<PAGE>
- --------------------------------------------------------------------------------
WEITZ PARTNERS, INC.
PARTNERS VALUE FUND
SEMI-ANNUAL
REPORT
JUNE 30, 1996
ONE PACIFIC PLACE, SUITE 600
1125 SOUTH 103 STREET
OMAHA, NEBRASKA 68124-6008
402-391-1980
800-232-4161
402-391-2125 FAX
<PAGE>
<PAGE>
HISTORICAL PERFORMANCE INFORMATION
The table below gives a long-term perspective of the Partners Value Fund (the
"Fund") and its predecessor, Weitz Partners II -- Limited Partnership (the
"Predecessor Partnership"). (Performance numbers are AFTER deducting all fees
and expenses and assume reinvestment of dividends.) The Fund succeeded to
substantially all of the assets of the Predecessor Partnership, a Nebraska
investment limited partnership as of December 31, 1993. Wallace R. Weitz was
General Partner and portfolio manager for the Predecessor Partnership and is
portfolio manager for the Fund. The Fund's investment objectives and policies
are substantially identical to those of the Predecessor Partnership. The table
also sets forth average annual total return data for the Fund and the
Predecessor Partnership for the one, five and ten year periods ended June 30,
1996, calculated in accordance with SEC standardized formulas.
<TABLE>
<CAPTION>
PERIOD ENDED DECEMBER 31, PARTNERS II S&P 500
- ---------------------------------- -------------- -------
<S> <C> <C>
1983 (7 Mos.) 9.9% 4.2%
1984 14.5 6.3
1985 40.7 31.7
1986 11.1 18.7
1987 4.3 5.3
1988 14.9 16.5
1989 20.3 31.6
1990 -6.3 -3.1
1991 28.1 30.2
1992 15.1 7.6
1993 23.0 10.1
<CAPTION>
PARTNERS VALUE
--------------
<S> <C> <C>
1994 -9.0 1.3
1995 38.7 37.5
1996 (6 Mos.) 10.0 10.1
Cumulative 568.9 540.0
Average Annual Compound Growth
(Since inception May 23, 1983) 15.6 15.2
</TABLE>
Average annual total return for the Fund (inception 1/94) and for the
Predecessor Partnership (inception 5/83) for the one, five and ten year periods
ended June 30, 1996, was 26.0%, 16.9% and 12.8%, respectively. These returns
assume redemption at the end of each period. Compound annual returns for the
Predecessor Partnership and the Fund are calculated in accordance with SEC
standardized formulas.
This information represents past performance 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. The S&P 500 is an unmanaged index consisting of 500
companies. Information relating to the S&P 500 assumes reinvestment of
dividends. 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 Fund's performance might have
been adversely affected. Additional information is available from Wallace R.
Weitz & Co. at the address listed on the front cover.
1
<PAGE>
WEITZ PARTNERS, INC. -- PARTNERS VALUE FUND
JUNE 30, 1996 - SEMI-ANNUAL REPORT
July 7, 1996
Dear Fellow Shareholder:
I am pleased to report that the 2nd quarter of 1996 was another good one
for the Partners Value. The table below summarizes the total returns (income
plus appreciation, after deducting all fees and expenses) for our fund, the
average fund in our Lipper Analytical Services peer group (Growth and Income
funds), and the S&P 500:
<TABLE>
<CAPTION>
2ND Q YEAR TO DATE 1 YEAR 5 YEARS 10 YEARS
----------- --------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Partners Value 3.7% 10.0% 26.0% 16.9% 12.8%
Ave. G&I Fund 3.4 9.2 22.6 14.4 11.9
S&P 500* 4.5 10.1 26.0 15.7 13.8
* The S&P 500 index is an unmanaged index consisting of 500 companies. Information
assumes reinvestment of dividends, with no deductions for investment expenses.
Sources: Lipper Analytical Services; WALL STREET JOURNAL
</TABLE>
The table on page 1 shows how an investment in the fund has grown since
the inception of the fund.
