generally, the NOCP will be the last sales price unless the reported trade for the security is outside the range of the bid/ask price. In such cases, the NOCP will be normalized to the nearer of the bid or ask price.
   
•
Short sales traded on a national or regional securities exchange are valued at the last sales price; if there were no sales on that day, short sales are valued at the mean between the latest available and representative bid and ask prices.
   
•
Securities not listed on an exchange are valued at the mean between the latest available and representative bid and ask prices.
   
•
The value of certain debt securities for which market quotations are not readily available may be based upon current market prices of securities which are comparable in coupon, rating and maturity or an appropriate matrix utilizing similar factors.
 
weitzfunds.com          65

 
 
 

•
The current market value of a traded option is the last sales price at which such option is traded, or, in the absence of a sale on or about the close of the exchange, the mean of the closing bid and ask prices.
   
•
The value of securities for which market quotations are not readily available or are deemed unreliable, including restricted and not readily marketable securities, is determined in good faith in accordance with procedures approved by the Trust’s Board of Trustees. Such valuation procedures and methods for valuing securities may include, but are not limited to: multiple of earnings, multiple of book value, discount from value of a similar freely-traded security, purchase price, private transaction in the security or related securities, the nature and duration of restrictions on disposition of the security and a combination of these and other factors.
 
Government Money Market Fund
Investment securities are carried at amortized cost, which approximates market value. Pursuant to Rule 2a-7 of the Investment Company Act of 1940, amortized cost, as defined, is a method of valuing securities at acquisition cost, adjusted for amortization of premium or accretion of discount.
 
(b) Option Transactions
The Funds, except for the Government Money Market Fund, may purchase put or call options. When a Fund purchases an option, an amount equal to the premium paid is recorded as an asset and is subsequently marked-to-market daily. Premiums paid for purchasing options that expire unexercised are recognized on the expiration date as realized losses. If an option is exercised, the premium paid is subtracted from the proceeds of the sale or added to the cost of the purchase to determine whether a Fund has realized a gain or loss on the related investment transaction. When a Fund enters into a closing transaction, a Fund will realize a gain or loss depending upon whether the amount from the closing transaction is greater or less than the premium paid.
 
The Funds, except for the Government Money Market Fund, may write put or call options. When a Fund writes an option, an amount equal to the premium received is recorded as a liability and is subsequently marked-to-market daily. Premiums received for writing options that expire unexercised are recognized on the expiration date as realized gains. If an option is exercised, the premium received is subtracted from the cost of purchase or added to the proceeds of the sale to determine whether a Fund has realized a gain or loss on the related investment transaction. When a Fund enters into a closing transaction, a Fund will realize a gain or loss depending upon whether the amount from the closing transaction is greater or less than the premium received.
 
The Funds attempt to limit market risk and enhance their income by writing (selling) covered call options. The risk in writing a covered call option is that a Fund gives up the opportunity of profit if the market price of the financial instrument increases. A Fund also has the additional risk of not being able to enter into a closing transaction if a liquid secondary market does not exist. The risk in writing a put option is that a Fund is obligated to purchase the financial instrument underlying the option at prices which may be significantly different than the current market price.
 
(c) Securities Sold Short
The Funds, except for the Government Money Market Fund, periodically engage in selling securities short, which obligates a Fund to replace a security borrowed by purchasing the same security at the current market value. A Fund would incur a loss 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. A Fund would realize a gain if the price of the security declines between those dates.
 
(d) Federal Income Taxes
It is the policy of each Fund to comply with all sections of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income to shareholders; therefore, no provision for income or excise taxes is required.
 
Net investment income and net realized gains may differ for financial statement and tax purposes. The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for Federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains were recorded by the Funds.
 
The Funds have reviewed their tax positions taken on federal income tax returns, for each of the three open tax years and as of September 30, 2010 and have determined that no provisions for income taxes are required in the Funds’ financial statements.
 
(e) Security Transactions
Security transactions are accounted for on the date the securities are purchased or sold (trade date). Realized gains or losses are determined by specifically identifying the security sold.
 
Income dividends less foreign tax withholding (if any), dividends on short positions and distributions to shareholders are recorded on the ex-dividend date. Interest, including amortization of discount or premium, is accrued as earned.
 
(f) Dividend Policy
The Funds declare and distribute income dividends and capital gains distributions as may be required to qualify as a regulated investment company under the Internal Revenue Code.
 
Generally, the Short-Intermediate Income and Nebraska Tax-Free Income Funds pay income dividends on a quarterly basis. The Government Money Market Fund declares dividends daily
 
66          Weitz Funds

 
 
 
 
and pays dividends monthly. All dividends and distributions are reinvested automatically, unless the shareholder elects otherwise.
 
(g) Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increase and decrease in net assets from operations during the period. Actual results could differ from those estimates.
 
(h) New Accounting Pronouncements
On January 21, 2010, FASB issued changes to the authoritative guidance under GAAP for fair value measurements. The objective of this guidance is to provide guidance on how investment assets and liabilities are to be valued and disclosed. Specifically, the amendment requires reporting entities to disclose (a) the input and valuation techniques used to measure fair value for both recurring and nonrecurring fair value measurements, for both Level 2 and Level 3 positions, (b) transfers between all levels (including Level 1 and Level 2) on a gross basis (i.e., transfers out must be disclosed separately from transfers in) as well as the reason(s) for the transfer and (c) purchases, sales, issuances and settlements in the Level 3 roll forward must be shown on a gross basis rather than as one net number. The effective date of the amendment is for interim and annual periods beginning after December 15, 2009, however, the requirement to provide the Level 3 activity for purchases, sales, issuances and settlements on a gross basis will be effective for interim and annual periods beginning after December 15, 2010. The Funds do not expect the implications of this guidance to have a material impact on its financial statements.
 
(3) Related Party Transactions
Each Fund has retained Wallace R. Weitz & Company (the “Adviser”) as its investment adviser. In addition, the Trust has an agreement with Weitz Securities, Inc. (the “Distributor”), a company under common control with the Adviser, to act as distributor for shares of the Trust. The Distributor receives no compensation for the distribution of shares of the Trust. Certain officers of the Trust are also officers and directors of the Adviser and the Distributor.
 
Under the terms of a management and investment advisory agreement, the Adviser is paid a monthly fee. The annual investment advisory fee schedule for each of the Weitz Equity Funds is as follows:
 
Average Daily Net Assets Break Points
 
    Greater Than  
Less Than or Equal To
  
Rate
   $
0
    
$2,500,000,000
    
1.00%
  
   
2,500,000,000
    
5,000,000,000
    
0.90%
  
   
5,000,000,000
          
0.80%
  
 
The Balanced Fund pays the Adviser, on a monthly basis, an annual advisory fee equal to 0.80% of the Fund’s average daily net assets.
 
The Short-Intermediate Income, Nebraska Tax-Free Income and Government Money Market Funds each pay the Adviser, on a monthly basis, an annual advisory fee equal to 0.40% of the respective Fund’s average daily net assets.
 
