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WEITZ SERIES FUND, INC.
--------------------------------------------------------------------------------
FIXED INCOME FUND
GOVERNMENT MONEY MARKET
FUND
QUARTERLY
REPORT
JUNE 30, 2000
ONE PACIFIC PLACE, SUITE 600
1125 SOUTH 103 STREET
OMAHA, NEBRASKA 68124-6008
402-391-1980
800-232-4161
402-391-2125 FAX
www.weitzfunds.com
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(This page has been left blank intentionally.)
2
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TABLE OF CONTENTS
<TABLE>
<S> <C>
FIXED INCOME FUND
Performance Since
Inception.................... 4
Shareholder Letter........... 5
Schedule of Investments...... 7
GOVERNMENT MONEY MARKET FUND
Shareholder Letter........... 9
Schedule of Investments...... 11
</TABLE>
3
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WEITZ SERIES FUND, INC. -- FIXED INCOME FUND
PERFORMANCE SINCE INCEPTION
A long-term perspective on the Fixed Income Fund's performance is shown below.
The table shows how an investment of $10,000 in the Fixed Income Fund at its
inception would have grown over the years (after deducting all fees and expenses
and assuming reinvestment of all dividends). The table also sets forth average
annual total return data for the Fixed Income Fund for the one, five, and ten
year periods ended June 30, 2000.
<TABLE>
<CAPTION>
VALUE OF VALUE OF VALUE OF
INITIAL CUMULATIVE CUMULATIVE TOTAL ANNUAL
$10,000 CAPITAL GAIN REINVESTED VALUE OF RATE OF
PERIOD ENDED INVESTMENT DISTRIBUTIONS DIVIDENDS SHARES RETURN
------------ ---------- ------------- --------- ------ ------
<S> <C> <C> <C> <C> <C>
Dec. 23, 1988 $10,000 $ -- $ -- $10,000 --%
Dec. 31, 1988 9,939 -- 68 10,007 --
Dec. 31, 1989 10,020 -- 900 10,920 9.1
Dec. 31, 1990 10,232 12 1,661 11,905 9.0
Dec. 31, 1991 10,625 13 2,597 13,235 11.4
Dec. 31, 1992 10,557 13 3,396 13,966 5.5
Dec. 31, 1993 10,820 14 4,258 15,092 8.1
Dec. 31, 1994 9,961 13 4,763 14,737 -2.4
Dec. 31, 1995 10,847 14 6,199 17,060 15.8
Dec. 31, 1996 10,637 13 7,158 17,808 4.4
Dec. 31, 1997 10,916 14 8,419 19,349 8.6
Dec. 31, 1998 10,989 14 9,653 20,656 6.8
Dec. 31, 1999 10,432 13 10,400 20,845 0.9
June 30, 2000 10,511 13 10,859 21,383 2.6+
</TABLE>
The Fixed Income Fund's average annual total return for the one, five and ten
year periods ended June 30, 2000, was 3.2%, 5.6% and 6.6%, respectively. These
returns assume redemption at the end of each period and reinvestment of
dividends.
Since inception, the total amount of capital gains distributions reinvested in
shares was $13, and the total amount of income distributions reinvested was
$10,908. This information represents past performance of the fund and is not
indicative of future performance. The investment return and the principal value
of an investment will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than the original cost. Additional information is
available from the Weitz Funds at the address listed on the front cover.
+ Return is for the period 1/1/00 through 6/30/00.
4
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WEITZ SERIES FUND, INC. -- FIXED INCOME FUND
JUNE 30, 2000 - QUARTERLY REPORT
July 7, 2000
Dear Fellow Shareholder:
The Fixed Income Fund's total return for the second quarter of 2000 was
+1.6%, which consisted primarily of net interest income (after deducting fees
and expenses) on our bonds. The table below summarizes total return data for our
fund as well as the average intermediate-term, investment grade fixed income
fund.