MARKET COMMENTARY
The BUSINESS VALUE of a company is the present value of all of the net
cash that the business will earn for its owners over the next several DECADES.
Business value rises and falls, GRADUALLY, as the business' long-term prospects
evolve. Business value is not affected by weekly economic statistics or most of
the other factors reported in the business press.
A company's STOCK PRICE, however, is an entirely different matter. The
cornerstone of value investing is that over LONG periods of time (e.g. 5 years),
the stock price will reflect the economic performance of the company. However,
in the short-run, stock prices are determined by the ebb and flow of an enormous
pool of capital in restless pursuit of high returns. The pool is directed by
humans, many of whom are intelligent, well-informed, and highly-motivated, but
who are subject to hopes, fears, greed, intellectual laziness, pressure from
clients to perform, and all sorts of other counter-productive, short-term
influences.
So, it should come as no surprise that stocks are "MISPRICED" a good part
of the time (though proponents of the "Efficient Market Theory" will dispute
this). Investors seem more
2
<PAGE>
likely to notice the discrepancy between value and price when stocks are low,
since they are being punished by the market's pricing "error." When stocks are
high relative to their business values, investors are being rewarded, and it is
easier to rationalize that maybe the market is right, after all. In strong
markets, greed and hubris are more in evidence than usual, common sense gives
way to "new investment paradigms," and otherwise intelligent people begin to
believe that, in fact, this time IS different.
One of my favorite illogical ideas is that if you buy the stock of a great
company, it does not matter what price you pay. Ben Graham wrote about how this
idea contributed to the stock mania of the twenties, and it was the guiding
principle behind the "one-decision stocks" of the "Nifty Fifty" era (which ended
with the 1973-74 bear market). Today's "momentum investors" seem to be carrying
on the tradition. Consider the following quotation from the June 23, 1996, NEW
YORK TIMES. It is part of an article on Gary Pilgrim, manager of the fabulously
successful PBHG Growth Fund (which, in the interest of full disclosure, I will
acknowledge has out-performed our fund over the past 10 years).
What does not enter into this quest for growth is any
consideration of a stock's price. For the most part, Mr. Pilgrim and
his colleagues ignore traditional measures of valuation like
price-to-earnings or price-to-book multiples. This disdain for
price-based decisions is clear. Three of the top five holdings in PBHG
Growth and PBHG Emerging Growth are priced at more than 100 times
trailing earnings. Inso, a fledgling software developer, for example,
has a multiple of 216, while Cascade Communications . . . recently had
a multiple of 181. None of the stocks had multiples below 50.
Mr. Pilgrim says there is little evidence that using any kind of
valuation measure helps bolster returns. "I frankly don't believe that
I've lost any serious money because of overvaluation," he says.
PBHG's mutual fund assets have ballooned from $160 million at the
beginning of 1994 to $7 billion today. It seems possible to me (even likely)
that the huge influx of cash into aggressive funds like these and the subsequent
investment of the cash without regard for price, has created some over-valuation
that needs to be corrected.
OUTLOOK FOR OUR PORTFOLIO
During the last year and a half, conditions for stocks have been nearly
ideal. The S&P 500 has risen 51% while the Partners Value is up 53%. This is not
a sustainable rate of growth, and it would not be at all surprising to see a
general market correction at some point of 10-25%. If this were to occur, our
stocks would not be immune, but I don't believe we would suffer any PERMANENT
losses because our businesses are sound and their stock prices are reasonable,
relative to their business values.
3
<PAGE>
From a tactical point of view, I have taken profits in some of our more
speculative stocks and have focused new purchases on higher quality companies. I
have allowed some extra cash reserves to accumulate, but I do not plan to make
any extreme moves to raise cash because of the transaction costs, taxes (for
some), and the impossibility of getting both the exit and re-entry points right.