Under the terms of an administration agreement, certain services are provided by the Adviser including the transfer of shares, disbursement of dividends, fund accounting and related administrative services of the Trust for which the Adviser is paid a monthly fee. The annual administrative fee for each Fund is a combination of the following:
 
(a) an annual fee based upon the following average daily net assets in each Fund:
 
Average Daily Net Assets Break Points
 
   
Greater Than
  
LessThan or Equal to
  
Rate
  
Minimum
  $
0
    
$25,000,000
    
0.25%
    
$25,000
  
   
25,000,000
    
100,000,000
    
0.15%
        
   
100,000,000
    
300,000,000
    
0.10%
        
   
300,000,000
          
0.05%
        
 
and;
 
(b) an annual fee equal to 0.10% of the average monthly net assets of each Fund’s shares held through a financial intermediary that receives compensation from the Adviser in the form of either asset-based fees, account-based fees or similar remuneration.
 
The Adviser has voluntarily agreed to reimburse the Weitz Equity (excluding the Partners III Fund), Balanced, Short-Intermediate Income and Nebraska Tax-Free Income Funds or to pay directly a portion of the respective Fund’s expenses to the extent that total expenses, excluding taxes, interest and brokerage commissions exceed 1.50%, 1.25%, 0.75% and 0.75%, of the respective Fund’s average daily net assets. The expenses incurred by the Weitz Equity, Balanced, Short-Intermediate Income and Nebraska Tax-Free Income Funds did not exceed the percentage limitation during the six months ended September 30, 2010. Through July 31, 2011, the Adviser has contractually agreed to reimburse the Government Money Market Fund or to pay directly a portion of the Fund’s expenses to the extent that total expenses, excluding taxes, interest and brokerage commissions exceed 0.20% of the Fund’s average daily net assets. In addition, for the six months ended September 30, 2010, the Adviser voluntarily reimbursed expenses to limit the expenses of the Government Money Market Fund to 0.07% of the Fund’s average daily net assets. The expenses reimbursed by the Adviser for the Government Money Market Fund for the six months ended September 30, 2010 were $315,636.
 
As of September 30, 2010, the controlling shareholder of the Adviser held approximately 47% of the Partners III Fund, 39% of the Balanced Fund, 38% of the Nebraska Tax-Free Income Fund, 23% of the Government Money Market Fund and 16% of the Hickory Fund.
 
weitzfunds.com           67

 
 
 
 
(4) Distributions to Shareholders and Distributable Earnings
The tax character of distributions paid by the Funds are summarized as follows:
 
   
Value
  
Partners Value
  
Distributions paid from:
  
Six months ended
Sept. 30, 2010
  
Year ended
March 31, 2010
  
Six months ended
Sept. 30, 2010
  
Year ended,
March 31, 2010
  
Ordinary income
  
$
—
  
$
2,460,543
  
$
—
  
$
402,905
  
Long-term capital gains
    
—
    
—
    
—
    
—
  
Total distributions
  
$
—
  
$
2,460,543
  
$
—
  
$
402,905
  
 
   
Balanced
  
Short-Intermediate Income
  
Distributions paid from:
    
Six months ended
Sept. 30, 2010
    
Year ended
March 31, 2010
    
Six months ended
Sept. 30, 2010
    
Year ended,
March 31, 2010
  
Ordinary income
  
$
135,038
  
$
802,894
  
$
10,823,736
  
$
13,111,833
  
Long-term capital gains
    
—
    
—
    
—
    
—
  
Total distributions
  
$
135,038
  
$
802,894
  
$
10,823,736
  
$
13,111,833
  
 
   
Nebraska Tax-Free Income
  
Government Money Market
  
Distributions paid from:
    
Six months ended
Sept. 30, 2010
    
Year ended
March 31, 2010
    
Six months ended
Sept. 30, 2010
    
Year ended,
March 31, 2010
  
Ordinary income
  
$
—
  
$
11,287
  
$
32,136
  
$
167,976
  
Tax exempt income
    
1,119,702
    
2,066,792
    
—
    
—
  
Long-term capital gains
    
—
    
—
    
—
    
—
  
Total distributions
  
$
1,119,702
  
$
2,078,079
  
$
32,136
  
$
167,976
  
 
As of March 31, 2010, the components of distributable earnings on a tax basis were as follows:
 
     
Value
    
Partners Value
    
Partners III
    
Hickory
  
Undistributed ordinary income
  
$
—
  
$
—
  
$
—
  
$
—
  
Capital loss carryforwards
    
(289,597,553
)
  
(207,517,802
)
  
(39,540,056
)
  
(99,670,539
)
Net unrealized appreciation (depreciation)
    
105,359,206
    
37,881,418
    
63,551,532
    
21,635,790
  
   
$
(184,238,347
)
$
(169,636,384
)
$
24,011,476
  
$
(78,034,749
)
 
     
Balanced
    
Short-Intermediate Income
    
Nebraska Tax-Free Income
    
Government Money Market
  
Undistributed ordinary income
  
$
134,718
  
$
479,688
  
$
—
  
$
3,969
  
Undistributed tax exempt income
    
—
    
—
    
42,631
    
—
  
Capital loss carryforwards
    
(13,662,030
)
  
(1,212,854
)
  
(13,163
)
  
—
  
Post October capital loss deferral
    
(7,791
)
  
—
    
—
    
—
  
Net unrealized appreciation (depreciation)
    
8,104,646
    
19,049,594
    
1,744,034
    
—
  
   
$
(5,430,457
)
$
18,316,428
  
$
1,773,502
  
$
3,969
  
 
Capital loss carryforwards represent tax basis capital losses which may be carried over to offset future realized capital gains, if any. To the extent that carryforwards are used, no capital gains distributions will be made. The carryforwards expire as follows:
 
   
Value
  
Partners
Value
  
Partners III
  
Hickory
  
Balanced
  
Short-
Intermediate
Income
  
Nebraska
Tax-Free
Income
  
March 31, 2012
  
$
—
  
$
—
  
$
—
  
$
(34,611,009
)
$
—
  
$
—
  
$
—
  
March 31, 2017
    
(113,609,398
)
  
(91,465,141
)
  
(23,153,116
)
  
(37,395,758
)
  
(5,635,175
)
  
(1,212,854
)
  
(13,163
)
March 31, 2018
    
(175,988,155
)
  
(116,052,661
)
  
(16,386,940
)
  
(27,663,772
)
  
(8,026,855
)
  
—
    
—
  
Total capital loss carryforwards
  
$
(289,597,553
)
$
(207,517,802
)
$
(39,540,056
)
$
(99,670,539
)
$
(13,662,030
)
$
(1,212,854
)
$
(13,163
)
 
68          Weitz Funds

 
 
 
 
(5) Securities Transactions
Purchases and proceeds from maturities or sales of investment securities of the Funds, other than short-term securities, are summarized as follows:
 
   
Value
  
Partners
Value
  
Partners III
  
Hickory
  
Balanced
  
Short-
Intermediate
Income
  
Nebraska
Tax-Free
Income
  
Purchases
  
$
296,747,252
  
$
175,533,342
  
$
146,975,620
  
$
108,703,721
  
$
19,116,277
  
$
377,901,557
  
$
16,222,756
  
Proceeds
    
251,690,925
    
147,117,293
    
110,311,929
    
68,320,539
    
14,475,049
    
129,650,541
    
3,862,500
  
 
The cost of investments is the same for financial reporting and Federal income tax purposes for the Short-Intermediate Income, Nebraska Tax-Free Income and Government Money Market Funds. The cost of investments for Federal income tax purposes for the Value, Partners Value, Partners III, Hickory and Balanced Funds is $892,513,697, $586,573,893, $264,420,494, $222,843,434 and $70,290,057, respectively.
 
