N-CSR 1 d74153_ncsr.htm ANNUAL REPORT



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-CSR

CERTIFIED 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 600
1125 South 103 Street
Omaha, NE 68124-6008
(Address of principal executive offices) (Zip code)

Wallace R. Weitz & Company
The Weitz Funds
Suite 600
1125 South 103 Street
Omaha, NE 68124-6008
(Name and address of agent for service)

Registrant’s telephone number, including area code: 402-391-1980

Date of fiscal year end: March 31

Date of reporting period: March 31, 2008

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.

 

 

 

 

(LOGO)

 

THE WEITZ FUNDS       

 

 

 

Value Fund
Partners Value Fund
Hickory Fund
Partners III Opportunity Fund
Balanced Fund
Nebraska Tax-Free Income Fund
Short-Intermediate Income Fund
Government Money Market Fund



ANNUAL REPORT

March 31, 2008



One Pacific Place, Suite 600 • 1125 South 103 Street • Omaha, Nebraska, 68124-6008
402-391-1980     800-304-9745     402-391-2125 FAX
www.weitzfunds.com



 

THE WEITZ FUNDS


 

 

Eight Funds—One Investment Philosophy

 

          Our small “family” of Funds is designed to offer a range of investment options for investors with different objectives and temperaments. There are bond funds, stock funds and a balanced fund. There are differences in fund size, portfolio concentration, volatility, and tax sensitivity. But there are certain common threads which run through all eight of the Funds.

 

          “We eat our own cooking.” All of our investment professionals have a majority of their families’ liquid net worth invested in our Funds. Our Trustees each have at least $100,000 invested in our family of Funds—some considerably more. This does not guarantee that the Funds will go up, but it means that we win or lose together and that shareholders definitely have our attention.

 

          We are patient, long-term investors. When we analyze potential equity investments, we think about the business behind the stock and try to buy shares 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, minimizing transaction costs, taxes, and the need for new investment ideas.

 

          We try to stay within our “circle of competence.” “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 ideally, 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 and thus may often be out of step with the general stock market.

 

          Risk—we worry about permanent loss of capital—not price volatility. We believe in concentrating our portfolio in the most attractive investment ideas and this can cause short-term price volatility of our portfolios.

 

          We think “benchmark risk” is part of investment life. Our firm’s goal is to earn good absolute investment returns over long periods of time without exposing our clients’ capital to undue risk. We do not think about any particular index when we make investment decisions. We also believe that cash is sometimes the most attractive investment. We know this approach causes headaches for some of our favorite consultants and plan sponsors, but we think flexibility and common sense will continue to serve our clients well over the years.

 

2



 

TABLE OF CONTENTS


 

 

Weitz Equity Funds

 

Portfolio Managers Letter

4

Fund Performance – Value Fund

8

Portfolio Profile – Value Fund

9

Schedule of Investments in Securities – Value Fund

10

Fund Performance – Partners Value Fund

14

Portfolio Profile – Partners Value Fund

15

Schedule of Investments in Securities – Partners Value Fund

16

Fund Performance – Hickory Fund

20

Portfolio Profile – Hickory Fund

21

Schedule of Investments in Securities – Hickory Fund

22

Fund Performance – Partners III Opportunity Fund

26

Portfolio Profile – Partners III Opportunity Fund

27

Schedule of Investments in Securities – Partners III Opportunity Fund

28

 

 

Balanced Fund

 

Portfolio Manager Letter

32

Fund Performance

34

Portfolio Profile

35

Schedule of Investments in Securities

36

 

 

Nebraska Tax-Free Income Fund

 

Portfolio Manager Letter

42

Fund Performance

46

Portfolio Profile

47

Schedule of Investments in Securities

48

 

 

Short-Intermediate Income and Government Money Market Funds

 

Portfolio Manager Letter

53

Fund Performance – Short-Intermediate Income Fund

58

Portfolio Profile – Short-Intermediate Income Fund

59

Portfolio Profile – Government Money Market Fund

59

Schedule of Investments in Securities – Short-Intermediate Income Fund

60

Schedule of Investments in Securities – Government Money Market Fund

64

 

 

Financial Statements

66

 

 

Notes to Financial Statements

83

 

 

Report of Independent Registered Public Accounting Firm

91

 

 

Actual and Hypothetical Expenses for Comparison Purposes

92

 

 

Other Information

93

 

 

Information about the Trustees and Officers of The Weitz Funds

94

3



 

WEITZ EQUITY FUNDS

April 21, 2008

Dear Fellow Shareholder:

          The first quarter of 2008 ending March 31 was another turbulent one. The liquidity crisis in the credit markets continued. The U.S. economy slowed further, lending credence to the idea that it has entered a recession. The dollar declined in value and commodity prices continued upward. The housing industry depression deepened as home prices declined and mortgage defaults and foreclosures rose. The Federal Reserve and Treasury made increasingly aggressive and creative policy responses, the most visible of which was the “rescue” of Bear Stearns by J.P. Morgan facilitated by a Fed guarantee of $29 billion of Bear’s most illiquid and hard-to-value assets.

          Given this backdrop, it is not surprising that stock prices were very volatile and, on balance, declined. It was a poor quarter for our Funds and a very disappointing way to finish our fiscal year. At times like these, it is natural for investors to extrapolate recent trends and come to very bleak conclusions. We would agree that the dimensions of our economic problems are (in some ways) unprecedented and not subject to quick and painless resolution, but we do not believe that our economy and stock market are headed into an extended period of “nuclear winter” as some would suggest.

          We will discuss our reasons for (cautious) optimism in the balance of this letter, but first the numbers. The table below shows investment results (after deducting fees and expenses) for each of our four stock Funds and for three major stock market indices—the S&P 500 (larger companies), the Russell 2000 (smaller companies) and the Nasdaq Composite (a proxy for technology companies).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total
Returns*

 

Average Annual Total Returns*

 

 

 


 


 

 

 

1st-Qtr

 

1-Year

 

3-Year

 

5-Year

 

10-Year

 

15-Year

 

20-Year

 

Since
Inception
(6/1/83)

 

 

 


 


 


 


 


 


 


 


 

Value

 

 

-12.5

%

 

 

-21.2

%

 

 

-1.0

%

 

 

7.6

%

 

 

6.3

%

 

 

11.3

%

 

 

11.9

%

 

 

N/A

 

 

Partners Value**

 

 

-12.9

 

 

 

-20.7

 

 

 

-0.3

 

 

 

7.5

 

 

 

6.3

 

 

 

11.7

 

 

 

12.3

 

 

 

13.2

 

 

Hickory

 

 

-11.2

 

 

 

-22.3

 

 

 

-0.3

 

 

 

11.9

 

 

 

3.4

 

 

 

10.7

 

 

 

N/A

 

 

 

N/A

 

 

Partners III**

 

 

-9.1

 

 

 

-20.1

 

 

 

-0.5

 

 

 

11.0

 

 

 

7.5

 

 

 

13.1

 

 

 

13.2

 

 

 

13.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

S&P 500#

 

 

-9.4

 

 

 

-5.1

 

 

 

5.8

 

 

 

11.3

 

 

 

3.5

 

 

 

9.4

 

 

 

10.9

 

 

 

11.6

 

 

Russell 2000#

 

 

-9.9

 

 

 

-13.0

 

 

 

5.1

 

 

 

14.9

 

 

 

5.0

 

 

 

N/A

 

 

 

N/A

 

 

 

N/A

 

 

Nasdaq Composite#

 

 

-13.9

 

 

 

-5.1

 

 

 

5.3

 

 

 

11.9

 

 

 

2.7

 

 

 

8.3

 

 

 

9.4

 

 

 

8.4

 

 

These performance numbers reflect the deduction of each Fund’s annual operating expenses. The current annual operating expenses for the Value, Partners Value, Hickory and Partners III Opportunity Funds, as stated in the most recent Prospectus are 1.14%, 1.15%, 1.22% and 1.57%, respectively, of each Fund’s net assets. 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.

 

 

*

All performance numbers assume reinvestment of dividends (except for the 15-year, 20-year and Since Inception Nasdaq numbers for which reinvestment of dividend information was not available).

 

 

**

As of December 31, 1993, the Partners Value Fund (“Partners Value”) succeeded to substantially all of the assets of Weitz Partners II Limited Partnership and as of December 30, 2005, the Partners III Opportunity Fund (“Partners III”) succeeded to substantially all of the assets of Weitz Partners III Limited Partnership (together with Weitz Partners II Limited Partnership, the “Partnerships”). The investment objectives, policies and restrictions of Partners Value and Partners III are materially equivalent to those of the respective Partnerships and the Partnerships were managed at all times with full investment authority by Wallace R. Weitz & Company. The performance information includes performance for the period before Partners Value and Partners III became investment companies registered with the Securities and Exchange Commission. During these periods, neither Partnership was registered under the Investment Company Act of 1940 and therefore were not subject to certain investment restrictions imposed by the 1940 Act. If either Partnership had been registered under the 1940 Act during these periods, the Partnership’s performance might have been adversely affected.

 

 

#

Index performance is hypothetical and is for illustrative purposes only.

4



 

 

Market Commentary

          Volumes have already been (and will be) written about the “credit bubble” and the implications of its deflation. It is a fascinating subject and it is very tempting to write about causes, symptoms, villains, victims, policy prescriptions, and long-term implications. We suspect that our shareholders are most interested in answers to the question, “How are we to protect our capital and make it grow?”

          We will start with the caveats. We are optimistic about surviving and earning positive returns over the next several years, but investors will need to be patient—the economic news is likely to get worse and remain negative for some time. Home foreclosures have not peaked and it may be many years before a “normal” housing market resumes. Credit losses among lenders will continue at elevated levels. It will take time for lenders to rebuild their reserves. Regulatory capital requirements will be higher and lending standards have been raised, so credit to support consumption will be less available and more expensive. This does not have to be a terrible environment for investing, but we would expect a long period of alternate mood swings between abject pessimism and wishful thinking that could be stressful even for patient investors.

          On the positive side, we do not subscribe to the view that the current vicious circle of falling home prices, rising foreclosures, and worsening business environment will inevitably lead to another great depression. We believe there are several reasons we will be able to short-circuit that return trip to the 1930’s:

 

 

 

 

(1)

While financial companies are currently reeling, other companies that produce “real” products and services are generally doing well enough that economists cannot tell for sure whether GDP has actually turned negative yet. Many companies do business globally and are enjoying healthy demand abroad.Most companies are entering this slowdown with sound balance sheets. A recession will not be good for them, but it need not be devastating. Even (most) financial companies should be able to cope reasonably well once the credit markets reopen. (The long-term implications of the efforts of the Fed, Treasury and Congress to restore liquidity to markets are another subject.)

 

 

 

 

(2)

Pension and endowment funds, investment companies like Berkshire Hathaway, hedge funds and private equity funds, and even individuals have enormous amounts of capital available with which to buy distressed assets and companies. Investors bought and “recycled” billions of dollars of real estate collateral of failed savings and loans that was sold by the Resolution Trust Corporation (RTC) in the 1980’s. The tactics and compensation of some of the “vulture investors” may be unattractive and many individual homeowners will suffer serious losses, but we believe that self-corrective (albeit sometimes ruthless) economic forces can facilitate a bottoming of home prices and restore a needed level of confidence among lenders and borrowers.

 

 

 

 

(3)

Government intervention—by the Federal Reserve, Treasury, and Congress—should soften the impact of the recession. The Fed has opened the “discount window,” allowing banks, and for the first time, investment banks (brokerage firms) to borrow hundreds of billions of dollars to maintain adequate liquidity in the banking system. As mentioned above, when other investment firms lost faith in Bear Stearns and its failure seemed imminent, the Fed engineered a “rescue” by J.P. Morgan. Americans will be receiving checks soon as part of a $152 billion “stimulus package.” Congress is also studying ways to help homeowners adjust mortgage terms or refinance through government programs. The legal and logistical challenges to effectively assisting distressed homeowners are huge, but a substantial amount of fiscal stimulus should find its way into the system.

          The credit market “freeze” which began last August has lasted longer than we would have imagined possible. The credit bubble at the heart of today’s economic and investment problems was a very long time in the making and deflating it will also take time.

5



 

 

          We believe that during this period of adjustment, which may take years, there can be lots of investment opportunities for value investors. A company’s business value is a function of the cash it will generate for its owners over the next few decades. A soggy year or two does not make the value zero. On the other hand, the world has changed permanently for certain kinds of companies. Our challenge is to acknowledge the changes, to value the businesses realistically and then to have the courage of our convictions, understanding that it may take a while for the market’s enthusiasm to return.

Portfolio Review and Outlook

          Given such a muted outlook, some shareholders may ask, “Why not sell all of our stocks and wait for a more favorable environment?” For some, selling and taking refuge in cash may be an appropriate answer. (For those looking for shelter we do offer the Government Money Market Fund.) As we have said many times, peace of mind is very important. Exposing one’s capital to volatility that will cause personal anxiety may be a bad idea, especially for one who has enough capital and is interested in preserving it. As Warren Buffett is fond of saying, “Marrying for money is almost always a bad idea, but it’s really dumb if you’re already rich.”

          For those who are interested in the prudent pursuit of capital appreciation, the answer is more complicated. The investment outlook is always uncertain. The interplay of fear and greed leads to gross mis-pricing of stocks from time to time, and paraphrasing Mr. Buffett again, “Our job is to be fearful when others are greedy and greedy when others are fearful.” There are real things to be afraid of today, and stocks in general are not dirt cheap. Nevertheless, we think it is worth the effort to continue to identify, buy and hold stocks of good companies that are available at reasonable prices.

          Following this letter, there are several pages of data on each of the stock Funds. The financial world has changed a great deal over the past year, and the summary tables of buys and sells, gains and losses, etc. may be less useful than usual. However, they do provide a capsule summary of changes to the portfolios during the fiscal year. There is also a list of holdings for each portfolio. The stocks in each Fund are arranged by Global Industry Classification Standards (GICS) (responding to requests from several analysts and consultants) which represents a slight change from past reports.

          We found a few new investment ideas (Vulcan Materials, Wells Fargo and Lowe’s) and we took profits in stocks that had appreciated and became fully valued (Apollo Group, Discovery Holding and News Corp). We discovered and acknowledged some mistakes (Countrywide Financial). We sold some stocks whose values had declined or whose upside potential was diminished by changes in their business outlook. We added to existing positions whose fundamentals improved while their stock prices declined (WellPoint).

          Generally speaking, we continued to find greater value in larger, financially stronger companies. This continues a trend that has been in place for a few years and which has allowed us to upgrade portfolio quality without sacrificing upside potential. One element of “quality” that is particularly important in today’s environment is “excess capital.” With banks facing a capital shortage now, companies with plenty of capital can finance their own expansion and take advantage of opportunities to buy distressed assets.

          For each company we analyze, we try to determine an approximate intrinsic business value. The idea is that if we can buy stocks at deep discounts to their intrinsic values, those values will eventually be reflected in the stocks’ prices. We have no illusions about the precision in this process, but we have found that when the aggregate “price-to-value” (P/V) of our entire portfolio is lower than usual, subsequent portfolio performance tends to be better than when P/V is higher. Today’s P/V of our portfolios is definitely on the low end of the range. This has no predictive value in the short run, but gives us some confidence about the next few years.

6



 

 

          Investing is our business and, happily, it is what we like to do. We are excited by the challenges of this market, but we have no illusions about earning “easy” returns. We think our investment methods will continue to work as they have over the past 25 years since our firm was started (the results of the past 12 months notwithstanding) but as we have said—possibly ad nauseam—we and our shareholders may have to be unusually patient.

Annual Shareholder Information Meeting – Tuesday, May 27, 2008

          Please plan to join us at the Scott Conference Center in Omaha at 4:30 p.m. on May 27. The center is located at 6450 Pine Street on the Aksarben campus. There will be no formal business to conduct, so we can devote the entire meeting to answering your questions. Maps and driving directions are available from our client service representatives. We look forward to seeing you there.

 

 

 

 

 

Sincerely,

 

 

 

 

-s- Wallace R. Weitz

 

-s- Bradley P. Hinton

 

 

Wallace R. Weitz

 

Bradley P. Hinton

 

Co-manager Value and Partners Value

 

Co-manager Value and Partners Value

 

Portfolio Manager Hickory and Partners III

 

brad@weitzfunds.com

 

wally@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. See the Schedules of Investments in Securities included in this report for the percent of assets in each of the Funds invested in particular industries or sectors.

7



 

FUND PERFORMANCE — VALUE FUND

(Unaudited)

The following table summarizes performance information for the Fund as compared to the S&P 500 over the periods indicated.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Period Ended

 

Value Fund

 

S&P 500

 

Difference
Value Fund – S&P 500

 


 



 



 



 

Dec. 31, 1998

 

 

 

28.9

%

 

 

 

28.6

%

 

 

 

0.3

%

 

Dec. 31, 1999

 

 

 

21.0

 

 

 

 

21.0

 

 

 

 

0.0

 

 

Dec. 31, 2000

 

 

 

19.6

 

 

 

 

–9.1

 

 

 

 

28.7

 

 

Dec. 31, 2001

 

 

 

0.2

 

 

 

 

–11.8

 

 

 

 

12.0

 

 

Dec. 31, 2002

 

 

 

–17.1

 

 

 

 

–22.1

 

 

 

 

5.0

 

 

Dec. 31, 2003

 

 

 

28.7

 

 

 

 

28.7

 

 

 

 

0.0

 

 

Dec. 31, 2004

 

 

 

15.7

 

 

 

 

10.9

 

 

 

 

4.8

 

 

Dec. 31, 2005

 

 

 

–2.8

 

 

 

 

4.9

 

 

 

 

–7.7

 

 

Dec. 31, 2006

 

 

 

21.8

 

 

 

 

15.8

 

 

 

 

6.0

 

 

Dec. 31, 2007

 

 

 

–10.3

 

 

 

 

5.5

 

 

 

 

–15.8

 

 

Mar. 31, 2008 (3 months)

 

 

 

–12.5

 

 

 

 

–9.4

 

 

 

 

–3.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10-Year Cumulative Return ended Mar. 31, 2008

 

 

 

84.3

 

 

 

 

41.1

 

 

 

 

43.2

 

 

10-Year Average Annual Compound Return ended Mar. 31, 2008

 

 

 

6.3

 

 

 

 

3.5

 

 

 

 

2.8

 

 


This chart depicts the change in the value of a $10,000 investment in the Value Fund for the period March 31, 1998, through March 31, 2008, 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.

(LINE GRAPH)



The Funds average annual total return for the one, five and ten year periods ended March 31, 2008 was –21.2%, 7.6% and 6.3%, respectively. These performance numbers reflect the deduction of the Funds annual operating expenses, which as stated in its most recent Prospectus are 1.14% of the Funds 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 investors 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.

8



 

PORTFOLIO PROFILE — VALUE FUND

(Unaudited)

 

 

 

 

 

 

Top Ten Stocks*

 

 

 

 


 

 

 

 

 

Berkshire Hathaway

 

 

11.0

%

Liberty Media - Entertainment

 

 

5.2

 

Redwood Trust

 

 

4.9

 

American International Group

 

 

4.7

 

Liberty Media - Interactive

 

 

4.7

 

American Express

 

 

4.1

 

Comcast

 

 

4.0

 

Liberty Global

 

 

3.7

 

Telephone & Data Systems

 

 

3.7

 

Washington Post

 

 

3.6

 

 

 



 

 

 

 

49.6

%

 

 



 

* As of March 31, 2008

 

 

 

 

 

 

 

 

 

 

Industry Sectors*

 

 

 

 


 

 

 

 

 

Financials

 

 

31.5

%

Consumer Discretionary

 

 

30.8

 

Health Care

 

 

10.9

 

Industrials

 

 

6.5

 

Information Technology

 

 

3.8

 

Telecommunication Services

 

 

3.7

 

Materials

 

 

3.1

 

Consumer Staples

 

 

2.0

 

Short-Term Securities/Other

 

 

7.7

 

 

 



 

 

 

 

100.0

%

 

 



 


Largest Net Purchases and Sales for Year Ended March 31, 2008

 

 

 

 

 

Net Purchases ($mil)

 

 

 

 


 

 

 

 

 

Lowe’s (new)

 

$

57

 

Wells Fargo (new)

 

 

45

 

Omnicare

 

 

40

 

Bed Bath & Beyond (new)

 

 

39

 

Vulcan Materials (new)

 

 

24

 

 

 



 

 

 

$

205

 

 

 



 

 

 

 

 

 

Net Sales ($mil)

 

 

 

 


 

 

 

 

 

Wal-Mart

 

$

100

 

UnitedHealth Group

 

 

95

 

Liberty Global

 

 

94

 

Berkshire Hathaway

 

 

89

 

Apollo Group

 

 

75

 

Other (net)

 

 

280

 

 

 



 

 

 

$

733

 

 

 



 

 

 

 

 

 

Net Portfolio Sales

 

$

528

 

 

 



 



Largest Net Contributions to Investment Results for Year Ended March 31, 2008

 

 

 

 

 

Positive ($mil)

 

 

 

 


 

 

 

 

 

Berkshire Hathaway

 

$

54

 

Apollo Group

 

 

29

 

Liberty Global

 

 

19

 

Covidien

 

 

11

 

Discovery Holding

 

 

10

 

 

 



 

 

 

$

123

 

 

 



 

 

 

 

 

 

Negative ($mil)

 

 

 

 


 

 

 

 

 

Countrywide Financial

 

$

(168

)

Fannie Mae

 

 

(47

)

Omnicare

 

 

(46

)

American International Group

 

 

(45

)

Liberty Media - Interactive

 

 

(42

)

Other (net)

 

 

(293

)

 

 



 

 

 

$

(641

)

 

 



 

 

 

 

 

 

Net Portfolio Losses

 

$

(518

)

 

 



 



9



 

VALUE FUND

Schedule of Investments in Securities

March 31, 2008

 

 

 

 

 

 

 

 

 

 

 

Shares

 

Value

 

 

 


 


 

COMMON STOCKS —92.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financials — 31.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Insurance — 15.7%

 

 

 

 

 

 

 

Berkshire Hathaway, Inc. - CL B*

 

 

43,380

 

$

194,034,402

 

American International Group, Inc.

 

 

1,912,500

 

 

82,715,625

 

 

 

 

 

 



 

 

 

 

 

 

 

276,750,027

 

Mortgage REIT’s — 6.1%

 

 

 

 

 

 

 

Redwood Trust, Inc.

 

 

2,382,100

 

 

86,589,335

 

Newcastle Investment Corp.

 

 

1,908,100

 

 

15,760,906

 

CBRE Realty Finance, Inc.

 

 

1,350,000

 

 

5,440,500

 

 

 

 

 

 



 

 

 

 

 

 

 

107,790,741

 

Diversified Financials — 4.1%

 

 

 

 

 

 

 

American Express Co.

 

 

1,650,000

 

 

72,138,000

 

 

 

 

 

 

 

 

 

Thrifts & Mortgage Finance — 3.5%

 

 

 

 

 

 

 

Fannie Mae

 

 

1,800,000

 

 

47,376,000

 

Freddie Mac

 

 

588,700

 

 

14,905,884

 

 

 

 

 

 



 

 

 

 

 

 

 

62,281,884

 

Banks — 2.1%

 

 

 

 

 

 

 

Wells Fargo & Co.(b)

 

 

1,300,000

 

 

37,830,000

 

 

 

 

 

 



 

 

 

 

 

 

 

556,790,652

 

 

 

 

 

 

 

 

 

Consumer Discretionary — 30.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broadcasting & Cable TV — 14.2%

 

 

 

 

 

 

 

Liberty Media Corp. - Entertainment - Series A*

 

 

4,051,630

 

 

91,728,903

 

Liberty Media Corp. - Capital - Series A*

 

 

1,080,000

 

 

16,999,200

 

Comcast Corp. - CL A

 

 

3,650,000

 

 

70,591,000

 

Liberty Global, Inc. - Series C*

 

 

1,990,000

 

 

64,635,200

 

Cumulus Media, Inc. - CL A*

 

 

1,121,168

 

 

7,153,052

 

Adelphia Recovery Trust, Series ACC-7* #

 

 

3,535,000

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

251,107,355

 

Retailing — 11.3%

 

 

 

 

 

 

 

Liberty Media Corp. - Interactive - Series A*

 

 

5,100,000

 

 

82,314,000

 

Lowe’s Companies, Inc.

 

 

1,900,000

 

 

43,586,000

 

IAC/InterActiveCorp*

 

 

1,800,000

 

 

37,368,000

 

Bed Bath & Beyond, Inc.*

 

 

1,250,000

 

 

36,875,000

 

 

 

 

 

 



 

 

 

 

 

 

 

200,143,000

 

The accompanying notes form an integral part of these financial statements.

10



 

VALUE FUND

Schedule of Investments in Securities, Continued

 

 

 

 

 

 

 

 

 

 

 

Shares

 

Value

 

 

 


 


 

Media — 3.6%

 

 

 

 

 

 

 

The Washington Post Co. - CL B

 

 

95,048

 

$

62,874,252

 

 

 

 

 

 

 

 

 

Education Services — 1.2%

 

 

 

 

 

 

 

Apollo Group, Inc. - CL A*

 

 

500,000

 

 

21,600,000

 

 

 

 

 

 

 

 

 

Consumer Durables & Apparel — 0.4%

 

 

 

 

 

 

 

Mohawk Industries, Inc.*

 

 

93,800

 

 

6,717,018

 

 

 

 

 

 

 

 

 

Leisure Facilities — 0.1%

 

 

 

 

 

 

 

Six Flags, Inc.*

 

 

900,000

 

 

1,476,000

 

 

 

 

 

 



 

 

 

 

 

 

 

543,917,625

 

 

 

 

 

 

 

 

 

Health Care — 10.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Managed Health Care — 6.3%

 

 

 

 

 

 

 

WellPoint, Inc.*

 

 

1,300,000

 

 

57,369,000

 

UnitedHealth Group, Inc.

 

 

1,560,000

 

 

53,601,600

 

 

 

 

 

 



 

 

 

 

 

 

 

110,970,600

 

Health Care Equipment & Services — 4.6%

 

 

 

 

 

 

 

Omnicare, Inc.

 

 

2,275,000

 

 

41,314,000

 

Covidien Ltd.

 

 

900,000

 

 

39,825,000

 

 

 

 

 

 



 

 

 

 

 

 

 

81,139,000

 

 

 

 

 

 



 

 

 

 

 

 

 

192,109,600

 

Industrials — 6.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Building Products — 2.4%

 

 

 

 

 

 

 

USG Corp.*

 

 

1,170,000

 

 

43,079,400

 

 

 

 

 

 

 

 

 

Industrial Conglomerates — 2.2%

 

 

 

 

 

 

 

Tyco International Ltd.

 

 

900,000

 

 

39,645,000

 

 

 

 

 

 

 

 

 

Transportation — 1.9%

 

 

 

 

 

 

 

United Parcel Service, Inc.

 

 

450,000

 

 

32,859,000

 

 

 

 

 

 



 

 

 

 

 

 

 

115,583,400

 

 

 

 

 

 

 

 

 

Information Technology — 3.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Technology Hardware & Equipment — 3.3%

 

 

 

 

 

 

 

Dell, Inc.*

 

 

2,950,000

 

 

58,764,000

 

The accompanying notes form an integral part of these financial statements.

11



 

VALUE FUND

Schedule of Investments in Securities, Continued

 

 

 

 

 

 

 

 

 

 

 

Shares

 

Value

 

 

 


 


 

Software & Services — 0.5%

 

 

 

 

 

 

 

Microsoft Corp.

 

 

300,000

 

$

8,514,000

 

 

 

 

 

 



 

 

 

 

 

 

 

67,278,000

 

 

 

 

 

 

 

 

 

Telecommunication Services — 3.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Telecommunication Services — 3.7%

 

 

 

 

 

 

 

Telephone and Data Systems, Inc. - Special

 

 

1,730,000

 

 

64,529,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Materials — 3.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Materials — 3.1%

 

 

 

 

 

 

 

Martin Marietta Materials, Inc.

 

 

180,000

 

 

19,110,600

 

Vulcan Materials Co.

 

 

277,000

 

 

18,392,800

 

Eagle Materials, Inc.

 

 

500,000

 

 

17,775,000

 

 

 

 

 

 



 

 

 

 

 

 

 

55,278,400

 

 

 

 

 

 

 

 

 

Consumer Staples — 2.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hypermarkets & Super Centers — 2.0%

 

 

 

 

 

 

 

Wal-Mart Stores, Inc.

 

 

675,000

 

 

35,559,000

 

 

 

 

 

 



 

Total Common Stocks (Cost $1,644,548,773)

 

 

 

 

 

1,631,045,677

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SHORT-TERM SECURITIES — 8.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wells Fargo Advantage Government Money Market Fund 2.4%(a)
(Cost $143,618,933)

 

 

143,618,933

 

 

143,618,933

 

 

 

 

 

 



 

Total Investments in Securities (Cost $1,788,167,706)

 

 

 

 

 

1,774,664,610

 

Options Written — (0.1%)

 

 

 

 

 

(1,530,000

)

Other Liabilities in Excess of Other Assets — (0.3%)

 

 

 

 

 

(5,306,274

)

 

 

 

 

 



 

Net Assets — 100%

 

 

 

 

$

1,767,828,336

 

 

 

 

 

 



 

Net Asset Value Per Share

 

 

 

 

$

27.74

 

 

 

 

 

 



 

The accompanying notes form an integral part of these financial statements.

12



 

VALUE FUND

Schedule of Investments in Securities, Continued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expiration date/
Strike price

 

Shares
subject
to option

 

Value

 

 

 


 


 


 

OPTIONS WRITTEN*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Covered Call Options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wells Fargo & Co.