I am still finding (and buying) a few stocks that are selling at 35-50%
discounts to their conservatively estimated current business values, and I have
not sold any of my Partners Value shares. In short, it seems like a good time to
turn off CNBC (try the History channel) and to try to avoid short-term thoughts
about your long-term investment.
If you would like to talk to someone about your investments, please feel
free to call me or Eric Ball. Eric is an experienced security analyst and
portfolio manager who enjoys helping people organize their investment lives and
make investment plans. Tom Carney is also available, especially if your
questions involve bonds, and Mary Bickels would be happy to help with questions
about your account and with information on our various funds.
ANNUAL MEETING
About 160 shareholders gathered at the Omaha Marriott on May 29 for our
annual meeting. We celebrated the 10th anniversary of the Value Fund with a
slide show that combined Value Fund history with some illustrations of the
practical application of our investment philosophy. We then had a question and
answer session that covered a lot of investment ground. It would be impossible
to reproduce the whole Q and A session, but there were a couple of questions
that come up so regularly that it seems appropriate to include them in this
letter.
Q: THE AVERAGE MUTUAL FUND HAS FAILED TO OUT-PERFORM THE S&P 500 IN
RECENT YEARS, SO WHY SHOULDN'T INVESTORS SIMPLY GIVE UP ON "ACTIVE" PORTFOLIO
MANAGERS AND BUY AN INDEX FUND?
A: As an active manager, I am biased on this matter, but I would suggest
that:
(a) in a strongly rising stock market, which is what we have enjoyed for
much of the last 20 years, cash held for defensive purposes, or to maintain
flexibility, hurts performance. If the market sees a more normal mix of rising
and falling markets over the next 10-20 years, the ability to hold cash from
time to time may be a positive for portfolio managers;
(b) if indexing becomes too popular (a point we may have reached), cash
moves from potentially good investments in non-index companies into the stocks
in the index, regardless of the attractiveness of the businesses or the prices
being paid. This is another case of an essentially good idea which, when carried
to an extreme, virtually guarantees a poor result for the latecomers; and
4
<PAGE>
(c) there are expenses and implementation problems associated with
managing an index fund (e.g. when the composition of the index is changed,
stocks are sold and replaced by many index fund managers at the same time,
sometimes causing sharp price fluctuations). Therefore, index funds often
under-perform the index that they are trying to track.
Q: WHY DON'T YOU INVEST MORE IN FOREIGN STOCKS?
A: Investing in domestic stocks is difficult enough, and moving to the
foreign stock arena is not just a matter of learning to pronounce a new set of
company names. There are undoubtedly some wonderful investment opportunities in
stock markets around the world, but I don't feel competent to do a good job of
researching and investing in foreign stocks. We like to invest where we have
edge, and when dealing with foreign currencies, customs, accounting, and
managements we do not know, we are at a distinct disadvantage. So, we leave
foreign stocks to others who are better at it or who are oblivious to the
obstacles.
The good news is that we can take advantage of some of the growth
opportunities of global markets without buying foreign stocks. Disney and Time
Warner have significant global entertainment businesses. Our cellular telephone
companies have significant global interests. (Approximately 50% of the business
value of AirTouch lies in its operations outside the U.S.) Coca Cola (owned
through Berkshire Hathaway) earns about 80% of its profits abroad. TCI, Comcast,
and Century Communications have major cable interests in Europe and around the
world. American Express' business is global, and Bank of America, Wells Fargo,
and even real estate developer Catellus are direct beneficiaries of the growth
in Pacific Rim business activity. So, even though we feel compelled to stay
within our circle of competence and focus on domestic stocks, we can still
participate in the growth of emerging markets.
The annual meeting provides a good opportunity to ask your investment
questions of me and the other analysts and portfolio managers and to meet the
rest of the staff that you work with by phone. We keep the format as informal as
possible, and I think people have a good time. I hope you will try to join us
next year if you can.
