<PAGE>
- --------------------------------------------------------------------------------
WEITZ PARTNERS, INC.
PARTNERS VALUE FUND
QUARTERLY
REPORT
MARCH 31, 1999
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, policies,
guidelines and restrictions are materially equivalent 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 March 31, 1999, 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
12/31/98 29.1 28.6
3/31/99 8.2 5.0++
Cumulative 1,321.9 1,186.5
Average Annual Compound Growth
(Since inception June 1, 1983) 18.2 17.5
</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 March 31, 1999, was 19.7%, 26.1%, and 18.9%, 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 1/1/99 through 3/31/99
2
<PAGE>
WEITZ PARTNERS, INC. -- PARTNERS VALUE FUND
MARCH 31, 1999 - QUARTERLY REPORT
April 6, 1999
Dear Fellow Shareholders:
The first quarter of 1999 was a good one for the Partners Value Fund. Our
total return (after expenses) was +8.2%. This compares to 5.0% for the S&P 500
(large companies) and -5.4% for the Russell 2000 (small companies). The table
below shows the fund's returns over various intervals, and compares it to the
performances of the S&P 500, the Russell 2000, and our peer group of mutual
funds (according to Lipper Analytical Services). All of the performance data
assumes reinvestment of dividends (except Russell for which dividend data is not
available) and are calculated after deducting expenses.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
PARTNERS VALUE 19.7 30.1 26.1 18.9
S&P 500 18.5 28.1 26.2 18.9
Russell 2000 -16.2 7.7 11.2 11.5
Average Growth and Income Fund 5.5 19.7 19.8 15.2
</TABLE>
I am pleased that we have kept pace with the S&P 500, because it has been
a very hard benchmark to beat. The popularity of index funds (which directly
mimic the S&P 500), "closet indexing" by active managers who fear trailing the
S&P 500, and a widespread bandwagon effect have led to a massive transfer of
capital from thousands of small and medium sized companies to the handful of
enormous companies (Microsoft, GE, Cisco, AOL, Intel, etc.) that drive the
performance of the S&P 500. The extent of this two-tier market can be seen in
the extreme divergence in performance between the S&P 500 and the Russell 2000,
as shown in the table.
Shareholders may be interested (or disappointed -- or relieved) to know
that our fund's returns were earned without owning ANY of the major technology
or Internet-related stocks that were responsible for the S&P's performance. In
fact, our portfolio bears very little resemblance to the S&P 500. Our
performance was also dampened a bit by our 35-40% cash position during the
quarter, but I feel very comfortable holding some reserves. The key to our good
returns has been our concentration of the portfolio in three areas: cable
television, cellular telephone, and financial services.
This concentration in a few industry groups is not good, or bad, PER SE,
but it virtually guarantees that our performance will be out of step with the
market indexes and other funds. In recent years, we have been out of step in a
positive way, which nobody seems to mind, but it is inevitable that we will be
out of step in a negative way from time to time (as in 1994). In fact, in order
to acquire very large positions in a stock or group of stocks, it helps if the
stock(s) go down for a while after we begin to buy them. (Seriously.) We began
to buy cable stocks in 1991, but bought most of our shares when the stocks were
clobbered in 1994 and 1996. The point is that our shareholders should not get
too excited about our recent over-performance, and they should not be overly
concerned when returns are (temporarily) under-whelming.
3
<PAGE>
PORTFOLIO REVIEW
We have been losing cable and cellular stocks to takeovers (a mixed
blessing), but these are still important industries for our fund. Cable
providers (excluding Liberty Media, which is a programming company) account for
about 7% of the portfolio while telecommunications accounts for about 10%.
Financial-services companies, broadly defined, make up another 26%. This
group includes huge companies with unlimited access to capital and small
companies which must be nimble and entrepreneurial. It includes companies that
are hurt by rising interest rates and some which are HELPED by rising rates. It
includes banks, mortgage companies, insurance, etc. This is absolutely NOT a
monolithic group whose business prospects move in tandem, but that is the way
Wall Street tends to treat them. When the liquidity crisis hit last fall, the
stocks all collapsed together, creating a great buying opportunity but
distorting short-term performance. The same thing happened in 1994, and will
surely happen again.
Given the split personality of the market, it should come as no surprise
that the best bargains we are finding are among small and medium-sized
companies. We are patiently accumulating shares of small banks, various types of
service companies, and even (I can't believe I'm saying this) a couple of
utility stocks. I have never been a fan of regulated utilities, but in the case
of Western Resources and Citizens Utilities, we have a combination of
unremarkable, but sound, regulated businesses and some valuable non-regulated
businesses. In both cases, managements have articulated plans to separate the
regulated parts from the unregulated, and we believe the (separated) parts will
be worth significantly more than the (combined) whole.
I believe that there is a certain "emperor's new clothes" element to the
levitation of many of the technology/Internet stocks, and that when the crowd
recognizes the reality of their business values, we will have some interesting
stock market volatility. We will not be immune in the short-run, but I feel very
good about the prospects for the companies we own now, and I would welcome a
chance to invest our reserves during a market correction.