At September 30, 2010, the aggregate gross unrealized appreciation and depreciation of investments, based on cost for Federal income tax purposes, are summarized as follows:
 
   
Value
  
Partners
Value
  
Partners III
  
Hickory
  
Balanced
  
Short-
Intermediate
Income
  
Nebraska
Tax-Free
Income
  
Appreciation
  
$
84,308,935
  
$
64,953,912
  
$
54,983,539
  
$
35,019,504
  
$
7,761,901
  
$
31,238,197
  
$
3,605,398
  
Depreciation
    
(78,856,515
)
  
(46,881,239
)
  
(13,059,663
)
  
(12,936,837
)
  
(2,216,445
)
  
(1,095,607
)
  
(42,407
)
Net
  
$
5,452,420
  
$
18,072,673
  
$
41,923,876
  
$
22,082,667
  
$
5,545,456
  
$
30,142,590
  
$
3,562,991
  
 
(a) Illiquid and Restricted Securities
The Funds own certain securities which have a limited trading market and/or certain restrictions on trading and therefore may be illiquid and/or restricted. Such securities have been valued at fair value in accordance with the procedures described in Note (2)(a). Because of the inherent uncertainty of valuation, these values may differ from the values that would have been used had a ready market for these securities existed and these differences could be material. Illiquid and/or restricted securities owned at September 30, 2010, include the following:
 
   
Acquisition
Date
  
Value
  
Partners
Value
  
Partners III
  
Hickory
  
Nebraska
Tax-Free
Income
  
Adelphia Recovery Trust,
   Series ACC-7
    
7/25/02
  
$
494,900
  
$
300,300
  
$
—
  
$
—
  
$
—
  
CIBL, Inc.
    
9/09/96
    
—
    
—
    
—
    
94,596
    
—
  
Continental Resources
    
1/28/87
    
—
    
—
    
43,750
    
—
    
—
  
ICTC Group, Inc. – CL A
    
9/09/96
    
—
    
—
    
—
    
173,420
    
—
  
Intelligent Systems Corp.
    
12/03/91
    
—
    
—
    
2,899,379
    
—
    
—
  
LICT Corp.
    
9/09/96
    
—
    
—
    
—
    
2,352,374
    
—
  
Nebraska Investment Finance Authority, Clean Water State Revolving Bond, Series 2010, 0.7%, 6/15/11
    
8/18/10
    
—
    
—
    
—
    
—
    
2,085,000
  
Total cost of illiquid and/or restricted securities
        
$
494,900
  
$
300,300
  
$
2,943,129
  
$
2,620,390
  
$
2,085,000
  
Value at 9/30/10
        
$
—
  
$
—
  
$
2,550,000
  
$
3,071,974
  
$
2,085,000
  
Percent of net assets at 9/30/10
          
0.0
%
  
0.0
%
  
0.8
%
  
1.2
%
  
2.2
%
 
(b) Options Written
Transactions relating to options written for the six months ended September 30, 2010 are summarized as follows:
 
   
Value
  
Partners Value
  
   
Number of
Contracts
  
Premiums
  
Number of
Contracts
  
Premiums
  
Options outstanding, beginning of period
    
7,700
  
$
2,845,164
    
2,250
  
$
944,933
  
Options written
    
—
    
—
    
1,250
    
546,866
  
Options exercised
    
(1,500
)
  
(281,243
)
  
—
    
—
  
Options expired
    
(4,200
)
  
(1,767,791
)
  
(2,500
)
  
(1,093,734
)
Options closed
    
(2,000
)
  
(796,130
)
  
(1,000
)
  
(398,065
)
Options outstanding, end of period
    
—
  
$
—
    
—
  
$
—
  
 
weitzfunds.com           69

 
 
 

     
Partners III
    
Hickory
  
     
Number of
Contracts
    
Premiums
    
Number of
Contracts
    
Premiums
  
Options outstanding, beginning of period
    
1,200
  
$
528,135
    
500
  
$
218,747
  
Options written
    
1,300
    
541,313
    
600
    
303,995
  
Options expired
    
(1,000
)
  
(437,493
)
  
(1,100
)
  
(522,742
)
Options closed
    
(1,500
)
  
(631,955
)
  
—
    
—
  
Options outstanding, end of period
    
—
  
$
—
    
—
  
$
—
  
 
     
Balanced
  
     
Number of
Contracts
    
Premiums
  
Options outstanding, beginning of period
    
—
  
$
—
  
Options written
    
165
    
64,481
  
Options exercised
    
(40
)
  
(18,899
)
Options expired
    
(75
)
  
(31,957
)
Options outstanding, end of period
    
50
  
$
13,625
  
 
The locations in the Statements of Assets and Liabilities of the Funds’ derivative positions, none of which are designated as hedging instruments are as follows:
 
           
Fair Value
      
             Fund
  
Type of Derivative
  
Location
    
Asset
Derivatives
    
Liability
Derivatives
    
Gross Notional
Amount Outstanding
Sept. 30, 2010
Balanced
  
Equity call options written
  
Options written, at value
  
$
—
  
$
 (14,100)
  
$
312,500
 
The gross notional amount of options outstanding (both purchased and written) is indicative of the volume of each Fund’s derivative activity for the six months ended September 30, 2010.
 
Transactions in derivative instruments during the six months ended September 30, 2010 by the Funds are recorded in the following locations in the Statements of Operations:
 
Fund
  
Type of Derivative
  
Location
    
Realized
Gain
(Loss)
  
Location
    
Change in
Unrealized
Gain (Loss)
  
Value
  
Equity call options written
  
Net realized gain (loss) - options written
  
$
2,502,921
  
Net unrealized appreciation (depreciation) - options written
  
$
(590,464
)
                           
Partners Value
  
Equity call options written
  
Net realized gain (loss) - options written
    
1,461,298
  
Net unrealized appreciation (depreciation) - options written
    
(107,433
)
                           
Partners III
  
Equity put options purchased
  
Net realized gain (loss) - unaffiliated issuers
    
82,297
  
Net unrealized appreciation (depreciation) - unaffiliated issuers
    
40,450
  
                           
   
Equity call options written
  
Net realized gain (loss) - options written
    
643,806
  
Net unrealized appreciation (depreciation) - options written
    
(13,135
)
                           