 

 

July 2008 / $30

 

 

600,000

 

$

(1,530,000

)

 

 

 

 

 

 

 

 



 

Total Options Written (premiums received $1,904,979)

 

 

 

 

 

 

 

$

(1,530,000

)

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

*

Non-income producing

 

 

Non-controlled affiliate

 

 

#

Illiquid and/or restricted security that has been fair valued.

 

 

(a)

Rate presented represents the annualized 7-day yield at March 31, 2008.

 

 

(b)

Fully or partially pledged on outstanding written options.

The accompanying notes form an integral part of these financial statements.

13



 

FUND PERFORMANCE — PARTNERS VALUE FUND

(Unaudited)

The following table summarizes performance information for the Fund as compared to the S&P 500 over the periods indicated.

 

 

 

 

 

 

 

 

 

 

Period Ended

 

Partners Value Fund

 

S&P 500

 

Difference
Partners Value – S&P 500


 


 


 


Dec. 31, 1998

 

29.1

%

 

28.6

%

 

0.5

%

Dec. 31, 1999

 

22.1

 

 

21.0

 

 

1.1

 

Dec. 31, 2000

 

21.1

 

 

–9.1

 

 

30.2

 

Dec. 31, 2001

 

–0.9

 

 

–11.8

 

 

10.9

 

Dec. 31, 2002

 

–17.0

 

 

–22.1

 

 

5.1

 

Dec. 31, 2003

 

25.4

 

 

28.7

 

 

–3.3

 

Dec. 31, 2004

 

15.0

 

 

10.9

 

 

4.1

 

Dec. 31, 2005

 

–2.4

 

 

4.9

 

 

–7.3

 

Dec. 31, 2006

 

22.5

 

 

15.8

 

 

6.7

 

Dec. 31, 2007

 

–8.5

 

 

5.5

 

 

–14.0

 

Mar. 31, 2008 (3 months)

 

–12.9

 

 

–9.4

 

 

–3.5

 

 

 

 

 

 

 

 

 

 

 

10-Year Cumulative Return ended Mar. 31, 2008

 

84.8

 

 

41.1

 

 

43.7

 

10-Year Average Annual Compound Return ended Mar. 31, 2008

 

6.3

 

 

3.5

 

 

2.8

 


This chart depicts the change in the value of a $10,000 investment in the Partners Value Fund for the period March 31, 1998, through March 31, 2008, 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.

(LINE GRAPH)










The Fund s average annual total return for the one, five and ten year periods ended March 31, 2008 was –20.7%, 7.5% and 6.3%, respectively. These performance numbers reflect the deduction of the Funds annual operating expenses which as stated in its most recent Prospectus are 1.15% of the Funds 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 investors 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.

14



 

PORTFOLIO PROFILE — PARTNERS VALUE FUND

(Unaudited)

 

 

 

 

Top Ten Stocks*

 

 

 





 

 

 

 

Berkshire Hathaway

 

11.5

%

Redwood Trust

 

6.1

 

Liberty Media - Entertainment

 

5.6

 

Liberty Media - Interactive

 

5.3

 

American International Group

 

5.2

 

American Express

 

4.6

 

Comcast

 

4.2

 

WellPoint

 

4.2

 

Telephone & Data Systems

 

4.1

 

UnitedHealth Group

 

4.1

 

 

 


 

 

 

54.9

%

 

 


 


 

 

 

 

Industry Sectors*

 

 

 





 

 

 

 

Consumer Discretionary

 

36.1

%

Financials

 

30.4

 

Health Care

 

11.0

 

Industrials

 

4.9

 

Telecommunication Services

 

4.1

 

Information Technology

 

3.3

 

Consumer Staples

 

2.1

 

Short-Term Securities/Other

 

8.1

 

 

 


 

 

 

100.0

%

 

 


 



* As of March 31, 2008

Largest Net Purchases and Sales for Year Ended March 31, 2008

 

 

 

 

 

Net Purchases ($mil)

 

 

 

 






 

 

 

 

 

Lowe’s (new)

 

$

42

 

Omnicare

 

 

33

 

Redwood Trust

 

 

28

 

American Express

 

 

25

 

WellPoint

 

 

22

 

 

 



 

 

 

$

150

 

 

 



 


 

 

 

 

 

Net Sales ($mil)

 

 

 

 






 

 

 

 

 

Wal-Mart

 

$

65

 

Apollo Group (eliminated)

 

 

63

 

Liberty Global

 

 

62

 

Berkshire Hathaway

 

 

44

 

Discovery Holding (eliminated)

 

 

43

 

Other (net)

 

 

172

 

 

 



 

 

 

$

449

 

 

 



 

 

 

 

 

 

Net Portfolio Sales

 

$

299

 

 

 



 



Largest Net Contributions to Investment Results for Year Ended March 31, 2008

 

 

 

 

 

Positive ($mil)

 

 

 

 






 

 

 

 

 

Berkshire Hathaway

 

$

36

 

Apollo Group

 

 

19

 

Liberty Global

 

 

14

 

Covidien

 

 

7

 

Discovery Holding

 

 

7

 

 

 



 

 

 

$

83

 

 

 



 


 

 

 

 

 

Negative ($mil)

 

 

 

 






 

 

 

 

 

Countrywide Financial

 

$

(114

)

American International Group

 

 

(35

)

Omnicare

 

 

(33

)

Fannie Mae

 

 

(32

)

Liberty Media - Interactive

 

 

(27

)

Other (net)

 

 

(179

)

 

 



 

 

 

$

(420

)

 

 



 

 

 

 

 

 

Net Portfolio Losses

 

$

(337

)

 

 



 



15



 

PARTNERS VALUE FUND

Schedule of Investments in Securities
March 31, 2008

 

 

 

 

 

 

 

 

 

 

Shares

 

Value

 

 

 


 


 

COMMON STOCKS — 91.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer Discretionary — 36.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broadcasting & Cable TV — 14.2%

 

 

 

 

 

 

 

Liberty Media Corp. - Entertainment - Series A*

 

 

3,000,000

 

$

67,920,000

 

Liberty Media Corp. - Capital - Series A*

 

 

775,000

 

 

12,198,500

 

Comcast Corp. - CL A

 

 

2,650,000

 

 

51,251,000

 

Liberty Global, Inc. - Series C*

 

 

1,277,000

 

 

41,476,960

 

Adelphia Recovery Trust, Series ACC-7* #

 

 

2,310,000

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

172,846,460

 

Retailing — 13.4%

 

 

 

 

 

 

 

Liberty Media Corp. - Interactive - Series A*

 

 

4,000,000

 

 

64,560,000

 

IAC/InterActiveCorp*

 

 

1,900,000

 

 

39,444,000

 

Cabela’s, Inc. - CL A*

 

 

2,311,600

 

 

32,732,256

 

Lowe’s Companies, Inc.

 

 

1,200,000

 

 

27,528,000

 

 

 

 

 

 



 

 

 

 

 

 

 

164,264,256

 

Media — 4.1%

 

 

 

 

 

 

 

The Washington Post Co. - CL B

 

 

68,100

 

 

45,048,150

 

Daily Journal Corp.*

 

 

116,000

 

 

4,761,800

 

 

 

 

 

 



 

 

 

 

 

 

 

49,809,950

 

Consumer Durables & Apparel — 2.9%

 

 

 

 

 

 

 

Mohawk Industries, Inc.*

 

 

500,000

 

 

35,805,000

 

 

 

 

 

 

 

 

 

Consumer Services — 1.5%

 

 

 

 

 

 

 

Coinstar, Inc.*

 

 

650,000

 

 

18,291,000

 

 

 

 

 

 



 

 

 

 

 

 

 

441,016,666

 

 

 

 

 

 

 

 

 

Financials — 30.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Insurance — 16.8%

 

 

 

 

 

 

 

Berkshire Hathaway, Inc. - CL B*

 

 

22,500

 

 

100,640,250

 

Berkshire Hathaway, Inc. - CL A*

 

 

300

 

 

40,020,000

 

American International Group, Inc.

 

 

1,481,200

 

 

64,061,900

 

 

 

 

 

 



 

 

 

 

 

 

 

204,722,150

 

Mortgage REIT’s — 6.1%

 

 

 

 

 

 

 

Redwood Trust, Inc.

 

 

2,045,515

 

 

74,354,470

 

 

 

 

 

 

 

 

 

Diversified Financials — 4.6%

 

 

 

 

 

 

 

American Express Co.

 

 

1,281,900

 

 

56,044,668

 

The accompanying notes form an integral part of these financial statements.

16



 

PARTNERS VALUE FUND

Schedule of Investments in Securities, Continued

 

 

 

 

 

 

 

 

 

 

Shares

 

Value

 

 

 


 


 

Thrifts & Mortgage Finance — 2.9%

 

 

 

 

 

 

 

Fannie Mae

 

 

1,352,000

 

$

35,584,640

 

 

 

 

 

 



 

 

 

 

 

 

 

370,705,928

 

 

 

 

 

 

 

 

 

Health Care — 11.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Managed Health Care — 8.2%

 

 

 

 

 

 

 

WellPoint, Inc.*

 

 

1,150,000

 

 

50,749,500

 

UnitedHealth Group, Inc.

 

 

1,450,000

 

 

49,822,000

 

 

 

 

 

 



 

 

 

 

 

 

 

100,571,500

 

Health Care Equipment & Services — 2.8%

 

 

 

 

 

 

 

Omnicare, Inc.

 

 

1,875,000

 

 

34,050,000

 

 

 

 

 

 



 

 

 

 

 

 

 

134,621,500

 

 

 

 

 

 

 

 

 

Industrials — 4.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Building Products — 2.6%

 

 

 

 

 

 

 

USG Corp.*

 

 

875,000

 

 

32,217,500

 

 

 

 

 

 

 

 

 

Industrial Conglomerates — 2.3%

 

 

 

 

 

 

 

Tyco International Ltd.

 

 

625,000

 

 

27,531,250

 

 

 

 

 

 



 

 

 

 

 

 

 

59,748,750

 

 

 

 

 

 

 

 

 

Telecommunication Services — 4.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Telecommunication Services — 4.1%

 

 

 

 

 

 

 

Telephone and Data Systems, Inc. - Special

 

 

1,342,000

 

 

50,056,600

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Information Technology — 3.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Technology Hardware & Equipment — 3.3%

 

 

 

 

 

 

 

Dell, Inc.*

 

 

2,000,000

 

 

39,840,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer Staples — 2.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hypermarkets & Super Centers — 2.1%

 

 

 

 

 

 

 

Wal-Mart Stores, Inc.

 

 

475,000

 

 

25,023,000

 

 

 

 

 

 



 

Total Common Stocks (Cost $1,103,711,701)

 

 

 

 

 

1,121,012,444

 

The accompanying notes form an integral part of these financial statements.

17



 

PARTNERS VALUE FUND

Schedule of Investments in Securities, Continued

 

 

 

 

 

 

 

 

 

 

Shares

 

Value

 

 

 


 


 

SHORT-TERM SECURITIES — 7.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wells Fargo Advantage Government Money Market Fund 2.4%(a)

 

 

 

 

 

 

 

(Cost $90,604,871)

 

 

90,604,871

 

$

90,604,871

 

 

 

 

 

 



 

Total Investments in Securities (Cost $1,194,316,572)

 

 

 

 

 

1,211,617,315

 

Other Assets Less Other Liabilities — 0.7%

 

 

 

 

 

8,827,448

 

 

 

 

 

 



 

Net Assets — 100%

 

 

 

 

$

1,220,444,763

 

 

 

 

 

 



 

Net Asset Value Per Share

 

 

 

 

$

17.33

 

 

 

 

 

 



 


 

 

*

Non-income producing

 

 

Non-controlled affiliate

 

 

#

Illiquid and/or restricted security that has been fair valued.

 

 

(a)

Rate presented represents the annualized 7-day yield at March 31, 2008.

The accompanying notes form an integral part of these financial statements.

18



(This page has been left blank intentionally.)

19



 

FUND PERFORMANCE — HICKORY FUND

(Unaudited)

The following table summarizes performance information for the Fund as compared to the S&P 500 over the periods indicated.

 

 

 

 

 

 

 

 

 

 

Period Ended

 

Hickory Fund

 

S&P 500

 

Difference
Hickory Fund – S&P 500


 


 


 


 

 

 

 

 

 

 

 

 

 

Dec. 31, 1998

 

33.0

%

 

28.6

%

 

4.4

%

Dec. 31, 1999

 

36.7

 

 

21.0

 

 

15.7

 

Dec. 31, 2000

 

–17.2

 

 

–9.1

 

 

–8.1

 

Dec. 31, 2001

 

–4.6

 

 

–11.8

 

 

7.2

 

Dec. 31, 2002

 

–29.3

 

 

–22.1

 

 

–7.2

 

Dec. 31, 2003

 

47.9

 

 

28.7

 

 

19.2

 

Dec. 31, 2004

 

22.6

 

 

10.9

 

 

11.7

 

Dec. 31, 2005

 

–0.2

 

 

4.9

 

 

–5.1

 

Dec. 31, 2006

 

22.8

 

 

15.8

 

 

7.0

 

Dec. 31, 2007

 

–13.1

 

 

5.5

 

 

–18.6

 

Mar. 31, 2008 (3 months)

 

–11.2

 

 

–9.4

 

 

–1.8

 

 

 

 

 

 

 

 

 

 

 

10-Year Cumulative Return ended Mar. 31, 2008

 

40.1

 

 

41.1

 

 

–1.0

 

10-Year Average Annual Compound Return ended Mar. 31, 2008

 

3.4

 

 

3.5

 

 

–0.1

 


This chart depicts the change in the value of a $10,000 investment in the Hickory Fund for the period March 31, 1998, through March 31, 2008, 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.

(LINE GRAPH)



The Funds average annual total return for the one, five and ten year periods ended March 31, 2008 was –22.3%, 11.9% and 3.4%, respectively. These performance numbers reflect the deduction of the Funds annual operating expenses which as stated in its most recent Prospectus are 1.22% of the Funds 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 investors 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.

20



 

PORTFOLIO PROFILE — HICKORY FUND

(Unaudited)


 

 

 

 

Top Ten Stocks*

 

 

 





 

Berkshire Hathaway

 

10.4

%

Redwood Trust

 

7.7

 

American International Group

 

5.1

 

Liberty Media - Entertainment

 

4.9

 

Liberty Media - Interactive

 

4.4

 

Coinstar

 

3.8

 

Cabela’s

 

3.7

 

UnitedHealth Group

 

3.5

 

Mohawk Industries

 

3.3

 

Liberty Global

 

3.3

 

 

 


 

 

 

50.1

%

 

 


 

* As of March 31, 2008

 

 

 

 

Industry Sectors*

 

 

 





 

Consumer Discretionary

 

35.7

%

Financials

 

30.8

 

Health Care

 

11.4

 

Industrials

 

6.2

 

Telecommunication Services

 

4.5

 

Information Technology

 

2.5

 

Materials

 

2.0

 

Short-Term Securities/Other

 

6.9

 

 

 


 

 

 

100.0

%

 

 


 

 

 

 

 



Largest Net Purchases and Sales for Year Ended March 31, 2008

 

 

 

 

 

Net Purchases ($mil)

 

 

 

 






 

American International Group

 

$

7.0

 

Lowe’s (new)

 

 

6.4

 

Omnicare

 

 

6.1

 

WellPoint

 

 

5.3

 

USG Corp.

 

 

4.4

 

 

 



 

 

 

$

29.2

 

 

 



 

 

 

 

 

 

Net Sales ($mil)

 

 

 

 






 

Cumulus Media

 

$

8.4

 

Liberty Global

 

 

8.1

 

Apollo Group

 

 

7.7

 

Corinthian Colleges (eliminated)

 

 

7.4

 

Wal-Mart (eliminated)

 

 

7.1

 

Other (net)

 

 

11.1

 

 

 



 

 

 

$

49.8

 

 

 



 

 

 

 

 

 

Net Portfolio Sales

 

$

20.6

 

 

 



 



Largest Net Contributions to Investment Results for Year Ended March 31, 2008

 

 

 

 

 

Positive ($mil)

 

 

 

 






 

Berkshire Hathaway

 

$

5.1

 

Apollo Group

 

 

3.2

 

Liberty Global

 

 

2.5

 

TD Ameritrade

 

 

1.6

 

LICT Corp. & CIBL, Inc.#

 

 

1.2

 

 

 



 

 

 

$

13.6

 

 

 



 

 

 

 

 

 

Negative ($mil)

 

 

 

 






 

Countrywide Financial

 

$

(19.9

)

Omnicare

 

 

(8.3

)

American International Group

 

 

(7.2

)

CBRE Realty

 

 

(6.0

)

Six Flags

 

 

(5.9

)

Other (net)

 

 

(41.6

)

 

 



 

 

 

$

(88.9

)

 

 



 

 

 

 

 

 

Net Portfolio Losses

 

$

(75.3

)

 

 



 


# For presentation purposes, securities combined due to spin-off during the year.

21



 

HICKORY FUND

Schedule of Investments in Securities

March 31, 2008


 

 

 

 

 

 

 

 

 

 

Shares

 

Value

 

 

 


 


 

 

 

 

 

 

 

 

 

COMMON STOCKS — 93.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer Discretionary — 35.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broadcasting & Cable TV — 13.1%

 

 

 

 

 

 

 

Liberty Media Corp. - Entertainment - Series A*

 

 

560,000

 

$

12,678,400

 

Liberty Media Corp. - Capital - Series A*

 

 

145,000

 

 

2,282,300

 

Liberty Global, Inc. - Series C*

 

 

261,695

 

 

8,499,854

 

Comcast Corp. - CL A Special

 

 

310,000

 

 

5,880,700

 

Cumulus Media, Inc. - CL A*

 

 

605,300

 

 

3,861,814

 

CIBL, Inc.* #

 

 

1,005

 

 

502,500

 

 

 

 

 

 



 

 

 

 

 

 

 

33,705,568

 

Retailing — 12.9%

 

 

 

 

 

 

 

Liberty Media Corp. - Interactive - Series A*

 

 

700,000

 

 

11,298,000

 

Cabela’s, Inc. - CL A*

 

 

672,500

 

 

9,522,600

 

Lowe’s Companies, Inc.

 

 

230,000

 

 

5,276,200

 

IAC/InterActiveCorp*

 

 

200,000

 

 

4,152,000

 

Bed Bath & Beyond, Inc.*

 

 

100,000

 

 

2,950,000

 

 

 

 

 

 



 

 

 

 

 

 

 

33,198,800

 

Consumer Services — 3.8%

 

 

 

 

 

 

 

Coinstar, Inc.*

 

 

349,960

 

 

9,847,874

 

 

 

 

 

 

 

 

 

Consumer Durables & Apparel — 3.4%

 

 

 

 

 

 

 

Mohawk Industries, Inc.*

 

 

120,000

 

 

8,593,200

 

 

 

 

 

 

 

 

 

Education Services — 1.7%

 

 

 

 

 

 

 

Apollo Group, Inc - CL A*

 

 

100,000

 

 

4,320,000

 

 

 

 

 

 

 

 

 

Leisure Facilities — 0.8%

 

 

 

 

 

 

 

Six Flags, Inc.*

 

 

1,250,000

 

 

2,050,000

 

 

 

 

 

 



 

 

 

 

 

 

 

91,715,442

 

 

 

 

 

 

 

 

 

Financials — 30.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Insurance — 15.5%

 

 

 

 

 

 

 

Berkshire Hathaway, Inc. - CL A*

 

 

200

 

 

26,680,000

 

American International Group, Inc.

 

 

300,000

 

 

12,975,000

 

 

 

 

 

 



 

 

 

 

 

 

 

39,655,000

 

The accompanying notes form an integral part of these financial statements.

22



 

HICKORY FUND

Schedule of Investments in Securities, Continued


 

 

 

 

 

 

 

 

 

 

Shares

 

Value

 

 

 


 


 

Mortgage REIT’s — 9.5%

 

 

 

 

 

 

 

Redwood Trust, Inc.

 

 

543,300

 

$

19,748,955

 

CBRE Realty Finance, Inc.

 

 

705,400

 

 

2,842,762

 

Newcastle Investment Corp.

 

 

227,200

 

 

1,876,672

 

 

 

 

 

 



 

 

 

 

 

 

 

24,468,389

 

Diversified Financials — 2.6%

 

 

 

 

 

 

 

American Express Co.

 

 

150,000

 

 

6,558,000

 

 

 

 

 

 

 

 

 

Thrifts & Mortgage Finance — 1.7%

 

 

 

 

 

 

 

Fannie Mae

 

 

170,000

 

 

4,474,400

 

 

 

 

 

 

 

 

 

Investment Banking & Brokerage — 1.5%

 

 

 

 

 

 

 

TD Ameritrade Holding Corp.*

 

 

230,000

 

 

3,797,300

 

 

 

 

 

 



 

 

 

 

 

 

 

78,953,089

 

 

 

 

 

 

 

 

 

Health Care — 11.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Managed Health Care — 6.7%

 

 

 

 

 

 

 

UnitedHealth Group, Inc.

 

 

260,000

 

 

8,933,600

 

WellPoint, Inc.*

 

 

185,000

 

 

8,164,050

 

 

 

 

 

 



 

 

 

 

 

 

 

17,097,650

 

Health Care Equipment & Services — 4.7%

 

 

 

 

 

 

 

Omnicare, Inc.

 

 

425,000

 

 

7,718,000

 

Covidien Ltd.

 

 

100,000

 

 

4,425,000

 

 

 

 

 

 



 

 

 

 

 

 

 

12,143,000

 

 

 

 

 

 



 

 

 

 

 

 

 

29,240,650

 

Industrials — 6.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Industrial Conglomerates — 2.6%

 

 

 

 

 

 

 

Tyco International Ltd.

 

 

150,000

 

 

6,607,500

 

 

 

 

 

 

 

 

 

Building Products — 2.4%

 

 

 

 

 

 

 

USG Corp.*

 

 

170,000

 

 

6,259,400

 

 

 

 

 

 

 

 

 

Capital Goods — 1.2%

 

 

 

 

 

 

 

Beacon Roofing Supply, Inc.*

 

 

300,000

 

 

3,000,000

 

 

 

 

 

 



 

 

 

 

 

 

 

15,866,900

 

The accompanying notes form an integral part of these financial statements.

23



 

HICKORY FUND

Schedule of Investments in Securities, Continued


 

 

 

 

 

 

 

 

 

 

Shares

 

Value

 

 

 


 


 

 

 

 

 

 

 

 

 

Telecommunication Services — 4.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Telecommunication Services — 4.5%

 

 

 

 

 

 

 

Telephone and Data Systems, Inc. - Special

 

 

200,000

 

$

7,460,000

 

LICT Corp.* #

 

 

1,005

 

 

4,120,500

 

 

 

 

 

 



 

 

 

 

 

 

 

11,580,500

 

Information Technology — 2.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Technology Hardware & Equipment — 2.3%

 

 

 

 

 

 

 

Dell, Inc.*

 

 

300,000

 

 

5,976,000

 

 

 

 

 

 

 

 

 

Software & Services — 0.2%

 

 

 

 

 

 

 

Convera Corp.*

 

 

343,562

 

 

584,056

 

 

 

 

 

 



 

 

 

 

 

 

 

6,560,056

 

Materials — 2.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Materials — 2.0%

 

 

 

 

 

 

 

Martin Marietta Materials, Inc.

 

 

25,000

 

 

2,654,250

 

Eagle Materials, Inc.

 

 

70,000

 

 

2,488,500

 

 

 

 

 

 



 

 

 

 

 

 

 

5,142,750

 

 

 

 

 

 



 

Total Common Stocks (Cost $262,125,710)

 

 

 

 

 

239,059,387

 

 

 

 

 

 

 

 

 

SHORT-TERM SECURITIES — 7.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wells Fargo Advantage Government Money Market Fund 2.4%(a)
(Cost $19,241,695)

 

 

19,241,695

 

 

19,241,695

 

 

 

 

 

 



 

Total Investments in Securities (Cost $281,367,405)

 

 

 

 

 

258,301,082

 

Other Liabilities in Excess of Other Assets — (0.6%)

 

 

 

 

 

(1,632,082

)

 

 

 

 

 



 

Net Assets — 100%

 

 

 

 

$

256,669,000

 

 

 

 

 

 



 

Net Asset Value Per Share

 

 

 

 

$

30.53

 

 

 

 

 

 



 


 

 

 

 

*

Non-income producing

 

 

 

 

#

Illiquid and/or restricted security that has been fair valued.

 

 

 

 

(a)

Rate presented represents the annualized 7-day yield at March 31, 2008.

The accompanying notes form an integral part of these financial statements.

24



(This page has been left blank intentionally.)

25



 

FUND PERFORMANCE — PARTNERS III OPPORTUNITY FUND

(Unaudited)

The following table summarizes performance information for the Partners III Opportunity Fund (“Partners III”) and its predecessor, Weitz Partners III-Limited Partnership (“Partnership”). Partners III succeeded to substantially all of the assets of the Partnership, a Nebraska investment limited partnership as of December 30, 2005. The investment objectives, policies, guidelines 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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Period Ended

 

Partners III

 

S&P 500

 

Difference
Partners III – S&P 500

 


 


 


 


 

Dec. 31, 1998

 

 

 

10.9

%

 

 

 

28.6

%

 

 

 

–17.7

%

 

Dec. 31, 1999

 

 

 

10.6

 

 

 

 

21.0

 

 

 

 

–10.4

 

 

Dec. 31, 2000

 

 

 

32.4

 

 

 

 

–9.1

 

 

 

 

41.5

 

 

Dec. 31, 2001

 

 

 

6.6

 

 

 

 

–11.8

 

 

 

 

18.4

 

 

Dec. 31, 2002

 

 

 

–16.1

 

 

 

 

–22.1

 

 

 

 

6.0

 

 

Dec. 31, 2003

 

 

 

42.6

 

 

 

 

28.7

 

 

 

 

13.9

 

 

Dec. 31, 2004

 

 

 

22.1

 

 

 

 

10.9

 

 

 

 

11.2

 

 

Dec. 31, 2005

 

 

 

–0.7

 

 

 

 

4.9

 

 

 

 

-5.6

 

 

Dec. 31, 2006

 

 

 

20.4

 

 

 

 

15.8

 

 

 

 

4.6

 

 

Dec. 31, 2007

 

 

 

–12.9

 

 

 

 

5.5

 

 

 

 

–18.4

 

 

Mar. 31, 2008 (3 months)

 

 

 

–9.1

 

 

 

 

–9.4

 

 

 

 

0.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10-Year Cumulative Return ended Mar. 31, 2008

 

 

 

105.2

 

 

 

 

41.1

 

 

 

 

64.1

 

 

10-Year Average Annual Compound Return ended Mar. 31, 2008

 

 

 

7.5

 

 

 

 

3.5

 

 

 

 

4.0

 

 


This chart depicts the change in the value of a $10,000 investment in Partners III for the period March 31, 1998, through March 31, 2008 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.

(LINE GRAPH)



The average annual total return of Partners III for the one, five and ten year periods ended March 31, 2008 was –20.1%, 11.0% and 7.5%, respectively. These performance numbers reflect the deduction of the Fund’s annual operating expenses which as stated in its most recent Prospectus are 1.57% 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. The performance data presented includes performance for the period before Partners III became an investment company registered with the Securities and Exchange Commission. During this time, Partners III 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 Partners III had been registered under the 1940 Act during this time period, the performance of Partners III might have been adversely affected. 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.

26




 

PORTFOLIO PROFILE — PARTNERS III OPPORTUNITY FUND

(Unaudited)

 

 

 

 

 

Top Ten Stocks*


 

 

 

 

 

Berkshire Hathaway

 

 

11.9

%

Redwood Trust

 

 

7.8

 

American International Group

 

 

5.2

 

WellPoint

 

 

4.8

 

Liberty Media - Interactive

 

 

4.4

 

Coinstar

 

 

3.6

 

Cabela’s

 

 

3.5

 

Liberty Media - Entertainment

 

 

3.4

 

American Express

 

 

3.4

 

Comcast

 

 

3.1

 

 

 



 

 

 

 

51.1

%

 

 



 

 

 

 

 

 

Industry Sectors*


 

 

 

 

 

Consumer Discretionary

 

 

34.3

%

Financials

 

 

32.0

 

Health Care

 

 

12.2

 

Industrials

 

 

5.5

 

Information Technology

 

 

4.2

 

Materials

 

 

3.0

 

Telecommunication Services

 

 

2.3

 

Consumer Staples

 

 

2.0

 

 

 



 

Total Long Positions

 

 

95.5

 

Securities Sold Short

 

 

(20.1

)

 

 



 

Net Long Positions

 

 

75.4

 

Short Proceeds/Other

 

 

24.6

 

 

 



 

 

 

 

100.0

%

 

 



 



* Percentage of net assets as of March 31, 2008

Largest Net Purchases and Sales for Year Ended March 31, 2008

 

 

 

 

 

Net Purchases ($mil)


 

 

 

 

 

WellPoint

 

$

10.7

 

American International Group

 

 

10.2

 

Lowe’s (new)

 

 

7.1

 

Redwood Trust

 

 

6.7

 

American Express

 

 

6.5

 

 

 



 

 

 

$

41.2

 

 

 



 

 

 

 

 

 

Net Sales ($mil)


 

 

 

 

 

Short Positions

 

$

8.0

 

Cumulus Media

 

 

7.9

 

Liberty Global

 

 

7.6

 

Expedia (eliminated)

 

 

7.2

 

Wal-Mart

 

 

7.2

 

Other (net)

 

 

6.5

 

 

 



 

 

 

$

44.4

 

 

 



 

 

 

 

 

 

Net Portfolio Sales

 

$

3.2

 

 

 



 



Largest Net Contributions to Investment Results for Year Ended March 31, 2008

 

 

 

 

 

Positive ($mil)


 

 

 

 

 

Short Positions

 

$

7.8

 

Berkshire Hathaway

 

 

5.7

 

Apollo Group

 

 

2.4

 

Liberty Global

 

 

2.3

 

Wal-Mart

 

 

1.4

 

 

 



 

 

 

$

19.6

 

 

 



 

 

 

 

 

 

Negative ($mil)


 

 

 

 

 

Countrywide Financial

 

$

(18.6

)

Omnicare

 

 

(8.2

)

American International Group

 

 

(6.7

)

Cabela’s

 

 

(6.0

)

Fannie Mae

 

 

(5.6

)

Other (net)

 

 

(37.8

)

 

 



 

 

 

$

(82.9

)

 

 



 

 

 

 

 

 

Net Portfolio Losses

 

$

(63.3

)

 

 



 



27




 

PARTNERS III OPPORTUNITY FUND

Schedule of Investments in Securities
March 31, 2008

 

 

 

 

 

 

 

 

 

 

Shares

 

Value

 

 

 


 


 

COMMON STOCKS — 95.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer Discretionary — 34.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retailing — 13.0%

 

 

 

 

 

 

 

Liberty Media Corp. - Interactive - Series A* (b)

 

 

700,000

 

$

11,298,000

 

Cabela’s, Inc. - CL A* (b)

 

 

647,500

 

 

9,168,600

 

Lowe’s Companies, Inc.

