<PAGE>
- --------------------------------------------------------------------------------
WEITZ PARTNERS, INC.
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
Norwest Bank Minnesota, 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.
PARTNERS VALUE FUND
Q U A R T E R L Y
R E P O R T
SEPTEMBER 30, 1998
ONE PACIFIC PLACE, SUITE 600
1125 SOUTH 103 STREET
OMAHA, NEBRASKA 68124-6008
402-391-1980
800-232-4161
402-391-2125 FAX
<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 September
30, 1998, calculated in accordance with SEC standardized formulas.
<TABLE>
<CAPTION>
PERIOD ENDED PARTNERS II S&P 500
- ------------- ------------ -----------
<S> <C> <C>
12/31/83 9.9% 4.2%+
12/31/84 14.5 6.3
12/31/85 40.7 31.7
12/31/86 11.1 18.7
12/31/87 4.3 5.3
12/31/88 14.9 16.5
12/31/89 20.3 31.6
12/31/90 -6.3 -3.1
12/31/91 28.1 30.2
12/31/92 15.1 7.6
12/31/93 23.0 10.1
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED PARTNERS VALUE S&P 500
- ----------------------- -------------- -----------
<S> <C> <C>
12/31/94 -9.0% 1.3%
12/31/95 38.7 37.5
12/31/96 19.2 22.9
12/31/97 40.6 33.4
9/30/98 12.6 6.0++
Cumulative 1,047.0 910.4
Average Annual Compound
Growth
(Since inception June
1, 1983) 17.2 16.3
</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 September 30, 1998, was 21.9%, 20.0% and 17.3%, respectively. These
returns assume redemption at the end of each period.
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 the Weitz
Funds at the address listed on the front cover.
+Return is for the period 6/1/83 through 12/31/83
++Return is for the period 1/1/98 through 9/30/98
2
<PAGE>
WEITZ PARTNERS, INC. -- PARTNERS VALUE PORTFOLIO
SEPTEMBER 30, 1998 - QUARTERLY REPORT
October 14, 1998
Dear Fellow Shareholder:
After an unusually strong first half of 1998, we gave back some of our
gains in the 3rd quarter. Our net asset value per share dropped by -9.0% (vs.
- -9.9% for the S&P 500), bringing our gain for the first 9 months of the year to
+12.6% (vs. +6.0% for the S&P). Our longer-term performance (after deducting
expenses) vs. the S&P 500 and the average fund in our category is shown below:
<TABLE>
<CAPTION>
PERIODS ENDING 9-30-98
1 YEAR 5 YEARS 10 YEARS
-------- -------- ---------
<S> <C> <C> <C>
PARTNERS VALUE FUND +21.9% +20.0 % +17.3 %
S&P 500 +9.1 +19.9 +17.2
Average Growth and Income Fund* -1.0 +15.2 +14.2
</TABLE>
* Source: Lipper Analytical Services
RECENT MARKET WEAKNESS
The U.S. stock market has been drifting lower since mid-July. Weak Asian,
Russian, and Latin American economies have begun to have an impact on our
economy, and fears of slowing earnings growth for American companies have led
investors to sell stocks. Global speculators, using huge amounts of borrowed
money, have sustained losses on their foreign stock, bond, and currency trades,
and more recently on their U.S. government bond and mortgage positions. Lenders
have suddenly become remorseful and risk averse, calling in loans and forcing
liquidation of collateral (stocks, bonds, and mortgages) in already-weak
markets.
Chaos in the credit markets has been very unsettling for stock investors
and is making it difficult for many companies to conduct business as usual. The
higher cost and lower availability of credit may continue for some time as both
lenders and borrowers work to strengthen their balance sheets before their
year-end audits. For companies with strong underlying businesses and appropriate
amounts of leverage, this period may be annoying -- temporarily depressing
earnings or disrupting expansion and acquisition plans -- but should not cause
permanent damage.
The larger, underlying issue for the stock market is the fact that stocks
in general had become over-valued. We have discussed this in previous letters.
It was impossible to predict when the correction would come, or what the
catalyst would be, but long-term investors will recognize this as an inevitable
part of investment life. If we had sold all our stocks when they first became
expensive by historical standards, we would have been out of the market for the
past several years and missed significant profits. Our plan is to continue to
evaluate companies one by one and to buy and hold those with good long-term
prospects. The trick in a bear market is to have the courage to buy good
businesses when others are fearful, but to be patient enough to buy them at
bargain prices.