Hickory
  
Equity call options written
  
Net realized gain (loss) - options written
    
522,742
  
Net unrealized appreciation (depreciation) - options written
    
(3,747
)
                           
Balanced
  
Equity call options written
  
Net realized gain (loss) - options written
    
31,957
  
Net unrealized appreciation (depreciation) - options written
    
(475
)
 
70          Weitz Funds

 
 
 
 
(6) Affiliated Issuers
Affiliated issuers, as defined under the Investment Company Act of 1940, are those in which a Fund’s holdings of an issuer represent 5% or more of the outstanding voting securities of the issuer. A summary of each Fund’s holdings in the securities of such issuers is set forth below:
 
   
Number of
Shares
Held March 31, 2010
  
Gross
Additions
  
Gross
Reductions
  
Number of
Shares Held
Sept. 30, 2010
  
Value
Sept. 30, 2010
  
Dividend
Income
  
Realized
Gains/
(Losses)
  
Partners III:
                                            
Intelligent Systems
                                            
Corp.†
    
2,270,000
    
—
    
—
    
2,270,000
  
$
2,270,000
  
$
—
  
$
—
  
 
† Controlled affiliate in which the Fund owns 25% or more of the outstanding voting securities.
 
(7) Contingencies
Each Fund indemnifies the Trust’s officers and trustees for certain liabilities that might arise from their performance of their duties to each of the Funds. Additionally, in the normal course of business the Funds enter into contracts that contain a variety of representations and warranties and which provide general indemnifications. The Funds’ maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Funds that have not yet occurred. However, based on experience, the Funds expect the risk of loss to be remote.
 
(8) Financial Instruments With Off-Balance Sheet Risks
Option contracts written and securities sold short result in off-balance sheet risk as the Fund’s ultimate obligation to satisfy the terms of the contract or the sale of securities sold short may exceed the amount recognized in the Statements of Assets and Liabilities.
 
The Funds are required to maintain collateral in a segregated account to provide adequate margin as determined by the broker.
 
(9) Margin Borrowing Agreement
The Partners III Fund has a margin account with its prime broker, Merrill Lynch, under which the Partners III Fund may borrow against the value of its securities, subject to regulatory limitations. Interest accrues at the federal funds rate plus 0.625% (0.815% at September 30, 2010). Interest is accrued daily and paid monthly. The Partners III Fund held a cash balance of $43,327,251 with the broker at September 30, 2010.
 
The Partners III Fund is exposed to credit risk from its prime broker who effects transactions and extends credit pursuant to a prime brokerage agreement. The Adviser attempts to minimize the credit risk by monitoring credit exposure and the credit worthiness of the prime broker.
 
(10) Concentration of Credit Risk
Approximately 79% of the Nebraska Tax-Free Income Fund’s net assets are in obligations of political subdivisions of the State of Nebraska which are subject to the credit risk associated with the non-performance of such issuers.
 
(11) Fair Value Measurements
Various inputs are used in determining the value of the Fund’s investments. These inputs are used in determining the value of the Funds’ investments and are summarized in the following fair value hierarchy:
   
•
Level 1 – quoted prices in active markets for identical securities
   
•
Level 2 – other significant observable inputs (including quoted prices for similar securities)
   
•
Level 3 – significant unobservable inputs (including the Funds’ own assumptions in determining the fair value of investments)
 
The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.
 
A description of the valuation techniques applied to the company’s major categories of assets and liabilities measured at fair value on a recurring basis follows.
 
Equity securities (common and preferred stock). Securities traded on a national securities exchange (or reported on the NASDAQ national market) are stated at the last reported sales price on the day of valuation. To the extent these securities are actively traded and valuation adjustments are not applied, they are categorized in level 1 of the fair value hierarchy. Preferred stock and other equities traded on inactive markets or valued by reference to similar instruments are categorized in level 2.
 
Corporate bonds. The fair value of corporate bonds is estimated using various techniques, which may consider recently executed transactions in securities of the issuer or comparable issuers, market price quotations (where observable), bond spreads and fundamental data relating to the issuer. Although most corporate bonds are categorized in level 2 of the fair value hierarchy, in instances where
 
weitzfunds.com          71

 
 
 
 
lower relative weight is placed on transaction prices, quotations, or similar observable inputs, they are categorized in level 3.
 
Asset backed securities. The fair value of asset backed securities is estimated based on models that consider the estimated cash flows of each tranche of the entity, establishes a benchmark yield and develops an estimated tranche specific spread to the benchmark yield based on the unique attributes of the tranche. To the extent the inputs are observable and timely, the values would be categorized in level 2 of the fair value hierarchy; otherwise they would be categorized as level 3.
 
U.S. Government securities. U.S. Government securities are normally valued using a model that incorporates market observable data such as reported sales of similar securities, broker quotes, yields, bids, offers and reference data. Certain securities are valued principally using dealer quotations. U.S. Government securities are categorized in level 1 or level 2 of the fair value hierarchy depending on the inputs used and market activity levels for specific securities.
 
U.S. agency securities. U.S. agency securities are comprised of two main categories consisting of agency issued debt and mortgage pass-throughs. Agency issued debt securities are generally valued in a manner similar to U.S. Government securities. Mortgage pass-throughs include to-be-announced (TBA) securities and mortgage pass-through certificates. TBA securities and mortgage pass-throughs are generally valued using dealer quotations. Depending on market activity levels and whether quotations or other data are used, these securities are typically categorized in level 1 or level 2 of the fair value hierarchy.
 
Restricted and/or illiquid securities. Restricted and/or illiquid securities for which quotations are not readily available are valued in accordance with procedures approved by the Trust’s Board of Trustees. Restricted securities issued by publicly traded companies are generally valued at a discount to similar publicly traded securities. Restricted or illiquid securities issued by nonpublic entities may be valued by reference to comparable public entities or fundamental data relating to the issuer or both. Depending on the relative significance of valuation inputs, these instruments may be classified in either level 2 or level 3 of the fair value hierarchy.
 
Derivative instruments. Listed derivatives, such as the Funds’ equity option contracts, that are valued based on closing prices from the exchange or the mean of the closing bid and ask prices are generally categorized in level 2 of the fair value hierarchy.
 