<TABLE>
<CAPTION>
1 YEAR 5 YEARS
------ --------
<S> <C> <C>
FIXED INCOME FUND 3.2% 5.6%
Average Intermediate Investment
Grade Fixed Income Fund* 3.4% 5.4%
</TABLE>
*Source: Lipper Analytical Services
The following table shows a profile of our portfolio as of June 30:
<TABLE>
<S> <C>
Average Maturity 7.2 years
Average Duration 4.4 years
Average Coupon 7.0%
30-Day SEC Yield at 6-30-00 7.2%
Average Rating AA
</TABLE>
MARKET REVIEW
The Federal Reserve increased short-term interest rates once again during
the second quarter in their continued effort to slow economic growth and prevent
an outbreak of inflation. Previous Fed action had been restricted to moderate,
quarter-point increments and their action in the second quarter (a 1/2 percent
increase in the fed funds rate in May) emphasized their concerns about an
over-heating economy and their attempt to slow it.
Recent evidence seems to indicate that the Fed's yearlong campaign of
raising interest rates is having the desired effect. Interest-sensitive sectors
of the economy (housing, manufacturing, and consumer spending) have slowed from
1999's torrid clip. The recent decline in certain segments of the stock market
may also have eased the Fed's concern about the "wealth effect" on the economy.
This buoyed bond investors' beliefs that the Fed's monetary belt-tightening may
be finished. The result for bond investors during the quarter was a slight
decline in yields where "income" returns were enhanced modestly by appreciation
of their fixed-income investments.
5
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OUTLOOK
We are currently enjoying an unusual combination of strong economic growth
and a low level of inflation. The Federal Reserve is trying to slow the
expansion to prevent an increase in the inflation rate, without causing a
recession. This is a delicate task.
Since bond prices fall as interest rates rise (and vice versa), bond
investors look forward to the end of the Fed's campaign. Actually, some bond
owners would welcome recession because rates tend to fall when the economy is
weak, and falling rates would mean portfolio price appreciation. Unfortunately,
credit risk is the downside of a weak economy and recession increases the risk
of bond defaults.
Our guess is that the Fed will not feel compelled to raise rates
materially from current levels and that the economy will slow, but not collapse.
However, we know it is impossible to predict these things so we do not invest in
a way that depends on accurate forecasts. Benjamin Graham (often considered the
father of "value investing") stressed that asset selection in the fixed-income
markets is a "negative art," one of avoiding problems rather than seizing
opportunities. We will continue to focus on investments with favorable
risk/reward characteristics, especially in an environment in which credit
quality may be deteriorating.
On the topic of interest rate forecasts, Adam Smith in THE MONEY GAME
summed up our feelings when he advised those with an urge to speculate in cocoa
futures to "go sit on the beach and wait for the feeling to pass." Too many
variables interact in determining interest rates. So, our strategy remains
investing in a portfolio of bonds that will provide a reasonable return over
time and avoiding extreme positions that depend on correct interest rate
predictions.
If you have any questions about our investments or strategy, please feel
free to call.
<TABLE>
<S> <C> <C>
Best Regards,
/s/ Wallace R. Weitz /s/ Thomas D. Carney
Wallace R. Weitz Thomas D. Carney
President, Portfolio Manager Portfolio Manager
</TABLE>
NOTE TO SHAREHOLDERS OF THE FIXED INCOME FUND:
This will be the last time that I sign the letters of these funds as
co-portfolio manager with Tom Carney. Effective on July 31, 2000, Tom will
become the sole portfolio manager of both funds. Tom knows far more about fixed
income securities markets than I ever will, and we shareholders will be in good
hands with Tom taking sole responsibility for these funds.