3
<PAGE>
OUTLOOK FOR OUR PORTFOLIO
Generally speaking, we believe that investors have over-reacted to news
and rumors about financial companies (of which we own many) and under-reacted to
the dimming prospects for some of the very largest "blue chip" or "nifty-fifty"
stocks (of which we own few). We cannot know how this will play out in the short
run, but we invest on the premise that value will eventually be recognized. Here
are some thoughts on the major holdings in our fund:
FINANCIAL SERVICE COMPANIES
Companies that originate or buy mortgages or other loans, finance them
temporarily with short-term credit, then either sell them or hold them in their
portfolios are exposed to liquidity risk during the interim financing stage. We
own a few of these companies (aggregate exposure 3-4% of the portfolio). Some
have had some anxious moments as the credit window closed, literally, overnight.
They do not have complete control over their destinies, but for these companies
as a group, we believe that generally their upside potential is far greater than
the downside risk.
Most of our financial stocks are banks and thrifts, mortgage bankers who
do NOT have significant liquidity risk, or investment companies. These companies
might face temporarily higher borrowing costs but are very sound and should cope
well with the unsettled markets. Their stocks have been weak, as investors sell
first and ask questions later, but their prospects are good.
A few of our financials will be clear beneficiaries of capital market
illiquidity. Fannie Mae and Freddie Mac are government agencies that own high
quality residential mortgages. They have virtually unlimited access to cheap
credit and they are buyers of mortgages that are being dumped at distress prices
by weak sellers. Nevertheless, their stocks have also dropped sharply. Other
potential beneficiaries are our over-capitalized banks and Berkshire Hathaway,
which has perhaps $25-30 billion of buying power available to take advantage of
distress situations. (Carol Loomis, in the October 26 issue of FORTUNE,
describes Berkshire's attempt to take over the troubled Long-Term Capital hedge
fund -- interesting reading.)
CABLE TELEVISION
There has been no noticeable negative economic impact on the cable
industry. If the credit markets remain unstable for a long time, financing costs
could rise, but most of our cable companies are rapidly approaching the point of
being net cash generators. The stocks have been especially strong in recent
quarters because of takeover activity in the industry, and acquisitions could be
slowed by financing problems, but the fundamentals of the business remain very
strong.
CELLULAR TELEPHONE
As with cable, cellular telephone growth and profitability have not been
affected by recent credit market turmoil. Financing costs could rise temporarily
and a recession would undoubtedly dampen subscriber growth and phone usage.
However, the only tangible impact on our portfolio has been the disruption of
merger plans for Centennial Cellular. The buyer wants to pay $43.50 per share
for Centennial, and the owners want to sell, but the investment bankers are
having trouble
4
<PAGE>
arranging financing, and the stock price has fallen to the mid-20's. My first
choice would be to sell at $43.50 now, but if the deal falls through because of
the state of the credit market, we should still earn a good return over the
years from today's price. We will buy more and be patient. (Another of our
cellular companies, Vanguard, recently received a takeover bid from AT&T, and
financing should not be an issue for them.)
REAL ESTATE
Real estate investors, especially real estate investment trusts (REITs),
have been aggressive buyers of office buildings, hotels, apartments and other
commercial properties over the past several years. Easily available credit has
been a major contributor to the demand for real estate and the resulting higher
prices. Going forward, tighter credit may lead to temporarily lower real estate
prices (and lower stock prices), but it may also create opportunities for
well-financed companies such as Hilton, Catellus, and Forest City.
OUTLOOK
I have no way of predicting how serious this liquidity crisis will get,
how long it will last, or when our stocks will begin to rise again. Our goal is
to be cautious when others are exuberant and confident when others are fearful,
and the current environment is definitely one of the latter. I feel good about
our portfolio and its long-term prospects, but shareholders should understand
that rebuilding confidence and liquidity may take a while.
SHAREHOLDER MEETING
On October 6, we held a special shareholder meeting to increase the
authorized number of shares of the Weitz Series Fund. The official business took
4 minutes, but the more interesting part of the meeting was the informal
question and answer period after the business was completed. The questions were
good, and I think the answers were generally informative and mostly comforting.