The following is a summary of the inputs used as of September 30, 2010, in valuing the Funds’ assets and liabilities carried at fair value:
 
Value
   
Level 1
  
Level 2
  
Level 3
  
Total
  
Assets:
                          
Investments in Securities:
                          
Common Stocks:
                          
Information Technology
  
$
197,684,320
  
$
—
  
$
—
  
$
197,684,320
  
Consumer Discretionary
    
181,316,100
    
—
    
—
    
181,316,100
  
Financials
    
110,884,563
    
—
    
—
    
110,884,563
  
Industrials
    
81,992,500
    
—
    
—
    
81,992,500
  
Materials
    
74,275,250
    
—
    
—
    
74,275,250
  
Health Care
    
56,101,750
    
—
    
—
    
56,101,750
  
Consumer Staples
    
53,065,300
    
—
    
—
    
53,065,300
  
Energy
    
40,201,000
    
—
    
—
    
40,201,000
  
Telecommunication Services
    
12,940,896
    
—
    
—
    
12,940,896
  
Short-Term Securities
    
89,504,438
    
—
    
—
    
89,504,438
  
Total Investments in Securities
  
$
897,966,117
  
$
—
  
$
—
  
$
897,966,117
  
 
72          Weitz Funds

 
 
 
 
Partners Value
   
Level 1
  
Level 2
  
Level 3
  
Total
  
Assets:
                          
Investments in Securities:
                          
Common Stocks:
                          
Consumer Discretionary
  
$
200,661,928
  
$
—
  
$
—
  
$
200,661,928
  
Information Technology
    
116,692,740
    
—
    
—
    
116,692,740
  
Financials
    
83,433,697
    
—
    
—
    
83,433,697
  
Health Care
    
44,511,750
    
—
    
—
    
44,511,750
  
Materials
    
39,589,784
    
—
    
—
    
39,589,784
  
Energy
    
35,405,000
    
—
    
—
    
35,405,000
  
Industrials
    
13,406,450
    
—
    
—
    
13,406,450
  
Telecommunication Services
    
8,379,948
    
—
    
—
    
8,379,948
  
Consumer Staples
    
3,361,500
    
—
    
—
    
3,361,500
  
Short-Term Securities
    
59,203,769
    
—
    
—
    
59,203,769
  
Total Investments in Securities
  
$
604,646,566
  
$
—
  
$
—
  
$
604,646,566
  
 
Partners III
   
Level 1
  
Level 2
  
Level 3
  
Total
  
Assets:
                          
Investments in Securities:
                          
Common Stocks:
                          
Consumer Discretionary
  
$
119,612,689
  
$
—
  
$
—
  
$
119,612,689
  
Information Technology
    
67,801,080
    
2,270,000
    
280,000
    
70,351,080
  
Financials
    
43,223,686
    
—
    
—
    
43,223,686
  
Health Care
    
24,559,000
    
—
    
—
    
24,559,000
  
Energy
    
24,479,284
    
—
    
—
    
24,479,284
  
Materials
    
10,897,600
    
—
    
—
    
10,897,600
  
Industrials
    
5,142,200
    
—
    
—
    
5,142,200
  
Consumer Staples
    
2,689,200
    
—
    
—
    
2,689,200
  
Telecommunication Services
    
902,352
    
—
    
—
    
902,352
  
Short-Term Securities
    
4,487,279
    
—
    
—
    
4,487,279
  
Total Investments in Securities
  
$
303,794,370
  
$
2,270,000
  
$
280,000
  
$
306,344,370
  
Liabilities:
                          
Securities Sold Short
  
$
(46,368,505
)
$
—
  
$
—
  
$
(46,368,505
)
 
Hickory
   
Level 1
  
Level 2
  
Level 3
  
Total
  
Assets:
                          
Investments in Securities:
                          
Common Stocks:
                          
Consumer Discretionary
  
$
107,294,007
  
$
—
  
$
502,500
  
$
107,796,507
  
Financials
    
28,188,400
    
—
    
—
    
28,188,400
  
Health Care
    
25,031,600
    
—
    
—
    
25,031,600
  
Materials
    
15,722,172
    
—
    
—
    
15,722,172
  
Information Technology
    
14,185,500
    
—
    
—
    
14,185,500
  
Energy
    
12,666,684
    
—
    
—
    
12,666,684
  
Consumer Staples
    
8,424,300
    
—
    
—
    
8,424,300
  
Telecommunication Services
    
2,309,504
    
2,423,146
    
146,328
    
4,878,978
  
Short-Term Securities
    
28,031,960
    
—
    
—
    
28,031,960
  
Total Investments in Securities
  
$
241,854,127
  
$
2,423,146
  
$
648,828
  
$
244,926,101
  
 
 
weitzfunds.com           73
 
 
 
 
 
Balanced
   
Level 1
  
Level 2
  
Level 3
  
Total
  
Assets:
                          
Investments in Securities:
                          
Common Stocks:
                          
Consumer Discretionary
  
$
13,091,800
  
$
—
  
$
—
  
$
13,091,800
  
Information Technology
    
8,258,910
    
—
    
—
    
8,258,910
  
Materials
    
6,717,890
    
—
    
—
    
6,717,890
  
Financials
    
6,557,160
    
—
    
—
    
6,557,160
  
Health Care
    
4,709,585
    
—
    
—
    
4,709,585
  
Consumer Staples
    
3,585,500
    
—
    
—
    
3,585,500
  
Energy
    
3,223,390
    
—
    
—
    
3,223,390
  
Industrials
    
2,689,335
    
—
    
—
    
2,689,335
  
Corporate Bonds
    
—
    
8,165,115
    
—
    
8,165,115
  
Mortgage-Backed Securities
    
—
    
5,968,550
    
—
    
5,968,550
  
Taxable Municipal Bonds
    
—
    
328,713
    
—
    
328,713
  
Short-Term Securities
    
12,539,565
    
—
    
—
    
12,539,565
  
Total Investments in Securities
  
$
61,373,135
  
$
14,462,378
  
$
—
  
$
75,835,513
  
Liabilities:
                          
Options Written
  
$
—
  
$
(14,100
)
$
—
  
$
(14,100
)
 
Short-Intermediate Income
   
Level 1
  
Level 2
  
Level 3
  
Total
  
Assets:
                          
Investments in Securities:
                          
Corporate Bonds
  
$
—
  
$
332,717,024
  
$
—
  
$
332,717,024
  
Mortgage-Backed Securities
    
—
    
367,293,665
    
—
    
367,293,665
  
Taxable Municipal Bonds
    
—
    
15,062,084
    
—
    
15,062,084
  
U.S. Treasury and Government Agency
    
—
    
110,323,640
    
—
    
110,323,640
  
Common Stocks
    
14,020,594
    
—
    
—
    
14,020,594
  
Short-Term Securities
    
130,516,598
    
—
    
—
    
130,516,598
  
Total Investments in Securities
  
$
144,537,192
  
$
825,396,413
  
$
—
  
$
969,933,605
  
 
Nebraska Tax-Free Income
   
Level 1
  
Level 2
  
Level 3
  
Total
  
Assets:
                          
Investments in Securities:
                          
Municipal Bonds:
                          
Arizona
  
$
—
  
$
1,044,920
  
$
—
  
$
1,044,920
  
District of Columbia
    
—
    
904,599
    
—
    
904,599
  
Florida
    
—
    
2,250,220
    
—
    
2,250,220
  
Hawaii
    
—
    
1,025,930
    
—
    
1,025,930
  
Illinois
    
—
    
2,373,326
    
—
    
2,373,326
  
Minnesota
    
—
    
15,038
    
—
    
15,038
  
Nebraska
    
—
    
75,468,101
    
—
    
75,468,101
  
North Dakota
    
—
    
883,905
    
—
    
883,905
  
Ohio
    
—
    
1,138,356
    
—
    
1,138,356
  
Puerto Rico
    
—
    
3,578,296
    
—
    
3,578,296
  
Virginia
    
—
    
1,122,888
    
—
    
1,122,888
  
Wisconsin
    
—
    
1,589,013
    
—
    
1,589,013
  
Short-Term Securities
    
4,556,834
    
—
    
—
    
4,556,834
  
Total Investments in Securities
  
$
4,556,834
  
$
91,394,592
  
$
—
  
$
95,951,426
  
 
74          Weitz Funds

 
 