 

 

235,000

 

 

5,390,900

 

IAC/InterActiveCorp*

 

 

200,000

 

 

4,152,000

 

Bed Bath & Beyond, Inc.*

 

 

130,000

 

 

3,835,000

 

 

 

 

 

 



 

 

 

 

 

 

 

33,844,500

 

Broadcasting & Cable TV — 11.1%

 

 

 

 

 

 

 

Liberty Media Corp. - Entertainment - Series A* (b)

 

 

388,000

 

 

8,784,320

 

Liberty Media Corp. - Capital - Series A* (b)

 

 

97,000

 

 

1,526,780

 

Comcast Corp. - CL A

 

 

410,000

 

 

7,929,400

 

Liberty Global, Inc. - Series C* (b)

 

 

233,000

 

 

7,567,840

 

Cumulus Media, Inc. - CL A*

 

 

450,750

 

 

2,875,785

 

 

 

 

 

 



 

 

 

 

 

 

 

28,684,125

 

Consumer Services — 3.6%

 

 

 

 

 

 

 

Coinstar, Inc.*

 

 

330,000

 

 

9,286,200

 

 

 

 

 

 

 

 

 

Consumer Durables & Apparel — 3.0%

 

 

 

 

 

 

 

Mohawk Industries, Inc.*

 

 

110,000

 

 

7,877,100

 

 

 

 

 

 

 

 

 

Education Services — 1.7%

 

 

 

 

 

 

 

Apollo Group, Inc - CL A*

 

 

100,000

 

 

4,320,000

 

 

 

 

 

 

 

 

 

Media — 1.3%

 

 

 

 

 

 

 

The Washington Post Co. - CL B(b)

 

 

5,000

 

 

3,307,500

 

 

 

 

 

 

 

 

 

Leisure Facilities — 0.6%

 

 

 

 

 

 

 

Six Flags, Inc.*

 

 

1,000,000

 

 

1,640,000

 

 

 

 

 

 



 

 

 

 

 

 

 

88,959,425

 

 

 

 

 

 

 

 

 

Financials — 32.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Insurance — 17.1%

 

 

 

 

 

 

 

Berkshire Hathaway, Inc. - CL A* (b)

 

 

130

 

 

17,342,000

 

Berkshire Hathaway, Inc. - CL B* (b)

 

 

3,000

 

 

13,418,700

 

American International Group, Inc.

 

 

310,000

 

 

13,407,500

 

 

 

 

 

 



 

 

 

 

 

 

 

44,168,200

 

The accompanying notes form an integral part of these financial statements.

28




 

PARTNERS III OPPORTUNITY FUND

Schedule of Investments in Securities, Continued

 

 

 

 

 

 

 

 

 

 

Shares

 

Value

 

 

 


 


 

Mortgage REIT’s — 8.7%

 

 

 

 

 

 

 

Redwood Trust, Inc.(b)

 

 

555,000

 

$

20,174,250

 

Newcastle Investment Corp.

 

 

220,000

 

 

1,817,200

 

CBRE Realty Finance, Inc.

 

 

117,000

 

 

471,510

 

 

 

 

 

 



 

 

 

 

 

 

 

22,462,960

 

Diversified Financials — 3.4%

 

 

 

 

 

 

 

American Express Co.

 

 

200,000

 

 

8,744,000

 

 

 

 

 

 

 

 

 

Thrifts & Mortgage Finance — 1.5%

 

 

 

 

 

 

 

Fannie Mae

 

 

150,000

 

 

3,948,000

 

 

 

 

 

 

 

 

 

Investment Banking & Brokerage — 1.3%

 

 

 

 

 

 

 

TD Ameritrade Holding Corp.*

 

 

210,000

 

 

3,467,100

 

 

 

 

 

 



 

 

 

 

 

 

 

82,790,260

 

 

 

 

 

 

 

 

 

Health Care — 12.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Managed Health Care — 7.7%

 

 

 

 

 

 

 

WellPoint, Inc.*

 

 

280,000

 

 

12,356,400

 

UnitedHealth Group, Inc.

 

 

220,000

 

 

7,559,200

 

 

 

 

 

 



 

 

 

 

 

 

 

19,915,600

 

Health Care Equipment & Services — 4.5%

 

 

 

 

 

 

 

Omnicare, Inc.

 

 

400,000

 

 

7,264,000

 

Covidien Ltd.

 

 

102,500

 

 

4,535,625

 

 

 

 

 

 



 

 

 

 

 

 

 

11,799,625

 

 

 

 

 

 



 

 

 

 

 

 

 

31,715,225

 

Industrials — 5.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Industrial Conglomerates — 2.5%

 

 

 

 

 

 

 

Tyco International Ltd.

 

 

145,000

 

 

6,387,250

 

 

 

 

 

 

 

 

 

Building Products — 2.0%

 

 

 

 

 

 

 

USG Corp.*

 

 

144,161

 

 

5,308,008

 

 

 

 

 

 

 

 

 

Capital Goods — 1.0%

 

 

 

 

 

 

 

Beacon Roofing Supply, Inc.*

 

 

250,000

 

 

2,500,000

 

 

 

 

 

 



 

 

 

 

 

 

 

14,195,258

 

The accompanying notes form an integral part of these financial statements.

29




 

PARTNERS III OPPORTUNITY FUND

Schedule of Investments in Securities, Continued

 

 

 

 

 

 

 

 

 

 

Shares

 

Value

 

 

 


 


 

Information Technology — 4.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Technology Hardware & Equipment — 2.6%

 

 

 

 

 

 

 

Dell, Inc.*

 

 

330,000

 

$

6,573,600

 

Continental Resources #

 

 

700

 

 

280,000

 

 

 

 

 

 



 

 

 

 

 

 

 

6,853,600

 

Software & Services — 1.6%

 

 

 

 

 

 

 

Intelligent Systems Corp.* # †

 

 

883,999

 

 

2,651,997

 

Google, Inc. - CL A*

 

 

2,000

 

 

880,940

 

Convera Corp.*

 

 

280,000

 

 

476,000

 

 

 

 

 

 



 

 

 

 

 

 

 

4,008,937

 

 

 

 

 

 



 

 

 

 

 

 

 

10,862,537

 

Materials — 3.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Materials — 3.0%

 

 

 

 

 

 

 

Eagle Materials, Inc.

 

 

120,000

 

 

4,266,000

 

Martin Marietta Materials, Inc.

 

 

32,000

 

 

3,397,440

 

 

 

 

 

 



 

 

 

 

 

 

 

7,663,440

 

 

 

 

 

 

 

 

 

Telecommunication Services — 2.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Telecommunication Services — 2.3%

 

 

 

 

 

 

 

Telephone and Data Systems, Inc. - Special(b)

 

 

162,900

 

 

6,076,170

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer Staples — 2.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hypermarkets & Super Centers — 2.0%

 

 

 

 

 

 

 

Wal-Mart Stores, Inc.(b)

 

 

100,000

 

 

5,268,000

 

 

 

 

 

 



 

Total Common Stocks (Cost $254,815,527)

 

 

 

 

 

247,530,315

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SHORT-TERM SECURITIES — 4.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wells Fargo Advantage Government Money Market Fund 2.4%(a)
(Cost $12,670,313)

 

 

12,670,313

 

 

12,670,313

 

 

 

 

 

 



 

Total Investments in Securities (Cost $267,485,840)

 

 

 

 

 

260,200,628

 

Due From Broker(b) — 21.2%

 

 

 

 

 

54,960,216

 

Securities Sold Short — (20.1%)

 

 

 

 

 

(52,184,150

)

Other Liabilities in Excess of Other Assets — (1.5%)

 

 

 

 

 

(3,897,878

)

 

 

 

 

 



 

Net Assets — 100%

 

 

 

 

$

259,078,816

 

 

 

 

 

 



 

Net Asset Value Per Share

 

 

 

 

$

8.55

 

 

 

 

 

 



 

The accompanying notes form an integral part of these financial statements.

30




 

PARTNERS III OPPORTUNITY FUND

Schedule of Investments in Securities, Continued

 

 

 

 

 

 

 

 

 

 

Shares

 

Value

 

 

 


 


 

SECURITIES SOLD SHORT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ishares Dow Jones U.S. Real Estate

 

 

100,000

 

$

(6,510,000

)

Ishares Russell 2000

 

 

220,000

 

 

(15,072,200

)

Ishares Russell 2000 Value

 

 

230,000

 

 

(15,166,200

)

Ishares Russell Midcap

 

 

165,000

 

 

(15,435,750

)

 

 

 

 

 



 

Total Securities Sold Short (proceeds $61,511,498)

 

 

 

 

$

(52,184,150

)

 

 

 

 

 



 


 

 

*

Non-income producing

 

 

Non-controlled affiliate

 

 

#

Illiquid and/or restricted security that has been fair valued.

 

 

(a)

Rate presented represents the annualized 7-day yield at March 31, 2008.

 

 

(b)

Fully or partially pledged as collateral on securities sold short.

The accompanying notes form an integral part of these financial statements.

31



 

BALANCED FUND

April 16, 2008

Dear Fellow Shareholder:

          The Balanced Fund had another rough quarter in a tough market. The Fund’s total return in the first calendar quarter was -7.1% versus -4.5% for our primary benchmark, the Blended Index. Our poor results over the past year have impacted all of the trailing return comparisons due to the Fund’s relatively short history. The unflattering details are shown below.

          The following table shows the results of the Balanced Fund over various time periods through March 31, 2008, along with the Blended Index, the S&P 500 (stocks) and the Lehman Brothers Intermediate U.S. Government/Credit Index (bonds).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Returns*

 

Average Annual
Total Returns*

 

 

 


 


 

 

 

3-Mos.

 

1-Year

 

2-Year

 

3-Year

 

4-Year

 

Since
Inception

 

 

 


 


 


 


 


 


 

Balanced Fund

 

 

 

-7.1

%

 

 

 

-12.3

%

 

 

 

-1.0

%

 

 

 

1.3

%

 

 

 

3.1

%

 

 

 

3.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Blended Index†#

 

 

 

-4.5

 

 

 

 

0.5

 

 

 

 

4.8

 

 

 

 

5.8

 

 

 

 

5.3

 

 

 

 

6.8

 

 

S&P 500#

 

 

 

-9.4

 

 

 

 

-5.1

 

 

 

 

3.0

 

 

 

 

5.8

 

 

 

 

6.1

 

 

 

 

8.5

 

 

Lehman Brothers Intermediate U.S.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Government/Credit Index#

 

 

 

3.0

 

 

 

 

8.9

 

 

 

 

7.5

 

 

 

 

5.7

 

 

 

 

4.1

 

 

 

 

4.2

 

 

These performance numbers reflect the deduction of the Fund’s annual operating expenses which as stated in its most recent Prospectus are 1.14% of the Fund’s net assets. This information represents past performance and past performance does not guarantee future results. The investment return and the principal value of an investment in the 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 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.

 

 

*

Fund inception date: October 1, 2003. All performance numbers assume reinvestment of dividends.

 

 

The Blended Index reflects an unmanaged portfolio of 60% of the S&P 500, which is an unmanaged index of common stock prices, and 40% of the Lehman Brothers Intermediate U.S. Government/Credit Index, which is an unmanaged index consisting of government securities and publicly issued corporate debt with maturities from one to ten years.

 

 

#

Index performance is hypothetical and is for illustrative purposes only.

Fiscal 2008 Review

          The numbers speak for themselves - it was a bad year. Last March, coming off a strong fiscal 2007, our stock investments (55% of Fund assets) were increasingly concentrated in industry-leading companies with strong balance sheets. The Fund’s bond investments (roughly 25% of assets) were tilted to U.S. Treasuries and other securities with limited credit risk, and we had nearly 20% of assets in short-term reserves waiting for better opportunities. We thought the portfolio was geared to withstand tough conditions. In retrospect, our positioning was not defensive enough.

          Lousy stock results drove the Fund’s negative return, as bonds provided a sturdy but insufficient cushion. Financial stocks in particular are mired in a bear market, as the credit crunch continues to exact a heavy toll on many companies. We booked a well-chronicled, permanent loss on our Countrywide Financial investment. In addition, several of our health care and retail stocks declined significantly. Our value estimates on a handful of stocks did decline moderately during the year. In most cases, however, we think our stocks are experiencing what Ben Graham described as temporary “quotational losses” rather than permanent capital impairments.

          In this challenging environment, we have continued to follow a methodical approach to allocating assets. We have not gone into the bunker, nor have we looked for a quick fix. In short, our investment philosophy and process remain the same. Significant portfolio developments over the past year include:

32



 

 


 

 

We bought stocks as they became more attractive. The Fund’s allocation to common stocks is 64%, up from 55% a year ago. We invested 5% of net assets in construction materials companies, and we modestly increased the Fund’s investments in cable television operators and retailers. Our financial investments are now more heavily weighted to world-class companies (Berkshire Hathaway, American Express, Wells Fargo) and businesses with substantial excess capital (Redwood Trust).

 

 

We sold U.S. Treasuries as they became less attractive. We decreased the Fund’s allocation to U.S. Treasuries from 14% to 3% over the past year. Investors have bid Treasury prices up aggressively amid the market turmoil. Our view is that they are now paying a high price for peace of mind. Longer-dated Treasuries have plenty of risk if interest rates rise, while offering very modest potential returns.

 

 

We bought high-quality mortgage-backed securities (MBS) as they became more attractive. Agency-guaranteed mortgage-backed and pass-through securities represent 17% of the Fund, up from 6% last year. We effectively rolled most of the Treasury sale proceeds into MBS with expected lives in the 2-5 year range. These securities offer decent-to-good return potential with little risk of negative surprises.

 

 

Our investments in corporate bonds remain small, though the opportunity set may be growing. Corporate bond yields are higher than they have been in some time, as investors are demanding more compensation for the risks they are taking. Many lower quality bonds again offer equity-like potential returns; however, the risks are quite high due to the lax lending standards of the past few years. We are watching with interest from the sidelines for now.

 

 

Internal “watch-list” securities represent just 3% of Fund assets. We have identified a handful of small positions that are most at risk if conditions worsen. These securities generally have uncorrelated risk profiles. We still own them because our outlook, while muted, is less pessimistic than that of the market. From current depressed prices, the return potential of this small basket of securities is quite high.

 

 

Short-term securities declined from 20% to 8% of Fund assets, primarily as a result of the stock purchases described above.

Outlook

          While recent results have been a disappointing setback, we think the Fund’s longer-term prospects are solid. We believe our stocks are materially cheaper than they were a year ago. Our approach has been to stockpile financially strong companies in case the economy surprises on the downside, rather than trying to maximize recovery returns. As a result, the portfolio is heavily weighted to durable, market-leading businesses. Our bonds consist of high quality, liquid securities that provide stability and a steady source of cash flow. Finally, we continue to hold significant short-term reserves for flexibility. Thank you again for your trust and continued patience.

Annual Shareholder Information Meeting – Tuesday, May 27, 2008

          Please plan to join us at the Scott Conference Center in Omaha at 4:30 p.m. on May 27. The center is located at 6450 Pine Street on the Aksarben campus. There will be no formal business to conduct, so we can devote the entire meeting to answering your questions. Maps and driving directions are available from our client service representatives. We look forward to seeing you there.

 

 

 

Regards,

 

 

 

-s- Bradley P. Hinton

 

 

 

Bradley P. Hinton
Portfolio Manager
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. See the Schedule of Investments in Securities included in this report for the percent of assets of the Fund invested in particular industries or sectors.

33



 

FUND PERFORMANCE — BALANCED FUND

(Unaudited)

The chart below depicts the change in the value of a $10,000 investment for the period since inception of the Balanced Fund (October 1, 2003) through March 31, 2008, as compared with the growth of the Blended Index during the same period. The Blended Index reflects an unmanaged portfolio of 60% of the S&P 500 (“S&P 500”), which is an unmanaged index of common stock prices, and 40% of the Lehman Brothers Intermediate U.S. Government/Credit Index (“Lehman Index”), which is an unmanaged index consisting of government securities and publicly issued corporate debt with maturities from one to ten years. The chart also includes information about the growth of the S&P 500 and the Lehman Index for the period. Index performance is hypothetical and is shown for illustrative purposes only. A $10,000 investment in the Balanced Fund on October 1, 2003, would have been valued at $11,879 on March 31, 2008.

(LINE GRAPH)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total
Return

 

Average Annual Total Returns

 

 

 


 


 

 

 

1-Year

 

2-Year

 

3-Year

 

4-Year

 

Since
Inception
(Oct. 1, 2003)

 

 

 


 


 


 


 


 

 

Balanced Fund

 

 

 

–12.3

%

 

 

 

–1.0

%

 

 

 

1.3

%

 

 

 

3.1

%

 

 

 

3.9

%

 

Blended Index

 

 

 

0.5

 

 

 

 

4.8

 

 

 

 

5.8

 

 

 

 

5.3

 

 

 

 

6.8

 

 

S&P 500 Index

 

 

 

–5.1

 

 

 

 

3.0

 

 

 

 

5.8

 

 

 

 

6.0

 

 

 

 

8.5

 

 

Lehman Index

 

 

 

8.9

 

 

 

 

7.5

 

 

 

 

5.7

 

 

 

 

4.1

 

 

 

 

4.2

 

 

These performance numbers reflect the deduction of the Funds annual operating expenses which as stated in its most recent prospectus are 1.14% of the Funds 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 investors 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

34



 

PORTFOLIO PROFILE — BALANCED FUND

(Unaudited)

(BAR CHART)

 

 

 

 

 

Top Ten Stocks*

 


 

 

Berkshire Hathaway

 

 

4.5

%

Liberty Media - Interactive

 

 

3.4

 

Redwood Trust

 

 

3.2

 

Comcast

 

 

2.7

 

American Express

 

 

2.5

 

Liberty Media - Entertainment

 

 

2.5

 

Coinstar

 

 

2.4

 

American International Group

 

 

2.4

 

WellPoint

 

 

2.3

 

UnitedHealth Group

 

 

2.3

 

 

 



 

 

 

 

28.2

%

 

 



 

 

 

 

 

 

* As of March 31, 2008

 

 

 

 

 

 

 

 

 

Industry Sectors*

 


 

 

Consumer Discretionary

 

 

22.0

%

Financials

 

 

18.3

 

Health Care

 

 

7.0

 

Materials

 

 

4.8

 

Industrials

 

 

4.8

 

Telecommunication Services

 

 

2.8

 

Consumer Staples

 

 

2.3

 

Information Technology

 

 

2.2

 

 

 



 

Total Common Stocks

 

 

64.2

%

 

 



 

 

 

 

 

 

Mortgage-Backed Securities

 

 

15.1

%

Short-Term Securities/Other

 

 

8.2

 

U.S. Treasury and Government Agency

 

 

6.8

 

Mortgage Pass-Through Securities

 

 

3.2

 

Corporate Bonds

 

 

1.6

 

Convertible Preferred Stocks

 

 

0.5

 

Taxable Municipal Bonds

 

 

0.4

 

 

 



 

Total Bonds & Short-Term Securities

 

 

35.8

%

 

 



 


Largest Net Contributions to Investment Results for Year Ended March 31, 2008

 

 

 

 

 

Positive (000’s)

 


 

 

Berkshire Hathaway

 

$

644

 

Apollo Group

 

 

530

 

Iron Mountain

 

 

466

 

Liberty Global

 

 

308

 

Wal-Mart

 

 

222

 

 

 



 

 

 

$

2,170

 

 

 



 

 

 

 

 

 

Negative (000’s)

 


 

 

Countrywide Financial

 

$

(2,964

)

Omnicare

 

 

(1,057

)

CBRE Realty

 

 

(944

)

WellPoint

 

 

(900

)

American International Group

 

 

(835

)

Other (net)

 

 

(7,138

)

 

 



 

 

 

$

(13,838

)

 

 



 

 

 

 

 

 

Net Portfolio Losses

 

$

(11,668

)

 

 



 



35



 

BALANCED FUND

Schedule of Investments in Securities

March 31, 2008


 

 

 

 

 

 

 

 

 

 

Shares

 

Value

 

 

 


 


 

COMMON STOCKS — 64.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer Discretionary — 22.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retailing — 10.1%

 

 

 

 

 

 

 

Liberty Media Corp. - Interactive - Series A*

 

 

160,000

 

$

2,582,400

 

Cabela’s, Inc. - CL A*

 

 

100,000

 

 

1,416,000

 

Lowe’s Companies, Inc.

 

 

60,000

 

 

1,376,400

 

IAC/InterActiveCorp*

 

 

65,000

 

 

1,349,400

 

Bed Bath & Beyond, Inc.*

 

 

32,000

 

 

944,000

 

 

 

 

 

 



 

 

 

 

 

 

 

7,668,200

 

Broadcasting & Cable TV — 6.6%

 

 

 

 

 

 

 

Comcast Corp. - CL A

 

 

105,000

 

 

2,030,700

 

Liberty Media Corp. - Entertainment - Series A*

 

 

84,000

 

 

1,901,760

 

Liberty Media Corp. - Capital - Series A*

 

 

21,000

 

 

330,540

 

Liberty Global, Inc. - Series C*

 

 

23,000

 

 

747,040

 

 

 

 

 

 



 

 

 

 

 

 

 

5,010,040

 

Consumer Services — 2.4%

 

 

 

 

 

 

 

Coinstar, Inc.*

 

 

65,000

 

 

1,829,100

 

 

 

 

 

 

 

 

 

Consumer Durables & Apparel — 1.9%

 

 

 

 

 

 

 

Mohawk Industries, Inc.*

 

 

20,000

 

 

1,432,200

 

 

 

 

 

 

 

 

 

Media — 1.0%

 

 

 

 

 

 

 

The Washington Post Co. - CL B

 

 

1,200

 

 

793,800

 

 

 

 

 

 



 

 

 

 

 

 

 

16,733,340

 

 

 

 

 

 

 

 

 

Financials — 18.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Insurance — 6.9%

 

 

 

 

 

 

 

Berkshire Hathaway, Inc. - CL B*

 

 

770

 

 

3,444,133

 

American International Group, Inc.

 

 

42,000

 

 

1,816,500

 

 

 

 

 

 



 

 

 

 

 

 

 

5,260,633

 

Mortgage REIT’s — 4.5%

 

 

 

 

 

 

 

Redwood Trust, Inc.

 

 

66,500

 

 

2,417,275

 

Newcastle Investment Corp.

 

 

62,868

 

 

519,290

 

CBRE Realty Finance, Inc.

 

 

128,400

 

 

517,452

 

 

 

 

 

 



 

 

 

 

 

 

 

3,454,017

 

Diversified Financials — 2.5%

 

 

 

 

 

 

 

American Express Co.

 

 

44,000

 

 

1,923,680

 

The accompanying notes form an integral part of these financial statements.

36



 

BALANCED FUND

Schedule of Investments in Securities, Continued


 

 

 

 

 

 

 

 

 

 

Shares

 

Value

 

 

 


 


 

Thrifts & Mortgage Finance — 1.7%

 

 

 

 

 

 

 

Fannie Mae

 

 

36,000

 

$

947,520

 

Freddie Mac

 

 

13,000

 

 

329,160

 

 

 

 

 

 



 

 

 

 

 

 

 

1,276,680

 

Investment Banking & Brokerage — 1.4%

 

 

 

 

 

 

 

TD Ameritrade Holding Corp.*

 

 

65,000

 

 

1,073,150

 

 

 

 

 

 

 

 

 

Banks — 1.3%

 

 

 

 

 

 

 

Wells Fargo & Co.

 

 

35,000

 

 

1,018,500

 

 

 

 

 

 



 

 

 

 

 

 

 

14,006,660

 

 

 

 

 

 

 

 

 

Health Care — 7.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Managed Health Care — 4.6%

 

 

 

 

 

 

 

WellPoint, Inc.*

 

 

40,000

 

 

1,765,200

 

UnitedHealth Group, Inc.

 

 

50,000

 

 

1,718,000

 

 

 

 

 

 



 

 

 

 

 

 

 

3,483,200

 

Health Care Equipment & Services — 2.4%

 

 

 

 

 

 

 

Omnicare, Inc.

 

 

60,000

 

 

1,089,600

 

Laboratory Corporation of America Holdings*

 

 

10,500

 

 

773,640

 

 

 

 

 

 



 

 

 

 

 

 

 

1,863,240

 

 

 

 

 

 



 

 

 

 

 

 

 

5,346,440

 

Materials — 4.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Materials — 4.8%

 

 

 

 

 

 

 

Martin Marietta Materials, Inc.

 

 

10,000

 

 

1,061,700

 

Vulcan Materials Co.

 

 

15,500

 

 

1,029,200

 

Eagle Materials, Inc.

 

 

27,000

 

 

959,850

 

Cemex, S.A.B. de C. V. - Sponsored ADR*

 

 

23,000

 

 

600,760

 

 

 

 

 

 



 

 

 

 

 

 

 

3,651,510

 

 

 

 

 

 

 

 

 

Industrials — 4.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Building Products — 1.7%

 

 

 

 

 

 

 

USG Corp.*

 

 

35,000

 

 

1,288,700

 

 

 

 

 

 

 

 

 

Transportation — 1.3%

 

 

 

 

 

 

 

United Parcel Service, Inc.

 

 

13,500

 

 

985,770

 

The accompanying notes form an integral part of these financial statements.

37



 

BALANCED FUND

Schedule of Investments in Securities, Continued


 

 

 

 

 

 

 

 

 

 

Shares

 

Value

 

 

 


 


 

Capital Goods — 1.0%

 

 

 

 

 

 

 

Beacon Roofing Supply, Inc.*

 

 

80,000

 

$

800,000

 

 

 

 

 

 

 

 

 

Industrial Conglomerates — 0.8%

 

 

 

 

 

 

 

Tyco International Ltd.

 

 

13,000

 

 

572,650

 

 

 

 

 

 



 

 

 

 

 

 

 

3,647,120

 

 

 

 

 

 

 

 

 

Telecommunication Services — 2.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Telecommunication Services — 2.8%

 

 

 

 

 

 

 

Telephone and Data Systems, Inc. - Special

 

 

42,000

 

 

1,566,600

 

U.S. Cellular Corp.*

 

 

10,000

 

 

550,000

 

 

 

 

 

 



 

 

 

 

 

 

 

2,116,600

 

 

 

 

 

 

 

 

 

Consumer Staples — 2.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hypermarkets & Super Centers — 1.5%

 

 

 

 

 

 

 

Wal-Mart Stores, Inc.

 

 

22,000

 

 

1,158,960

 

 

 

 

 

 

 

 

 

Food Beverage & Tobacco — 0.8%

 

 

 

 

 

 

 

Diageo PLC - Sponsored ADR

 

 

7,500

 

 

609,900

 

 

 

 

 

 



 

 

 

 

 

 

 

1,768,860

 

 

 

 

 

 

 

 

 

Information Technology — 2.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software & Services — 1.1%

 

 

 

 

 

 

 

Microsoft Corp.

 

 

30,000

 

 

851,400

 

 

 

 

 

 

 

 

 

Technology Hardware & Equipment — 1.1%

 

 

 

 

 

 

 

Dell, Inc.*

 

 

41,000

 

 

816,720

 

 

 

 

 

 



 

 

 

 

 

 

 

1,668,120

 

 

 

 

 

 



 

Total Common Stocks (Cost $55,159,860)

 

 

 

 

 

48,938,650

 

 

 

 

 

 

 

 

 

CONVERTIBLE PREFERRED STOCKS — 0.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Flags, Inc. 7.25% 8/15/09 (Cost $698,995)

 

 

30,000

 

 

358,800

 

The accompanying notes form an integral part of these financial statements.