Best regards,
/s/ Wallace R. Weitz
Wallace R. Weitz
President
5
<PAGE>
WEITZ PARTNERS, INC. -- PARTNERS VALUE FUND
SCHEDULE OF INVESTMENTS IN SECURITIES
JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES
OR UNITS COST MARKET VALUE
- ----------- ------------ -------------
<C> <S> <C> <C>
COMMON STOCKS -- 86.5%
BANKING -- 14.9%
40,000 Bank America Corp. $ 1,748,625 $ 3,030,000
70,000 Bank Plus Corp.* 564,097 612,500
80,000 Dime Bancorp, Inc.* 897,200 1,050,000
52,500 Glendale Federal Bank* 493,740 951,563
80,000 Greenpoint Financial Corp. 2,160,725 2,290,000
22,333 Wells Fargo & Co. 2,994,740 5,334,795
------------ -------------
8,859,127 13,268,858
------------ -------------
CABLE TELEVISION -- 14.6%
80,000 Adelphia Communications CL A* 957,500 600,000
140,000 Century Communications Corp. CL A* 1,140,123 1,190,000
225,000 Comcast Corporation CL A 3,153,267 4,162,500
180,000 Tele-Communications, Inc. CL A* 2,852,009 3,262,500
60,000 Tele-Communications Liberty Media CL A* 1,358,017 1,590,000
40,000 Time Warner, Inc. 761,457 1,570,000
35,000 U.S. West Media Group* 649,105 638,750
------------ -------------
10,871,478 13,013,750
------------ -------------
CONSUMER PRODUCTS AND SERVICES -- 2.5%
50,000 American Classic Voyages Co.* 489,375 368,750
6,650 Lady Baltimore Foods 212,725 292,600
27,500 Protection One, Inc.* 150,938 450,312
30,000 Seafield Capital Corp. 1,106,484 1,125,000
------------ -------------
1,959,522 2,236,662
------------ -------------
FEDERAL AGENCIES -- 7.5%
25,000 Federal Home Loan Mortgage Corp. 546,129 2,137,500
70,000 Federal National Mortgage Association 1,336,588 2,336,250
30,000 Student Loan Marketing Association 1,123,048 2,250,000
------------ -------------
3,005,765 6,723,750
------------ -------------
FINANCIAL SERVICES -- 9.1%
45,000 American Express 1,347,134 2,008,125
70 Berkshire Hathaway, Inc.* 91,818 2,149,000
40,000 Capital One Financial Corp. 926,068 1,140,000
20,000 Central Financial Acceptance Corp.* 240,000 277,500
25,000 Imperial Credit Industries, Inc.* 129,682 756,250
40,000 Imperial Thrift & Loan Association* 441,875 590,000
20,000 PS Group, Inc.* 211,200 277,500
20,000 Salomon, Inc. 760,540 880,000
------------ -------------
4,148,317 8,078,375
------------ -------------
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
WEITZ PARTNERS, INC. -- PARTNERS VALUE FUND
SCHEDULE OF INVESTMENTS IN SECURITIES, CONTINUED
<TABLE>
<CAPTION>
SHARES
OR UNITS COST MARKET VALUE
- ----------- ------------ -------------
<C> <S> <C> <C>
INFORMATION AND DATA PROCESSING -- 2.5%
50,000 BRC Holdings, Inc.* $ 540,880 $ 1,800,000
175,000 Intelligent Systems Corp.* 164,183 437,500
------------ -------------
705,063 2,237,500
------------ -------------
MORTGAGE BANKING -- 6.1%
155,000 Countrywide Credit, Inc. 2,509,454 3,836,250
135,000 Resource Bancshares Mtg. Grp.* 1,550,365 1,636,875
------------ -------------
4,059,819 5,473,125
------------ -------------
PUBLISHING AND BROADCASTING 3.8%
23,000 Daily Journal Corp.* 231,501 632,500
20,000 Katz Media Group, Inc.* 293,700 287,500
