<PAGE>
- --------------------------------------------------------------------------------
WEITZ PARTNERS, INC.
PARTNERS VALUE FUND
ANNUAL
REPORT
DECEMBER 31, 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 December
31, 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 19.2 22.9
Cumulative 624.3 614.8
Average Annual Compound Growth
(Since inception June 1, 1983) 15.7 15.6
</TABLE>
Average annual total return for the Fund (inception 1/94) and for the
Predecessor Partnership (inception 6/83) for the one, five and ten year periods
ended December 31, 1996, was 19.2%, 16.3% and 13.9%, respectively. These returns
assume redemption at the end of each period. Average annual total 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
DECEMBER 31, 1996 - ANNUAL REPORT
January 12, 1997
Dear Fellow Shareholder:
1996 was a good year. Our fund's total return was +19.2%. This gain
exceeds our average annual rate of return since the fund was started of +15.7%,
and is well above the long-term average rate of return on stocks in general of
about 10%. On the other hand, we lagged the S&P 500 this year (+22.9%) as my
caution in the face of what Fed Chairman Greenspan called an "irrationally
exuberant" stock market got in the way of profits. The table on page 1 shows
total returns (capital appreciation plus dividends, minus all expenses) for the
Fund and the Predecessor Partnership since inception.
1996 IN REVIEW
A common theme of these quarterly letters is that we invest in businesses,
not pieces of paper. We try to determine the price that an informed, rational
buyer would pay for 100% of a company, and then buy shares of that business when
they are available at, say, 50% of the "private market value" of the company.
The theory is that the business value will grow and that, from time to time, the
stock price will coincide with (or if we are lucky, exceed) the value of the
underlying business, allowing us to sell the stock at a significant profit.
In the short-run, though, price and value often diverge widely. While
business value tends to change slowly, stock prices run up and down in response
to various insignificant, temporary, or imagined factors. Virtually all of our
companies did well in 1996, showing gains in revenues, earnings, cash flow,
etc., yet some stocks rose sharply and others fell like stones. Most of the
major contributors to our gains are stocks I have written about over the past
several years.
Some have been consistent gainers since we first bought them. After solid
gains in 1995, Redwood Trust common stock rose 117% in 1996 while the warrants
rose 350%, and together they accounted for almost one-fifth of our 1996 profits.
Others were "slow starters" like Catellus. A few years ago, the Southern
Pacific Railroad spun off its real estate holdings and named the new company
Catellus. At that time we paid about $10 for what we thought was $20+ in assets.
By 1995, fears that the California real estate recession would last forever
drove the stock down to $5. We visited the company several times,
2
<PAGE>
reassured ourselves that the asset values were real, and bought more shares all
the way down. Catellus rose 94% in 1996 and currently sells at about $13 (vs.
our average cost of about $7). The value of the company's properties grew by at
most 15-20% in 1996, but investor perceptions changed for the better. I believe
that the stock is still under-valued, but I have no idea when the next price
spurt may occur.
Several of our bank, financial service, real estate, consumer, and other
stocks also showed gains that were greater than the actual growth in the value
of the underlying businesses. In some cases (Forest City Enterprises +88%,
Capital One +53%), the moves represented catching up with reality, and we still
hold those stocks. With others (Greenpoint +82%, Imperial Credit +112%),
overly-enthusiastic buyers seem to have gotten carried away and we have sold the
stocks. Still others showed little gain for the calendar year, but allowed for a
profitable trade during the year. For example, we were able to sell Protection
One between $16 and $17 (which seemed expensive) and to repurchase it between $9
and $10 in December.
On the other hand, some companies enjoyed good business results in 1996,
but their stocks were major drags on our portfolio in 1996. The major culprits
(again) were cable television (TCI -28%, Century -29%) and cellular telephone
(Centennial -29%, Cellular of Puerto Rico -29%). There are specific fears about
competition and capital expenditure costs associated with these companies and
"general principles" avoidance by investors who are uncomfortable with valuing
businesses on the basis of "cash flow" rather than "earnings per share." I think
these companies have bright futures, but the stocks are so universally reviled,
that a change in investor perception from hate, UP TO INDIFFERENCE, would result
in a large percentage gain for the stocks.