38



 

BALANCED FUND

Schedule of Investments in Securities, Continued


 

 

 

 

 

 

 

 

 

 

Principal
amount

 

Value

 

 

 


 


 

CORPORATE BONDS — 1.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Washington Post Co. 5.5% 2/15/09

 

$

755,000

 

$

768,758

 

Berkshire Hathaway Finance Corp. 4.2% 12/15/10

 

 

300,000

 

 

309,281

 

Harrah’s Operating Co., Inc. 5.375% 12/15/13

 

 

250,000

 

 

162,500

 

 

 

 

 

 



 

Total Corporate Bonds (Cost $1,303,094)

 

 

 

 

 

1,240,539

 

 

 

 

 

 

 

 

 

MORTGAGE-BACKED SECURITIES — 15.1%(c)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal Home Loan Mortgage Corporation — 9.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2665 CL WY — 4.5% 2027 (1.3 years)

 

 

750,000

 

 

752,442

 

3028 CL MB — 5.0% 2026 (1.3 years)

 

 

504,456

 

 

512,579

 

2548 CL HB — 4.5% 2010 (1.6 years)

 

 

750,000

 

 

762,413

 

2831 CL AB — 5.0% 2018 (2.5 years)

 

 

343,712

 

 

354,115

 

2926 CL AB — 5.0% 2019 (2.7 years)

 

 

797,291

 

 

821,304

 

2542 CL LD — 5.0% 2022 (2.8 years)

 

 

1,055,861

 

 

1,086,234

 

2627 CL LE — 3.0% 2017 (2.9 years)

 

 

884,414

 

 

862,580

 

2975 CL OD — 5.5% 2027 (3.1 years)

 

 

800,000

 

 

823,227

 

3209 CL TU — 5.0% 2017 (4.9 years)

 

 

887,400

 

 

905,938

 

 

 

 

 

 



 

 

 

 

 

 

 

6,880,832

 

 

 

 

 

 

 

 

 

Federal National Mortgage Association — 4.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2003-87 CL JA — 4.25% 2033 (0.3 years)

 

 

41,576

 

 

41,565

 

2003-87 CL TG — 4.5% 2014 (1.4 years)

 

 

460,000

 

 

466,411

 

2003-113 CL PC — 4.0% 2015 (1.6 years)

 

 

1,000,000

 

 

1,009,341

 

2002-55 CL VA — 5.5% 2013 (1.9 years)

 

 

260,440

 

 

266,621

 

2006-78 CL AV — 6.5% 2017 (2.3 years)

 

 

664,385

 

 

697,019

 

2003-83 CL VA — 5.5% 2014 (2.8 years)

 

 

291,581

 

 

302,856

 

2005-59 CL PB — 5.5% 2028 (3.2 years)

 

 

650,000

 

 

668,068

 

 

 

 

 

 



 

 

 

 

 

 

 

3,451,881

 

 

 

 

 

 

 

 

 

Other — 1.6%

 

 

 

 

 

 

 

CDMC 2003-7P CL A4 — 3.376% 2017 (3.3 years)(d)

 

 

912,723

 

 

857,615

 

Chase MTG 2004-S1 CL A6 — 4.5% 2019 (4.6 years)

 

 

357,792

 

 

343,209

 

 

 

 

 

 



 

 

 

 

 

 

 

1,200,824

 

 

 

 

 

 



 

Total Mortgage-Backed Securities (Cost $11,212,690)

 

 

 

 

 

11,533,537

 

The accompanying notes form an integral part of these financial statements.

39



 

BALANCED FUND

Schedule of Investments in Securities, Continued


 

 

 

 

 

 

 

 

 

 

Principal
amount

 

Value

 

 

 


 


 

MORTGAGE PASS-THROUGH SECURITIES — 3.2%(c)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal National Mortgage Association — 1.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

357985 — 4.5% 2020 (4.3 years)

 

$

1,127,003

 

$

1,123,454

 

 

 

 

 

 

 

 

 

Federal Home Loan Mortgage Corporation — 1.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18190 — 5.5% 2022 (3.7 years)

 

 

439,400

 

 

448,657

 

G11773 — 5.0% 2020 (3.9 years)

 

 

848,681

 

 

859,959

 

 

 

 

 

 



 

 

 

 

 

 

 

1,308,616

 

 

 

 

 

 



 

Total Mortgage Pass-Through Securities (Cost $2,349,286)

 

 

 

 

 

2,432,070

 

 

 

 

 

 

 

 

 

TAXABLE MUNICIPAL BONDS — 0.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

University of California 4.85% 5/15/13 (Cost $297,983)

 

 

300,000

 

 

305,148

 

 

 

 

 

 

 

 

 

U.S. TREASURY AND GOVERNMENT AGENCY — 6.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury — 3.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury Note 3.75% 5/15/08

 

 

1,250,000

 

 

1,254,005

 

U.S. Treasury Note 3.125% 10/15/08

 

 

300,000

 

 

302,953

 

U.S. Treasury Note 3.0% 2/15/09

 

 

400,000

 

 

405,094

 

U.S. Treasury Note 3.625% 7/15/09

 

 

500,000

 

 

513,399

 

 

 

 

 

 



 

 

 

 

 

 

 

2,475,451

 

 

 

 

 

 

 

 

 

Government Agency — 3.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal Home Loan Banks 3.55% 4/15/08

 

 

500,000

 

 

500,218

 

Freddie Mac 4.0% 4/28/09

 

 

240,000

 

 

244,450

 

Federal Home Loan Banks 4.16% 12/08/09

 

 

400,000

 

 

412,745

 

Federal Home Loan Banks 5.25% 5/16/11

 

 

500,000

 

 

501,774

 

Federal Home Loan Banks 5.2% 5/21/12

 

 

1,000,000

 

 

1,034,853

 

 

 

 

 

 



 

 

 

 

 

 

 

2,694,040

 

 

 

 

 

 



 

Total U.S. Treasury and Government Agency (Cost $5,073,783)

 

 

 

 

 

5,169,491

 

The accompanying notes form an integral part of these financial statements.

40



 

BALANCED FUND

Schedule of Investments in Securities, Continued


 

 

 

 

 

 

 

 

 

 

Shares

 

Value

 

 

 


 


 

SHORT-TERM SECURITIES — 8.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wells Fargo Advantage Government Money Market Fund 2.4%(a)

 

 

3,636,257

 

$

3,636,257

 

Federal Farm Credit Banks Discount Note 1.8% 4/07/08(b)

 

 

3,000,000

 

 

2,999,112

 

 

 

 

 

 



 

Total Short-Term Securities (Cost $6,635,357)

 

 

 

 

 

6,635,369

 

 

 

 

 

 



 

Total Investments in Securities (Cost $82,731,048)

 

 

 

 

 

76,613,604

 

Other Liabilities in Excess of Other Assets — (0.5%)

 

 

 

 

 

(414,363

)

 

 

 

 

 



 

Net Assets — 100%

 

 

 

 

$

76,199,241

 

 

 

 

 

 



 

Net Asset Value Per Share

 

 

 

 

$

10.05

 

 

 

 

 

 



 

 

 

 

*

Non-income producing

 

 

(a)

Rate presented represents the annualized 7-day yield at March 31, 2008.

 

 

(b)

Interest rate presented represents 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.

The accompanying notes form an integral part of these financial statements.

41



 

NEBRASKA TAX-FREE INCOME FUND

April 21, 2008

Dear Fellow Shareholder:

          The Nebraska Tax-Free Income Fund’s total return for the first quarter of 2008 was +0.4%, which consisted of approximately +0.9% from net interest income (after deducting fees and expenses) and -0.5% from (realized and unrealized) depreciation of our bonds. Our Fund’s primary benchmark, the Lehman Brothers 5-Year Municipal Bond Index, returned +1.9%.

          The table below shows the results of the Nebraska Tax-Free Income Fund over various time periods through March 31, 2008, along with the Lehman Brothers 5-Year Municipal Bond Index, our primary benchmark. The key measures of the Fund’s portfolio (average maturity and duration) have most closely resembled this Lehman Brothers index. As a reminder, we don’t manage the Fund to mimic any particular index but thought it would be informative to provide an example of a broadly constructed unmanaged index whose credit quality and maturity composition were similar to the Fund.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Return*

 

Average Annual Total Returns*

 

 

 


 


 

 

 

1-Year

 

3-Year

 

5-Year

 

10-Year

 

15-Year

 

20-Year

 

 

 


 


 


 


 


 


 

Nebraska Tax-Free Income Fund**

 

 

3.0

%

 

 

 

3.3

%

 

 

 

3.2

%

 

 

 

4.2

%

 

 

 

4.7

%

 

 

 

5.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lehman Brothers 5-Year Municipal Bond Index#

 

 

6.2

 

 

 

 

4.2

 

 

 

 

3.4

 

 

 

 

4.7

 

 

 

 

4.9

 

 

 

 

5.8

 

 

 

These performance numbers reflect the deduction of the Fund’s annual operating expenses which as stated in its most recent Prospectus are 1.03% of the Fund’s net assets. This information represents past performance and past performance does not guarantee future results. The investment return and the principal value of an investment in the 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 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.

 

 

*

All performance numbers assume reinvestment of dividends and/or income.

 

 

**

As of December 29, 2006, the Fund succeeded to substantially all of the assets of Weitz Income Partners Limited Partnership (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 these periods, 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 these periods, the Partnership’s performance might have been adversely affected.

 

 

#

Index performance is hypothetical and is for illustrative purposes only.

The following table shows a profile of our portfolio as of March 31:

 

 

Average Maturity

7.6 years

Average Duration

3.5 years

30-Day SEC Yield at 3-31-08

3.3%

Average Rating

AA

Income from municipals exempt from federal
and Nebraska income taxes

Over 80%

Income subject to alternative minimum tax

Less than 5%

42


 

 

Fiscal Year in Review

          A longstanding relationship between municipal bond yields and taxable alternatives (U.S. Treasury bonds, for example) became unhinged in the past year. Since municipal bonds generate interest income that is exempt from Federal (and usually state income) taxes, their yields have historically been less than U.S. Treasury bonds. As an example, the graph below, courtesy of Citigroup and Thomson Financial, depicts this relationship between 10-year municipal and 10-year Treasury bonds over a 12-year time span (January 1996 to April 2008). Until early this year, 10-year municipal bonds yielded less than 10-year Treasuries, and have averaged approximately 80% of their taxable counterpart over this long period of time. That municipal bonds should yield less than Treasury bonds makes intuitive sense given munis’ tax-free advantage. However, a host of issues conspired to push this relationship above 100% early this year. This is a rare occurrence in the municipal marketplace and, absent credit concerns, typically only occurs when investors are concerned that Congress might remove their tax-exempt status – not an issue at the present time.

 


Ten-Year Munis as a Pct of Ten-Year Treasuries, Jan 96-Apr 08


(LINE GRAPH)

Sources: Yield Book® and Citi.

          The principal result of the disconnect in yield relationship between municipal bonds and Treasuries was that shorter-term municipal bond yields (less than 10 years) declined meaningfully less than Treasury yields. Longer-term municipal bond yields (greater than 10 years), however, actually rose materially (prices fell).

          So what has buffeted the municipal bond marketplace to create this seeming anomaly? Some key contributors include:

 

 

 

 

The center of the turmoil was likely the result of leverage. Hedge funds and other traders, who bought longer-term municipal bonds with borrowed money, were forced to sell as the unfolding credit crunch spread. This flood of selling pushed prices lower.

 

 

 

 

A major contributor was the ongoing plight of the bond insurers, which many state and local governments use to protect their bonds – and (hopefully) win them lower interest rates. Bond insurers such as Ambac Financial Group, Inc. and MBIA, Inc. have been hurt by guarantees they made away from their core municipal guarantee business. As these once AAA-rated bond insurers have been downgraded, municipal bonds backed by these insurers have experienced price declines – not because the quality of the underlying bond went down, but because of the real or perceived decrease in the value of the insurance coverage.

43



 

 

 

 

 

 

The seizing up of the market for auction rate securities has been a problem for municipal bond issuers. These typically long-term debt instruments carry floating interest rates that are reset weekly or monthly via an auction process. As the investment banks that ran the auctions stopped committing their capital to make sure the auctions ran smoothly, this market largely froze up and added to the anxiety about liquidity. This increased upward pressure on long municipal bond yields as investors anticipated many of these auction rate securities would be re-issued as longer-term bonds.

 

 

 

 

The dramatic decline in U.S. Treasury interest rates may also have added to the breakdown in the historical relationship between municipal bond and Treasury yields. It is plausible that U.S. Treasury bond yields are artificially low as investors have sought the relative safety and comfort of the government guarantee.

          For further discussion on the events of the past year, please see the “Fiscal Year in Review” section of the Short-Intermediate Income Fund letter.

Portfolio Review

          The Nebraska Tax-Free Income Fund had a total return of 3.0% in fiscal 2008, compared to 6.2% for the Lehman Brothers 5-year Municipal Bond Index, our Fund’s primary benchmark. This one-year outcome is somewhat discouraging, especially since it is our first full fiscal year in our current form (i.e. public mutual fund). Our investments in 10-year and longer municipal bonds (non-existent in the Lehman Brothers index) particularly hurt our results as they experienced the largest price declines. The credit quality of these bonds (as well as our entire portfolio) is solid and we expect to recover these price declines at maturity, if not before. More importantly, we have taken advantage of the rare opportunity to invest capital in the Fund at yields well in excess of Treasury bonds (before adjusting for the tax-exempt benefit).

          As a reminder, we invest in a portfolio of bonds of varying maturities that we believe represent the best opportunities. The Lehman Brothers index, on the other hand, is a static index of 4-6 year bonds. We believe our portfolio positioning affords us the best opportunity to generate solid long-term returns and are willing to accept shorter periods of underperformance (like now) to accomplish this goal.

          Turning to portfolio metrics, over the past year, the average duration of our Fund was unchanged at 3.5 years while the average maturity declined to 7.6 from 8.5 years. The overall credit quality of Fund investments remains high and we are well-positioned to take advantage of any further opportunities the market may present us.

Outlook

          The divergence in inflation and interest rates over the past year is reason for caution, we believe. Inflation measures (both consumer and producer) have risen meaningfully while interest rates (U.S. Treasury) have fallen even more. The Consumer Price Index, for example, has risen 4% in the past year, up from a 2.8% rise a year ago. Five-year Treasury bond yields, on the other hand, have declined by nearly half to 2.4% at March 31. High inflation is not the friend of the bond investor as it erodes the purchasing power of interest returns. While it’s plausible that a recession (if one occurs in the U.S.) could lower inflationary pressures in the economy, we believe U.S. Treasury rates are still abnormally low. The tremendous ‘flight to quality’ by investors fearful of further cataclysmic events certainly explains much of this decline in Treasury rates.

          The opportunities in the municipal marketplace have been real, we believe, and we have taken advantage of them. The absolute low level of interest rates (particularly U.S. Treasuries) does give us reason for pause, however. Given these crosscurrents, we expect to be more defensively positioned by holding cash reserves while we remain on the lookout for qualifying investments with more favorable terms.

44



 

 

Annual Shareholder Information Meeting – Tuesday, May 27, 2008

          Please plan to join us at the Scott Conference Center in Omaha at 4:30 p.m. on May 27. The center is located at 6450 Pine Street on the Aksarben campus. There will be no formal business to conduct, so we can devote the entire meeting to answering your questions. Maps and driving directions are available from our client service representatives. Thanks for your continued support, and we look forward to seeing you there.

 

 

 

Best Regards,

 

 

 

-s- Thomas D. Carney

 

 

Thomas D. Carney

 

Portfolio Manager

 

tom@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. See the Schedule of Investments in Securities included in this report for the percent of assets in the Fund invested in a particular State.

45



 

FUND PERFORMANCE - NEBRASKA TAX-FREE INCOME FUND

(Unaudited)

The following table summarizes performance information for the Nebraska Tax-Free Income Fund (the “Fund”) and its predecessor, Weitz Income Partners Limited Partnership (the “Partnership”). The Fund succeeded to substantially all of the assets of the Partnership, a Nebraska investment limited partnership as of December 29, 2006. The investment objectives, policies, guidelines 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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period Ended

 

NE Tax-Free

 

Lehman
5-Yr

 

Difference
NE Tax-Free -
Lehman 5-Yr

 


 




 




 




 

Dec. 31, 1998

 

 

6.1

%

 

 

5.8

%

 

 

0.3

%

 

Dec. 31, 1999

 

 

-1.2

 

 

 

0.7

 

 

 

-1.9

 

 

Dec. 31, 2000

 

 

9.9

 

 

 

7.7

 

 

 

2.2

 

 

Dec. 31, 2001

 

 

3.9

 

 

 

6.2

 

 

 

-2.3

 

 

Dec. 31, 2002

 

 

8.0

 

 

 

9.3

 

 

 

-1.3

 

 

Dec. 31, 2003

 

 

4.3

 

 

 

4.1

 

 

 

0.2

 

 

Dec. 31, 2004

 

 

3.4

 

 

 

2.7

 

 

 

0.7

 

 

Dec. 31, 2005

 

 

2.2

 

 

 

0.9

 

 

 

1.3

 

 

Dec. 31, 2006

 

 

3.3

 

 

 

3.3

 

 

 

0.0

 

 

Dec. 31, 2007

 

 

3.6

 

 

 

5.2

 

 

 

–1.6

 

 

Mar. 31, 2008 (3 months)

 

 

0.4

 

 

 

1.9

 

 

 

–1.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10-Year Cumulative Return ended Mar. 31, 2008

 

 

50.5

 

 

 

57.6

 

 

 

–7.1

 

 

10-Year Average Annual Compound Return ended
Mar. 31, 2008

 

 

4.2

 

 

 

4.7

 

 

 

–0.5

 

 


This chart depicts the change in the value of a $10,000 investment in the Fund for the period March 31, 1998, through March 31, 2008 as compared with the growth of the Lehman Brothers 5-Year Municipal Bond Index (“Lehman 5-Yr”) during the same period. Index performance is hypothetical and is shown for illustrative purposes only.

(LINE GRAPH)



The average annual total return of the Fund for the one, five and ten year periods ended March 31, 2008 was 3.0%, 3.2% and 4.2%, respectively. These performance numbers reflect the deduction of the Fund’s annual operating expenses, which as stated in its most recent Prospectus are 1.03% 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. The performance data presented includes performance for the period before the Fund became an investment company registered with the Securities and Exchange Commission. During this time, the Fund 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 Fund had been registered under the 1940 Act during this time period, the performance of the Fund might have been adversely affected. 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.

46



 

PORTFOLIO PROFILE — NEBRASKA TAX-FREE INCOME FUND

(Unaudited)

State Breakdown

 

 

 

 

 

Nebraska

 

 

78.3

%

Illinois

 

 

4.0

 

Commonwealth of Puerto Rico

 

 

3.3

 

Washington

 

 

2.7

 

Texas

 

 

1.5

 

Missouri

 

 

1.4

 

Alaska

 

 

0.9

 

Minnesota

 

 

0.1

 

Short-Term Securities/Other

 

 

7.8

 

 

 



 

 

 

 

100.0

%

 

 



 


Sector Breakdown

 

 

 

 

 

Power

 

 

19.9

%

Higher Education

 

 

15.5

 

Hospital

 

 

12.4

 

Water/Sewer

 

 

10.5

 

General

 

 

7.0

 

Housing

 

 

1.9

 

 

 



 

Total Revenue

 

 

67.2

 

 

 

 

 

 

City/Subdivision

 

 

6.8

 

State/Commonwealth

 

 

6.0

 

School District

 

 

4.6

 

County

 

 

1.8

 

 

 



 

Total General Obligation

 

 

19.2

 

 

 

 

 

 

Short-Term Securities/Other

 

 

7.8

 

Escrow/Pre-Refunded

 

 

5.8

 

 

 



 

 

 

 

100.0

%

 

 



 

47



 

NEBRASKA TAX-FREE INCOME FUND

Schedule of Investments in Securities
March 31, 2008

 

 

 

 

 

 

 

 

 

 

Principal
amount

 

Value

 

 

 



 



 

MUNICIPAL BONDS — 92.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alaska — 0.9%

 

 

 

 

 

 

 

University of Alaska, University Revenue, Series J, FSA Insured,

 

 

 

 

 

 

 

5.0%, 10/01/17

 

$

500,000

 

$

505,775

 

 

 

 

 

 

 

 

 

Illinois — 4.0%

 

 

 

 

 

 

 

Cook County, General Obligation, Refunding, Series A, 5.0%, 11/15/16

 

 

1,000,000

 

 

1,021,640

 

Illinois Health Facility Authority, Revenue, Series A, Evangelical

 

 

 

 

 

 

 

Hospital Corp., Escrowed to Maturity, 6.75%, 4/15/12

 

 

185,000

 

 

199,883

 

Illinois State, General Obligation, FGIC Insured, 5.0%, 3/01/19

 

 

500,000

 

 

509,350

 

Illinois State, Sales Tax Revenue, Series Z, 5.0%, 6/15/19

 

 

500,000

 

 

512,590

 

 

 

 

 

 



 

 

 

 

 

 

 

2,243,463

 

Minnesota — 0.1%

 

 

 

 

 

 

 

Minnesota State Housing Financial Agency, Single Family Mortgage,

 

 

 

 

 

 

 

Series D, 6.0%, 1/01/16

 

 

40,000

 

 

40,058

 

 

 

 

 

 

 

 

 

Missouri — 1.4%

 

 

 

 

 

 

 

Joplin, Industrial Development Authority, Revenue, Series A,

 

 

 

 

 

 

 

Catholic Health Initiatives, 5.125%, 12/01/15

 

 

750,000

 

 

758,100

 

 

 

 

 

 

 

 

 

Nebraska — 78.3%

 

 

 

 

 

 

 

Adams County, Hospital Authority #1, Revenue, Mary Lanning

 

 

 

 

 

 

 

Memorial Hospital Project, Radian Insured, 5.3%, 12/15/18

 

 

700,000

 

 

702,919

 

Blair, Water System Revenue, Bond Anticipation Notes, AMT

 

 

 

 

 

 

 

Series A, 4.5%, 6/15/12

 

 

500,000

 

 

502,995

 

Series B, 4.65%, 6/15/12

 

 

500,000

 

 

506,275

 

Douglas County, Educational Facility Revenue, Series A, Creighton

 

 

 

 

 

 

 

University Project, FGIC Insured, 3.5%, 9/01/12

 

 

255,000

 

 

255,171

 

Douglas County, Hospital Authority #1, Revenue, Refunding,

 

 

 

 

 

 

 

Alegent Health — Immanuel, AMBAC Insured, 5.125%, 9/01/17

 

 

250,000

 

 

255,417

 

Quality Living Inc. Project, 4.7%, 10/01/17

 

 

255,000

 

 

242,051

 

Douglas County, Hospital Authority #2, Revenue,

 

 

 

 

 

 

 

Lakeside Village Project, 5.125%, 12/15/22

 

 

500,000

 

 

508,080

 

Nebraska Medical Center Project, 5.0%, 11/15/14

 

 

380,000

 

 

402,580

 

Nebraska Medical Center Project, 5.0% 11/15/15

 

 

295,000

 

 

311,821

 

Douglas County, Millard School District #17, Refunding,

 

 

 

 

 

 

 

FSA Insured, 4.0%, 11/15/13

 

 

500,000

 

 

521,090

 

MBIA Insured, 4.3%, 11/15/14

 

 

500,000

 

 

508,055

 

4.75%, 6/15/17

 

 

490,000

 

 

490,823

 

The accompanying notes form an integral part of these financial statements.

48



 

NEBRASKA TAX-FREE INCOME FUND

Schedule of Investments in Securities, Continued

 

 

 

 

 

 

 

 

 

 

Principal
amount

 

Value

 

 

 


 


 

Nebraska — 78.3% (continued)

 

 

 

 

 

 

 

Douglas County, Ralston Public School District #54, FSA Insured,

 

 

 

 

 

 

 

5.125%, 12/15/21

 

$

500,000

 

$

518,835

 

5.2%, 12/15/26

 

 

500,000

 

 

509,090

 

Douglas County, Sanitary & Improvement District #206,

 

 

 

 

 

 

 

Eldorado/Farmington, 5.75%, 12/01/14

 

 

195,000

 

 

195,201

 

Douglas County, Zoo Facility Revenue, Refunding, Omaha’s

 

 

 

 

 

 

 

Henry Doorly Zoo Project,

 

 

 

 

 

 

 

4.2%, 9/01/16

 

 

600,000

 

 

596,868

 

4.75%, 9/01/17

 

 

200,000

 

 

204,884

 

Gage County, Hospital Authority #1, Revenue, Beatrice Community

 

 

 

 

 

 

 

Hospital & Health Project, 5.35%, 5/01/19

 

 

500,000

 

 

468,930

 

Grand Island, Electric Revenue, MBIA Insured,

 

 

 

 

 

 

 

5.0%, 8/15/14

 

 

500,000

 

 

524,955

 

5.125%, 8/15/16

 

 

500,000

 

 

526,860

 

Grand Island, Public Safety, Tax Anticipation Bonds, AMBAC

 

 

 

 

 

 

 

Insured, 4.1%, 9/01/14

 

 

480,000

 

 

486,096

 

Grand Island, Sanitary Sewer Revenue, Refunding, FSA Insured,

 

 

 

 

 

 

 

3.3%, 4/01/13

 

 

870,000

 

 

877,438

 

3.45%, 4/01/14

 

 

650,000

 

 

654,706

 

Hastings, Electric System Revenue, Refunding, FSA Insured,

 

 

 

 

 

 

 

5.0%, 1/01/19

 

 

750,000

 

 

772,845

 

Lancaster County, Hospital Authority #1, Revenue, Bryan LGH

 

 

 

 

 

 

 

Medical Center,

 

 

 

 

 

 

 

4.0%, 6/01/10

 

 

380,000

 

 

385,005

 

Series A-2, AMBAC Insured, 4.512%, 6/01/31 (Auction

 

 

 

 

 

 

 

Rated Security)#

 

 

500,000

 

 

500,000

 

Lincoln, Airport Authority Revenue, Refunding, 5.2%, 7/01/19

 

 

200,000

 

 

202,224

 

Lincoln, Electric System Revenue, Refunding,

 

 

 

 

 

 

 

5.0%, 9/01/10

 

 

500,000

 

 

530,580

 

5.0%, 9/01/18

 

 

1,000,000

 

 

1,064,440

 

Lincoln, General Obligation, Highway Allocation Fund, 4.0%, 5/15/23

 

 

1,000,000

 

 

936,030

 

Lincoln, Parking Revenue, Refunding, Series A, 5.375%, 8/15/14

 

 

250,000

 

 

258,067

 

Lincoln, Sanitary Sewer Revenue, Refunding, MBIA Insured, 5.0%, 6/15/16

 

 

885,000

 

 

942,251

 

Lincoln, Water Revenue, 5.0%, 8/15/22

 

 

800,000

 

 

822,296

 

NEBHELP, Inc., Revenue, Series A-5A, AMT, 6.2%, 6/01/13

 

 

400,000

 

 

402,396

 

Nebraska Educational Financial Authority, Revenue, Refunding,

 

 

 

 

 

 

 

Creighton University Project, FGIC Insured,

 

 

 

 

 

 

 

4.729%, 8/01/31, (Auction Rated Security)

 

 

400,000

 

 

400,000

 

Hastings College Project, 5.05%, 12/01/23

 

 

500,000

 

 

461,800

 

Nebraska Wesleyan University Project, Radian Insured,

 

 

 

 

 

 

 

5.15%, 4/01/22

 

 

1,000,000

 

 

1,000,000

 

The accompanying notes form an integral part of these financial statements.

49



 

NEBRASKA TAX-FREE INCOME FUND

Schedule of Investments in Securities, Continued

 

 

 

 

 

 

 

 

 

 

Principal
amount

 

Value

 

 

 


 


 

Nebraska — 78.3% (continued)

 

 

 

 

 

 

 

Nebraska Educational Telecommunications Commission,

 

 

 

 

 

 

 

Revenue, DTV Project, 6.0%, 2/01/10

 

$

455,000

 

$

477,272

 

Nebraska Investment Financial Authority, Revenue, Series A,

 

 

 

 

 

 

 

Drinking Water State Revolving Fund, 5.15% 1/01/16

 

 

200,000

 

 

201,700

 

Nebraska Investment Financial Authority, Health Facility Revenue,

 

 

 

 

 

 

 

Childrens Hospital Obligated Group, Refunding, Series A,

 

 

 

 

 

 

 

3.623%, 8/15/32 (Auction Rated Security)#

 

 

850,000

 

 

850,000

 

Hospital Revenue, Great Plains Regional Medical Center

 

 

 

 

 

 

 

Project, Radian Insured, 5.0% 11/15/14

 

 

250,000

 

 

253,985

 

Hospital Revenue, Great Plains Regional Medical Center

 

 

 

 

 

 

 

Project, Radian Insured, 5.45%, 11/15/17

 

 

455,000

 

 

458,640

 

Nebraska Investment Financial Authority, Single Family

 

 

 

 

 

 

 

Housing Revenue, Series C, AMT

 

 

 

 

 

 

 

4.05%, 3/01/12

 

 

285,000

 

 

288,577

 

4.05%, 9/01/12

 

 

340,000

 

 

344,066

 

4.125%, 3/01/13

 

 

375,000

 

 

375,769

 

Nebraska Public Power District, Revenue,

 

 

 

 

 

 

 

Series A, 5.0%, 1/01/17, Pre-Refunded 1/01/09 @ 101

 

 

1,000,000

 

 

1,033,950

 

Series A, 5.125%, 1/01/18, Pre-Refunded 1/01/09 @ 101

 

 

425,000

 

 

439,824

 

Series B, 5.0%, 1/01/21

 

 

1,000,000

 

 

1,050,560

 

Nebraska State Colleges Facility Corp., Deferred Maintenance

 

 

 

 

 

 

 

Revenue, MBIA Insured,

 

 

 

 

 

 

 

4.25%, 7/15/15

 

 

405,000

 

 

419,309

 

5.0%, 7/15/16

 

 

200,000

 

 

216,296

 

4.0%, 7/15/17

 

 

200,000

 

 

199,960

 

Nebraska Utilities Corp., Revenue, University of Nebraska

 

 

 

 

 

 

 

Lincoln Project, 5.25%, 1/01/19

 

 

750,000

 

 

784,695

 

Omaha, Douglas County, General Obligation, Public Building

 

 

 

 

 

 

 

Commission, 5.1%, 5/01/20

 

 

750,000

 

 

775,357

 

Omaha, General Obligation, Refunding, 4.5%, 12/15/17

 

 

250,000

 

 

256,312

 

Omaha, Public Facilities Corp., Lease Revenue, Series C,

 

 

 

 

 

 

 

Rosenblatt Stadium Project,

 

 

 

 

 

 

 

3.9%, 10/15/17

 

 

235,000

 

 

238,946

 

3.95%, 10/15/18

 

 

240,000

 

 

241,243

 

Omaha Public Power District, Electric Revenue,

 

 

 

 

 

 

 

Series A, 4.3%, 2/01/12, Pre-Refunded 2/01/10 @ 100

 

 

500,000

 

 

517,930

 

Series A, 5.0%, 2/01/17, Pre-Refunded 2/01/10 @ 100

 

 

400,000

 

 

419,340

 

Series A, Escrowed to Maturity, 7.625%, 2/01/12

 

 

410,000

 

 

452,517

 

Series A, 4.25%, 2/01/18

 

 

900,000

 

 

911,349

 

Series A, 4.1%, 2/01/19

 

 

1,000,000

 

 

995,110

 

Series B, FGIC Insured, 4.75%, 2/01/36

 

 

1,000,000

 

 

929,960

 

Series C, 5.5%, 2/01/14

 

 

280,000

 

 

307,535

 

The accompanying notes form an integral part of these financial statements.