Many of the subjects which were discussed have been incorporated into this
letter. We will be having our regular shareholder information meeting in the
Spring, probably in May, and I would encourage you to attend, meet your fellow
shareholders, and ask any questions you may have.
In the meantime, both our client service and investment people are
available to answer your questions. We all have been unusually busy in recent
weeks because we have a large number of new shareholders and the market news has
been unsettling, but most shareholders have been very patient with us. We
appreciate that.
Sincerely,
/s/ WALLACE R. WEITZ
Wallace R. Weitz
President, Portfolio
Manager
5
<PAGE>
WEITZ PARTNERS, INC. -- PARTNERS VALUE FUND
SCHEDULE OF INVESTMENTS IN SECURITIES
SEPTEMBER 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES
OR UNITS COST VALUE
---------- ------------ ------------
<C> <S> <C> <C>
COMMON STOCKS -- 80.5%
AUTO SERVICES -- 0.2%
30,000 Insurance Auto Auctions, Inc.* $ 330,000 $ 375,000
------------ ------------
BANKING-- 2.8%
20,000 Astoria Financial Corp. 833,368 842,500
64,300 Commercial Federal Corp. 1,524,521 1,515,069
182,000 Golden State Bancorp, Inc.* 3,786,142 3,628,625
------------ ------------
6,144,031 5,986,194
------------ ------------
CABLE TELEVISION -- 12.0%
64,000 Adelphia Communications Corp. CL A* 485,512 2,504,000
455,000 Century Communications Corp. CL A* 2,656,136 10,863,125
60,000 Comcast Corp. Special CL A 571,524 2,816,250
80,000 MediaOne Group, Inc.* 1,340,420 3,555,000
145,000 Tele-Communications, Inc. CL A* 1,729,343 5,673,125
------------ ------------
6,782,935 25,411,500
------------ ------------
CONSUMER PRODUCTS AND SERVICES -- 1.5%
26,000 American Classic Voyages Co.* 251,125 383,500
100,000 Lab Holdings, Inc. 2,628,185 1,525,000
6,650 Lady Baltimore Foods, Inc. 212,725 364,088
100,000 Protection One, Inc. 171,893 975,000
------------ ------------
3,263,928 3,247,588
------------ ------------
FEDERAL AGENCIES -- 6.1%
50,000 Federal Home Loan Mortgage Corp. 138,785 2,471,875
40,000 Federal National Mortgage Association 759,888 2,570,000
242,500 SLM Holding Corp. 6,656,769 7,866,094
------------ ------------
7,555,442 12,907,969
------------ ------------
FINANCIAL SERVICES-- 7.7%
45,000 American Express, Co. 1,347,134 3,493,125
60 Berkshire Hathaway, Inc. CL A* 78,698 3,576,000
651,000 Imperial Credit Industries, Inc.* 9,850,152 4,068,750
20,000 PS Group, Inc. 181,200 232,500
202,000 United Asset Management Corp. 5,135,159 4,343,000
81,000 United Panam Financial Corp.* 919,423 455,625
------------ ------------
17,511,766 16,169,000
------------ ------------
INFORMATION AND DATA PROCESSING -- 1.0%
96,000 BRC Holdings, Inc.* 626,796 1,632,000
175,000 Intelligent Systems Corp.* 164,183 388,290
------------ ------------
790,979 2,020,290
------------ ------------
</TABLE>
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>
LODGING -- 1.4%
170,000 Hilton Hotels Corp. $ 3,249,572 $ 2,900,625
------------ ------------
MEDIA AND ENTERTAINMENT -- 9.9%
23,000 Daily Journal Corp.* 231,501 805,000
190,000 Tele-Communications Liberty Media CL A* 2,093,600 6,970,625
200,000 Tele-Communications TCI-Ventures Grp. A* 1,630,639 3,587,500
239,000 Valassis Communications, Inc.* 5,971,315 9,560,000
------------ ------------
9,927,055 20,923,125
------------ ------------
MORTGAGE BANKING -- 6.3%
128,700 Countrywide Credit Industries, Inc. 3,277,760 5,357,137