GROWTH OF THE PARTNERS VALUE FUND AND OF WEITZ & CO.
Our funds have attracted a number of new investors over the past year and
we welcome them. During the busiest period of growth, last summer, we struggled
with a flood of phone calls, and our operations people spent long hours
processing an unusual number of new accounts and transactions. Our people
performed miraculously, clients were very patient about busy signals and time
spent "on hold," and with added staff and some temporary solutions, we have
returned to a version of normal.
Now we are in the final stages of implementing a part of our longer-term
solution to this growth, changing our transfer agency functions from an
in-house, PC-based system to a much more sophisticated and powerful system run
by DST in Kansas City. Our recent newsletter outlined some of the ways that this
new system will enhance our ability to serve shareholders -- automated phone
lines for checking account balances and recent transactions, consolidated
statements for investors who have multiple accounts with us, etc. At some point,
I expect that Internet access to your account information will also become a
reality (though don't look for that in 1999).
4
<PAGE>
The new, automated services are meant to supplement, not replace, the
human touch that (I hope) makes us a little easier to deal with than some other
fund companies. REAL, LIVE PEOPLE ARE AVAILABLE TO HELP YOU WITH TRANSACTIONS,
QUESTIONS, AND PROBLEMS.
Rapid growth can also have an impact on investment portfolios. We closed
the Hickory Fund because it had grown from $20 million in assets to $500 million
in 8 months, and because there is a practical limit to how much can be invested
in a fund that is meant to hold a small number (ideally 30, or so) of relatively
small companies. Although the two funds I manage, Value and Partners Value, hold
combined assets of over $2 billion, I do not believe the large cash inflows have
had a negative impact. I am comfortable with a more diversified portfolio of
stocks (70-90), and many of our favorite companies are large enough to allow us
to buy much larger positions if the price were right. I continue to believe that
our trouble finding great bargains is a function of high valuation levels rather
than fund size.
SHAREHOLDER INFORMATION MEETING -- MAY 26
Please plan to join us on Wednesday, May 26 for our Shareholder
Information Meeting at 4:30 p.m. at the Omaha Marriott. There will be no formal
business to conduct, so we will be able to spend the entire time discussing
investments. Because of the number of new shareholders, we do not know how many
people to expect, so PLEASE send back the reply card which came with your
newsletter or call our receptionist to let us know you are coming (no need to do
both, or we'll have a very large, half-empty room).
Best regards,
/s/ WALLACE R. WEITZ
Wallace R. Weitz
President, Portfolio
Manager
5
<PAGE>
WEITZ PARTNERS, INC. -- PARTNERS VALUE FUND
SCHEDULE OF INVESTMENTS IN SECURITIES
MARCH 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES
OR UNITS COST VALUE
---------- ------------ ------------
<C> <S> <C> <C>
COMMON STOCKS -- 63.9%
AUTO SERVICES -- 0.3%
108,000 Insurance Auto Auctions, Inc.* $ 1,217,988 $ 1,309,500
------------ ------------
BANKING -- 6.7%
28,000 Astoria Financial Corp. 1,060,368 1,400,000
335,000 Commercial Federal Corp. 7,700,371 7,767,812
70,000 East West Bancorp, Inc. 647,500 625,625
141,000 First Place Financial Corp.* 1,516,312 1,427,625
589,800 Golden State Bancorp, Inc.* 11,068,773 13,123,050
82,400 Greenpoint Financial Corp. 2,222,500 2,863,400
20,000 Roslyn Bancorp, Inc. 346,250 337,500
70,000 South Jersey Financial Corp. Inc.* 759,006 800,625
40,000 Troy Financial Corp.* 393,500 400,000
96,000 Virginia Capital Bancshares, Inc. 1,237,813 1,212,000
60,000 Washington Mutual, Inc. 2,124,626 2,452,500
------------ ------------
29,077,019 32,410,137
------------ ------------
CABLE TELEVISION -- 6.6%
64,000 Adelphia Communications Corp. CL A* 485,512 4,032,000
453,000 Century Communications Corp. CL A* 2,639,636 21,036,187
30,000 Comcast Corp. Special CL A 268,805 1,888,125
80,000 MediaOne Group, Inc.* 1,340,420 5,080,000
------------ ------------
4,734,373 32,036,312
------------ ------------
CONSUMER PRODUCTS AND SERVICES -- 1.0%
26,000 American Classic Voyages Co.* 251,125 422,500
105,000 Lab Holdings, Inc. 2,768,122 1,745,625