50



 

NEBRASKA TAX-FREE INCOME FUND

Schedule of Investments in Securities, Continued

 

 

 

 

 

 

 

 

 

 

Principal
amount

 

Value

 

 

 



 



 

Nebraska — 78.3% (continued)

 

 

 

 

 

 

 

Omaha, Sanitary Sewer Revenue, MBIA Insured,

 

 

 

 

 

 

 

4.0%, 11/15/12

 

$

520,000

 

$

544,908

 

4.0%, 11/15/14

 

 

250,000

 

 

260,903

 

Papillion, General Obligation, Bond Anticipation Notes,

 

 

 

 

 

 

 

Series A, 3.7%, 6/01/09

 

 

700,000

 

 

701,694

 

Platte County, Hospital Authority #1, Revenue, Columbus

 

 

 

 

 

 

 

Community Hospital Project, Radian Insured, 5.9%, 5/01/15

 

 

250,000

 

 

259,625

 

Public Power Generation Agency, Revenue, Whelan Energy

 

 

 

 

 

 

 

Center Unit 2, Series A, AMBAC Insured, 5.0%, 1/01/18

 

 

750,000

 

 

791,258

 

Saline County, Hospital Authority #1, Revenue, Bryan LGH Medical

 

 

 

 

 

 

 

Center, Refunding, Series B, 3.894%, 6/01/31 (Auction Rated Security)#

 

 

500,000

 

 

500,000

 

Sarpy County, General Obligation, Sanitary & Improvement

 

 

 

 

 

 

 

District #111, Stoneybrook, 5.9%, 3/15/13

 

 

300,000

 

 

300,522

 

Sarpy County, General Obligation, Sanitary & Improvement

 

 

 

 

 

 

 

District #112, Leawood Oaks III, 6.2%, 2/15/14

 

 

105,000

 

 

105,194

 

Scottsbluff County, Hospital Authority #1, Revenue, Regional

 

 

 

 

 

 

 

West Medical Center, 6.375%, 12/15/08

 

 

40,000

 

 

40,110

 

Southern Nebraska Public Power District, Electric System Revenue,

 

 

 

 

 

 

 

AMBAC Insured, 4.625%, 9/15/21

 

 

1,000,000

 

 

1,011,130

 

Bond Anticipation Notes, 4.0%, 12/15/08

 

 

1,000,000

 

 

1,015,120

 

University of Nebraska, Facilities Corp., Lease Rental Revenue,

 

 

 

 

 

 

 

UNMC Sorell Center Project, 4.0%, 4/15/11

 

 

1,000,000

 

 

1,039,960

 

University of Nebraska, University Revenue,

 

 

 

 

 

 

 

Lincoln Student Fees and Facilities, 4.6%, 7/01/17

 

 

570,000

 

 

588,992

 

Omaha Health & Recreation Project, 4.05%, 5/15/19

 

 

 

 

 

 

 

(settlement date 4/2/08)

 

 

390,000

 

 

387,914

 

Omaha Health & Recreation Project, 5.0%, 5/15/33

 

 

 

 

 

 

 

(settlement date 4/2/08)

 

 

700,000

 

 

694,022

 

Omaha Student Facilities Project, 4.5%, 5/15/16

 

 

565,000

 

 

593,527

 

Omaha Student Facilities Project, 5.0%, 5/15/27

 

 

800,000

 

 

802,864

 

Refunding, Lincoln Parking Project, 4.0%, 6/01/17(b)

 

 

1,070,000

 

 

1,088,586

 

 

 

 

 

 



 

 

 

 

 

 

 

43,615,605

 

Puerto Rico — 3.3%

 

 

 

 

 

 

 

Commonwealth,

 

 

 

 

 

 

 

Refunding, Series B4, FSA Insured, 6.0%, 7/01/28 (Auction

 

 

 

 

 

 

 

Rated Security)

 

 

800,000

 

 

800,000

 

General Obligation, Refunding, FGIC Insured, 5.5%, 7/01/11

 

 

990,000

 

 

1,047,460

 

 

 

 

 

 



 

 

 

 

 

 

 

1,847,460

 

The accompanying notes form an integral part of these financial statements.

51



 

NEBRASKA TAX-FREE INCOME FUND

Schedule of Investments in Securities, Continued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Principal
amount
or shares

 

Value

 

 

 


 


 

Texas — 1.5%

 

 

 

 

 

 

 

San Antonio, Electric & Gas Revenue, Series A

 

 

 

 

 

 

 

5.0%, 2/01/18

 

$

325,000

 

$

331,490

 

5.0%, 2/01/18, Pre-Refunded 2/01/09 @ 101

 

 

175,000

 

 

181,475

 

5.25%, 2/01/14

 

 

320,000

 

 

329,696

 

 

 

 

 

 



 

 

 

 

 

 

 

842,661

 

Washington — 2.7%

 

 

 

 

 

 

 

Vancouver, Water & Sewer Revenue, Refunding, MBIA Insured,

 

 

 

 

 

 

 

4.75%, 6/01/16

 

 

500,000

 

 

501,385

 

Washington State, General Obligation, Variable Purpose,

 

 

 

 

 

 

 

Series B, 5.0%, 1/01/19

 

 

1,000,000

 

 

1,009,690

 

 

 

 

 

 



 

 

 

 

 

 

 

1,511,075

 

 

 

 

 

 



 

Total Municipal Bonds (Cost $50,710,513)

 

 

 

 

 

51,364,197

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SHORT-TERM SECURITIES — 8.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wells Fargo Advantage Tax-Free Money Market Fund 2.1%(a)

 

 

 

 

 

 

 

(Cost $4,817,220)

 

 

4,817,220

 

 

4,817,220

 

 

 

 

 

 



 

Total Investments in Securities (Cost $55,527,733)

 

 

 

 

 

56,181,417

 

Other Liabilities in Excess of Other Assets — (0.9%)

 

 

 

 

 

(495,996

)

 

 

 

 

 



 

Net Assets — 100.0%

 

 

 

 

$

55,685,421

 

 

 

 

 

 



 

Net Asset Value Per Share

 

 

 

 

$

9.95

 

 

 

 

 

 



 


 

 

(a)

Rate presented represents the annualized 7-day yield at March 31, 2008.

 

 

(b)

Designated to cover a forward purchase commitment.

 

 

#

Illiquid and/or restricted security that has been fair valued.

The accompanying notes form an integral part of these financial statements.

52



 

SHORT-INTERMEDIATE INCOME FUND AND

GOVERNMENT MONEY MARKET FUND

April 16, 2008

Dear Fellow Shareholder:

Short-Intermediate Income Fund Overview

          The Short-Intermediate Income Fund’s total return for the first quarter of 2008 was +2.3%, which consisted of approximately +0.9% from net interest and dividend income (after deducting fees and expenses) and +1.4% from (net realized and unrealized) appreciation of our bonds and other investments. Our first quarter return was less than the 3.0% return of the Lehman Brothers Intermediate U.S. Government/Credit Index, our Fund’s primary benchmark. For the fiscal year ended March 31, 2008, our total return was +7.0%.

          The table below shows the results of the Short-Intermediate Income Fund over various time periods through March 31, 2008, along with the Lehman Brothers Intermediate U.S. Government/Credit Index and two additional Lehman Brothers Indexes with a shorter average maturity (1-3 and 1-5 year) which more closely resemble the historical average life of our Fund.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total
Return*

 

Average Annual
Total Returns*

 

 


 


 

 

1-Year

 

3-Year

 

5-Year

 

10-Year

 

 


 


 


 


Short-Intermediate Income Fund

 

 

 

7.0

%

 

 

 

4.8

%

 

 

 

4.4

%

 

 

 

5.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lehman Brothers Intermediate U.S. Government/Credit Index#

 

 

 

8.9

 

 

 

 

5.7

 

 

 

 

4.4

 

 

 

 

5.9

 

Lehman Brothers 1-5 Year U.S. Government/Credit Index#

 

 

 

8.7

 

 

 

 

5.5

 

 

 

 

4.0

 

 

 

 

5.5

 

Lehman Brothers 1-3 Year U.S. Government/Credit Index#

 

 

 

8.2

 

 

 

 

5.3

 

 

 

 

3.7

 

 

 

 

5.1

 

These performance numbers reflect the deduction of the Fund’s annual operating expenses which as stated in its most recent Prospectus are 0.67% of the Fund’s net assets. This information represents past performance and past performance does not guarantee future results. The investment return and the principal value of an investment in the 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 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

.

 

*

All performance numbers assume reinvestment of dividends.

 

 

#

Index performance is hypothetical and is for illustrative purposes only.

The following table and chart show a profile of our portfolio and asset allocation as of March 31:

 

 

Average Maturity

3.0 years

Average Duration

1.7 years

Average Coupon

4.2%

30-Day SEC Yield at 3-31-08

3.4%

Average Rating

AA+

(PIE CHART)



53



 

 

Fiscal Year in Review

          Charles Dickens came to mind in trying to describe the events of the past year in the fixed-income marketplace —“It was the best of times, it was the worst of times”. The best of times were had by owning U.S. Treasury bonds, as yields fell dramatically (prices rose). The latter half of the fiscal year, particularly, was marked by rising turbulence in the financial markets. This led to increased risk aversion and a dramatic ‘flight to quality’, primarily U.S. Treasury securities.

          The worst of times were also an unfortunate experience last year. The storm that began in the subprime segment of the mortgage market took on crisis-like qualities as summer turned to fall and began to have a broader effect on the economy. Business and consumer confidence fell. Transparency and liquidity, key components of healthy capital markets, were periodically unavailable as worries of large, but yet-to-be disclosed, losses pervaded the stock and bond markets. These concerns and events led to a radical, and belated, reassessment of risk by investors who had been willing to accept yields that, in retrospect, provided insufficient compensation given the risks involved.

          Borrowing further from Dickens’ A Tale of Two Cities, last year may also be dubbed the “age of foolishness” as layers of leverage added to the misery for some. Declining asset prices and high leverage conspired to sink a number of large investment funds, leaving investors with little to nothing. And investors were painfully reminded that all AAA-rated bonds are not created equal. Wall Street alchemy and rating agency support succeeded in turning pyrite into gold (for a time) – transforming low investment grade (BBB-rated) mortgage securities and other assets into mostly AAA-rated instruments in the securitization market through the power of perceived diversification. As delinquencies and losses mounted for these newly created “AAA” bonds, investors may have felt like so many prospectors who mistook pyrite for the real thing.

          The monetary (Federal Reserve) and fiscal (Congressional) response to the unfolding credit crisis has been dramatic and historic. Actions not used since the Great Depression, and a few new ones, have been (or will be) implemented to alleviate the stress in the financial markets. Here is a recap of some of the actions taken to date:

 

 

 

 

The Federal Reserve has lowered the Federal Funds rate by 300 basis points (a basis point is one one-hundredth of a percent), the largest and swiftest decline in over a decade. This has resulted in a dramatic steepening of the yield curve, where yields of shorter-maturity instruments (e.g. T-Bills) are much lower than longer-maturity instruments (e.g. 10-year bonds). Changes in the Federal Funds rate tend to act with a lag in the economy, but this reduction in short-term rates may alleviate some of the rate shock for some homeowners with adjustable-rate mortgages that are set to re-price this year.

 

 

 

 

The Federal Reserve has injected enormous amounts of liquidity into the markets, approximately $400 billion, via an alphabet soup of lending facilities (FAF, TSLF, PDCF) to depository institutions and primary dealers. One of the intended goals of these actions is to improve trading conditions and increase the willingness of market participants to provide credit to households and firms.

 

 

 

 

With the consent of Congress and their regulator, the two largest participants in the mortgage market (Freddie Mac and Fannie Mae) have been granted permission to provide up to $200 billion of immediate liquidity to segments of the mortgage-backed securities market.

 

 

 

 

And beginning May 2, the IRS will start mailing out rebate checks to many households as part of a $152 billion stimulus package to help boost the flagging economy.

          These dramatic actions, and others, may succeed in lessening the impact of the current credit crisis. They also have the capacity to create unintended consequences, the most troubling of which could be a meaningful rise in the long-term inflation level. Since inflation is a genie best left in the bottle, we will be particularly focused on what implications this should have on the Fund’s portfolio allocations.

54



 

 

Portfolio Review

          The Short-Intermediate Income Fund had a total return of 7.0% in fiscal 2008, compared to 8.9% for the Lehman Brothers Intermediate U.S. Government/Credit Index (LBIGC), our Fund’s primary benchmark. Most of this difference can be attributed to unrealized price declines in the Fund’s corporate bond and common and preferred stock segments. It’s also worth noting that, over the years, our portfolio has almost always been constructed with a shorter average life (i.e. duration) and of higher quality than the LBIGC. We chose this benchmark to highlight that we could periodically invest longer term and/or lower quality when conditions warranted. The effect over time of our portfolio construction (typically shorter average life) has been a penalty in bull markets for Treasury bonds (like now), but a boost to performance when interest rates rise.

          Compared to a year ago, the average maturity of our Fund was unchanged at 3.0 years. The duration declined to 1.7 from 2.6 years, and the average coupon decreased to 4.2% from 4.4%. The overall credit quality of our portfolio remains very high with approximately 89% of the portfolio invested in AAA rated securities (not BBB-rated bonds masquerading as AAA, but true AAA) or U.S. Treasury, U.S. government agency-guaranteed Mortgage-Backed Securities (MBS) and cash.

          U.S. Treasury bonds account for approximately 6% of our Fund, down from 34% a year ago. This segment added materially to our performance last year. Given the rapid decline in yields that U.S. Treasury bonds have experienced, the risk/reward now appears particularly unfavorable. The 5-year Treasury yield at March 31 was 2.4%. Inflation would have to fall materially from its current pace of 4% (as measured by the Consumer Price Index) to leave any purchasing power (or ‘real’) return for investors buying Treasuries with today’s low yields.

          MBS exposure increased the most in the past year, to approximately 49% of our Fund from 37% a year ago. The risk aversion that has gripped the marketplace in the past year has even affected the high-quality, agency-guaranteed mortgage-backed securities market. At one point, yield spreads for Fannie Mae and Freddie Mac MBS increased to over 300 basis points to the Treasury curve versus a more normal 100-150 basis point spread. Much of this spread widening occurred as leveraged investors were forced to liquidate assets to meet margin calls from their lenders. This disruption gave us the opportunity to redeploy some of the proceeds from Treasury bond sales into much higher yielding instruments while assuming minimal incremental risk. In addition, we have been monitoring and studying the developments in the subprime and Alt-A (loans made to borrowers above subprime) segments of the mortgage market, but have yet to commit any Fund capital to this area.

          Corporate bond, convertible bond and preferred or common stock exposure remains a small segment of our Fund (less than 10%). We have written in the past that our rationale for this low weighting, particularly in corporate bonds, was a lack of compensation (i.e. incremental yield over U.S. Treasury bonds) for taking on the added credit risk. The past year’s blowout of credit spreads (rise in yields and price declines of lower quality bonds compared to higher quality) certainly affirms this decision. Sometimes the best investments are those not made. However, our small exposure still detracted from our results as Newcastle Investment Corp. and Redwood Trust common shares, Six Flags convertible preferred stock and Harrah’s bonds all declined.

          The rise in credit spreads has allowed us to invest on more favorable terms than have been available in some time. An example is our investment in the USG Corporation 6.30% senior unsecured bonds maturing in 2016. USG is a leading manufacturer and distributor of building materials, maybe best known for its SHEETROCK® Brand gypsum wallboard panels. We were able to purchase these bonds at a meaningful (20 point) discount to where they were issued in May of last year. While the housing contraction has impacted USG’s near-term business prospects, we believe the market has mispriced the company’s modest leverage, strong management and attractive long-term outlook. Our near-10% yield at cost should generate attractive interest income for our Fund with possible appreciation potential as economic conditions improve.

55



 

 

Fund Strategy Review

          Our investment approach consists primarily of investing in a portfolio of high quality, short-to-intermediate-term bonds where we believe we can capture most of the “coupon” returns of long-term bonds with materially less interest-rate risk. Overall, we strive to maximize our investment (or reinvestment) yield while avoiding making interest rate “bets”, particularly ones that depend on interest rates going down. We are willing to trade some upside in a rapidly falling interest-rate environment in exchange for enhanced capital preservation.

          For a small portion of our portfolio, we also search for other fixed-income related investments that have favorable risk/reward characteristics (such as high-yield and convertible bonds, preferred and convertible preferred stock, or high dividend paying common stock). Despite the disappointing results of the past year, these types of investments (like the USG bonds) have enhanced our Fund’s historical returns.

Outlook

          The divergence in inflation and interest rates over the past year is reason for caution, we believe. Inflation measures (both consumer and producer) have risen meaningfully while interest rates (U.S. Treasury) have fallen even more. The Consumer Price Index, for example, has risen 4% in the past year, up from a 2.8% rise a year ago. Five-year Treasury bond yields, on the other hand, have declined by nearly half to 2.4% at March 31. High inflation is not the friend of the bond investor as it erodes the purchasing power of interest returns. While it’s plausible that a recession (if one occurs in the U.S.) could lower inflationary pressures in the economy, we believe U.S. Treasury rates are still abnormally low. The tremendous ‘flight to quality’ by investors fearful of further cataclysmic events certainly explains much of this decline in Treasury rates. Therefore, we expect to maintain our shorter portfolio duration compared to that of our Fund’s primary benchmark (1.7 years versus 3.8 years for the LBIGC at fiscal year end) while we continue searching for qualifying investments with more favorable terms for investors.

Government Money Market Fund Overview

          The Government Money Market Fund closed the first quarter with a 7-day effective yield of 2.14%. (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.)

          In the past year the Fund’s 7-day effective yield has declined meaningfully (by 3.05%), coinciding almost exactly with the 3% year-over-year decline in the Fed Funds rate (the overnight lending rate between banks controlled by the Federal Reserve). Most of this decline, nearly two thirds, has occurred in 2008 as the Fed has acted in historic fashion in response to a growing credit crisis.

          As we have mentioned in previous letters, the Fed Funds rate exerts an effect similar to a gravitational pull on the investment universe for our Fund. The past year has been no exception. Since 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 ninety days, 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 we proceed through the balance of 2008, it seems increasingly plausible that our yield will continue to drift lower. The Fed seems poised to continue lowering the Fed Funds rate as a tool to address the ongoing turmoil in the financial markets. In anticipation of this possibility, and in reaction to the overall ‘flight to quality’, investors have already pushed Treasury bill yields meaningfully below the current Fed Funds rate. While we have limited control over the longer term direction of our Fund’s yield, which will rise and fall with changes in the Fed Funds rate, credit quality will remain high.

          If you have any questions about the mechanics of either Fund or our investment strategy, please call or email. As always, we welcome your comments and questions.

56



 

 

Annual Shareholder Information Meeting – Tuesday, May 27, 2008

          Please plan to join us at the Scott Conference Center in Omaha at 4:30 p.m. on May 27. The center is located at 6450 Pine Street on the Aksarben campus. There will be no formal business to conduct, so we can devote the entire meeting to answering your questions. Maps and driving directions are available from our client service representatives. Thanks for your continued support, and we look forward to seeing you there.

 

 

 

Best Regards,

 

 

 

-s- Thomas D. Carney

 

 

 

Thomas D. Carney

 

Portfolio Manager

 

tom@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. See the Schedules of Investments in Securities included in this report for the percent of assets in each of the Funds invested in particular industries or sectors.

57



 

 

FUND PERFORMANCE — SHORT-INTERMEDIATE INCOME FUND

 

(Unaudited)

 

The chart below depicts the change in the value of a $10,000 investment for the period March 31, 1998, through March 31, 2008 for the Short-Intermediate Income Fund as compared with the growth of the Lehman Brothers Intermediate U.S. Government/Credit Index during the same period. The Lehman Brothers Intermediate U.S. Government/Credit Index is an unmanaged index consisting of government securities and publicly issued corporate debt with maturities from one to ten years. Index performance is hypothetical and is shown for illustrative purposes only. A $10,000 investment in the Short-Intermediate Income Fund on March 31, 1998 would have been valued at $16,430 on March 31, 2008.

(LINE GRAPH)

 

 

 

 

 

 

 

 

 

 

Total
Return

 

Average Annual
Total Returns

 


 


 

1-Year

 

5-Year

10-Year

 


 



Short-Intermediate Income Fund

   7.0%

 

   4.4%

   5.1%

Lehman Brothers Intermediate U.S. Government/Credit Index

8.9

 

4.4

5.9

These performance numbers reflect the deduction of the Funds annual operating expenses, which as stated in its most recent Prospectus are 0.67% of the Funds 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 investors 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.

58



 

PORTFOLIO PROFILE — SHORT-INTERMEDIATE INCOME FUND

(Unaudited)

Credit Quality Ratings

 

 

 

 

 

 

U.S. Treasury

 

 

6.4

%

 

U.S. Government Agency Mortgage Related Securities

 

 

46.2

 

 

Aaa/AAA

 

 

14.0

 

 

Aa/AA

 

 

3.6

 

 

A/A

 

 

1.5

 

 

Baa/BBB

 

 

0.7

 

 

Ba/BB

 

 

1.0

 

 

B/B, below, and non-rated

 

 

4.1

 

 

Cash Equivalents

 

 

22.5

 

 

 

 



 

 

 

 

 

100.0

%

 

 

 



 

 

Sector Breakdown

 

 

 

 

 

 

Mortgage-Backed Securities

 

 

44.3

%

Short-Term Securities/Other

 

 

22.5

 

Government Agency

 

 

10.5

 

U.S. Treasury

 

 

6.4

 

Corporate Bonds

 

 

4.5

 

Mortgage Pass-Through Securities

 

 

4.3

 

Taxable Municipal Bonds

 

 

3.9

 

Non-Convertible Preferred Stocks

 

 

1.9

 

Common Stocks

 

 

1.4

 

Convertible Preferred Stocks

 

 

0.3

 

 

 



 

 

 

 

100.0

%

 

 



 


 

PORTFOLIO PROFILE — GOVERNMENT MONEY MARKET FUND

(Unaudited)

Sector Breakdown

 

 

 

 

 

 

Government Agency

 

 

75.3

%

 

Treasury Money Market Funds

 

 

23.2

 

 

Other Assets Less Other Liabilities

 

 

1.5

 

 

 

 



 

 

 

 

 

100.0

%

 

 

 



 

 

59



 

SHORT-INTERMEDIATE INCOME FUND

Schedule of Investments in Securities
March 31, 2008

 

 

 

 

 

 

 

 

 

 

Principal
amount

 

Value

 

 

 


 


 

CORPORATE BONDS — 4.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liberty Media Corp. 7.875% 7/15/09

 

$

500,000

 

$

504,236

 

Berkshire Hathaway Finance Corp. 4.2% 12/15/10

 

 

375,000

 

 

386,601

 

Countrywide Home Loans, Inc. 4.0% 3/22/11

 

 

1,000,000

 

 

892,452

 

Berkshire Hathaway Finance Corp. 4.625% 10/15/13

 

 

1,000,000

 

 

1,045,232

 

Harrah’s Operating Co., Inc. 5.375% 12/15/13

 

 

750,000

 

 

487,500

 

Berkshire Hathaway Finance Corp. 4.85% 1/15/15

 

 

1,500,000

 

 

1,565,660

 

USG Corp. 6.3% 11/15/16

 

 

1,000,000

 

 

795,000

 

 

 

 

 

 



 

Total Corporate Bonds (Cost $5,893,883)

 

 

 

 

 

5,676,681

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MORTGAGE-BACKED SECURITIES — 44.3%(b)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal Home Loan Mortgage Corporation — 25.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2498 CL PD — 5.5% 2016 (0.2 years)

 

 

296,895

 

 

297,494

 

3125 CL A — 5.125% 2013 (0.3 years)

 

 

562,196

 

 

563,741

 

2878 CL TB — 5.5% 2024 (0.8 years)

 

 

1,973,800

 

 

1,995,619

 

2665 CL WY — 4.5% 2027 (1.3 years)

 

 

4,000,000

 

 

4,013,023

 

2765 CL JN — 4.0% 2019 (1.4 years)

 

 

1,648,349

 

 

1,657,138

 

2548 CL HB — 4.5% 2010 (1.6 years)

 

 

4,250,000

 

 

4,320,338

 

2692 CL QT — 4.5% 2018 (1.6 years)

 

 

2,000,000

 

 

2,027,228

 

2921 CL A — 5.5% 2018 (1.6 years)

 

 

1,765,556

 

 

1,800,372

 

2743 CL HC — 4.5% 2015 (1.9 years)

 

 

3,000,000

 

 

3,052,078

 

2831 CL AB — 5.0% 2018 (2.5 years)

 

 

1,374,847

 

 

1,416,459

 

R011 CL AB— 5.5% 2020 (2.9 years)

 

 

2,656,131

 

 

2,701,785

 

2627 CL LE — 3.0% 2017 (2.9 years)

 

 

1,547,725

 

 

1,509,516

 

2975 CL OD — 5.5% 2027 (3.1 years)

 

 

2,700,000

 

 

2,778,392

 

2999 CL NB — 4.5% 2017 (3.3 years)

 

 

4,000,000

 

 

4,064,412

 

 

 

 

 

 



 

 

 

 

 

 

 

32,197,595

 

Federal National Mortgage Association — 16.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2003-87 CL JA — 4.25% 2033 (0.3 years)

 

 

175,450

 

 

175,404

 

2003-81 CL NX — 3.5% 2013 (0.5 years)

 

 

664,026

 

 

663,697

 

2002-74 CL TC — 5.0% 2015 (0.5 years)

 

 

250,244

 

 

251,480

 

2003-87 CL TE — 4.0% 2013 (0.5 years)

 

 

1,221,796

 

 

1,225,582

 

2003-20 CL QC — 5.0% 2027 (1.0 years)

 

 

799,372

 

 

804,551

 

2002-74 CL TD — 5.0% 2015 (1.5 years)

 

 

4,000,000

 

 

4,078,596

 

2003-113 CL PC — 4.0% 2015 (1.6 years)

 

 

1,010,000

 

 

1,019,434

 

2006-78 CL AV — 6.5% 2017 (2.3 years)

 

 

2,101,229

 

 

2,204,439

 

The accompanying notes form an integral part of these financial statements.