 
 
Government Money Market
     
Level 1
    
Level 2
    
Level 3
    
Total
  
Assets:
                          
Investments in Securities:
                          
U.S. Treasury
  
$
98,983,245
  
$
—
  
$
—
  
$
98,983,245
  
Short-Term Securities
    
608,345
    
—
    
—
    
608,345
  
Total Investments in Securities
  
$
99,591,590
  
$
—
  
$
—
  
$
99,591,590
  
 
For transfers between the levels within the fair value hierarchy, the Funds have adopted a policy of recognizing the transfers as of the date of the underlying event which caused the transfer.
 
The transfer shown below in the Hickory Fund was the result of a spin-off from a Level 2 security.
 
At September 30, 2010, the reconciliation of assets in which significant unobservable inputs (Level 3) were used in determining the following Funds’ fair values were as follows:
 
     
Partners III
    
Hickory
  
Common Stocks:
              
Beginning balance, March 31, 2010
  
$
280,000
  
$
341,700
  
Net realized gain (loss)
    
—
    
—
  
Net change in unrealized appreciation (depreciation)
    
—
    
160,800
  
Net purchases (sales)
    
—
    
—
  
Transfers in to Level 3 from Level 2
    
—
    
146,328
  
Transfers out of Level 3
    
—
        
Ending balance, September 30, 2010
  
$
280,000
  
$
648,828
  
Net change in unrealized appreciation (depreciation) attributable to assets still held at end of period
  
$
—
  
$
160,800
  
 
(12) Subsequent Events
Management has evaluated the impact of all subsequent events on the Funds through the date the financial statements were issued and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.
  weitzfunds.com           75

 
 
 
 
 
COMPARISON PURPOSES • (UNAUDITED)
 
 
Example
As a shareholder of one or more of the Funds, you incur two types of costs: (1) transaction costs, including any transaction fees that you may be charged if you purchase or redeem your Fund shares through certain financial institutions; and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from April 1, 2010 through September 30, 2010.
 
Actual Expenses
The first line for each Fund in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an account value of $8,600 divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid from 4/01/10 –9/30/10” to estimate the expenses you paid on your account during this period.
 
Hypothetical Example for Comparison Purposes
The second line for each Fund in the table below provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each Fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of the Fund. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in a specific Weitz Fund to other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
 
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs charged by certain financial institutions. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if you incurred transactional fees, your costs would have been higher. Actual and hypothetical expenses for each Fund are provided in this table.
 
         
Beginning
Account Value
4/01/10
    
Ending Account
Value
9/30/10
    
Annualized
Expense
Ratio
  
Expenses Paid
from 4/01/10
9/30/10(1)
  
Value
  
Actual
  
$
1,000.00
  
$
  992.35
    
1.22
%
$
6.09
  
   
Hypothetical(2)
    
1,000.00
    
1,018.90
    
1.22
%
  
6.17
  
Partners Value
  
Actual
    
1,000.00
    
1,019.74
    
1.21
%
  
6.13
  
   
Hypothetical(2)
    
1,000.00
    
1,018.95
    
1.21
%
  
6.12
  
Partners III
  
Actual
    
1,000.00
    
1,028.57
    
1.55
%
  
7.88
  
   
Hypothetical(2)
    
1,000.00
    
1,017.25
    
1.55
%
  
7.84
  
Hickory
  
Actual
    
1,000.00
    
1,062.64
    
1.26
%
  
6.52
  
   
Hypothetical(2)
    
1,000.00
    
1,018.70
    
1.26
%
  
6.38
  
Balanced
  
Actual
    
1,000.00
    
1,008.43
    
1.16
%
  
5.84
  
   
Hypothetical(2)
    
1,000.00
    
1,019.20
    
1.16
%
  
5.87
  
Short-Intermediate
  
Actual
    
1,000.00
    
1,028.66
    
0.60
%
  
3.05
  
Income
  
Hypothetical(2)
    
1,000.00
    
1,022.00
    
0.60
%
  
3.04
  
Nebraska Tax-Free
  
Actual
    
1,000.00
    
1,033.63
    
0.73
%
  
3.72
  
   
Hypothetical(2)
    
1,000.00
    
1,021.35
    
0.73
%
  
3.70
  
Government
  
Actual
    
1,000.00
    
1,000.34
    
0.07
%
  
0.35
  
Money Market
  
Hypothetical(2)
    
1,000.00
    
1,024.65
    
0.07
%
  
0.36
  
 
(1)
Expenses are equal to the annualized expense ratio for the Fund, multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half year (183/365).
(2)
Assumes 5% total return before expenses.
 
76          Weitz Funds

 
 
 
 
 
(UNAUDITED)
 
 
Proxy Voting Policy
A description of the Funds’ proxy voting policies and procedures is available without charge, upon request by (i) calling 800-304-9745, (ii) on the Funds’ website at http://www.weitzfunds.com; and (iii) on the SEC’s website at http://www.sec.gov.
 
Information on how each of the Funds (other than the Nebraska Tax-Free Income and Government Money Market Funds) voted proxies relating to portfolio securities during each twelve month period ended June 30 is available: (i) on the Funds’ website at http://www.weitzfunds.com, and (ii) on the SEC’s website at http://www.sec.gov.
 
Form N-Q
The Funds file complete schedules of their portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Form N-Q is available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington DC. Information on the operation of the Public Reference Room may be obtained by calling 800 SEC-0330. When filed, the Fund’s quarterly reports, including the information filed on Form N-Q will also be available on the Funds’ website at http://www.weitzfunds.com.
 
Factors Considered by the Board of Trustees in Approving the Continuation of the Management and Investment Advisory Agreements with Wallace R. Weitz & Company
In accordance with the Investment Company Act of 1940, the Board of Trustees of the Funds is required, on an annual basis, to consider the continuation of the Management and Investment Advisory Agreements (the “Agreements”) with Wallace R. Weitz & Company (“Weitz & Co.”). The relevant provisions of the Investment Company Act of 1940 specifically provide that it is the duty of the Board to request and evaluate such information as the Board determines is necessary to allow them to properly consider the continuation of the Agreements, and it is the duty of Weitz & Co. to furnish the Trustees with such information that is responsive to their request. Accordingly, in determining whether to renew the Agreements between the Funds and Weitz & Co., the Board of Trustees requested, and Weitz & Co. provided, information and data relevant to the Board’s consideration. This included materials prepared by Weitz & Co. and materials prepared by an independent informational services firm that produced materials specifically for the Board that provided them with information regarding the investment performance of the Funds and information regarding the fees and expenses of the Funds, as compared to other similar mutual funds. As part of its deliberations, the Board also considered and relied upon the information about the Funds and Weitz & Co. that had been provided to them throughout the year in connection with their regular Board meetings at which they engage in the ongoing oversight of the Funds and their operations.
 