THE OUTLOOK -- IS "THE MARKET" TOO HIGH?
Over the past 21 years, nearly all stock investments have been like the
children of Lake Woebegon -- above average. Market corrections have been scarce
and short, and investors have begun to take 15% returns for granted. Evidence
abounds that stocks are expensive by historical standards and that many stock
buyers' expectations are unrealistic. If I were forced to make a general
characterization of "the market," I would say that it is "high."
It is tempting to try to get out of stocks when the market is high and to
buy them back when the market is low (market timing). The problem is that (in my
opinion) it cannot be done successfully and consistently over time. I believe it
is much better to stay reasonably fully invested (80-90%), acknowledging the
CERTAINTY that stocks will go down from time to time, and trusting that the
declines will be temporary.
One argument against market timing is that "the market" is NOT a
monolithic entity. As I have described, some of our stocks became more expensive
(relative to their business values) in
3
<PAGE>
1996 while others became cheaper. The same is true of stocks in general. There
are always some stocks which are out of favor for the wrong reason. One general
trend which is beginning to create some bargains is the shift in popularity from
small company stocks to large company stocks. As a result of this shift, the S&P
500 Index, which is dominated by about 50 of the very largest companies, has
out-performed most mutual funds in the last few years. Less obvious, but more
dramatic, evidence of investment concentration in a few large companies can be
seen in the NASDAQ Composite Index of 5259 stocks traded in the over-the-counter
market. This index was UP 22.7% in 1996, but if you remove the 100 largest
companies (Intel, Microsoft, MCI, etc.) from the calculation, the remaining 5159
stocks, in the aggregate, were DOWN for the year. There are probably some
bargains being created as investors sell the 5159 smaller companies' stocks to
buy the 100 popular favorites.
This is why I feel good about our portfolio of stocks and the prospects of
earning reasonable returns over the next few years, even though "the market" is
high. There is no law of market physics that assures that money will gradually
shift back into "the rest" of the stocks from the very largest that are popular
today. (In fact, the resolution of a similar "two-tier" market situation in the
early 70's was rather ugly as the "Nifty Fifty" fell sharply and most smaller
company stocks fell even further.) However, when (in spite of myself) I begin to
feel nervous about the market and look at our portfolio for candidates to sell,
I generally find that I would rather buy more of several of our stocks. I think
cable and cellular stocks (30+ % of our portfolio) are likely to out-perform
this year. NHP, Protection One, Vallasis, and other less well-known companies
seem cheap at today's prices. Seafield sells at $38.50, yet it will be
distributing liquid securities over the next 6 months which are worth about $50
today. The examples go on and on.
Investing in stocks is a wonderful business, and I believe it will
continue to be profitable for intelligent investors. The absolute returns will
undoubtedly be lower, on average, over the next 5-10 years than they have been
during the past 5-10, but a less euphoric investment environment should be good
for value investors. I feel very good about our investment team, including our
newest research associate, Dave Kurzman, and I'm looking forward to the new
year. It will be interesting.