60



 

SHORT-INTERMEDIATE INCOME FUND

Schedule of Investments in Securities, Continued


 

 

 

 

 

 

 

 

 

 

Principal
amount

 

Value

 

 

 


 


 

Federal National Mortgage Association — 16.6% (continued)

 

 

 

 

 

 

 

2004-81 CL KC — 4.5% 2017 (2.4 years)

 

$

3,000,000

 

$

3,054,957

 

2003-39 CL LC — 5.0% 2022 (2.5 years)

 

 

1,188,311

 

 

1,221,901

 

2003-43 CL EX — 4.5% 2017 (2.7 years)

 

 

814,715

 

 

825,572

 

2005-59 CL PB — 5.5% 2028 (3.2 years)

 

 

2,000,000

 

 

2,055,595

 

2003-92 CL PD — 4.5% 2017 (3.4 years)

 

 

2,500,000

 

 

2,537,923

 

2003-27 CL DW — 4.5% 2017 (3.6 years)

 

 

1,000,000

 

 

1,011,686

 

 

 

 

 

 



 

 

 

 

 

 

 

21,130,817

 

Other — 2.4%

 

 

 

 

 

 

 

CDMC 2003-7P CL A4 — 3.376% 2017 (3.3 years)(c)

 

 

2,738,169

 

 

2,572,844

 

Chase MTG 2004-S1 CL A6 — 4.5% 2019 (4.6 years)

 

 

441,305

 

 

423,319

 

 

 

 

 

 



 

 

 

 

 

 

 

2,996,163

 

 

 

 

 

 



 

Total Mortgage-Backed Securities (Cost $55,244,247)

 

 

 

 

 

56,324,575

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MORTGAGE PASS-THROUGH SECURITIES — 4.3%(b)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal National Mortgage Association — 3.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

254863 — 4.0% 2013 (2.2 years)

 

 

549,802

 

 

553,254

 

255291 — 4.5% 2014 (2.5 years)

 

 

723,740

 

 

735,774

 

251787 — 6.5% 2018 (3.2 years)

 

 

37,022

 

 

38,743

 

254907 — 5.0% 2018 (3.6 years)

 

 

1,285,857

 

 

1,304,283

 

357985 — 4.5% 2020 (4.3 years)

 

 

1,502,670

 

 

1,497,939

 

 

 

 

 

 



 

 

 

 

 

 

 

4,129,993

 

Federal Home Loan Mortgage Corporation — 1.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1386 — 5.0% 2018 (3.4 years)

 

 

413,961

 

 

420,376

 

18190 — 5.5% 2022 (3.7 years)

 

 

878,800

 

 

897,314

 

 

 

 

 

 



 

 

 

 

 

 

 

1,317,690

 

 

 

 

 

 



 

Total Mortgage Pass-Through Securities (Cost $5,348,173)

 

 

 

 

 

5,447,683

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TAXABLE MUNICIPAL BONDS — 3.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Topeka, Kansas 4.5% 8/15/09

 

 

1,135,000

 

 

1,144,534

 

Stratford, Connecticut 6.55% 2/15/13

 

 

500,000

 

 

528,525

 

University of California 4.85% 5/15/13

 

 

990,000

 

 

1,006,988

 

Nebraska Public Power District 5.14% 1/01/14

 

 

1,000,000

 

 

1,007,830

 

Iowa State University Revenue 5.8% 7/01/22

 

 

1,335,000

 

 

1,334,867

 

 

 

 

 

 



 

Total Taxable Municipal Bonds (Cost $4,959,509)

 

 

 

 

 

5,022,744

 

The accompanying notes form an integral part of these financial statements.

61



 

SHORT-INTERMEDIATE INCOME FUND

Schedule of Investments in Securities, Continued


 

 

 

 

 

 

 

 

 

 

Principal
amount
or shares

 

Value

 

 

 


 


 

U.S. TREASURY AND GOVERNMENT AGENCY — 16.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury — 6.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury Note 3.0% 2/15/09

 

$

5,000,000

 

$

5,063,675

 

U.S. Treasury Note 2.625% 3/15/09

 

 

3,000,000

 

 

3,031,641

 

 

 

 

 

 



 

 

 

 

 

 

 

8,095,316

 

 

 

 

 

 

 

 

 

Government Agency — 10.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Freddie Mac 4.0% 4/28/09

 

 

240,000

 

 

244,450

 

Freddie Mac 3.25% 7/09/09

 

 

1,000,000

 

 

1,012,582

 

Federal Home Loan Banks 4.16% 12/08/09

 

 

1,500,000

 

 

1,547,793

 

Fannie Mae 4.125% 4/28/10

 

 

2,000,000

 

 

2,073,904

 

Freddie Mac 4.125% 6/16/10

 

 

1,000,000

 

 

1,038,162

 

Freddie Mac 5.5% 9/15/11

 

 

1,000,000

 

 

1,089,244

 

Federal Home Loan Banks 5.2% 5/21/12

 

 

1,000,000

 

 

1,034,853

 

Fannie Mae 4.375% 7/17/13

 

 

2,000,000

 

 

2,100,834

 

Freddie Mac 5.0% 11/13/14

 

 

3,000,000

 

 

3,237,363

 

 

 

 

 

 



 

 

 

 

 

 

 

13,379,185

 

 

 

 

 

 



 

Total U.S. Treasury and Government Agency (Cost $20,650,107)

 

 

 

 

 

21,474,501

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COMMON STOCKS — 1.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Redwood Trust, Inc.

 

 

38,000

 

 

1,381,300

 

Newcastle Investment Corp.

 

 

45,000

 

 

371,700

 

 

 

 

 

 



 

Total Common Stocks (Cost $2,483,048)

 

 

 

 

 

1,753,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONVERTIBLE PREFERRED STOCKS — 0.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Flags, Inc. 7.25% 8/15/09 (Cost $814,492)

 

 

35,000

 

 

418,600

 

The accompanying notes form an integral part of these financial statements.

62



 

SHORT-INTERMEDIATE INCOME FUND

Schedule of Investments in Securities, Continued


 

 

 

 

 

 

 

 

 

 

Shares

 

Value

 

 

 


 


 

NON-CONVERTIBLE PREFERRED STOCKS — 1.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fannie Mae 8.25% 12/13/10

 

 

50,000

 

$

1,202,500

 

Freddie Mac 8.375% 12/31/12

 

 

50,000

 

 

1,220,000

 

 

 

 

 

 



 

Total Non-Convertible Preferred Stocks (Cost $2,496,935)

 

 

 

 

 

2,422,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SHORT-TERM SECURITIES — 22.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wells Fargo Advantage Government Money Market Fund 2.4%(a)
(Cost $28,036,568)

 

 

28,036,568

 

 

28,036,568

 

 

 

 

 

 



 

Total Investments in Securities (Cost $125,926,962)

 

 

 

 

 

126,576,852

 

Other Assets Less Other Liabilities — 0.4%

 

 

 

 

 

524,681

 

 

 

 

 

 



 

Net Assets — 100%

 

 

 

 

$

127,101,533

 

 

 

 

 

 



 

Net Asset Value Per Share

 

 

 

 

$

11.74

 

 

 

 

 

 



 


 

 

(a)

Rate presented represents the annualized 7-day yield at March 31, 2008.

 

 

(b)

Number of years indicated represents estimated average life of mortgage-backed securities.

 

 

(c)

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.

The accompanying notes form an integral part of these financial statements.

63



 

GOVERNMENT MONEY MARKET FUND

Schedule of Investments in Securities
March 31, 2008


 

 

 

 

 

 

 

 

 

 

Principal
amount or
shares

 

Value

 

 

 


 


 

GOVERNMENT AGENCY — 75.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal Farm Credit Banks Discount Note 1.8% 4/07/08

 

$

37,000,000

 

$

36,988,900

 

Federal Home Loan Banks Discount Note 2.5% 4/09/08

 

 

25,000,000

 

 

24,986,528

 

Federal Home Loan Banks Discount Note 2.8% 4/25/08

 

 

15,000,000

 

 

14,972,600

 

 

 

 

 

 



 

 

 

 

 

 

 

76,948,028

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SHORT-TERM SECURITIES — 23.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wells Fargo Advantage 100% Treasury Money Market Fund 1.4%(a)

 

 

13,762,243

 

 

13,762,243

 

Milestone Treasury Obligations Portfolio 1.4%(a)

 

 

10,000,388

 

 

10,000,388

 

 

 

 

 

 



 

Total Short-Term Securities

 

 

 

 

 

23,762,631

 

 

 

 

 

 



 

Total Investments in Securities (Cost $100,710,659)

 

 

 

 

 

100,710,659

 

Other Assets Less Other Liabilities —1.5%

 

 

 

 

 

1,535,791

 

 

 

 

 

 



 

Net Assets — 100%

 

 

 

 

$

102,246,450

 

 

 

 

 

 



 

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 March 31, 2008.

The accompanying notes form an integral part of these financial statements.

64



(This page has been left blank intentionally.)

65



 

THE WEITZ FUNDS

Statements of Assets and Liabilities

March 31, 2008


 

 

 

 

 

 

 

 

 

 

 

 

 

Value

 

Partners
Value

 

Hickory

 

 

 


 


 


 

Assets:

 

 

 

 

 

 

 

 

 

 

Investments in securities at value:

 

 

 

 

 

 

 

 

 

 

Unaffiliated issuers*

 

$

1,688,075,275

 

$

1,132,501,045

 

$

258,301,082

 

Non-controlled affiliates*

 

 

86,589,335

 

 

79,116,270

 

 

 

 

 



 



 



 

 

 

 

1,774,664,610

 

 

1,211,617,315

 

 

258,301,082

 

Accrued interest and dividends receivable

 

 

3,359,578

 

 

2,338,011

 

 

666,973

 

Due from broker

 

 

 

 

 

 

 

Receivable for securities sold

 

 

18,652,705

 

 

14,292,499

 

 

2,711,317

 

Receivable for fund shares sold

 

 

193,656

 

 

244,102

 

 

20,669

 

 

 



 



 



 

Total assets

 

 

1,796,870,549

 

 

1,228,491,927

 

 

261,700,041

 

 

 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

Due to adviser

 

 

1,981,759

 

 

1,314,426

 

 

303,241

 

Options written, at value

 

 

1,530,000

 

 

 

 

 

Payable for securities purchased

 

 

20,939,551

 

 

 

 

4,387,761

 

Payable for fund shares redeemed

 

 

4,590,903

 

 

6,732,738

 

 

340,039

 

Securities sold short#

 

 

 

 

 

 

 

Other expenses

 

 

 

 

 

 

 

 

 



 



 



 

Total liabilities

 

 

29,042,213

 

 

8,047,164

 

 

5,031,041

 

 

 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

Net assets applicable to shares outstanding

 

$

1,767,828,336

 

$

1,220,444,763

 

$

256,669,000

 

 

 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

Composition of net assets:

 

 

 

 

 

 

 

 

 

 

Paid-in capital

 

$

1,770,405,692

 

$

1,206,974,175

 

$

334,440,044

 

Accumulated undistributed net investment income

 

 

11,228,745

 

 

1,402,516

 

 

238,781

 

Accumulated net realized gain (loss)

 

 

(677,984

)

 

(5,232,671

)

 

(54,943,502

)

Net unrealized appreciation (depreciation) of investments

 

 

(13,128,117

)

 

17,300,743

 

 

(23,066,323

)

 

 



 



 



 

Total net assets applicable to shares outstanding

 

$

1,767,828,336

 

$

1,220,444,763

 

$

256,669,000

 

 

 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

Net asset value, offering and redemption price per share of shares outstanding

 

$

27.74

 

$

17.33

 

$

30.53

 

 

 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

Total shares outstanding

 

 

63,728,111

 

 

70,408,376

 

 

8,407,007

 

 

 



 



 



 

(indefinite number of no par value shares authorized)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* Cost of investments in securities:

 

 

 

 

 

 

 

 

 

 

Unaffiliated issuers

 

$

1,715,376,477

 

$

1,136,065,702

 

$

281,367,405

 

Non-controlled affiliates

 

 

72,791,229

 

 

58,250,870

 

 

 

 

 



 



 



 

 

 

$

1,788,167,706

 

$

1,194,316,572

 

$

281,367,405

 

 

 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

† Premiums from options written

 

$

1,904,979

 

$

 

$

 

 

 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

# Proceeds from securities sold short

 

$

 

$

 

$

 

 

 



 



 



 


The accompanying notes form an integral part of these financial statements.

66



 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Partners III

 

Balanced

 

Nebraska
Tax-Free Income

 

Short-Intermediate
Income

 

Government
Money Market

 

 

 


 


 


 


 


 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments in securities at value:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unaffiliated issuers*

 

$

257,548,631

 

$

76,613,604

 

$

56,181,417

 

$

126,576,852

 

$

100,710,659

 

Non-controlled affiliates*

 

 

2,651,997

 

 

 

 

 

 

 

 

 

 

 



 



 



 



 



 

 

 

 

260,200,628

 

 

76,613,604

 

 

56,181,417

 

 

126,576,852

 

 

100,710,659

 

Accrued interest and dividends receivable

 

 

605,264

 

 

265,760

 

 

608,728

 

 

688,355

 

 

30,012

 

Due from broker

 

 

54,960,216

 

 

 

 

 

 

 

 

 

Receivable for securities sold

 

 

 

 

 

 

 

 

 

 

 

Receivable for fund shares sold

 

 

901

 

 

3,182

 

 

 

 

68,854

 

 

1,529,973

 

 

 



 



 



 



 



 

Total assets

 

 

315,767,009

 

 

76,882,546

 

 

56,790,145

 

 

127,334,061

 

 

102,270,644

 

 

 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Due to adviser

 

 

269,335

 

 

82,151

 

 

31,783

 

 

86,833

 

 

16,814

 

Options written, at value

 

 

 

 

 

 

 

 

 

 

 

Payable for securities purchased

 

 

4,195,464

 

 

568,669

 

 

1,072,542

 

 

 

 

 

Payable for fund shares redeemed

 

 

39,244

 

 

32,485

 

 

399

 

 

145,695

 

 

5,400

 

Securities sold short#

 

 

52,184,150

 

 

 

 

 

 

 

 

 

Other expenses

 

 

 

 

 

 

 

 

 

 

1,980

 

 

 



 



 



 



 



 

Total liabilities

 

 

56,688,193

 

 

683,305

 

 

1,104,724

 

 

232,528

 

 

24,194

 

 

 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets applicable to shares outstanding

 

$

259,078,816

 

$

76,199,241

 

$

55,685,421

 

$

127,101,533

 

$

102,246,450

 

 

 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Composition of net assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Paid-in capital

 

$

271,050,427

 

$

84,387,261

 

$

55,029,549

 

$

125,040,499

 

$

102,249,141

 

Accumulated undistributed net investment income

 

 

327,826

 

 

306,595

 

 

72,076

 

 

197,904

 

 

 

Accumulated net realized gain (loss)

 

 

(14,341,573

)

 

(2,377,171

)

 

(69,888

)

 

1,213,240

 

 

(2,691

)

Net unrealized appreciation (depreciation) of investments

 

 

2,042,136

 

 

(6,117,444

)

 

653,684

 

 

649,890

 

 

 

 

 



 



 



 



 



 

Total net assets applicable to shares outstanding

 

$

259,078,816

 

$

76,199,241

 

$

55,685,421

 

$

127,101,533

 

$

102,246,450

 

 

 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net asset value, offering and redemption price per share of shares outstanding

 

$

8.55

 

$

10.05

 

$

9.95

 

$

11.74

 

$

1.000

 

 

 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total shares outstanding

 

 

30,307,903

 

 

7,578,926

 

 

5,595,637

 

 

10,822,690

 

 

102,249,141

 

 

 



 



 



 



 



 

(indefinite number of no par value shares authorized)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* Cost of investments in securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unaffiliated issuers

 

$

265,551,294

 

$

82,731,048

 

$

55,527,733

 

$

125,926,962

 

$

100,710,659

 

Non-controlled affiliates

 

 

1,934,546

 

 

 

 

 

 

 

 

 

 

 



 



 



 



 



 

 

 

$

267,485,840

 

$

82,731,048

 

$

55,527,733

 

$

125,926,962

 

$

100,710,659

 

 

 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

† Premiums from options written

 

$

 

$

 

$

 

$

 

$

 

 

 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

# Proceeds from securities sold short

 

$

61,511,498

 

$

 

$

 

$

 

$

 

 

 



 



 



 



 



 


The accompanying notes form an integral part of these financial statements.

67



 

THE WEITZ FUNDS

Statements of Operations

Year Ended March 31, 2008


 

 

 

 

 

 

 

 

 

 

 

 

 

Value

 

Partners
Value

 

Hickory

 

 

 


 


 


 

Investment income:

 

 

 

 

 

 

 

 

 

 

Dividends:

 

 

 

 

 

 

 

 

 

 

Unaffiliated issuers*

 

$

23,216,764

 

$

11,004,536

 

$

5,333,800

 

Non-controlled affiliates

 

 

12,220,325

 

 

7,198,273

 

 

 

 

 



 



 



 

 

 

 

35,437,089

 

 

18,202,809

 

 

5,333,800

 

Interest

 

 

12,187,172

 

 

6,919,207

 

 

1,335,692

 

 

 



 



 



 

Total investment income

 

 

47,624,261

 

 

25,122,016

 

 

6,669,492

 

 

 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

Investment advisory fee

 

 

25,734,193

 

 

17,490,006

 

 

3,362,975

 

Administrative fee

 

 

2,680,784

 

 

1,830,251

 

 

417,548

 

Custodial fees

 

 

47,166

 

 

34,316

 

 

10,417

 

Dividend expense on securities sold short

 

 

 

 

 

 

 

Interest expense

 

 

 

 

 

 

 

Registration fees

 

 

61,764

 

 

46,619

 

 

29,188

 

Sub-transfer agent fees

 

 

359,540

 

 

134,588

 

 

117,245

 

Trustees fees

 

 

145,791

 

 

98,136

 

 

18,647

 

Other expenses

 

 

779,445

 

 

449,162

 

 

123,494

 

 

 



 



 



 

Total expenses

 

 

29,808,683

 

 

20,083,078

 

 

4,079,514

 

Less expenses reimbursed by investment adviser

 

 

 

 

 

 

 

 

 



 



 



 

Net expenses

 

 

29,808,683

 

 

20,083,078

 

 

4,079,514

 

 

 



 



 



 

Net investment income

 

 

17,815,578

 

 

5,038,938

 

 

2,589,978

 

 

 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

Realized and unrealized gain (loss) on investments:

 

 

 

 

 

 

 

 

 

 

Net realized gain (loss):

 

 

 

 

 

 

 

 

 

 

Unaffiliated issuers

 

 

163,155,122

 

 

95,254,549

 

 

(4,634,000

)

Non-controlled affiliates

 

 

(631,342

)

 

 

 

 

Options written

 

 

 

 

 

 

357,238

 

Securities sold short

 

 

 

 

 

 

 

 

 



 



 



 

Net realized gain (loss)

 

 

162,523,780

 

 

95,254,549

 

 

(4,276,762

)

 

 



 



 



 

Net unrealized appreciation (depreciation):

 

 

 

 

 

 

 

 

 

 

Unaffiliated issuers

 

 

(679,015,140

)

 

(469,824,734

)

 

(76,190,247

)

Non-controlled affiliates

 

 

(37,579,660

)

 

19,162,198

 

 

 

Options written

 

 

374,979

 

 

 

 

(138,519

)

Securities sold short

 

 

 

 

 

 

 

 

 



 



 



 

Net unrealized appreciation (depreciation)

 

 

(716,219,821

)

 

(450,662,536

)

 

(76,328,766

)

 

 



 



 



 

Net realized and unrealized gain (loss) on investments

 

 

(553,696,041

)

 

(355,407,987

)

 

(80,605,528

)

 

 



 



 



 

Net increase (decrease) in net assets resulting from operations

 

$

(535,880,463

)

$

(350,369,049

)

$

(78,015,550

)

 

 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

* Foreign taxes withheld

 

$

 

$

 

$

 

 

 



 



 



 


The accompanying notes form an integral part of these financial statements.

68



 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Partners III

 

Balanced

 

Nebraska
Tax-Free Income

 

Short-Intermediate
Income

 

Government
Money Market

 

 

 



 



 



 



 



 

Investment income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unaffiliated issuers*

 

$

4,829,556

 

$

1,048,511

 

$

 

$

272,237

 

$

 

Non-controlled affiliates

 

 

 

 

 

 

 

 

 

 

 

 

 



 



 



 



 



 

 

 

 

4,829,556

 

 

1,048,511

 

 

 

 

272,237

 

 

 

Interest

 

 

2,409,415

 

 

1,699,856

 

 

2,382,965

 

 

5,259,267

 

 

3,843,900

 

 

 



 



 



 



 



 

Total investment income

 

 

7,238,971

 

 

2,748,367

 

 

2,382,965

 

 

5,531,504

 

 

3,843,900

 

 

 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment advisory fee

 

 

3,015,815

 

 

711,946

 

 

214,494

 

 

476,691

 

 

354,922

 

Administrative fee

 

 

382,832

 

 

161,988

 

 

100,091

 

 

200,423

 

 

160,941

 

Custodial fees

 

 

8,326

 

 

5,629

 

 

1,822

 

 

4,074

 

 

3,650

 

Dividend expense on securities sold short

 

 

867,795

 

 

 

 

 

 

 

 

 

Interest expense

 

 

213,516

 

 

 

 

 

 

 

 

 

Registration fees

 

 

30,581

 

 

25,856

 

 

14,849

 

 

21,511

 

 

26,929

 

Sub-transfer agent fees

 

 

34,879

 

 

34,240

 

 

22,665

 

 

35,731

 

 

34,507

 

Trustees fees

 

 

16,626

 

 

4,938

 

 

2,966

 

 

6,522

 

 

4,638

 

Other expenses

 

 

68,603

 

 

55,012

 

 

69,789

 

 

86,522

 

 

46,090

 

 

 



 



 



 



 



 

Total expenses

 

 

4,638,973

 

 

999,609

 

 

426,676

 

 

831,474

 

 

631,677

 

Less expenses reimbursed by investment adviser

 

 

 

 

 

 

(24,500

)

 

 

 

(542,947

)

 

 



 



 



 



 



 

Net expenses

 

 

4,638,973

 

 

999,609

 

 

402,176

 

 

831,474

 

 

88,730

 

 

 



 



 



 



 



 

Net investment income

 

 

2,599,998

 

 

1,748,758

 

 

1,980,789

 

 

4,700,030

 

 

3,755,170

 

 

 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Realized and unrealized gain (loss) on investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net realized gain (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unaffiliated issuers

 

 

(1,990,010

)

 

(679,408

)

 

(65,395

)

 

1,447,324

 

 

(1,054

)

Non-controlled affiliates

 

 

 

 

 

 

 

 

 

 

 

Options written

 

 

550,376

 

 

(474

)

 

 

 

 

 

 

Securities sold short

 

 

(5,012,918

)

 

 

 

 

 

 

 

 

 

 



 



 



 



 



 

Net realized gain (loss)

 

 

(6,452,552

)

 

(679,882

)

 

(65,395

)

 

1,447,324

 

 

(1,054

)

 

 



 



 



 



 



 

Net unrealized appreciation (depreciation):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unaffiliated issuers

 

 

(73,060,440

)

 

(12,258,667

)

 

(261,325

)

 

1,896,539

 

 

 

Non-controlled affiliates

 

 

(1,149,199

)

 

 

 

 

 

 

 

 

Options written

 

 

(212,882

)

 

 

 

 

 

 

 

 

Securities sold short

 

 

13,663,247

 

 

 

 

 

 

 

 

 

 

 



 



 



 



 



 

Net unrealized appreciation (depreciation)

 

 

(60,759,274

)

 

(12,258,667

)

 

(261,325

)

 

1,896,539

 

 

 

 

 



 



 



 



 



 

Net realized and unrealized gain (loss) on investments

 

 

(67,211,826

)

 

(12,938,549

)

 

(326,720

)

 

3,343,863

 

 

(1,054

)

 

 



 



 



 



 



 

Net increase (decrease) in net assets resulting from operations

 

$

(64,611,828

)

$

(11,189,791

)

$

1,654,069

 

$

8,043,893

 

$

3,754,116

 

 

 



 



 



 



 



 

* Foreign taxes withheld

 

$

 

$

2,228

 

$

 

$

 

$

 

 

 



 



 



 



 



 


The accompanying notes form an integral part of these financial statements.

69



 

THE WEITZ FUNDS

Statements of changes in Net Assets

 

 

 

 

 

 

 

 

 

 

Value

 

 

 


 

 

 

Year ended March 31,

 

 

 

2008

 

2007

 

 

 


 


 

Increase (decrease) in net assets:

 

 

 

 

 

 

 

From operations:

 

 

 

 

 

 

 

Net investment income (loss)

 

$

17,815,578

 

$

20,847,264

 

Net realized gain (loss)

 

 

162,523,780

 

 

310,968,278

 

Net unrealized appreciation (depreciation)

 

 

(716,219,821

)

 

153,775,432

 

 

 



 



 

Net increase (decrease) in net assets resulting from operations

 

 

(535,880,463

)

 

485,590,974

 

 

 



 



 

 

 

 

 

 

 

 

 

Distributions to shareholders from:

 

 

 

 

 

 

 

Net investment income

 

 

(20,009,956

)

 

(21,241,301

)

Net realized gains

 

 

(305,750,842

)

 

(189,247,059

)

 

 



 



 

Total distributions

 

 

(325,760,798

)

 

(210,488,360

)

 

 



 



 

 

 

 

 

 

 

 

 

Fund share transactions:*

 

 

 

 

 

 

 

Proceeds from sales

 

 

192,361,391

 

 

459,271,293

 

Payments for redemptions

 

 

(980,592,941

)

 

(713,503,239

)

Reinvestment of distributions

 

 

295,919,555

 

 

190,685,772

 

 

 



 



 

Net increase (decrease) from fund share transactions

 

 

(492,311,995

)

 

(63,546,174

)

 

 



 



 

Total increase (decrease) in net assets

 

 

(1,353,953,256

)

 

211,556,440

 

 

 



 



 

 

 

 

 

 

 

 

 

Net assets:

 

 

 

 

 

 

 

Beginning of period

 

$

3,121,781,592

 

$

2,910,225,152

 

 

 



 



 

 

 

 

 

 

 

 

 

End of period

 

$

1,767,828,336

 

$

3,121,781,592

 

 

 



 



 

 

 

 

 

 

 

 

 

Undistributed net investment income

 

$

11,228,745

 

$

13,423,123

 

 

 



 



 

 

 

 

 

 

 

 

 

*Transactions in fund shares:

 

 

 

 

 

 

 

Shares issued

 

 

5,308,964

 

 

11,537,045

 

Shares redeemed

 

 

(27,898,307

)

 

(18,560,901

)

Reinvested dividends

 

 

8,441,810

 

 

4,799,641

 

 

 



 



 

Net increase (decrease) in shares outstanding

 

 

(14,147,533

)

 

(2,224,215

)

 

 



 



 


The accompanying notes form an integral part of these financial statements.

70



 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Partners Value

 

Hickory

 

Partners III

 

 

 


 


 


 

 

 

Year ended March 31,

 

Year ended March 31,

 

Year ended March 31,

 

 

 

2008

 

2007

 

2008

 

2007

 

2008

 

2007

 

 

 


 


 


 


 


 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase (decrease) in net assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

From operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income (loss)

 

$

5,038,938

 

$

7,407,396

 

$

2,589,978

 

$

2,595,004

 

$

2,599,998

 

$

2,426,209

 

Net realized gain (loss)

 

 

95,254,549

 

 

269,766,451

 

 

(4,276,762

)

 

15,660,861

 

 

(6,452,552

)

 

15,781,160

 

Net unrealized appreciation (depreciation)

 

 

(450,662,536

)

 

52,171,152

 

 

(76,328,766

)

 

33,881,344

 

 

(60,759,274

)

 

25,536,559

 

 

 



 



 



 



 



 



 

Net increase (decrease) in net assets resulting from operations

 

 

(350,369,049

)

 

329,344,999

 

 

(78,015,550

)

 

52,137,209

 

 

(64,611,828

)

 

43,743,928

 

 

 



 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distributions to shareholders from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

(7,216,957

)

 

(10,524,431

)

 

(3,116,768

)

 

(1,987,488

)

 

(2,829,383

)

 

(2,324,851

)

Net realized gains

 

 

(190,212,819

)

 

(242,439,968

)

 

 

 

 

 

(12,357,842

)

 

(14,529,358

)

 

 



 



 



 



 



 



 

Total distributions

 

 

(197,429,776

)

 

(252,964,399

)

 

(3,116,768

)

 

(1,987,488

)

 

(15,187,225

)

 

(16,854,209

)

 

 



 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fund share transactions:*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from sales

 

 

107,617,239

 

 

229,009,536

 

 

42,285,183

 

 

74,553,956

 

 

28,577,638

 

 

24,857,070

 

Payments for redemptions

 

 

(541,166,682

)

 

(396,511,045

)

 

(93,084,667

)

 

(70,235,193

)

 

(27,804,517

)

 

(9,731,102

)

Reinvestment of distributions

 

 

177,955,858

 

 

233,952,755

 

 

2,539,287

 

 

1,710,051

 

 

14,867,123

 

 

16,600,718

 

 

 



 



 



 



 



 



 

Net increase (decrease) from fund share transactions

 

 

(255,593,585

)

 

66,451,246

 

 

(48,260,197

)

 

6,028,814

 

 

15,640,244

 

 

31,726,686

 

 

 



 



 



 



 



 



 

Total increase (decrease) in net assets

 

 

(803,392,410

)

 

142,831,846

 

 

(129,392,515

)

 

56,178,535

 

 

(64,158,809

)

 

58,616,405

 

 

 



 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning of period

 

$

2,023,837,173

 

$

1,881,005,327

 

$

386,061,515

 

$

329,882,980

 

$

323,237,625

 

$

264,621,220

 

 

 



 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

End of period

 

$

1,220,444,763

 

$

2,023,837,173

 

$

256,669,000

 

$

386,061,515

 

$

259,078,816

 

$

323,237,625

 

 

 



 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Undistributed net investment income

 

$

1,402,516

 

$

3,580,535

 

$

238,781

 

$

765,571

 

$

327,826

 

$

557,211

 

 

 



 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

*Transactions in fund shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued

 

 

4,889,029

 

 

9,272,428

 

 

1,140,840

 

 

1,963,588

 

 

2,865,100

 

 

2,242,244

 

Shares redeemed

 

 

(25,093,961

)

 

(16,470,331

)

 

(2,530,899

)

 

(1,922,957

)

 

(2,681,759

)

 

(904,899

)

Reinvested dividends

 

 

8,122,148

 

 

9,703,067

 

 

70,604

 

 

43,190

 

 

1,479,323

 

 

1,494,784

 

 

 



 



 



 



 



 



 

Net increase (decrease) in shares outstanding

 

 

(12,082,784

)

 

2,505,164

 

 

(1,319,455

)

 

83,821

 

 

1,662,664

 

 

2,832,129

 

 

 



 



 



 



 



 



 


The accompanying notes form an integral part of these financial statements.