The Board of Trustees most recently considered the continuation of the Agreements at their in-person meeting held on May 21, 2010. At this meeting the Board engaged in a thorough review process in connection with determining whether or not to continue the Agreements. The Board met during the meeting directly with representatives of Weitz & Co. and reviewed various factors with them concerning the proposed continuation of the Agreements. Among the factors the Board considered was the overall performance of the Funds relative to their respective benchmark indices as well as the performance and level of expenses of other funds in the Funds’ peer groups on a long-term basis and over shorter time periods.
 
With respect to the equity funds managed by Weitz & Co., consisting of Value Fund, Partners Value Fund, Partners III Opportunity Fund and Hickory Fund (the “Equity Funds”), the Board noted the applicable investment objectives, strategies and fee arrangements for each Equity Fund and also noted Weitz & Co.’s investment expertise and the investment strategies utilized by Weitz & Co. with respect to each of the Equity Funds. The Board discussed with management the fact that Weitz & Co. maintains a particular focus on long-term investment performance results and they reviewed the reasons why this may, from time to time, cause the longer-term performance results and the shorter-term performance results to compare differently when compared to similar funds for similar time periods. In connection with this, the Board took note of management’s stated position that achieving favorable long-term
 
weitzfunds.com           77

 
 
 
 
 
OTHER INFORMATION
(UNAUDITED) (CONTINUED)
 
 
investment results is a primary objective of the firm. The Board also took into consideration the fact that the performance results achieved by Weitz & Co. for the Equity Funds was generally favorable on a short-term basis and on a longer-term basis and that Weitz & Co. produced these results in a manner consistent with the stated investment objective and policies of these Funds.
 
In addition, the Board compared expenses of each of the Equity Funds to the expenses of their peers, noting that the expenses for each of the Equity Funds compare favorably with industry averages for other funds of similar size and investment objective. The Board also considered the fact that the advisory fees for Value Fund, Partners Value Fund, Partners III Opportunity Fund and Hickory Fund are each subject to breakpoints which result in reduced investment advisory fees as assets increase, and the Board agreed that this type of fee structure is reasonable and fair to shareholders. They noted the range of investment advisory and administrative services provided by Weitz & Co. to the Equity Funds and the level and quality of these services, and in particular, they noted the quality of the personnel providing these services.
 
The Board also reviewed matters with respect to the proposed continuation of the Investment Management Agreement for the Balanced Fund. The Board reviewed the fees and expenses for the Balanced Fund as well as performance information for the Balanced Fund. Among the factors the Board considered was the overall performance of the Balanced Fund relative to its respective benchmark indices as well as the performance of other funds in the Balanced Fund’s peer group. The Board noted that the performance results achieved by Weitz & Co. for the Balanced Fund were favorable and that Weitz & Co. produced these results in a manner consistent with the stated investment objectives and policies of the Balanced Fund. The Board also discussed with representatives of Weitz & Co. the investment advisory fee for the Balanced Fund, and it was noted that the Balanced Fund is not currently subject to breakpoints on its investment advisory fees. Management reviewed with the Board the fact that the Balanced Fund utilizes an investment style that combines equity investments and fixed income investments and it was noted that the Balanced Fund currently has a substantially smaller asset base than the Equity Funds. In addition, the Board compared the expenses of the Balanced Fund to its peers, noting that the expenses of the Fund compared favorably with industry averages for other funds of similar size and investment objective. Management indicated that they would be willing to consider the introduction of breakpoints for the Balanced Fund in the event that assets in the Balanced Fund were to become more substantial and economies of scale were able to be realized.
 
The Board then considered each of the fixed income funds managed by Weitz & Co., consisting of the Short-Intermediate Income Fund, Nebraska Tax-Free Income Fund and Government Money Market Fund (the “Fixed Income Funds”) noting the applicable investment objectives, strategies and fee arrangements for each Fixed Income Fund, and noting Weitz & Co.’s investment expertise and the investment strategies utilized by Weitz & Co. with respect to each of the Fixed Income Funds. Among the factors the Board considered was the overall performance of the Fixed Income Funds relative to their respective benchmark indices as well as the performance and level of expenses of other funds in the Fixed Income Funds’ peer group on a long-term basis and over shorter time periods. The Board noted that the performance results achieved by Weitz & Co. for the Fixed Income Funds was favorable on both a short-term and on a long-term basis and that Weitz & Co. produced these results in a manner consistent with the stated investment objectives and policies of each of the Fixed Income Funds. In addition, the Board compared expenses of each Fixed Income Fund to the expenses of its peers, noting that the expenses for each of the Fixed Income Funds compare favorably with industry
 
78           Weitz Funds

 
 
 
 
averages for other funds of similar size and investment objective. In considering the investment advisory fees applicable to each of the Fixed Income Funds, the Board discussed with representatives of Weitz & Co. their reasons for assessing the applicable fees in connection with each of the Fixed Income Funds, and the Board considered and discussed the fees charged by similar funds in each respective investment category.
 
In connection with their consideration of the continuation of the Agreements for the Funds, the Board took into consideration the contractual expense limitation agreement in place for the Government Money Market Fund and the voluntary fee waiver in place for each of the other Funds (other than the Partners III Opportunity Fund) pursuant to which Weitz & Co. has agreed to waive fees and/or reimburse expenses in order to limit the total operating expenses of the Funds.
 
The Board then considered various factors in addition to the fees, expenses and performance of each of the Funds. The Board took note of the long-term relationship between Weitz & Co. and the Funds and the efforts that have been undertaken by Weitz & Co. to foster the growth and development of the Funds since the inception of each of the Funds. They also took note of the fact that the Funds are not subject to sales charges or Rule 12b-1 fees and that Weitz & Co. bears a substantial portion of the costs associated with the Funds’ participation in various “no-transaction fee,” or “fund supermarket,” programs out of their own resources, and conducts marketing efforts on behalf of the Funds out of their own resources. The Board also reviewed financial information concerning Weitz & Co. relating to its operation of the Funds, noting the overall profitability of the relationship with the Funds to Weitz & Co., and the financial soundness of Weitz & Co. as demonstrated by the financial information provided and reached a finding that the level of profitability was consistent with relevant industry averages. In reviewing the profitability of Weitz & Co. relating to its management of the Funds, the Board reviewed the level of profitability including the various marketing expenses that are borne directly by Weitz & Co. and they considered the level of profitability without taking into consideration the impact of these marketing costs.
 
The Board further reviewed Weitz & Co.’s brokerage practices, including its soft dollar arrangements and best-execution procedures, and noted that these were reasonable and consistent with standard industry practice. The Board took note of the current portfolio managers for each of the Funds, their respective compensation arrangements, the other types of accounts that they manage, and their overall management of each of the Funds. The Board also considered information regarding the fees that Weitz & Co. charges other clients for investment advisory services that are similar to the advisory services provided to the Funds and noted that the fees were comparable based on the relevant circumstances of the types of accounts involved.
 