156,000 Franchise Mortgage Acceptance Co.* 1,488,295 1,033,500
128,000 New Century Financial Corp.* 1,262,250 968,000
313,000 Resource Bancshares Mtg. Grp., Inc. 4,115,959 5,555,750
56,666 WMF Group, Limited* 518,494 403,745
------------ ------------
10,662,758 13,318,132
------------ ------------
REAL ESTATE AND CONSTRUCTION -- 1.0%
55,000 Catellus Development Corp.* 378,550 715,000
60,000 Forest City Enterprises, Inc. CL A 671,825 1,260,000
10,000 Syntroleum Corp.* 31,917 105,000
------------ ------------
1,082,292 2,080,000
------------ ------------
REAL ESTATE INVESTMENT TRUSTS -- 10.4%
390,000 Fortress Investment Corp. 7,734,164 7,020,000
245,500 Hanover Capital Mortgage Holdings, Inc. 3,755,004 1,687,812
24,000 Healthcare Financial Partners Units** 2,400,000 2,400,000
367,300 NovaStar Financial, Inc. 6,306,565 4,774,900
423,952 Redwood Trust, Inc. 9,690,050 6,147,304
------------ ------------
29,885,783 22,030,016
------------ ------------
TELECOMMUNICATIONS -- 20.2%
84,900 Alltel Corp. 2,046,370 4,022,138
30,000 Airtouch Communications, Inc.* 797,086 1,710,000
216,400 Cellular Communications of Puerto Rico 2,159,495 2,515,650
286,000 Centennial Cellular Corp. CL A* 4,321,941 9,152,000
218,900 Corecomm Limited 2,185,120 2,380,538
355,000 Telephone and Data Systems, Inc. 14,384,619 12,380,625
133,000 United States Cellular Corp. 3,919,678 3,965,062
347,000 Vanguard Cellular Systems, Inc. CL A* 6,158,133 6,593,000
------------ ------------
35,972,442 42,719,013
------------ ------------
OTHER -- 0.0%
8,300 ONI International, Inc.* 62,630 83
------------ ------------
Total Common Stocks 133,221,613 170,088,535
------------ ------------
</TABLE>
7
<PAGE>
WEITZ PARTNERS, INC. -- PARTNERS VALUE FUND
SCHEDULE OF INVESTMENTS IN SECURITIES, CONTINUED
<TABLE>
<CAPTION>
SHARES
OR UNITS COST VALUE
---------- ------------ ------------
<C> <S> <C> <C>
WARRANTS -- 0.8%
399,500 Hanover Capital Mtg. Holdings, Inc., Expiring 9/15/00 $ 1,168,484 $ 74,906
370,000 NovaStar Financial, Inc., Expiring 2/03/01 2,201,800 1,665,000
------------ ------------
3,370,284 1,739,906
------------ ------------
<CAPTION>
FACE
AMOUNT
----------
<C> <S> <C> <C>
U.S. GOVERNMENT AND AGENCY SECURITIES-- 5.2%
$3,000,000 U.S. Treasury Note 5.50% 3/31/00 2,996,141 3,044,064
2,000,000 Federal Natl. Mtg. Assn. 6.625% 7/12/00 2,000,000 2,065,786
2,500,000 Federal Home Loan Bank 6.44% 11/28/05 2,502,817 2,720,202
3,000,000 Federal Natl. Mtg. Assn. 6.56% 11/26/07 3,000,000 3,185,475
------------ ------------
Total U.S. Government and Agency Securities 10,498,958 11,015,527
------------ ------------
SHORT-TERM SECURITIES-- 13.5%
13,653,752 Norwest U.S. Government Money Market Fund 13,653,752 13,653,752
5,000,000 Federal Home Loan Mtg. Corp. Discount Note 11/10/98 4,970,000 4,971,555
5,000,000 Federal Farm Credit Bank 5.54% 1/04/99 5,000,000 5,007,195
5,000,000 Federal Farm Credit Bank Discount Note 1/07/99 4,927,452 4,931,670
------------ ------------
28,551,204 28,564,172
------------ ------------
Total Investments in Securities $175,642,059 $211,408,140
------------ ------------
------------
Other Liabilities in Excess of Other Assets -- 0.0% (67,414)
------------
Total Net Assets -- 100% $211,340,726
------------
------------
Net Asset Value Per Share $ 15.423
------------
------------
</TABLE>
*Non-income producing
**Each unit consists of five shares of common stock and one stock purchase
warrant.
8