100,000 Valassis Communications, Inc.* 1,369,960 1,850,000
10,000 Walt Disney Co. 599,350 628,750
------------ -------------
2,494,511 3,398,750
------------ -------------
REAL ESTATE AND CONSTRUCTION -- 6.6%
300,000 Catellus Development Corp.* 1,938,070 2,775,000
20,000 Forest City Enterprises Cl A 671,825 820,000
100,000 NHP, Inc.* 1,326,435 2,062,500
125,000 Presley Companies CL A* 399,586 187,500
------------ -------------
4,335,916 5,845,000
------------ -------------
REAL ESTATE INVESTMENT TRUSTS -- 5.6%
147,782 Redwood Trust, Inc. 2,665,029 4,137,896
50,000 Redwood Trust, Inc. Warrants** 137,200 650,000
10,000 Thornburg Mortgage Asset Corp. 149,350 162,500
------------ -------------
2,951,579 4,950,396
------------ -------------
TELECOMMUNICATIONS -- 13.2%
105,000 360 Communications Co.* 2,436,110 2,520,000
65,000 Airtouch Communications, Inc.* 1,835,213 1,836,250
65,800 Cellular Communications of Puerto Rico, Inc.* 1,794,252 2,138,500
200,000 Centennial Cellular Corp. CL A* 3,213,892 3,375,000
24,000 CommNet Cellular, Inc.* 656,275 720,000
25,000 Telephone and Data Systems, Inc. 904,050 1,128,125
------------ -------------
10,839,792 11,717,875
------------ -------------
OTHER -- 0.1%
8,300 ONI International, Inc.* 74,250 2,075
15,625 Package Machinery Co.* 77,500 56,641
------------ -------------
151,750 58,716
------------ -------------
Total Common Stocks 54,382,639 77,002,757
------------ -------------
</TABLE>
See accompanying notes to financial statements.
7
<PAGE>
WEITZ PARTNERS, INC. -- PARTNERS VALUE FUND
SCHEDULE OF INVESTMENTS IN SECURITIES, CONTINUED
<TABLE>
<CAPTION>
FACE
AMOUNT COST MARKET VALUE
- ----------- ------------ -------------
U.S. GOVERNMENT AND AGENCY SECURITIES -- 11.3%
<C> <S> <C> <C>
$ 300,000 U.S. Treasury Bill 5.078% 7/05/96**** $ 299,834 $ 299,749
2,700,000 U.S. Treasury Bill 5.208% 10/03/96**** 2,664,433 2,663,334
2,000,000 Federal Natl Mtg. Assn 6.625% 7/12/00 2,000,000 1,987,206
2,000,000 Federal Home Loan Bank 6.535% 3/21/01 2,000,000 1,978,391
750,000 Federal Home Loan Bank 6.55% 11/15/02 750,000 732,876
2,500,000 Federal Home Loan Bank 6.44% 11/28/05 2,503,703 2,404,310
------------ -------------
Total U.S. Government and Agency Securities 10,217,970 10,065,866
------------ -------------
SHORT-TERM SECURITIES -- 2.4%
2,146,672 Norwest U.S. Government Money Market Fund, 4.9% 2,146,672 2,146,672
------------ -------------
Total Investments in Securities $ 66,747,281*** 89,215,295
------------ -------------
------------
Other Assets Less Liabilities -- (0.2%) (219,672)
-------------
Total Net Assets -- 100% $88,995,623
-------------
-------------
Net Asset Value Per Share $ 11.427
-------------
-------------
</TABLE>
*Non-income producing
**Each warrant allows for the purchase of 1 share of common stock at $14.99;
expiration date is 12/31/97
***Also approximates cost for federal income tax purposes
****Interest rates presented for treasury bills are based upon yield to maturity
rate(s) at date(s) of purchase
See accompanying notes to financial statements.