In considering information regarding the investment management fees payable by the Funds to Weitz & Co. under the Agreements, the Board also took note of the administration fees that are payable by each of the Funds to Weitz & Co. under the terms of the Administration Agreement. The Board was informed by Weitz & Co. that it was proposing a revision in the level of fees payable by the Funds under the Administration Agreement and the Board considered that the fee revision was intended to address the costs related to the types of administrative services that are incurred by the Funds in connection with various service providers that provide administrative support services to investors in the Funds, and the Board determined that the proposed fee revision was reasonable and advisable based upon the services provided. In considering the continuation of the amended Administration Agreement, the Board members indicated that they had considered various factors with respect to the administration fees, including the level
 
weitzfunds.com           79

 
 
 
 
 
OTHER INFORMATION
(UNAUDITED) (CONTINUED)
 
 
and amount of these fees, the method of calculating these fees, the proposed revision in the fees payable under the Agreement, and the services provided by Weitz & Co. in connection with the Administration Agreement, in determining the reasonableness of the total fees paid by the Funds to Weitz & Co. for the overall level of services that Weitz & Co. provides to the Funds and their shareholders. The Board also took into consideration the fact that an affiliate of Weitz & Co., Weitz Securities, Inc., provides underwriting and distribution services to the Funds and that Weitz Securities, Inc. receives no compensation for the services that it provides to the Funds. The Board noted that Weitz Securities, Inc. provides useful services to the Funds in a highly effective manner that benefit the Funds and their shareholders.
 
In reaching their conclusion with respect to the continuation of the Agreements, the Trustees did not identify any one single factor as being controlling, rather, the Board took note of a combination of factors that influenced their decision making process. The Board did, however, identify the performance of the Funds, the commitment of Weitz & Co. to the successful operation of the Funds, and the level of expenses of the Funds, as being  important elements of their consideration, as well as Weitz & Co.’s willingness to waive fees and/or reimburse expenses of the Funds in order to limit their overall operating expenses. They noted the overall level and quality of the investment advisory, administration and distribution services provided by Weitz & Co. and its affiliates to the Funds and they found that these services continued to benefit the shareholders of the Funds and reflected management’s overall commitment to the continued successful growth and development of the Funds. Based upon their review and consideration of these factors and other matters deemed relevant by the Board in reaching an informed business judgment, a majority of the Board of Trustees, including a majority of the Independent Trustees, concluded that the terms of the Management and Investment Advisory Agreements are fair and reasonable and the Board voted to renew the Agreements for an additional one-year period.
 
80          Weitz Funds

 
 
 
 
 
 
 
This page has been left blank intentionally.
 
 
weitzfunds.com           81

 
 
 
 
 
 

 
This page has been left blank intentionally.
 
82          Weitz Funds

 
 
 
 
 
 
 
Board of Trustees
  
Officers
Lorraine Chang
  
Wallace R. Weitz, President
John W. Hancock
  
Mary K. Beerling, Vice President, Secretary &
Richard D. Holland
  
Chief Compliance Officer
Thomas R. Pansing, Jr.
  
Kenneth R. Stoll, Vice President & Chief
Roland J. Santoni
  
Financial Officer
Barbara W. Schaefer
  
Bradley P. Hinton, Vice President
Delmer L. Toebben
    
Wallace R. Weitz
  
Distributor
Justin B. Wender
  
Weitz Securities, Inc.
     
Investment Adviser
  
Transfer Agent and Dividend Paying Agent
Wallace R. Weitz & Company
  
Wallace R. Weitz & Company
1125 South 103rd Street, Suite 200
    
Omaha, NE 68124-1071
    
(800) 304-9745
  
Sub-Transfer Agent
   
Boston Financial Data Services, Inc.
Custodian
    
Wells Fargo Bank Minnesota,
  
NASDAQ symbols:
National Association
  
Value Fund - WVALX
   
Partners Value Fund - WPVLX
   
Partners III Opportunity Fund - WPOPX
   
Hickory Fund - WEHIX
   
Balanced Fund - WBALX
   
Short-Intermediate Income Fund - WEFIX
   
Nebraska Tax-Free Income Fund - WNTFX
   
Government Money Market Fund - WGMXX
 
Help us conserve resources by receiving your report electronically.
Visit us online at www.weitzfunds.com.
Simply log in to Account Access and click the “Electronic Delivery” button.		  
 
An investor should consider carefully the investment objectives, risks, and charges and expenses of the Funds before investing. The Funds’ Prospectus contains this and other information about the Funds. The Prospectus should be read carefully before investing.
 
10/29/10
 
weitzfunds.com           83

 
 
 


 
 
 
 
Item 2. Code of Ethics.
 
Not required for Semi-Annual Report.
 
Item 3. Audit Committee Financial Expert.
 
Not required for Semi-Annual Report.
 
Item 4. Principal Accountant Fees and Services.

Not required for Semi-Annual Report.
 
Item 5. Audit Committee of Listed Registrants.
 
Not applicable.
 
Item 6. Schedule of Investments.
 
The Schedule of Investments in Securities of unaffiliated issuers is included as part of the Report to Shareholders filed under Item 1.
 
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Investment Companies.
 
Not applicable.
 
Item 8. Portfolio Managers of Closed-End Investment Companies.
 
Not applicable.
 
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
 
Not applicable.
 
Item 10. Submissions of Matters to a Vote of Security Holders.
 
Not applicable.
 
Item 11. Controls and Procedures.
 
(a) Based on an evaluation of the Disclosure Controls and Procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) (the "Disclosure Controls") as of a date within 90 days prior to the filing date (the "Filing Date") of this report on Form N-CSR (the "Report"), the Registrant's principal executive officer and principal financial officer have concluded that the Disclosure Controls are reasonably designed to ensure that information required to be disclosed by the Registrant in the Report is recorded, processed, summarized and reported by the Filing Date, including ensuring that information required to be disclosed in the Report is accumulated and communicated to the Registrant's management, including the Registrant's principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

(b) There were no changes in the Registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the Registrant's second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting.
 
 
 
 
 
Item 12. Exhibits
 
(a)(1) Not applicable.
 
(a)(2) The certifications required by Rule 30a-2(a) of the Investment Company Act of 1940 are attached hereto.
 
(a)(3) Not applicable.
 
(b)  The certifications required by Rule 30a-2(b) of the Investment Company Act of 1940 and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
 
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

The Weitz Funds

By (Signature and Title)*/s/ Wallace R. Weitz
 Wallace R. Weitz, President
Date: October 29, 2010

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.


By: (Signature and Title)* /s/ Wallace R. Weitz
              Wallace R. Weitz, President
 
Date: October 29, 2010


By: (Signature and Title)* /s/ Kenneth R. Stoll
 Kenneth R. Stoll, Chief Financial
 Officer
Date: October 29, 2010


* Print the name and title of each signing officer under his or her signature.