Best regards,
/s/ Wallace R. Weitz
--------------------
Wallace R. Weitz
President
4
<PAGE>
SCHEDULE OF INVESTMENTS
5
<PAGE>
WEITZ PARTNERS, INC. -- PARTNERS VALUE FUND
SCHEDULE OF INVESTMENTS IN SECURITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES
OR UNITS COST VALUE
- ----------- ----------- ------------
<C> <S> <C> <C>
COMMON STOCKS -- 88.2%
BANKING -- 8.7%
70,000 Bank Plus Corp.* $ 564,097 $ 805,000
80,000 Dime Bancorp, Inc.* 897,200 1,180,000
30,000 Poughkeepsie Savings Bank, FSB 148,125 157,500
30,000 R&G Financial Corp. CL B 633,750 712,500
20,000 Wells Fargo & Co. 2,629,981 5,395,000
----------- ------------
4,873,153 8,250,000
----------- ------------
CABLE TELEVISION -- 19.7%
88,000 Adelphia Communications Corp. CL A* 741,763 506,000
174,700 Century Communications Corp. CL A* 1,174,922 993,606
285,000 Comcast Corp. Special CL A 4,084,525 5,076,563
20,000 Comcast UK Cable Partners Limited CL A* 250,714 272,500
34,200 TCI Satellite Entertainment CL A* 439,590 337,725
342,000 Tele-Communications, Inc. CL A* 4,613,170 4,467,375
140,000 Tele-Communications Liberty Media CL A* 3,315,443 3,998,750
46,000 Time Warner, Inc. 962,442 1,725,000
70,000 U.S. West Media Group* 1,239,785 1,295,000
----------- ------------
16,822,354 18,672,519
----------- ------------
CONSUMER PRODUCTS AND SERVICES -- 3.2%
50,000 American Classic Voyages Co.* 489,375 656,250
6,650 Lady Baltimore Foods, Inc. 212,725 325,850
47,000 Protection One, Inc.* 371,093 464,125
42,000 Seafield Capital Corp. 1,531,422 1,627,500
----------- ------------
2,604,615 3,073,725
----------- ------------
FEDERAL AGENCIES -- 7.1%
15,000 Federal Home Loan Mortgage Corp. 170,785 1,651,875
50,000 Federal National Mortgage Association 951,913 1,862,500
35,000 Student Loan Marketing Association 1,480,489 3,259,375
----------- ------------
2,603,187 6,773,750
----------- ------------
FINANCIAL SERVICES -- 8.3%
45,000 American Express, Co. 1,347,134 2,542,500
70 Berkshire Hathaway, Inc.* 91,818 2,387,000
40,000 Capital One Financial Corp. 926,068 1,445,000
20,000 HealthCare Financial Partners, Inc.* 263,875 255,000
20,000 PS Group, Inc.* 181,200 270,000
20,000 Salomon, Inc. 760,540 942,500
----------- ------------
3,570,635 7,842,000
----------- ------------
</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 VALUE
- ----------- ----------- ------------
<C> <S> <C> <C>
INFORMATION AND DATA PROCESSING -- 2.5%
42,000 BRC Holdings, Inc.* $ 444,140 $ 1,879,500
175,000 Intelligent Systems Corp.* 164,183 525,000
----------- ------------
608,323 2,404,500
----------- ------------
MORTGAGE BANKING -- 5.2%
100,000 Countrywide Credit Industries, Inc. 1,546,954 2,862,500
144,450 Resource Bancshares Mtg. Grp., Inc. 1,550,365 2,058,412
----------- ------------
3,097,319 4,920,912
----------- ------------
PUBLISHING AND BROADCASTING -- 6.7%
23,000 Daily Journal Corp.* 231,501 724,500
100,000 Gabelli Global Multimedia Trust, Inc. 687,987 687,500
92,900 Katz Media Group, Inc.* 1,046,362 1,045,125
120,000 Valassis Communications, Inc.* 1,685,960 2,535,000
20,000 Walt Disney Co. 1,148,724 1,392,500
----------- ------------
4,800,534 6,384,625
----------- ------------
REAL ESTATE AND CONSTRUCTION -- 6.3%
190,000 Catellus Development Corp.* 1,156,245 2,161,250
20,000 Forest City Enterprises, Inc. CL A 671,825 1,210,000
156,000 NHP, Inc.* 2,255,185 2,418,000
125,000 Presley Companies CL A* 179,687 140,625
----------- ------------