Wallace R. Weitz
6
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WEITZ SERIES FUND, INC. -- FIXED INCOME FUND
SCHEDULE OF INVESTMENTS IN SECURITIES
JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
FACE
RATING AMOUNT COST VALUE
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
CORPORATE BONDS -- 30.4%
$ 750,000 Superior Financial Corp. Sr. Notes 8.65% 4/01/03 $ 750,000 $ 727,113
A+ 48,000 Homeside, Inc. 11.25% 5/15/03 48,000 52,200
Ba2 1,100,000 USA Networks, Inc. 7.0% 7/01/03 1,085,751 1,071,125
A 1,000,000 Countrywide Home Loans, Inc. 6.85% 6/15/04 996,275 975,678
A 1,000,000 Ford Motor Credit Co. Notes 6.7% 7/16/04 998,633 966,326
250,000 Local Financial Corp. 11.0% 9/08/04 250,000 251,875
BBB 1,000,000 ConAgra, Inc. Sub. Notes 7.4% 9/15/04 1,000,000 984,952
BB- 750,000 Century Communications Sr. Notes 9.5% 3/01/05 792,888 727,500
A 600,000 General Motors Acceptance Corp. Debs. 6.625% 10/15/05 597,987 575,407
BBB- 1,000,000 Hilton Hotels Corp. Sr. Notes 7.95% 4/15/07 968,978 941,722
BBB- 500,000 Liberty Media Corp. Sr. Notes 7.875% 7/15/09 501,800 482,150
BBB 500,000 Harcourt General 6.5% 5/15/11 486,545 452,500
AA- 1,000,000 Merrill Lynch 7.15% 7/30/12 1,000,000 934,682
AAA 1,000 Berkshire Hathaway, Inc. Debs. 9.75% 1/15/18 1,037 1,043
----------- -----------
Total Corporate Bonds 9,477,894 9,144,273
----------- -----------
MORTGAGE-BACKED SECURITIES -- 24.6%
AAA 4,374 Fannie Mae 11% 1/01/01 (Avg. Life 0.3 years) 4,388 4,409
AAA 248,991 Fannie Mae REMIC Planned Amortization Class 7.5% 4/25/19 247,058 249,187
(Avg. Life 1.0 years)
AAA 21,763 Freddie Mac 9.5% 9/01/03 (Avg. Life 1.4 years) 21,763 22,351
AAA 500,000 Fannie Mae REMIC Planned Amortization Class 6.5% 10/25/18 487,195 489,922
(Avg. Life 2.1 years)
AAA 1,000,000 Freddie Mac REMIC Planned Amortization Class 7.0% 8/15/20 1,003,393 990,623
(Avg. Life 2.5 years)
AAA 500,000 Freddie Mac REMIC Planned Amortization Class 6.65% 9/15/21 491,153 487,169
(Avg. Life 3.6 years)
AAA 1,000,000 Freddie Mac REMIC Planned Amortization Class 6.75% 12/15/21 992,457 966,827
(Avg. Life 5.0 years)
AAA 1,000,000 Freddie Mac REMIC Planned Amortization Class 7.0% 9/15/09 1,003,272 972,675
(Avg. Life 5.2 years)
AAA 1,000,000 Freddie Mac REMIC Planned Amortization Class 7.0% 4/15/21 977,447 972,575
(Avg. Life 5.2 years)
AAA 500,000 Freddie Mac REMIC Planned Amortization Class 7.0% 7/15/21 495,712 486,284
(Avg. Life 5.6 years)
AAA 1,000,000 Freddie Mac REMIC Planned Amortization Class 7.0% 8/15/21 1,018,793 968,495
(Avg. Life 6.0 years)
AAA 826,102 Fannie Mae 6.5% 6/01/18 (Avg. Life 6.6 years) 825,149 790,862
----------- -----------
Total Mortgage-Backed Securities 7,567,780 7,401,379
----------- -----------
</TABLE>
7
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WEITZ SERIES FUND, INC. -- FIXED INCOME FUND
SCHEDULE OF INVESTMENTS IN SECURITIES, CONTINUED
<TABLE>
<CAPTION>
FACE
RATING AMOUNT COST VALUE
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
TAXABLE MUNICIPAL BONDS -- 3.1%
AAA $ 325,000 Baltimore Maryland 7.25% 10/15/05 $ 328,482 $ 322,988
AAA 500,000 Stratford Connecticut 6.55% 2/15/13 500,000 457,460