8
<PAGE>
WEITZ PARTNERS, INC. -- PARTNERS VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1996
(UNAUDITED)
<TABLE>
<S> <C>
Assets:
Investment in securities at market (cost $66,747,281) $ 89,215,295
Accrued interest and dividends receivable 207,396
Other assets 10,495
------------
Total assets 89,433,186
------------
Liabilities:
Accrued expenses, including amount due adviser (note 3) 87,563
Payable for securities purchased 350,000
------------
Total liabilities 437,563
------------
Net assets applicable to outstanding capital stock $ 88,995,623
------------
------------
Net assets represented by:
Capital stock outstanding, at par (notes 3 & 4) 78
Additional paid-in capital 62,165,104
Accumulated undistributed net investment income 218,883
Accumulated undistributed net realized gains 4,143,544
Net unrealized appreciation of investments 22,468,014
------------
Total representing net assets applicable to
shares outstanding $ 88,995,623
------------
------------
Net asset value per share of outstanding capital stock
(7,788,314 shares outstanding) $ 11.427
------------
------------
</TABLE>
See accompanying notes to financial statements.
9
<PAGE>
WEITZ PARTNERS, INC. -- PARTNERS VALUE FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
<TABLE>
<S> <C>
Investment income:
Dividends $ 386,695
Interest 312,827
-----------
Total investment income 699,522
-----------
Expenses (note 3):
Investment advisory fee 409,689
Administrative fee 46,383
Other expenses 55,375
-----------
Total expenses 511,447
-----------
Net investment income 188,075
-----------
Realized and unrealized gain on investments (note 5):
Realized gain on investments 2,291,371
Net increase in unrealized appreciation of investments 5,250,555
-----------
Net realized and unrealized gain on investments 7,541,926
-----------
Net increase in net assets resulting from
operations $ 7,730,001
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
WEITZ PARTNERS, INC. -- PARTNERS VALUE FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1996 YEAR ENDED
(UNAUDITED) DEC. 31, 1995
----------------- -------------
<S> <C> <C>
Increase in net assets:
From operations:
Net investment income $ 188,075 $ 530,256
Net realized gain 2,291,371 7,145,678
Unrealized appreciation 5,250,555 12,782,328
----------------- -------------
Net increase in net assets resulting from operations 7,730,001 20,458,262
----------------- -------------
Distributions to shareholders from:
Net investment income -- 885,603
Excess net realized gains -- 651,811
Net realized gains -- 5,495,175
----------------- -------------
Total distributions -- 7,032,589
----------------- -------------
Capital share transactions (note 4):
Proceeds from sales 10,878,960 8,387,791
Payments for redemptions (3,394,226) (5,550,950)
Reinvestment of net investment income and net realized gain at net asset
value -- 6,230,882
----------------- -------------
Total increase from capital share transactions 7,484,734 9,067,723
----------------- -------------
Total increase in net assets 15,214,735 22,493,396
----------------- -------------
Net assets:
Beginning of period 73,780,888 51,287,492
----------------- -------------
End of period (including undistributed net investment income of $218,883 as
of 6/30/96 and $30,808 as of 12/31/95) $ 88,995,623 $ 73,780,888
----------------- -------------
----------------- -------------
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
WEITZ PARTNERS, INC. -- 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.
<TABLE>
<CAPTION>
PERIOD
OCTOBER 12,
1993
(COMMENCEMENT
SIX MONTHS OF
ENDED JUNE 30, YEAR ENDED DECEMBER 31, OPERATIONS)
1996 -------------------------- TO DECEMBER
(UNAUDITED) 1995 1994 31, 1993
-------------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.384 $ 8.275 $ 10.000 $ 10.000
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.024 0.084 0.057 0.068
Net gains or losses on securities (realized
and unrealized) 1.019 3.108 (0.964) --
-------------- ------------ ------------ -----------
Total from investment operations 1.043 3.192 (0.907) 0.068
LESS DISTRIBUTIONS:
Dividends (from net investment income) -- (0.137) -- (0.068 )
Distributions (from excess realized gains) -- (0.100) --
Distributions (from capital gains) -- (0.846) (0.818) --
-------------- ------------ ------------ -----------
Total distributions -- (1.083) (0.818) --
-------------- ------------ ------------ -----------
NET ASSET VALUE, END OF PERIOD $ 11.427 $ 10.384 $ 8.275 $ 10.000
-------------- ------------ ------------ -----------
-------------- ------------ ------------ -----------
TOTAL RETURN 10.0% 38.7% -9.0% 0.7%
RATIOS/SUPPLEMENTAL DATA:
Net assets, End of period 88,995,623 73,780,888 51,287,492 49,863,222
Ratio of expenses to average net assets 1.24%* 1.27% 1.29% --
Ratio of net investment income to average net
assets 0.46%* 0.82% 0.67% --
Portfolio turnover rate 33%* 51% 33% --
Average commission rate paid on portfolio
transactions 4.9817%
</TABLE>
*Annualized for periods of less than twelve months.