4,262,942 5,929,875
----------- ------------
REAL ESTATE INVESTMENT TRUSTS -- 9.1%
50,000 Innkeepers USA Trust 542,175 693,750
65,000 NovaStar Financial, Inc.** 975,000 975,000
182,069 Redwood Trust, Inc. 3,260,122 6,782,070
10,000 Thornburg Mortgage Asset Corp. 149,350 213,750
----------- ------------
4,926,647 8,664,570
----------- ------------
TELECOMMUNICATIONS -- 11.3%
125,000 360 Communications Co.* 2,894,910 2,890,625
80,000 Airtouch Communications, Inc.* 2,232,273 2,020,000
102,000 Cellular Communications of Puerto Rico, Inc.* 2,678,783 2,014,500
185,000 Centennial Cellular Corp. CL A* 2,780,750 2,243,125
24,000 CommNet Cellular, Inc.* 656,275 669,000
25,000 Telephone and Data Systems, Inc. 904,050 906,250
----------- ------------
12,147,041 10,743,500
----------- ------------
OTHER -- 0.1%
8,300 ONI International, Inc.* 70,100 2,075
----------- ------------
Total Common Stocks 60,386,850 83,662,051
----------- ------------
</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 VALUE
- ----------- ----------- ------------
<C> <S> <C> <C>
U.S. GOVERNMENT AND AGENCY SECURITIES -- 9.5%
$1,000,000 U.S. Treasury Bill 4/17/97 $ 985,145 $ 985,377
2,000,000 Federal Natl Mtg. Assn. 6.625% 7/12/00 2,000,000 2,023,437
2,000,000 Federal Home Loan Bank 6.535% 3/21/01 2,000,000 1,993,639
1,500,000 Federal Home Loan Bank 6.0% 4/12/01 1,501,848 1,496,884
2,500,000 Federal Home Loan Bank 6.44% 11/28/05 2,503,505 2,470,312
----------- ------------
Total U.S. Government and Agency Securities 8,990,498 8,969,649
----------- ------------
SHORT-TERM SECURITIES -- 1.8%
1,696,981 Norwest U.S. Government Money Market Fund 1,696,981 1,696,981
----------- ------------
Total Investments in Securities $71,074,329 94,328,681
----------- ------------
-----------
Other Assets Less Liabilities -- 0.5% 517,730
------------
Total Net Assets -- 100% $ 94,846,411
------------
------------
Net Asset Value Per Share $ 11.524
------------
------------
</TABLE>
*Non-income producing
**This restricted security, exempt from registration under the Securities Act of
1933, was purchased in a private placement and, unless registered under the Act
or exempted from registration, may only be sold to qualified institutional
investors or certain accredited investors.
See accompanying notes to financial statements.
8
<PAGE>
WEITZ PARTNERS, INC. -- PARTNERS VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<S> <C>
Assets:
Investment in securities at value (cost $71,074,329) $ 94,328,681
Accrued interest and dividends receivable 251,706
Receivable for securities sold 576,253
Other assets 10,495
------------
Total assets 95,167,135
------------
Liabilities:
Accrued expense 17,118
Due to adviser 88,992
Payable for securities purchased 214,614
------------
Total liabilities 320,724
------------
Net assets applicable to outstanding capital stock $ 94,846,411
------------
------------
Net assets represented by:
Capital stock outstanding, at par (note 4) 82
Additional paid-in capital 67,248,734
Accumulated undistributed net realized gains 4,343,243
Net unrealized appreciation of investments (note 5) 23,254,352
------------
Total representing net assets applicable
to shares outstanding $ 94,846,411
------------
------------
Net asset value per share of outstanding capital stock
(8,230,622 shares outstanding) $ 11.524
------------
------------
</TABLE>
See accompanying notes to financial statements.