AAA 60,000 Oklahoma Hsg. Fin. Auth. 8.7% 9/01/13 60,000 61,300
AAA 80,000 Oklahoma Hsg. Fin. Auth. 7.3% 12/01/14 80,000 77,101
----------- -----------
Total Taxable Municipal Bonds 968,482 918,849
----------- -----------
U.S. GOVERNMENT AND AGENCY SECURITIES -- 35.0%
AAA 1,000,000 Fannie Mae 5.75% 4/15/03 997,973 969,604
AAA 1,000,000 Federal Home Loan Bank 5.125% 9/15/03 1,000,000 948,549
AAA 1,000,000 Freddie Mac 7.09% 6/01/05 1,000,000 983,252
AAA 1,000,000 Fannie Mae 7.27% 8/24/05 1,000,062 985,967
AAA 2,000,000 Federal Home Loan Bank 6.04% 9/08/05 2,000,000 1,900,824
AAA 500,000 Federal Home Loan Bank 6.44% 11/28/05 500,440 487,168
AAA 500,000 Freddie Mac 6.407% 2/22/06 497,802 479,355
AAA 1,000,000 Fannie Mae 7.15% 10/11/06 993,775 974,699
AAA 1,000,000 Fannie Mae 6.56% 11/26/07 1,000,000 951,230
AAA 1,000,000 Fannie Mae 6.50% 3/19/08 993,342 945,705
AAA 1,000,000 Freddie Mac 6.41% 7/15/13 1,011,227 903,981
----------- -----------
Total U.S. Government and Agency Securities 10,994,621 10,530,334
----------- -----------
<CAPTION>
SHARES
-----------
<S> <C> <C> <C> <C>
COMMON STOCKS -- 0.7%
46,500 Hanover Capital Mortgage Holdings, Inc. 422,645 209,250
----------- -----------
CONVERTIBLE PREFERRED STOCKS -- 3.1%
37,700 Redwood Trust, Inc. 9.74% Pfd. Class B 1,002,317 923,650
----------- -----------
NON-CONVERTIBLE PREFERRED STOCKS -- 0.6%
B3 5,000 Crown American Realty Trust 11% Pfd. Series A 222,500 188,750
----------- -----------
<CAPTION>
FACE
AMOUNT
-----------
<S> <C> <C> <C> <C>
SHORT-TERM SECURITIES -- 0.9%
$ 270,940 Wells Fargo Government Money Market Fund 270,940 270,940
----------- -----------
Total Investments in Securities $30,927,179 29,587,425
===========
Other Assets Less Liabilities -- 1.6% 475,936
-----------
Total Net Assets -- 100% $30,063,361
===========
Net Asset Value Per Share $ 10.66
===========
</TABLE>
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WEITZ SERIES FUND, INC.
GOVERNMENT MONEY MARKET FUND
JUNE 30, 2000 - QUARTERLY REPORT
July 5, 2000
Dear Shareholder:
The yield on our Government Money Market Fund increased by approximately
1/2 percent since the last time we reported to you as short-term yields
continued to move higher. As of June 30th, our 7-day and 30-day yields were 5.8%
and 5.5%, respectively.
The Federal Reserve applied one additional dose of monetary medicine (a
1/2 percent increase to the fed funds rate) during the second quarter in an
effort to further slow economic growth and stave off potential inflationary
pressures. Recent evidence would seem to indicate that the Fed's year-long
campaign of raising short-term interest rates by 1 3/4 percent in six steps is
having the desired effect. Interest-sensitive sectors of the economy (housing,
manufacturing, and consumer spending) have slowed from 1999's torrid clip. The
recent decline in certain segments of the stock market may also have eased the
Fed's concern about the "wealth effect" on the economy. Time will tell, however,
whether the recent slow-down is merely the pause that refreshes (and the Fed has
to resume raising interest rates) or the actual slowing of the economy to a more
sustainable, non-inflationary level.