71




 

THE WEITZ FUNDS

Statements of Changes in Net Assets, Continued

 

 

 

 

 

 

 

 

 

 

Balanced

 

 

 


 

 

 

Year ended March 31,

 

 

 

2008

 

2007

 

 

 


 


 

Increase (decrease) in net assets:

 

 

 

 

 

 

 

From operations:

 

 

 

 

 

 

 

Net investment income (loss)

 

$

1,748,758

 

$

1,093,548

 

Net realized gain (loss)

 

 

(679,882

)

 

2,585,109

 

Net unrealized appreciation (depreciation)

 

 

(12,258,667

)

 

3,886,258

 

 

 



 



 

Net increase (decrease) in net assets resulting from operations

 

 

(11,189,791

)

 

7,564,915

 

 

 



 



 

 

 

 

 

 

 

 

 

Distributions to shareholders from:

 

 

 

 

 

 

 

Net investment income

 

 

(1,793,225

)

 

(964,071

)

Net realized gains

 

 

(3,738,089

)

 

(1,547,204

)

 

 



 



 

Total distributions

 

 

(5,531,314

)

 

(2,511,275

)

 

 



 



 

 

 

 

 

 

 

 

 

Fund share transactions:*

 

 

 

 

 

 

 

Proceeds from sales

 

 

15,754,338

 

 

24,275,214

 

Proceeds from shares issued in connection with reorganization(a)

 

 

 

 

 

Payments for redemptions

 

 

(16,018,837

)

 

(8,670,585

)

Reinvestment of distributions

 

 

5,223,150

 

 

2,453,555

 

 

 



 



 

Net increase (decrease) from fund share transactions

 

 

4,958,651

 

 

18,058,184

 

 

 



 



 

Total increase (decrease) in net assets

 

 

(11,762,454

)

 

23,111,824

 

 

 



 



 

 

 

 

 

 

 

 

 

Net assets:

 

 

 

 

 

 

 

Beginning of period

 

$

87,961,695

 

$

64,849,871

 

 

 



 



 

 

 

 

 

 

 

 

 

End of period

 

$

76,199,241

 

$

87,961,695

 

 

 



 



 

 

 

 

 

 

 

 

 

Undistributed net investment income

 

$

306,595

 

$

348,854

 

 

 



 



 

 

 

 

 

 

 

 

 

*Transactions in fund shares:

 

 

 

 

 

 

 

Shares issued

 

 

1,334,944

 

 

2,005,301

 

Shares issued in connection with reorganization(a)

 

 

 

 

 

Shares redeemed

 

 

(1,425,925

)

 

(744,692

)

Reinvested dividends

 

 

458,197

 

 

210,847

 

 

 



 



 

Net increase (decrease) in shares outstanding

 

 

367,216

 

 

1,471,456

 

 

 



 



 

(a) Fund commenced operations on January 1, 2007 (See Note 1).


The accompanying notes form an integral part of these financial statements.

72



 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nebraska Tax-Free Income

 

Short-Intermediate Income

 

Government Money Market

 

 

 


 


 


 

 

 

Year ended
March 31, 2008

 

Three months
ended
March 31, 2007(a)

 

 

 

 

 

 

 

 

Year ended March 31,

 

Year ended March 31,

 

 

 

 

2008

 

2007

 

2008

 

2007

 

 

 


 


 


 


 


 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase (decrease) in net assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

From operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income (loss)

 

$

1,980,789

 

$

409,673

 

$

4,700,030

 

$

5,241,969

 

$

3,755,170

 

$

3,083,902

 

Net realized gain (loss)

 

 

(65,395

)

 

(4,493

)

 

1,447,324

 

 

(62,291

)

 

(1,054

)

 

245

 

Net unrealized appreciation (depreciation)

 

 

(261,325

)

 

(11,689

)

 

1,896,539

 

 

2,163,335

 

 

 

 

 

 

 



 



 



 



 



 



 

Net increase (decrease) in net assets resulting from operations

 

 

1,654,069

 

 

393,491

 

 

8,043,893

 

 

7,343,013

 

 

3,754,116

 

 

3,084,147

 

 

 



 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distributions to shareholders from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

(1,957,350

)

 

(361,003

)

 

(4,742,984

)

 

(5,308,508

)

 

(3,755,170

)

 

(3,083,902

)

Net realized gains

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 



 



 



 



 



 

Total distributions

 

 

(1,957,350

)

 

(361,003

)

 

(4,742,984

)

 

(5,308,508

)

 

(3,755,170

)

 

(3,083,902

)

 

 



 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fund share transactions:*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from sales

 

 

15,047,217

 

 

2,478,219

 

 

32,488,734

 

 

27,625,026

 

 

167,022,571

 

 

147,038,660

 

Proceeds from shares issued in connection with reorganization(a)

 

 

 

 

43,255,162

 

 

 

 

 

 

 

 

 

Payments for redemptions

 

 

(6,054,868

)

 

(643,907

)

 

(34,534,880

)

 

(70,365,512

)

 

(147,544,732

)

 

(132,006,799

)

Reinvestment of distributions

 

 

1,536,005

 

 

338,386

 

 

4,553,969

 

 

5,088,798

 

 

3,703,485

 

 

3,026,373

 

 

 



 



 



 



 



 



 

Net increase (decrease) from fund share transactions

 

 

10,528,354

 

 

45,427,860

 

 

2,507,823

 

 

(37,651,688

)

 

23,181,324

 

 

18,058,234

 

 

 



 



 



 



 



 



 

Total increase (decrease) in net assets

 

 

10,225,073

 

 

45,460,348

 

 

5,808,732

 

 

(35,617,183

)

 

23,180,270

 

 

18,058,479

 

 

 



 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning of period

 

$

45,460,348

 

$

 

$

121,292,801

 

$

156,909,984

 

$

79,066,180

 

$

61,007,701

 

 

 



 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

End of period

 

$

55,685,421

 

$

45,460,348

 

$

127,101,533

 

$

121,292,801

 

$

102,246,450

 

$

79,066,180

 

 

 



 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Undistributed net investment income

 

$

72,076

 

$

48,637

 

$

197,904

 

$

187,153

 

$

 

$

 

 

 



 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

*Transactions in fund shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued

 

 

1,503,218

 

 

247,025

 

 

2,806,445

 

 

2,430,425

 

 

167,022,571

 

 

147,038,660

 

Shares issued in connection with reorganization(a)

 

 

 

 

4,325,516

 

 

 

 

 

 

 

 

 

Shares redeemed

 

 

(604,070

)

 

(64,330

)

 

(2,999,291

)

 

(6,200,086

)

 

(147,544,732

)

 

(132,006,799

)

Reinvested dividends

 

 

154,473

 

 

33,805

 

 

396,527

 

 

449,114

 

 

3,703,485

 

 

3,026,373

 

 

 



 



 



 



 



 



 

Net increase (decrease) in shares outstanding

 

 

1,053,621

 

 

4,542,016

 

 

203,681

 

 

(3,320,547

)

 

23,181,324

 

 

18,058,234

 

 

 



 



 



 



 



 



 


The accompanying notes form an integral part of these financial statements.

73



 

THE WEITZ FUNDS

Partners III Opportunity Fund

Statement of Cash Flows

Year Ended March 31, 2008


 

 

 

 

 

Increase (decrease) in cash:

 

 

 

 

Cash flows from operating activities:

 

 

 

 

Net decrease in net assets from operations

 

$

(64,611,828

)

Adjustments to reconcile net decrease in net assets from operations
to net cash used in operating activities:

 

 

 

 

Purchase of investment securities

 

 

(116,830,399

)

Proceeds from sale of investment securities

 

 

112,303,603

 

Proceeds from securities sold short

 

 

42,886,499

 

Short positions covered

 

 

(34,843,220

)

Purchase of short-term investment securities, net

 

 

(7,792,150

)

Decrease in accrued interest and dividends receivable

 

 

4,501

 

Decrease in receivable for fund shares sold

 

 

24,099

 

Decrease in dividends payable on securities sold short

 

 

(67,485

)

Increase in payable for securities purchased

 

 

577,948

 

Increase in payable for fund shares redeemed

 

 

39,244

 

Decrease in due to adviser

 

 

(65,206

)

Net unrealized depreciation on investments, options and short sales

 

 

60,759,274

 

Net realized loss on investments, options and short sales

 

 

6,452,552

 

 

 



 

 

 

 

 

 

Net cash used in operating activities

 

 

(1,162,568

)

 

 



 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

Proceeds from sales of fund shares

 

 

28,577,638

 

Payments for redemptions of fund shares

 

 

(27,804,517

)

Cash distributions to shareholders

 

 

(320,102

)

Decrease in due from broker

 

 

709,549

 

 

 



 

 

 

 

 

 

Net cash provided by financing activities

 

 

1,162,568

 

 

 



 

 

 

 

 

 

Net increase (decrease) in cash

 

 

 

 

 

 

 

 

Cash:

 

 

 

 

Balance, beginning of period

 

 

 

 

 



 

Balance, end of period

 

$

 

 

 



 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

Cash payments for interest

 

$

213,516

 

 

 



 

 

 

 

 

 

Noncash financing activities:

 

 

 

 

Reinvestment of shareholder distributions

 

$

14,867,123

 

 

 



 


The accompanying notes form an integral part of these financial statements.

74



 

THE WEITZ FUNDS

Value Fund

Financial Highlights

The following financial information provides selected data for a share of the Value Fund outstanding throughout the periods indicated.


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended March 31,

 

 

 


 

 

 

2008

 

2007

 

2006

 

2005

 

2004

 

 

 


 


 


 


 


 

Net asset value, beginning of period

 

$

40.09

 

$

36.33

 

$

36.14

 

$

37.78

 

$

26.85

 

 

 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from investment operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

0.28

 

 

0.28

 

 

0.29

 

 

0.36

 

 

0.19

 

Net gain (loss) on securities (realized and unrealized)

 

 

(7.94

)

 

6.31

 

 

1.14

 

 

1.51

 

 

10.89

 

 

 



 



 



 



 



 

Total from investment operations

 

 

(7.66

)

 

6.59

 

 

1.43

 

 

1.87

 

 

11.08

 

 

 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less distributions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends from net investment income

 

 

(0.28

)

 

(0.28

)

 

(0.37

)

 

(0.21

)

 

(0.15

)

Distributions from realized gains

 

 

(4.41

)

 

(2.55

)

 

(0.87

)

 

(3.30

)

 

 

 

 



 



 



 



 



 

Total distributions

 

 

(4.69

)

 

(2.83

)

 

(1.24

)

 

(3.51

)

 

(0.15

)

 

 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net asset value, end of period

 

$

27.74

 

$

40.09

 

$

36.33

 

$

36.14

 

$

37.78

 

 

 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total return

 

 

(21.2

%)

 

18.3

%

 

4.0

%

 

5.1

%

 

41.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios/supplemental data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets, end of period ($000)

 

 

1,767,828

 

 

3,121,782

 

 

2,910,225

 

 

4,124,493

 

 

4,409,206

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of expenses to average net assets

 

 

1.15

%

 

1.13

%

 

1.12

%

 

1.10

%

 

1.11

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of net investment income to average net assets

 

 

0.69

%

 

0.71

%

 

0.64

%

 

0.95

%

 

0.57

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Portfolio turnover rate

 

 

22

%

 

29

%

 

40

%

 

26

%

 

12

%


The accompanying notes form an integral part of these financial statements.

75



 

THE WEITZ FUNDS

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.


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended March 31,

 

 

 


 

 

 

2008

 

2007

 

2006

 

2005

 

2004

 

 

 


 


 


 


 


 

Net asset value, beginning of period

 

$

24.53

 

$

23.52

 

$

22.98

 

$

22.52

 

$

16.41

 

 

 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from investment operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

0.07

 

 

0.10

 

 

0.14

 

 

0.15

 

 

0.03

 

Net gain (loss) on securities (realized and unrealized)

 

 

(4.67

)

 

4.24

 

 

0.95

 

 

1.09

 

 

6.10

 

 

 



 



 



 



 



 

Total from investment operations

 

 

(4.60

)

 

4.34

 

 

1.09

 

 

1.24

 

 

6.13

 

 

 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less distributions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends from net investment income

 

 

(0.10

)

 

(0.14

)

 

(0.15

)

 

(0.08

)

 

(0.02

)

Distributions from realized gains

 

 

(2.50

)

 

(3.19

)

 

(0.40

)

 

(0.70

)

 

 

 

 



 



 



 



 



 

Total distributions

 

 

(2.60

)

 

(3.33

)

 

(0.55

)

 

(0.78

)

 

(0.02

)

 

 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net asset value, end of period

 

$

17.33

 

$

24.53

 

$

23.52

 

$

22.98

 

$

22.52

 

 

 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total return

 

 

(20.7

%)

 

19.1

%

 

4.8

%

 

5.5

%

 

37.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios/supplemental data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets, end of period ($000)

 

 

1,220,445

 

 

2,023,837

 

 

1,881,005

 

 

2,633,613

 

 

2,936,054

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of expenses to average net assets

 

 

1.15

%

 

1.14

%

 

1.14

%

 

1.13

%

 

1.13

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of net investment income to
average net assets

 

 

0.29

%

 

0.39

%

 

0.49

%

 

0.61

%

 

0.16

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Portfolio turnover rate

 

 

24

%

 

31

%

 

36

%

 

22

%

 

11

%


The accompanying notes form an integral part of these financial statements.

76



 

THE WEITZ FUNDS

Hickory Fund
Financial Highlights

The following financial information provides selected data for a share of the Hickory Fund outstanding throughout the periods indicated.


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended March 31,

 

 

 


 

 

 

2008

 

2007

 

2006

 

2005

 

2004

 

 

 


 


 


 


 


 

Net asset value, beginning of period

 

$

39.69

 

$

34.21

 

$

31.36

 

$

28.86

 

$

17.97

 

 

 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from investment operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

0.30

 

 

0.27

 

 

0.09

 

 

0.19

 

 

0.25

 

Net gain (loss) on securities (realized and unrealized)

 

 

(9.11

)

 

5.42

 

 

2.84

 

 

2.54

 

 

10.90

 

 

 



 



 



 



 



 

Total from investment operations

 

 

(8.81

)

 

5.69

 

 

2.93

 

 

2.73

 

 

11.15

 

 

 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less distributions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends from net investment income

 

 

(0.35

)

 

(0.21

)

 

(0.08

)

 

(0.23

)

 

(0.26

)

Distributions from realized gains

 

 

 

 

 

 

 

 

 

 

 

 

 



 



 



 



 



 

Total distributions

 

 

(0.35

)

 

(0.21

)

 

(0.08

)

 

(0.23

)

 

(0.26

)

 

 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net asset value, end of period

 

$

30.53

 

$

39.69

 

$

34.21

 

$

31.36

 

$

28.86

 

 

 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total return

 

 

(22.3

%)

 

16.6

%

 

9.3

%

 

9.4

%

 

62.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios/supplemental data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets, end of period ($000)

 

 

256,669

 

 

386,062

 

 

329,883

 

 

328,636

 

 

274,991

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of expenses to average net assets

 

 

1.21

%

 

1.20

%

 

1.20

%

 

1.21

%

 

1.30

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of net investment income to average net assets

 

 

0.77

%

 

0.74

%

 

0.28

%

 

0.65

%

 

0.96

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Portfolio turnover rate

 

 

31

%

 

42

%

 

65

%

 

58

%

 

50

%


The accompanying notes form an integral part of these financial statements.

77



 

THE WEITZ FUNDS

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.


 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended March 31,

 

Three months
ended
March 31, 2006(a)

 

 

 


 

 

 

 

2008

 

2007

 

 

 

 


 


 


 

Net asset value, beginning of period

 

$

11.28

 

$

10.25

 

$

10.00

 

 

 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from investment operations:

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

0.09

 

 

0.09

 

 

0.02

 

Net gain (loss) on securities (realized and unrealized)

 

 

(2.28

)

 

1.58

 

 

0.23

 

 

 



 



 



 

Total from investment operations

 

 

(2.19

)

 

1.67

 

 

0.25

 

 

 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

Less distributions:

 

 

 

 

 

 

 

 

 

 

Dividends from net investment income

 

 

(0.10

)

 

(0.09

)

 

 

Distributions from realized gains

 

 

(0.44

)

 

(0.55

)

 

 

 

 



 



 



 

Total distributions

 

 

(0.54

)

 

(0.64

)

 

 

 

 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

Net asset value, end of period

 

$

8.55

 

$

11.28

 

$

10.25

 

 

 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

Total return

 

 

 

 

 

 

 

 

 

 

 

 

 

(20.1

%)

 

16.4

%

 

2.5

%

 

 

 

 

 

 

 

 

 

 

 

Ratios/supplemental data:

 

 

 

 

 

 

 

 

 

 

Net assets, end of period ($000)

 

 

259,079

 

 

323,238

 

 

264,621

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of net expenses to average net assets(c)

 

 

1.54

%

 

1.57

%

 

1.52

%*(b)

 

 

 

 

 

 

 

 

 

 

 

Ratio of net investment income to average net assets

 

 

0.86

%

 

0.83

%

 

0.72

%*

 

 

 

 

 

 

 

 

 

 

 

Portfolio turnover rate

 

 

51

%

 

41

%

 

32

%



 

 

*

Annualized

 

 

Not Annualized

 

 

(a)

Fund commenced operations on January 1, 2006.

 

 

(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 0.07%, 0.14% and 0.12% related to interest expense and 0.29%, 0.22% and 0.20% related to dividend expense on securities sold short for the periods ended March 31, 2008, 2007 and 2006, respectively.

The accompanying notes form an integral part of these financial statements.

78



 

THE WEITZ FUNDS

Balanced Fund
Financial Highlights

The following financial information provides selected data for a share of the Balanced Fund outstanding throughout the periods indicated.


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended March 31,

 

 

Six months
ended
March 31, 2004(a)

 

 

 


 

 

 

 

 

2008

 

2007

 

2006

 

2005

 

 

 

 

 


 


 


 


 


 

Net asset value, beginning of period

 

$

12.20

 

$

11.30

 

$

11.17

 

$

10.52

 

$

10.00

 

 

 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from investment operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

0.23

 

 

0.16

 

 

0.14

 

 

0.09

 

 

0.01

 

Net gain (loss) on securities (realized and unrealized)

 

 

(1.65

)

 

1.15

 

 

0.53

 

 

0.80

 

 

0.52

 

 

 



 



 



 



 



 

Total from investment operations

 

 

(1.42

)

 

1.31

 

 

0.67

 

 

0.89

 

 

0.53

 

 

 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less distributions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends from net investment income

 

 

(0.24

)

 

(0.15

)

 

(0.12

)

 

(0.06

)

 

(0.01

)

Distributions from realized gains

 

 

(0.49

)

 

(0.26

)

 

(0.42

)

 

(0.18

)

 

#

 

 



 



 



 



 



 

Total distributions

 

 

(0.73

)

 

(0.41

)

 

(0.54

)

 

(0.24

)

 

(0.01

)

 

 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net asset value, end of period

 

$

10.05

 

$

12.20

 

$

11.30

 

$

11.17

 

$

10.52

 

 

 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total return

 

 

(12.3

%)

 

11.8

%

 

6.1

%

 

8.5

%

 

5.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios/supplemental data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets, end of period ($000)

 

 

76,199

 

 

87,962

 

 

64,850

 

 

54,234

 

 

23,129

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of net expenses to average net assets

 

 

1.12

%

 

1.13

%

 

1.15

%

 

1.21

%

 

1.25

%*††

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of net investment income to average net assets

 

 

1.97

%

 

1.53

%

 

1.28

%

 

0.89

%

 

0.09

%*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Portfolio turnover rate

 

 

44

%

 

33

%

 

36

%

 

50

%

 

5

%



 

 

*

Annualized

 

 

Not Annualized

 

 

#

Amount rounds to less than $0.01

 

 

††

Absent waivers and expenses assumed by the Adviser, the annualized expense ratio would have been 1.74% for the period ended March 31, 2004.

 

 

(a)

Fund commenced operations on October 1, 2003.

The accompanying notes form an integral part of these financial statements.

79



 

THE WEITZ FUNDS

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.


 

 

 

 

 

 

 

 

 

 

Year ended
March 31, 2008

 

Three months
ended
March 31, 2007(a)

 

 

 


 


 

Net asset value, beginning of period

 

$

10.01

 

$

10.00

 

 

 



 



 

 

 

 

 

 

 

 

 

Income (loss) from investment operations:

 

 

 

 

 

 

 

Net investment income

 

 

0.36

 

 

0.09

 

Net gain (loss) on securities (realized and unrealized)

 

 

(0.06

)

 

#

 

 



 



 

Total from investment operations

 

 

0.30

 

 

0.09

 

 

 



 



 

 

 

 

 

 

 

 

 

Less distributions:

 

 

 

 

 

 

 

Dividends from net investment income

 

 

(0.36

)

 

(0.08

)

Distributions from realized gains

 

 

 

 

 

 

 



 



 

Total distributions

 

 

(0.36

)

 

(0.08

)

 

 



 



 


Net asset value, end of period

 

$

9.95

 

$

10.01

 

 

 



 



 

 

 

 

 

 

 

 

 

Total return

 

 

3.0

%

 

0.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios/supplemental data:

 

 

 

 

 

 

 

Net assets, end of period ($000)

 

 

55,685

 

 

45,460

 

 

 

 

 

 

 

 

 

Ratio of net expenses to average net assets(b)

 

 

0.75

%

 

0.75

%*

 

 

 

 

 

 

 

 

Ratio of net investment income to average net assets

 

 

3.69

%

 

3.74

%*

 

 

 

 

 

 

 

 

Portfolio turnover rate

 

 

8

%

 

2

%



 

 

*

Annualized

 

 

Not Annualized

 

 

#

Amount rounds to less than $0.01.

 

 

(a)

Fund commenced operations on January 1, 2007 (See Note 1)

 

 

(b)

Absent expenses assumed by the Adviser, the expense ratio would have been 0.80% for the year ended March 31, 2008 and the annualized expense ratio would have been 1.02% for the period ended March 31, 2007.

The accompanying notes form an integral part of these financial statements.

80



 

THE WEITZ FUNDS

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.


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended March 31,

 

 

 


 

 

 

2008

 

2007

 

2006

 

2005

 

2004

 

 

 


 


 


 


 


 

Net asset value, beginning of period

 

$

11.42

 

$

11.26

 

$

11.50

 

$

11.71

 

$

11.29

 

 

 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from investment operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

0.46

 

 

0.47

 

 

0.38

 

 

0.26

 

 

0.30

 

Net gain (loss) on securities (realized and unrealized)

 

 

0.32

 

 

0.16

 

 

(0.19

)

 

(0.16

)

 

0.45

 

 

 



 



 



 



 



 

Total from investment operations

 

 

0.78

 

 

0.63

 

 

0.19

 

 

0.10

 

 

0.75

 

 

 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less distributions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends from net investment income

 

 

(0.46

)

 

(0.47

)

 

(0.39

)

 

(0.31

)

 

(0.33

)

Distributions from realized gains

 

 

 

 

 

 

(0.04

)

 

 

 

 

 

 



 



 



 



 



 

Total distributions

 

 

(0.46

)

 

(0.47

)

 

(0.43

)

 

(0.31

)

 

(0.33

)

 

 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net asset value, end of period

 

$

11.74

 

$

11.42

 

$

11.26

 

$

11.50

 

$

11.71

 

 

 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total return

 

 

7.0

%

 

5.7

%

 

1.7

%

 

0.9

%

 

6.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios/supplemental data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets, end of period ($000)

 

 

127,102

 

 

121,293

 

 

156,910

 

 

157,395

 

 

95,733

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of net expenses to average net assets

 

 

0.70

%

 

0.71

%

 

0.74

%

 

0.75

%#

 

0.75

%#

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of net investment income to average net assets

 

 

3.94

%

 

3.90

%

 

3.29

%

 

2.51

%

 

2.72

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Portfolio turnover rate

 

 

32

%

 

7

%

 

24

%

 

41

%

 

48

%



 

 

#

Absent voluntary waivers, the expense ratio would have been 0.76% and 0.88% for the years ended March 31, 2005 and 2004, respectively.

The accompanying notes form an integral part of these financial statements.

81



 

THE WEITZ FUNDS

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.


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended March 31,

 

 

 


 

 

 

2008

 

2007

 

2006

 

2005

 

2004

 

 

 


 


 


 


 


 

Net asset value, beginning of period

 

$

1.000

 

$

1.000

 

$

1.000

 

$

1.000

 

$

1.000

 

 

 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from investment operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

0.042

 

 

0.047

 

 

0.030

 

 

0.010

 

 

0.005

 

 

 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less distributions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends from net investment income

 

 

(0.042

)

 

(0.047

)

 

(0.030

)

 

(0.010

)

 

(0.005

)

 

 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net asset value, end of period

 

$

1.000

 

$

1.000

 

$

1.000

 

$

1.000

 

$

1.000

 

 

 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total return

 

 

4.4

%

 

4.8

%

 

2.9

%

 

1.0

%

 

0.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios/supplemental data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets, end of period ($000)

 

 

102,246

 

 

79,066

 

 

61,008

 

 

40,689

 

 

49,103

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of net expenses to average net assets#

 

 

0.10

%

 

0.22

%

 

0.50

%

 

0.50

%

 

0.50

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of net investment income to average net assets

 

 

4.23

%

 

4.74

%

 

2.96

%

 

1.00

%

 

0.48

%



 

 

#

Absent voluntary waivers, the expense ratio would have been 0.71%, 0.78%, 0.89%, 0.90% and 0.91% for the years ended March 31, 2008, 2007, 2006, 2005 and 2004, respectively.

The accompanying notes form an integral part of these financial statements.

82



 

THE WEITZ FUNDS

Notes to Financial Statements
March 31, 2008

 

 

 

 

 

(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 March 31, 2008, the Trust had eight series in operation: Value Fund, Partners Value Fund, Hickory Fund, Partners III Opportunity Fund, Balanced Fund, Nebraska Tax-Free Income Fund, Short-Intermediate Income Fund and Government Money Market Fund (individually, a “Fund”, collectively, the “Funds”). The Nebraska Tax-Free Income Fund was originally organized in October 1985 as a Nebraska limited partnership (the “Income Partners Partnership”). Effective as of the close of business on December 29, 2006, the Income Partners Partnership was reorganized into a series of the Trust through a tax-free exchange of 4,325,516 shares of the Fund (valued at $10.00 per share) in exchange for the net assets of the Income Partners Partnership. At the time of the exchange, the Income Partners Partnership had net assets of $43,255,162 including net unrealized appreciation of $926,180.

 

 

 

The investment objective of the Value, Partners Value, Hickory and Partners III Opportunity 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 stocks 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 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 in municipal securities that generate income exempt from Nebraska state income tax and from federal income tax, including the alternative minimum tax.

 

 

 

The investment objective of the Short-Intermediate Income Fund is high current income consistent with preservation of capital. Under normal market conditions, the Fund will invest at least 80% of the value of its total assets in fixed income securities such as U.S. government and agency securities, corporate debt securities, mortgage-backed securities, preferred stocks and taxable municipal bonds.

 

 

 

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 principally 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.

 

 

(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, Nebraska Tax-Free Income and Short-Intermediate 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.

83



 

 

 

 

 

 

 

 

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.

 

 

 

 

 

 

 

 

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. 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. 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 March 31, 2008 and have determined that no provisions for income taxes are required in the Funds’ financial statements.


84



 

 

 

 

 

The following permanent differences between net asset components for financial reporting and tax purposes were reclassified at the end of the fiscal year:


 

 

 

 

 

 

 

 

 

 

Balanced

 

Short-
Intermediate
Income

 

 

 


 


 

Accumulated undistributed net investment income

 

$

2,208

 

$

53,705

 

Accumulated net realized gain (loss)

 

 

(2,208

)

 

(53,705

)


 

 

 

 

 

The differences are due to the tax treatment of principal paydown adjustments. These reclassifications have no impact on the net asset value of the Funds.

 

 

 

 

(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, 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 Nebraska Tax-Free Income and Short-Intermediate Income Funds pay income dividends on a quarterly basis. The Government Money Market Fund declares dividends daily 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.

 

 

 

 

(i)

New Accounting Pronouncements

 

 

 

 

 

In September 2006, FASB issued Statement on Financial Accounting Standards No. 157 (“SFAS 157”), “Fair Value Measurements,” effective for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. This standard establishes a single authoritative definition of fair value, sets out a framework for measuring fair value and requires additional disclosures about fair value measurements. SFAS 157 applies to fair value measurements already required or permitted by existing standards. The Funds do not believe that the impact of the adoption of SFAS 157 will be material to the financial statements.

 

 

 

 

 

In March 2008, the FASB issued Statement on Financial Accounting Standards No. 161 (SFAS “161”), “Disclosures about Derivative Instruments and Hedging Activities – an amendment of FASB Statement No. 133,” which requires enhanced disclosures about an entity’s derivative and hedging activities. Entities are required to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The Funds do not expect SFAS 161 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.