9
<PAGE>
WEITZ PARTNERS, INC. -- PARTNERS VALUE FUND
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<S> <C>
Investment income:
Dividends $ 872,728
Interest 632,476
-----------
Total investment income 1,505,204
-----------
Expenses (note 3):
Investment advisory fee 862,790
Administrative fee 99,953
Directors fees 5,580
Other expenses 97,245
-----------
Total expenses 1,065,568
-----------
Net investment income 439,636
-----------
Realized and unrealized gain on investments:
Realized gain on investments 8,613,668
Net unrealized appreciation of investments 6,036,893
-----------
Net realized and unrealized gain on investments 14,650,561
-----------
Net increase in net assets resulting from
operations $15,090,197
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
WEITZ PARTNERS, INC. -- PARTNERS VALUE FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1996 1995
------------ ------------
<S> <C> <C>
Increase in net assets:
From operations:
Net investment income $ 439,636 $ 530,256
Net realized gain 8,613,668 7,145,678
Unrealized appreciation 6,036,893 12,782,328
------------ ------------
Net increase in net assets resulting
from operations 15,090,197 20,458,262
------------ ------------
Distributions to shareholders from:
Net investment income (476,435) (1,537,414)
Net realized gains (6,116,607) (5,495,175)
------------ ------------
Total distributions (6,593,042) (7,032,589)
------------ ------------
Capital share transactions (note 4):
Proceeds from sales 13,203,924 8,387,791
Payments for redemptions (5,655,658) (5,550,950)
Reinvestment of distributions 5,020,102 6,230,882
------------ ------------
Total increase from capital share
transactions 12,568,368 9,067,723
------------ ------------
Total increase in net assets 21,065,523 22,493,396
------------ ------------
Net assets:
Beginning of period 73,780,888 51,287,492
------------ ------------
End of period $ 94,846,411 $ 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>
YEAR ENDED DECEMBER 31,
1996 1995 1994*
------------- ------------- -------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.384 $ 8.275 $ 10.000
------------- ------------- -------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.057 0.084 0.057
Net gains or losses on securities
(realized and unrealized) 1.933 3.108 (0.964)
------------- ------------- -------------
Total from investment operations 1.990 3.192 (0.907)
------------- ------------- -------------
LESS DISTRIBUTIONS:
Dividends from net investment income (0.061) (0.237) --
Distributions from realized gains (0.789) (0.846) (0.818)
------------- ------------- -------------
Total distributions (0.850) (1.083) (0.818)
------------- ------------- -------------
NET ASSET VALUE, END OF PERIOD $ 11.524 $ 10.384 $ 8.275
------------- ------------- -------------
------------- ------------- -------------
TOTAL RETURN 19.2% 38.7% -9.0%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period 94,846,411 73,780,888 51,287,492
Ratio of expenses to average
net assets 1.23% 1.27% 1.29%
Ratio of net investment income to
average net assets 0.51% 0.82% 0.67%
Portfolio turnover rate 37% 51% 33%
Average commission rate paid (per share) $ 0.0495+
</TABLE>
+Required by regulations issued in 1995.
*Fund commenced public offering of shares on January 1, 1994.
See accompanying notes to financial statements.
12
<PAGE>
WEITZ PARTNERS, INC. -- PARTNERS VALUE FUND
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
(1) ORGANIZATION AND BUSINESS CHANGES
Weitz Partners, Inc. (the "Company"), is registered under the Investment
Company Act of 1940 as an open-end 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 Fund 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.
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 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
13
<PAGE>
exchange on which such option is traded, or, in the absence of such sale,
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 year ended December 31, 1996, such options are authorized.
The risk in writing a call option is that the Portfolio gives up the
opportunity of profit if the market price of the security increases. The
Portfolio also has the additional risk of not being able to enter into a
closing transaction if a liquid secondary market does not exist.
(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). Income dividends 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.
14
<PAGE>
(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.
(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 a 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 year ended December 31, 1996.
Under the terms of an administration 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 year ended December 31,
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.
(4) CAPITAL STOCK
The Company is authorized to issue a total of 1,000,000,000 shares of common
stock 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 Partners Value Fund. At December 31, 1996 8,230,622 shares are
outstanding. 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.