Investors in the Government Money Market Fund will continue to be directly
impacted by the Federal Reserve's actions since the maturities of our securities
are so short (90 day maximum average maturity for our portfolio). The changes in
short-term interest rates that the Fed uses in conducting monetary policy will
invariably dictate the level of our returns. Since the securities we hold are
very short, we are continuously reinvesting parts of our portfolio. So our yield
will change fairly quickly to reflect changes in the "going rate" in the
short-term government security market. The increase in yield of our fund over
the past year is evidence of this sensitivity to short-term interest rates.
One final reminder. This fund is allowed to own only U.S. government and
government agency securities, so its portfolio should never make exciting
reading. In fact, it is the avoidance of "excitement" that leads investors to
own funds of this type. You will notice that we currently own Treasury Bills and
Discount Notes from two government agencies (Federal
9
<PAGE>
Home Loan and Federal Farm Credit Banks). We believe that the addition of
government agency securities to our portfolio enhances our risk/reward
characteristics.
If any of this raises questions, please feel free to call.
<TABLE>
<S> <C> <C>
Best regards,
/s/ Wallace R. Weitz /s/ Thomas D. Carney
Wallace R. Weitz Thomas D. Carney
President, Portfolio Manager Portfolio Manager
</TABLE>
NOTE TO SHAREHOLDERS OF THE GOVERNMENT MONEY MARKET FUND:
This will be the last time that I sign the letters of these funds as
co-portfolio manager with Tom Carney. Effective on July 31, 2000, Tom will
become the sole portfolio manager of both funds. Tom knows far more about fixed
income securities markets than I ever will, and we shareholders will be in good
hands with Tom taking sole responsibility for these funds.
Wallace R. Weitz
10
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WEITZ SERIES FUND, INC.
GOVERNMENT MONEY MARKET FUND
SCHEDULE OF INVESTMENTS IN SECURITIES
JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
FACE
RATING AMOUNT VALUE
----------- ----------- ------------
<S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY SECURITIES -- 92.8%*
AAA $ 6,000,000 U.S Treasury Bill 6.095% 8/24/00 $ 5,947,350
AAA 6,000,000 Federal Farm Credit Bank Discount Note 6.638% 9/14/00 5,919,500
AAA 10,000,000 Federal Home Loan Bank Discount Note 6.634% 9/15/00 9,864,361
AAA 2,500,000 U.S Treasury Bill 5.943% 10/19/00 2,456,076
-----------
Total U.S. Government and Agency Securities 24,187,287
-----------
SHORT-TERM SECURITIES -- 7.7%
2,014,999 Wells Fargo 100% Treasury Money Market Fund 5.595% 2,014,999
-----------
Total Investments in Securities (Cost $26,202,286)** 26,202,286
Other Liabilities in Excess of Other Assets -- (0.5%) (127,548)
-----------
Total Net Assets -- 100% $26,074,738
===========
</TABLE>
*Interest rates presented for treasury bills and discount notes are based upon
yield to maturity rate(s) at date(s) of purchase.
**Cost is the same for Federal income tax purposes.
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WEITZ SERIES FUND, INC.
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BOARD OF DIRECTORS
Lorraine Chang
John W. Hancock
Richard D. Holland
Thomas R. Pansing, Jr.
Delmer L. Toebben
Wallace R. Weitz
OFFICERS
Wallace R. Weitz, President
Mary K. Beerling, Vice-President & Secretary
Linda L. Lawson, Vice-President
Richard F. Lawson, Vice-President
INVESTMENT ADVISER
Wallace R. Weitz & Company
DISTRIBUTOR
Weitz Securities, Inc.
CUSTODIAN
Wells Fargo Bank Minnesota, National Association
TRANSFER AGENT AND DIVIDEND PAYING AGENT
Wallace R. Weitz & Company
SUB-TRANSFER AGENT
National Financial Data Services, Inc.
This report has been prepared for the information of the shareholders of Weitz
Series Fund, Inc. -- Fixed Income Fund and Government Money Market Fund. For
more detailed information about the Funds, their investment objectives,
management, fees and expenses, please see a current prospectus. This report is
not authorized for distribution to prospective investors unless preceded or
accompanied by a current prospectus.
08/02/2000
514361