See accompanying notes to financial statements.
12
<PAGE>
WEITZ PARTNERS, INC. -- PARTNERS VALUE FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
(1) ORGANIZATION AND BUSINESS CHANGES
Weitz Partners, Inc. (the "Company"), is registered under the Investment
Company Act of 1940 as an open-end nondiversified management investment
company. At present, there is only one series authorized by the Company, the
Partners Value Fund (the "Fund"). The accompanying financial statements
present the financial position and results of operations of the Fund.
The Fund commenced operations on October 12, 1993. Under an Agreement and
Plan of Exchange (the "Plan"), the Company acquired net assets of
$49,762,545 from Weitz Partners -- II Limited Partnership (the
"Partnership") as of the close of business on December 31, 1993, which
included securities with unrealized appreciation of $14,587,514. In exchange
for the partners' interest in the net assets of the Partnership, the Company
issued shares of the Partners Value Fund series in a transaction that
qualified as a tax-free exchange. The Fund was publicly offered effective
January 1, 1994.
The Fund's investment objective is capital appreciation. The Fund intends to
invest principally in common stocks, preferred stocks and a variety of
securities convertible into equity such as rights, warrants, preferred
stocks and convertible bonds. The following accounting policies are in
accordance with accounting policies generally accepted in the investment
company industry.
(2) SIGNIFICANT ACCOUNTING POLICIES
(a)Valuation of Investments
Investments are carried at market determined using the following
valuation methods:
- Securities traded on a national or regional securities exchange are
valued at the last quoted sales price.
- Securities not listed on an exchange or securities in which there
were no reported transactions will be valued at the mean between the
last current closing bid and ask prices.
- Securities or other assets for which reliable recent market
quotations are not readily available will be valued at fair market
value as determined in good faith by or under the direction of the
Company's Board of Directors or a committee of the Board.
All securities are valued in accordance with the above noted policies at
the close of each business day.
When the Fund writes a call option, an amount equal to the premium
received by the Fund is included in the Fund's statement of assets and
liabilities as a liability. The amount of the liability
13
<PAGE>
is subsequently marked-to-market to reflect the current market value of
the option written. The current market value of a traded option is the
last sales price on the principal exchange on which such option is
traded, or, in the absence of such sale, at the latest ask quotation.
When an option expires on its stipulated expiration date or the Fund
enters into a closing purchase transaction, the Fund realizes a gain (or
loss if the cost of a closing purchase transaction exceeds the premium
received when the option was sold) without regard to any unrealized gain
or loss on the underlying security, and the liability related to such
option is extinguished. When a call option is exercised, the Fund
realizes a gain or loss from the sale of the underlying security and the
proceeds from such sale are increased by the premium originally received.
Although no call options were written in the six months ended June 30,
1996, such options are authorized.
(b)Federal Income Taxes
Since the fund's policy is 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, 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 Fund.
(c)Security Transactions
Security transactions are accounted for on the date the securities are
purchased or sold (trade date). Dividend income and distributions to
shareholders are recorded on the ex-dividend date. Interest, including
amortization of discount and premium, is accrued as earned.