15
<PAGE>
Transactions in the capital stock of the Fund are summarized as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
1996 1995
---------- ---------
<S> <C> <C>
Transactions in shares:
Shares issued................................... 1,195,364 865,684
Shares redeemed................................. (504,774) (562,886)
Reinvested dividends............................ 435,093 604,236
---------- ---------
Net increase.................................. 1,125,683 907,034
---------- ---------
---------- ---------
</TABLE>
(5) SECURITIES TRANSACTIONS
Purchases and proceeds from maturities or sales of investment securities of
the Fund, other than short-term securities, aggregated $37,340,039 and
$31,022,663, respectively. The cost of investments for Federal income tax
purposes is $71,196,097. At December 31, 1996, the aggregate gross
unrealized appreciation and depreciation, based on cost for Federal income
tax purposes, were $26,047,738 and $2,915,154, respectively.
16
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Shareholders
Weitz Partners, Inc. -- Partners Value Fund:
We have audited the accompanying statement of assets and liabilities of
Weitz Partners, Inc. -- Partners Value Fund, including the schedule of
investments in securities, as of December 31, 1996, and the related statement of
operations, the statement of changes in net assets, and the financial highlights
for the year then ended. These financial statements and financial highlights are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on our
audit. The statement of changes in net assets for the year ended December 31,
1995, and the financial highlights for all years prior to January 1, 1996, were
audited by other auditors whose report, dated January 19, 1996, expressed an
unqualified opinion on those statements.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1996, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides 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
Weitz Partners, Inc. -- Partners Value Fund as of December 31, 1996, the results
of its operations, changes in its net assets, and financial highlights for the
year then ended in conformity with generally accepted accounting principles.
/s/ McGladrey & Pullen, LLP
---------------------------
New York, New York
January 17, 1997
17
<PAGE>
- --------------------------------------------------------------------------------
WEITZ SERIES FUND, INC.
BOARD OF DIRECTORS
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
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. For more detailed information about the
Fund, its 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.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS INCLUDED IN THE COMPANY'S ANNUAL REPORT AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 1
<NAME> WEITZ PARTNERS VALUE FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 71,074,329
<INVESTMENTS-AT-VALUE> 94,328,681
<RECEIVABLES> 827,959
<ASSETS-OTHER> 10,495
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 95,167,135
<PAYABLE-FOR-SECURITIES> 214,614
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 106,110
<TOTAL-LIABILITIES> 320,724
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 67,248,816
<SHARES-COMMON-STOCK> 8,230,622
<SHARES-COMMON-PRIOR> 7,104,939
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 4,343,243
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 23,254,352
<NET-ASSETS> 94,846,411
<DIVIDEND-INCOME> 872,728
<INTEREST-INCOME> 632,476
<OTHER-INCOME> 0
<EXPENSES-NET> (1,065,568)
<NET-INVESTMENT-INCOME> 439,636
<REALIZED-GAINS-CURRENT> 8,613,668
<APPREC-INCREASE-CURRENT> 6,036,893
<NET-CHANGE-FROM-OPS> 15,090,197
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (476,435)
<DISTRIBUTIONS-OF-GAINS> (6,116,607)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,195,364
<NUMBER-OF-SHARES-REDEEMED> (504,774)
<SHARES-REINVESTED> 435,093
<NET-CHANGE-IN-ASSETS> 21,065,523
<ACCUMULATED-NII-PRIOR> 30,808
<ACCUMULATED-GAINS-PRIOR> 1,852,173
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 862,790
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,065,568
<AVERAGE-NET-ASSETS> 85,944,900
<PER-SHARE-NAV-BEGIN> 10.384
<PER-SHARE-NII> 0.057
<PER-SHARE-GAIN-APPREC> 1.933
<PER-SHARE-DIVIDEND> (0.061)
<PER-SHARE-DISTRIBUTIONS> (0.789)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.524
<EXPENSE-RATIO> 1.23
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