85



 

 

 

Under the terms of a management and investment advisory agreement, the Adviser is paid a monthly fee. The annual investment advisory fee schedule for 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 Nebraska Tax-Free Income, Short-Intermediate 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. Prior to August 1, 2006, the Short-Intermediate Income and Government Money Market Funds each paid an annual advisory fee equal to 0.50% 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 schedule for each Fund is as follows:


 

 

 

 

 

 

 

 

 

Average Daily Net Assets Break Points

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Greater Than

 

Less Than or
Equal To

 

Rate

 


 


 


 

$

0

 

$

25,000,000

 

 

0.200%

 

 

25,000,000

 

 

100,000,000

 

 

0.175%

 

 

100,000,000

 

 

 

 

 

0.100%

 


 

 

 

The Adviser has voluntarily agreed to reimburse the Weitz Equity (excluding the Partners III Fund), Balanced, Nebraska Tax-Free Income and Short-Intermediate 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 and Short-Intermediate Income Funds did not exceed the percentage limitation during the year ended March 31, 2008. The expenses reimbursed by the Adviser for the Nebraska Tax-Free Income Fund for the year ended March 31, 2008 were $24,500. Through July 31, 2008, 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 0.10% of the Fund’s average daily net assets. The expenses reimbursed by the Adviser for the Government Money Market Fund for the year ended March 31, 2008 were $542,947.

 

 

 

As of March 31, 2008, the controlling shareholder of the Adviser held approximately 48% of the Nebraska Tax-Free Income Fund, 45% of the Government Money Market Fund, 40% of the Partners III Fund, 35% of the Balanced Fund and 15% of the Hickory Fund.

 

 

(4)

Distributions to Shareholders and Distributable Earnings

 

 

 

The tax character of distributions paid by the Funds are summarized as follows:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Value

 

Partners Value

 

 

 


 


 

 

 

Year ended March 31,

 

Year ended March 31,

 

 

 

2008

 

2007

 

2008

 

2007

 

 

 


 


 


 


 

Distributions paid from:

 

 

 

 

 

 

 

 

 

 

 

 

 

Ordinary income

 

$

46,903,390

 

$

41,103,769

 

$

23,757,423

 

$

22,951,561

 

Long-term capital gains

 

 

278,857,408

 

 

169,384,591

 

 

173,672,353

 

 

230,012,838

 

 

 


 


 


 


 

Total distributions

 

$

325,760,798

 

$

210,488,360

 

$

197,429,776

 

$

252,964,399

 

 

 


 


 


 


 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hickory

 

Partners III

 

 

 


 


 

 

 

Year ended March 31,

 

Year ended March 31,

 

 

 

2008

 

2007

 

2008

 

2007

 

 

 


 


 


 


 

Distributions paid from:

 

 

 

 

 

 

 

 

 

 

 

 

 

Ordinary income

 

$

3,116,768

 

$

1,987,488

 

$

2,829,383

 

$

2,324,851

 

Long-term capital gains

 

 

 

 

 

 

12,357,842

 

 

14,529,358

 

 

 


 


 


 


 

Total distributions

 

$

3,116,768

 

$

1,987,488

 

$

15,187,225

 

$

16,854,209

 

 

 


 


 


 


 

86



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balanced

 

Nebraska Tax-Free Income

 

 

 


 


 

 

 

 

 

 

 

Year ended
March 31, 2008

 

Three months
ended
March 31, 2007(a)

 

 

 

Year ended March 31,

 

 

 

 

 

2008

 

2007

 

 

 

 

 


 


 


 


 

Distributions paid from:

 

 

 

 

 

 

 

 

 

 

 

 

 

Ordinary income

 

$

2,856,335

 

$

1,314,769

 

$

32,826

 

$

2,479

 

Tax exempt income

 

 

 

 

 

 

1,924,524

 

 

358,524

 

Long-term capital gains

 

 

2,674,979

 

 

1,196,506

 

 

 

 

 

 

 



 



 



 



 

Total distributions

 

$

5,531,314

 

$

2,511,275

 

$

1,957,350

 

$

361,003

 

 

 



 



 



 



 

(a) Fund commenced operations on January 1, 2007 (See Note 1)

The distributions paid by the Short-Intermediate Income and Government Money Market Funds for the years ended March 31, 2008 and 2007, were all from ordinary income.

As of March 31, 2008, the components of distributable earnings on a tax basis were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

Value

 

Partners
Value

 

Hickory

 

 

 


 


 


 

Undistributed ordinary income

 

$

11,228,745

 

$

1,402,516

 

$

238,781

 

Capital loss carryforwards

 

 

 

 

 

 

(34,611,009

)

Post October capital loss deferral

 

 

(497,301

)

 

(4,517,603

)

 

(20,165,832

)

Net unrealized appreciation (depreciation)

 

 

(13,308,800

)

 

16,585,675

 

 

(23,232,984

)

 

 



 



 



 

 

 

$

(2,577,356

)

$

13,470,588

 

$

(77,771,044

)

 

 



 



 



 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Partners
III

 

Balanced

 

Nebraska
Tax-Free
Income

 

Short-
Intermediate
Income

 

 

 



 



 



 



 

Undistributed ordinary income

 

$

327,826

 

$

306,595

 

$

 

$

381,554

 

Undistributed tax exempt income

 

 

 

 

 

 

72,076

 

 

 

Undistributed long-term gains

 

 

 

 

 

 

 

 

1,029,590

 

Capital loss carryforwards

 

 

 

 

 

 

(3,798

)

 

 

Post October capital loss deferral

 

 

(14,073,636

)

 

(2,372,563

)

 

(66,090

)

 

 

Net unrealized appreciation (depreciation)

 

 

1,774,199

 

 

(6,122,052

)

 

653,684

 

 

649,890

 

 

 



 



 



 



 

 

 

$

(11,971,611

)

$

(8,188,020

)

$

655,872

 

$

2,061,034

 

 

 



 



 



 



 

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 Hickory Fund’s carryforward expires on March 31, 2012. The Nebraska Tax-Free Income Fund’s carryforward expires on March 31, 2015. During the fiscal year, the Hickory, Nebraska Tax-Free Income and Short-Intermediate Income Funds utilized capital loss carryforwards of $15,846,001, $695 and $99,192, respectively, to offset realized capital gains. The Government Money Market Fund has a capital loss carryforward of $2,691 which expires as follows: March 31, 2013 - $225, March 31, 2014 - $1,412 and March 31, 2016 - $1,054. The Value, Partners Value, Hickory, Partners III, Balanced and Nebraska Tax-Free Income Funds elected to defer realized capital losses arising after October 31, 2007. Such losses are treated for tax purposes as arising on April 1, 2008.

87



 

 

(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

 

Hickory

 

Partners III

 

Balanced

 

Nebraska
Tax-Free
Income

 

Short-
Intermediate
Income

 

 

 


 


 


 


 


 


 


 

Purchases

 

$

507,195,380

 

$

379,504,600

 

$

94,046,346

 

$

150,748,910

 

$

46,550,417

 

$

12,010,311

 

$

35,618,287

 

Proceeds

 

 

1,035,280,451

 

 

678,369,961

 

 

114,920,021

 

 

154,314,784

 

 

34,429,586

 

 

3,527,060

 

 

58,380,427

 


 

 

 

The cost of investments is the same for financial reporting and Federal income tax purposes for the Nebraska Tax-Free Income, Short-Intermediate Income and Government Money Market Funds. The cost of investments for Federal income tax purposes for the Value, Partners Value, Hickory, Partners III and Balanced Funds is $1,788,348,389, $1,195,031,640, $281,534,066, $267,753,777 and $82,735,656, respectively.

 

 

 

At March 31, 2008, the aggregate gross unrealized appreciation and depreciation of investments, based on cost for Federal income tax purposes, are summarized as follows:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Value

 

Partners
Value

 

Hickory

 

Partners III

 

Balanced

 

Nebraska
Tax-Free
Income

 

Short-
Intermediate
Income

 

 

 


 


 


 


 


 


 


 

Appreciation

 

$

263,647,881

 

$

187,253,809

 

$

27,306,601

 

$

28,202,993

 

$

3,765,147

 

$

885,616

 

$

2,266,588

 

Depreciation

 

 

(277,331,660

)

 

(170,668,134

)

 

(50,539,585

)

 

(35,756,142

)

 

(9,887,199

)

 

(231,932

)

 

(1,616,698

)

 

 



 



 



 



 



 



 



 

Net

 

$

(13,683,779

)

$

16,585,675

 

$

(23,232,984

)

$

(7,553,149

)

$

(6,122,052

)

$

653,684

 

$

649,890

 

 

 



 



 



 



 



 



 



 


 

 

 

 

(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 March 31, 2008, include the following:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition
Date

 

Value

 

Partners
Value

 

Hickory

 

Partners III

 

 

 


 


 


 


 


 

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

 

Intelligent Systems Corp.

 

 

12/03/91

 

 

 

 

 

 

 

 

 

1,934,546

 

LICT Corp.

 

 

9/09/96

 

 

 

 

 

 

 

2,525,794

 

 

 

 

 

 

 

 

 



 



 



 



 

Total cost of illiquid and/or restricted securities

 

 

 

 

 

$

494,900

 

$

300,300

 

$

2,620,390

 

$

1,978,296

 

 

 

 

 

 

 



 



 



 



 

Value

 

 

 

 

 

$

 

$

 

$

4,623,000

 

$

2,931,997

 

 

 

 

 

 

 



 



 



 



 

Percent of net assets

 

 

 

 

 

 

0.0

%

 

0.0

%

 

1.8

%

 

1.1

%

 

 

 

 

 

 



 



 



 



 

88




 

 

 

 

 

 

 

 

 

 

Acquisition
Date

 

Nebraska
Tax-Free
Income

 

 

 


 


 

Lancaster County, Hospital Authority #1, Revenue, Bryan LGH Medical Center, Series A-2, AMBAC Insured, 4.512%, 6/01/31 (Auction Rated Security)

 

 

1/18/08

 

$

500,000

 

 

 

 

 

 

 

 

 

Nebraska Investment Financial Authority, Health Facility Revenue, Childrens Hospital Obligated Group, Refunding, Series A, 3.623%, 8/15/32 (Auction Rated Security)

 

 

6/07/07

 

 

850,000

 

 

 

 

 

 

 

 

 

Saline County, Hospital Authority #1, Revenue, Bryan LGH Medical Center, Refunding, Series B, 3.894%, 6/01/31 (Auction Rated Security)

 

 

4/17/07

 

 

500,000

 

 

 

 

 

 



 

Total cost of illiquid and/or restricted securities

 

 

 

 

$

1,850,000

 

 

 

 

 

 



 

Value

 

 

 

 

$

1,850,000

 

 

 

 

 

 



 

Percent of net assets

 

 

 

 

 

3.3

%

 

 

 

 

 



 

(b)   Options Written

Transactions relating to options written for the year ended March 31, 2008 are summarized as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Value

 

Hickory

 

 

 


 


 

 

 

Numbers of
Contracts

 

Premiums

 

Numbers of
Contracts

 

Premiums

 

 

 


 


 


 


 

Options outstanding, beginning of period

 

 

 

$

 

 

1,686

 

$

511,289

 

Options written

 

 

6,000

 

 

1,904,979

 

 

3,500

 

 

871,697

 

Options exercised

 

 

 

 

 

 

(768

)

 

(316,997

)

Options expired

 

 

 

 

 

 

(918

)

 

(194,292

)

Options closed

 

 

 

 

 

 

(3,500

)

 

(871,697

)

 

 



 



 



 



 

Options outstanding, end of period

 

 

6,000

 

$

1,904,979

 

 

 

$

 

 

 



 



 



 



 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Partners III

 

Balanced

 

 

 


 


 

 

 

Numbers of
Contracts

 

Premiums

 

Numbers of
Contracts

 

Premiums

 

 

 


 


 


 


 

Options outstanding, beginning of period

 

 

2,788

 

$

727,917

 

 

 

$

 

Options written

 

 

3,000

 

 

747,168

 

 

180

 

 

65,061

 

Options exercised

 

 

(769

)

 

(317,210

)

 

 

 

 

Options expired

 

 

(2,019

)

 

(410,707

)

 

 

 

 

Options closed

 

 

(3,000

)

 

(747,168

)

 

(180

)

 

(65,061

)

 

 



 



 



 



 

Options outstanding, end of period

 

 

 

$

 

 

 

$

 

 

 



 



 



 



 

89



 

 

(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:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Value


Name of Issuer

 

Number of
Shares Held
March 31, 2007

 

Gross
Additions

 

Gross
Reductions

 

Number of
Shares Held
March 31, 2008

 

Value
March 31, 2008

 

Dividend
Income

 

Realized
Gains/
(Losses)

 


 


 


 


 


 


 


 


 

Redwood Trust, Inc.

 

 

2,345,000

 

 

110,000

 

 

(72,900)

 

 

2,382,100

 

$

86,589,335

 

$

12,220,325

 

$

(631,342

)


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Partners Value


Name of Issuer

 

Number of
Shares Held
March 31, 2007

 

Gross
Additions

 

Gross
Reductions

 

Number of
Shares Held
March 31, 2008

 

Value
March 31, 2008

 

Dividend
Income

 

Realized
Gains/
(Losses)

 


 


 


 


 


 


 


 


 

Daily Journal Corp.

 

 

116,000

 

 

 

 

 

 

116,000

 

$

4,761,800

 

$

 

$

 

Redwood Trust, Inc.

 

 

1,110,000

 

 

935,515

 

 

 

 

2,045,515

 

 

74,354,470

 

 

7,198,273

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

79,116,270

 

$

7,198,273

 

$

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Partners III


Name of Issuer

 

Number of
Shares Held
March 31, 2007

 

Gross
Additions

 

Gross
Reductions

 

Number of
Shares Held
March 31, 2008

 

Value
March 31, 2008

 

Dividend
Income

 

Realized
Gains/
(Losses)

 


 


 


 


 


 


 


 


 

Intelligent Systems Corp.

 

883,999

 

 

 

883,999

 

$

2,651,997

 

$

 

$

 


 

 

(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 Statement 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 Fund may borrow against the value of its securities, subject to regulatory limitations. Interest accrues at the federal funds rate plus 0.625% (2.715% at March 31, 2008). Interest is accrued daily and paid monthly. The Fund held a cash balance of $54,960,216 with the broker at March 31, 2008.

 

 

 

The 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 Fund’s credit risk by monitoring credit exposure and the credit worthiness of the prime broker.

 

 

(10)

Concentration of Credit Risk

 

 

 

Approximately 78% 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.

90



REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM

To the Board of Trustees and Shareholders of
The Weitz Funds

We have audited the accompanying statements of assets and liabilities of The Weitz Funds, comprising the Value Fund, Partners Value Fund, Hickory Fund, Partners III Opportunity Fund, Balanced Fund, Nebraska Tax-Free Income Fund, Short-Intermediate Income Fund and Government Money Market Fund (collectively referred to as the “Funds”), including the schedules of investments in securities, as of March 31, 2008, and the related statements of operations (and statement of cash flows for Partners III Opportunity Fund) for the year then ended, the statements of changes in net assets for each of the two years or periods in the period then ended, and the financial highlights for each of the five years or periods in the period then ended. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of March 31, 2008, by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the respective Funds referred to above of The Weitz Funds as of March 31, 2008, the results of their operations (and cash flows for Partners III Opportunity Fund) for the year then ended, the changes in their net assets for each of the two years or periods in the period then ended, and their financial highlights for each of the five years or periods in the period then ended, in conformity with U.S. generally accepted accounting principles.

-s- Ernst & Young LLP

Cincinnati, Ohio
April 25, 2008

91



 

ACTUAL AND HYPOTHETICAL EXPENSES FOR 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 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 October 1, 2007 through March 31, 2008.

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 10/01/07 – 3/31/08” 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
10/01/07

 

Ending
Account Value
3/31/08

 

Annualized
Expense Ratio

 

Expenses
Paid from
10/01/07 - 3/31/08(1)

 

 

 

 

 

 


 


 


 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Value

 

 

Actual

 

$

1,000.00

 

 

$

817.13

 

 

1.17

%

 

$

5.32

 

 

 

 

 

Hypothetical(2)

 

 

1,000.00

 

 

 

1,019.15

 

 

1.17

%

 

 

5.91

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Partners Value

 

 

Actual

 

 

1,000.00

 

 

 

813.69

 

 

1.16

%

 

 

5.26

 

 

 

 

 

Hypothetical(2)

 

 

1,000.00

 

 

 

1,019.20

 

 

1.16

%

 

 

5.86

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hickory

 

 

Actual

 

 

1,000.00

 

 

 

823.60

 

 

1.23

%

 

 

5.61

 

 

 

 

 

Hypothetical(2)

 

 

1,000.00

 

 

 

1,018.85

 

 

1.23

%

 

 

6.21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Partners III

 

 

Actual

 

 

1,000.00

 

 

 

843.60

 

 

1.53

%

 

 

7.05

 

 

 

 

 

Hypothetical(2)

 

 

1,000.00

 

 

 

1,017.35

 

 

1.53

%

 

 

7.72

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balanced

 

 

Actual

 

 

1,000.00

 

 

 

892.48

 

 

1.15

%

 

 

5.44

 

 

 

 

 

Hypothetical(2)

 

 

1,000.00

 

 

 

1,019.25

 

 

1.15

%

 

 

5.81

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nebraska Tax-Free

 

 

Actual

 

 

1,000.00

 

 

 

1,016.11

 

 

0.75

%

 

 

3.78

 

 

 

 

 

Hypothetical(2)

 

 

1,000.00

 

 

 

1,021.25

 

 

0.75

%

 

 

3.79

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-Intermediate

 

 

Actual

 

 

1,000.00

 

 

 

1,045.74

 

 

0.69

%

 

 

3.53

 

 

Income

 

 

Hypothetical(2)

 

 

1,000.00

 

 

 

1,021.55

 

 

0.69

%

 

 

3.49

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Government

 

 

Actual

 

 

1,000.00

 

 

 

1,018.48

 

 

0.10

%

 

 

0.50

 

 

Money Market

 

 

Hypothetical(2)

 

 

1,000.00

 

 

 

1,024.50

 

 

0.10

%

 

 

0.51

 

 


 

 

(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 (183/366)

 

 

(2)

Assumes 5% total return before expenses.

92



 

OTHER INFORMATION

(Unaudited)

Tax Information

For the fiscal year ended March 31, 2008, certain dividends paid by the Funds may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. Of the distributions paid during the fiscal year, the amounts designated as long-term capital gain, the amounts that may be considered qualified dividend income and for corporate shareholders, the amounts that may qualify for the corporate dividends received deduction, are summarized as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Value

 

Partners
Value

 

Hickory

 

Partners III

 

Balanced

 

Short-
Intermediate
Income

 

 

 


 


 


 


 


 


 

Long-term capital gain distribution

 

$

278,857,408

 

$

173,672,353

 

$

 

$

12,357,842

 

$

2,674,979

 

$

 

Qualified dividend income

 

 

19,707,447

 

 

12,107,527

 

 

1,514,400

 

 

1,759,924

 

 

433,542

 

 

63,437

 

Corporate dividends received deduction

 

 

19,707,447

 

 

12,107,527

 

 

1,514,400

 

 

1,774,924

 

 

433,542

 

 

63,437

 


The information and distributions reported herein may differ from the information and distributions reported to shareholders for the calendar year ended December 31, 2007, which was reported in conjunction with your 2007 Form 1099-DIV.

 

 

 

 


 

Proxy Voting Policy

A description of the Fund’s 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 available on the Funds’ website at http://www.weitzfunds.com.

93



 

INFORMATION ABOUT THE TRUSTEES
AND OFFICERS OF THE WEITZ FUNDS

(Unaudited)

The individuals listed below serve as Trustees or Officers of The Weitz Funds (the “Weitz Funds”). Each Trustee of the Weitz Funds serves until a successor is elected and qualified or until resignation. Each Officer of the Weitz Funds is elected annually by the Trustees.

The address of all Officers and Trustees is 1125 South 103rd Street, Suite 600, Omaha, Nebraska 68124.

 

 

 

Interested Trustees*

 

 


 


Wallace R. Weitz (Age: 58)
Position(s) Held with Trust: President; Portfolio Manager; Trustee
Length of Service (Beginning Date): The Weitz Funds (and certain predecessor funds) – January, 1986
Principal Occupation(s) During Past 5 Years: President, Wallace R. Weitz & Company, The Weitz Funds (and certain predecessor funds)
Number of Portfolios Overseen in Fund Complex: 8
Other Directorships: N/A
 
Thomas R. Pansing (Age: 63)
Position(s) Held with Trust: Trustee
Length of Service (Beginning Date): The Weitz Funds (and certain predecessor funds) - January, 1986
Principal Occupation(s) During Past 5 Years: Partner,
Pansing Hogan Ernst & Bachman LLP, a law firm
Number of Portfolios Overseen in Fund Complex: 8
Other Directorships: N/A

 



 

 

*

Mr. Weitz is a Director and Officer of Wallace R. Weitz & Company, investment adviser to The Weitz Funds, and as such is considered an “interested person” of the Trust, as that term is defined in the Investment Company Act of 1940 (an “Interested Trustee”). Mr. Pansing performs certain legal services for the investment adviser and The Weitz Funds and, therefore, is also classified as an “Interested Trustee”.


 

 

 

Independent Trustees

 

 


 


Lorraine Chang (Age: 57)
Position(s) Held with Trust: Trustee; Chairman, Board of Trustees
Length of Service (Beginning Date): The Weitz Funds (and certain predecessor funds) - June, 1997
Principal Occupation(s) During Past 5 Years: Partner, The Public Strategies Group, a management consulting firm, 1999-Present
Number of Portfolios Overseen in Fund Complex: 8
Other Directorships: N/A
 
John W. Hancock (Age: 60)
Position(s) Held with Trust: Trustee
Length of Service (Beginning Date): The Weitz Funds (and certain predecessor funds) - January, 1986
Principal Occupation(s) During Past 5 Years: Partner, Hancock & Dana, an accounting firm
Number of Portfolios Overseen in Fund Complex: 8
Other Directorships: N/A

 


Richard D. Holland (Age: 86)
Position(s) Held with Trust: Trustee
Length of Service (Beginning Date): The Weitz Funds (and certain predecessor funds) - June, 1995
Principal Occupation(s) During Past 5 Years: Retired
Number of Portfolios Overseen in Fund Complex: 8
Other Directorships: N/A
 
Delmer L. Toebben (Age: 77)
Position(s) Held with Trust: Trustee
Length of Service (Beginning Date): The Weitz Funds (and certain predecessor funds) - July, 1996
Principal Occupation(s) During Past 5 Years: Retired
Number of Portfolios Overseen in Fund Complex: 8
Other Directorships: N/A

 


Roland J. Santoni (Age: 66)
Position(s) Held with Trust: Trustee
Length of Service (Beginning Date): The Weitz Funds - February, 2004
Principal Occupation(s) During Past 5 Years: Vice President, West Development, Inc., a development company, June 2003-Present; Professor of Law, Creighton University, 1977-2003; Of Counsel, Erickson & Sederstrom, a law firm, 1978-2003
Number of Portfolios Overseen in Fund Complex: 8
Other Directorships: N/A
 
Barbara W. Schaefer (Age: 54)
Position(s) Held with Trust: Trustee
Length of Service (Beginning Date): The Weitz Funds - March, 2005
Principal Occupation(s) During Past 5 Years: Senior Vice President-Human Resources and Corporate Secretary, Union Pacific Corporation, 2004-Present; Senior Vice President-Human Resources, Union Pacific Corporation, 1997-2004
Number of Portfolios Overseen in Fund Complex: 8
Other Directorships: N/A

 


94



 

 

 

Officers

 

 


 


Mary K. Beerling (Age: 67)
Position(s) Held with Trust: Vice President, Secretary and Chief Compliance Officer
Length of Service (Beginning Date): The Weitz Funds (and certain predecessor funds) - July, 1994
Principal Occupation(s) During Past 5 Years: Vice President and Chief Compliance Officer, Wallace R. Weitz & Company, Vice President and Chief Compliance Officer, The Weitz Funds (and certain predecessor funds)
 
Kenneth R. Stoll (Age: 46)
Position(s) Held with Trust: Vice President and Chief Financial Officer
Length of Service (Beginning Date): The Weitz Funds - April, 2004
Principal Occupation(s) During Past 5 Years: Vice President and Chief Operating Officer, Wallace R. Weitz & Company; Vice President and Chief Financial Officer, The Weitz Funds - April 2004 to Present; Partner, PricewaterhouseCoopers LLP, an accounting firm, 1999- 2004

 


Bradley P. Hinton (Age: 40)
Position(s) Held with Trust: Vice President
Length of Service (Beginning Date): The Weitz Funds - August, 2006
Principal Occupation(s) During Past 5 Years: Portfolio Manager - October 2003 to Present; Director of Research, Wallace R. Weitz & Company - April 2004 to Present; Vice President, Wallace R. Weitz & Company - August, 2006 to Present
 
 

 

 

The Statement of Additional Information for The Weitz Funds, which can be obtained without charge by calling 800-304-9745, includes additional information about the Trustees and Officers of The Weitz Funds.

95



 

 

 

 

 

 

 

 

 

 


 

 

Board of Trustees

Lorraine Chang

John W. Hancock

Richard D. Holland

Thomas R. Pansing, Jr.

Roland J. Santoni

Barbara W. Schaefer

Delmer L. Toebben

Wallace R. Weitz

 

Investment Adviser

Wallace R. Weitz & Company

 

Custodian

Wells Fargo Bank Minnesota,

National Association


 

Officers

Wallace R. Weitz, President

Mary K. Beerling, Vice President, Secretary &

Chief Compliance Officer

Kenneth R. Stoll, Vice President & Chief

Financial Officer

Bradley P. Hinton, Vice President

 

Distributor

Weitz Securities, Inc.

 

Transfer Agent and Dividend Paying Agent

Wallace R. Weitz & Company

 

Sub-Transfer Agent

Boston Financial Data Services, Inc.

 

 



NASDAQ symbols:
Value Fund – WVALX
Partners Value Fund – WPVLX
Hickory Fund – WEHIX
Partners III Opportunity Fund – WPOPX
Balanced Fund – WBALX
Nebraska Tax-Free Income Fund – WNTFX
Short-Intermediate Income Fund – WEFIX
Government Money Market Fund – WGMXX

An investor should consider carefully the investment objectives, risks, and charges and expenses of the Funds before investing. The FundsProspectus contains this and other information about the Funds. The Prospectus should be read carefully before investing.

 

 

5/2/08

(RECYCLED LOGO)




Item 2. Code of Ethics.

As of the end of the period covered by this report, the Registrant has adopted a code of ethics that applies to the Registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the Registrant or a third party (the “Code of Ethics”). During the period covered by this report, there were no amendments, nor did the Registrant grant any waivers, including any implicit waivers, from any provision of the Code of Ethics.

The Code of Ethics is attached hereto as Exhibit 12(a)(1).

Item 3. Audit Committee Financial Expert.

The Registrant’s board of trustees has determined that the Registrant has at least one “audit committee financial expert” (as defined in Item 3 of Form N-CSR) serving on its audit committee. John Hancock is an “audit committee financial expert” and is “independent” (as each term is defined in Item 3 of Form N-CSR).

Item 4. Principal Accountant Fees and Services.

 

 

 

 

(a)

Audit Fees. Fees for audit services provided to the Registrant were $222,800 and $229,800 for fiscal years ended March 31, 2008 and 2007, respectively.

 

 

 

 

(b)

Audit Related Fees. The aggregate fees billed in each of the last two fiscal years for audit related- services by the principal accountant that are reasonably related to the performance of the audit of the Registrant’s financial statements and are not reported under paragraph (a) of this item were $25,000 and $23,600 for fiscal years ended March 31, 2008 and 2007, respectively. The fees, paid by Wallace R. Weitz & Company, the Registrant’s investment adviser and transfer agent, were payment for the principal accountant performing internal control reviews of the Registrant’s transfer agent.

 

 

 

 

(c)

Tax Fees. Fees for tax services, which consisted of income and excise tax compliance services, were $33,450 and $29,400 for the fiscal years ended March 31, 2008 and 2007, respectively.

 

 

 

 

(d)

All Other Fees. Fees for all other services totaled $10,700 and $10,100 for fiscal years ended March 31, 2008 and 2007, respectively.

 

 

 

 

(e)

(1) The Registrant’s Audit Committee has adopted Pre-Approval Policies and Procedures. The Audit Committee must pre-approve all audit services and non-audit services that the principal accountant provides to the Registrant. The Audit Committee must also pre-approve any engagement of the principal accountant to provide non-audit services to the Registrant’s investment adviser, or any affiliate of the adviser that provides ongoing services to the Registrant, if such non-audit services directly impact the Registrant’s operations and financial reporting.

 

 

 

 

 

(2) No services described in items (b) were pre-approved by the Audit Committee pursuant to Rule 2- 01(c)(7)(i)(c) of Regulation S-X.

 

 

 

 

(f)

All of the work in connection with the audit of the Registrant during the years ended March 31, 2008 and 2007 was performed by full-time employees of the Registrant’s principal accountant.

 

 

 

 

(g)

The aggregate fees billed by the principal accountant for non-audit services to the Registrant, the Registrant’s investment adviser and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the Registrant were $93,650 and $86,100 for the years ended March 31, 2008 and 2007, respectively.

 

 

 

 

(h)

The Registrant’s Audit Committee has considered whether the provision of non-audit services that were rendered to the Registrant’s investment adviser, and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the Registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal auditor’s independence.




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.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Investment Companies.

Not applicable.

Item 8. Portfolio Managers of Closed-End Management 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 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 significant 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 half-year 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) The Code of Ethics is attached hereto.

(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 May 8, 2008

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 May 8, 2008

 

 

 

By (Signature and Title)*

 

/s/ Kenneth R. Stoll

 

 

 


 

 

 

Kenneth R. Stoll, Chief Financial Officer

 

 

 

Date May 8, 2008

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