Realized gains or losses are determined by specifically identifying the
issue sold.
(d)Dividend Policy
The Fund will 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. All dividends and distributions
will be reinvested automatically unless the shareholder elects otherwise.
(e)Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles 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.
14
<PAGE>
(3) RELATED PARTY TRANSACTIONS
The Company and Fund have retained Wallace R. Weitz & Company (the
"Adviser") as their exclusive investment adviser. In addition, the Company
has an agreement with Weitz Securities, Inc. to act as distributor for the
Fund's shares. Certain officers and directors of the Company are also
officers and directors of the Adviser and Weitz Securities, Inc.
Under the terms of the management and investment advisory agreement, the
Adviser receives an investment advisory fee equal to 1% per annum of the
Fund's average daily net asset value. The Adviser has agreed to reimburse
the Fund up to the amount of advisory fees paid to the extent that total
expenses exceed 1.50% of the Fund's average annual daily net asset value.
The expenses incurred by the Fund did not exceed the percentage limitation
during the six months ended June 30, 1996. At June 30, 1996, the Fund had
accrued advisory fees of $72,291 which were classified as accrued expenses.
Under the terms of the administrative services agreement, certain services
are being provided including the transfer of shares, disbursement of
dividends, fund accounting and related administrative services of the
Company for which the Adviser is being paid a monthly fee. During the six
months ended June 30, 1996, the fee was calculated at an average annual rate
of .11% of the Fund's average daily net assets.
Weitz Securities, Inc. as distributor, received no compensation for
distribution of Company shares.
As of June 30, 1996, directors, officers and employees of the Company, the
Adviser and Weitz Securities, Inc. and their immediate family members held
433,415 shares of capital stock of the Fund representing 5.6% of the Fund.
(4) CAPITAL STOCK
The Company is authorized to issue a total of 1,000,000,000 shares of common
stock in series with a par value of $.00001 per share. Fifty million of
these shares have been authorized by the Board of Directors to be issued in
the series designated the Partners Value Fund shares, of which 7,788,314
shares are outstanding at June 30, 1996. The Board of Directors may
authorize additional shares in series without shareholder approval. Each
share of stock will have a pro rata interest in the assets of the Fund to
which the stock of that series relates and will have no other interest in
the assets of any other series.
Transactions in the capital stock of the Fund are summarized as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE
30, 1996 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1995
------------ ------------------
<S> <C> <C>
Transactions in shares:
Shares issued....................................................... 991,377 865,684
Shares redeemed..................................................... (308,002) (562,886)
Reinvested dividends................................................ -- 604,236
------------ --------
Net increase...................................................... 683,375 907,034
------------ --------
------------ --------
</TABLE>
15
<PAGE>
(5) SECURITIES TRANSACTIONS
The aggregate cost and the proceeds from the sales of securities was
approximately $14,583,085 and $16,874,456 for the six months ended June 30,
1996.
At June 30, 1996, unrealized appreciation of securities was comprised of
gross unrealized appreciation of $23,857,773 offset by gross unrealized
depreciation of $1,389,759.
(6) DIRECTORS' FEES AND EXPENSES
The Company pays directors (other than directors who are also officers of
the Adviser) a fee of $200 per board meeting attended, $200 per audit
committee meeting attended, and an annual retainer of $400. During the six
months ended June 30, 1996, the Fund paid directors' fees of $3,784.
16
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
WEITZ SERIES FUND, INC.
BOARD OF DIRECTORS
Carroll E. Fredrickson
John W. Hancock
Richard D. Holland
Thomas R. Pansing, Jr.
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
Norwest Bank Nebraska, N.A.
TRANSFER AGENT AND DIVIDEND PAYING AGENT
Wallace R. Weitz & Company
This report has been prepared for the information of shareholders of Weitz
Partners, Inc. -- Partners Value Fund and is not authorized for distribution to
prospective investors unless preceded or accompanied by a current prospectus
which describes the Fund's objectives, policies and other information.