6,650 Lady Baltimore Foods, Inc. 212,725 385,700
366,000 Protection One, Inc. 2,328,196 2,287,500
------------ ------------
5,560,168 4,841,325
------------ ------------
FEDERAL AGENCIES -- 4.0%
40,000 Fannie Mae 759,888 2,770,000
50,000 Freddie Mac 138,785 2,856,250
331,200 SLM Holding Corp. 10,429,082 13,827,600
------------ ------------
11,327,755 19,453,850
------------ ------------
</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>
FINANCIAL SERVICES -- 10.3%
942,000 Allied Capital Corp. $ 17,167,750 $ 17,309,250
45,000 American Express Co. 1,347,134 5,287,500
75 Berkshire Hathaway, Inc. CL A* 1,163,348 5,355,000
751,000 Imperial Credit Industries, Inc.* 10,380,152 5,491,687
245,000 The PMI Group, Inc. 10,512,567 11,361,875
20,000 PS Group, Inc. 104,200 162,500
202,000 United Asset Management Corp. 5,135,159 4,570,250
60,000 United Panam Financial Corp.* 607,346 240,000
------------ ------------
46,417,656 49,778,062
------------ ------------
INFORMATION AND DATA PROCESSING -- 0.7%
129,900 Data Transmission Network Corp.* 2,949,521 3,101,363
175,000 Intelligent Systems Corp.* 164,183 393,750
------------ ------------
3,113,704 3,495,113
------------ ------------
LODGING AND GAMING -- 4.3%
203,000 Circus Circus Enterprises, Inc.* 2,601,553 3,565,187
145,000 Harrah's Entertainment, Inc.* 2,120,444 2,764,063
430,000 Hilton Hotels Corp. 5,191,782 6,046,875
1,085,000 Park Place Entertainment Corp.* 6,731,752 8,205,313
------------ ------------
16,645,531 20,581,438
------------ ------------
MEDIA AND ENTERTAINMENT -- 8.2%
447,600 AT&T Corp. - Liberty Media Group A* 11,715,460 23,554,950
57,165 Chris-Craft Industries, Inc.* 2,353,719 2,608,153
23,000 Daily Journal Corp.* 231,501 891,250
244,000 Valassis Communications, Inc.* 6,121,614 12,627,000
------------ ------------
20,422,294 39,681,353
------------ ------------
MORTGAGE BANKING -- 4.9%
413,200 Countrywide Credit Industries, Inc. 14,198,620 15,495,000
166,000 Franchise Mortgage Acceptance Co.* 1,554,545 1,203,500
50,000 Long Beach Financial Corp. 431,250 481,250
128,000 New Century Financial Corp.* 1,262,250 1,520,000
322,000 Resource Bancshares Mtg. Grp., Inc. 4,096,395 4,145,750
85,882 WMF Group, Limited* 601,423 515,292
------------ ------------
22,144,483 23,360,792
------------ ------------
</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>
REAL ESTATE AND CONSTRUCTION -- 1.2%
303,500 Catellus Development Corp.* $ 3,781,371 $ 4,059,313
72,000 Forest City Enterprises, Inc. CL A 946,362 1,741,500
10,000 Syntroleum Corp.* 31,917 61,250
------------ ------------
4,759,650 5,862,063
------------ ------------
REAL ESTATE INVESTMENT TRUSTS -- 5.3%
244,500 Capital Automotive REIT 2,768,765 3,040,969
400,000 Dynex Capital, Inc. 1,803,500 1,325,000
407,830 Fortress Investment Corp. 8,037,274 6,933,110
245,500 Hanover Capital Mortgage Holdings, Inc. 3,709,440 1,089,406
24,000 Healthcare Financial Partners Units** 2,400,000 2,400,000
190,000 Imperial Credit Commerical Mtg. Inv. Corp. 1,700,500 1,828,750
367,300 NovaStar Financial, Inc. 6,013,405 2,249,712
423,952 Redwood Trust, Inc. 9,571,344 6,783,232
------------ ------------
36,004,228 25,650,179
------------ ------------
TELECOMMUNICATIONS -- 10.4%
84,900 Alltel Corp. 2,046,370 5,295,638
241,400 Cellular Communications of Puerto Rico* 2,359,495 6,517,800
98,064 Centennial Cellular Corp. CL A* 454,394 4,633,524
189,400 Corecomm, Limited* 1,772,167 6,960,450
362,000 Telephone and Data Systems, Inc. 14,741,969 20,407,750
149,000 United States Cellular Corp.* 4,451,062 6,556,000
------------ ------------
25,825,457 50,371,162
------------ ------------
Total Common Stocks 227,250,306 308,831,286
------------ ------------
WARRANTS -- 0.1%
399,500 Hanover Capital Mtg. Holdings, Inc., Expiring 9/15/00 31,211 62,442
370,000 NovaStar Financial, Inc., Expiring 2/03/01 185,000 138,750
------------ ------------
216,211 201,192
------------ ------------
CONVERTIBLE PREFERRED STOCKS -- 0.7%
500,000 NovaStar Financial, Inc. 7% Pfd. Class B Cumulative 3,500,000 3,500,000
------------ ------------
</TABLE>
8
<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 -- 2.2%
$3,000,000 U.S. Treasury Note 5.50% 3/31/00 $ 2,997,422 $ 3,017,814
2,000,000 Fannie Mae 6.625% 7/12/00 2,000,000 2,034,040
2,500,000 Federal Home Loan Bank 6.44% 11/28/05 2,502,620 2,604,500
3,000,000 Fannie Mae 6.56% 11/26/07 3,000,000 3,038,136
------------ ------------
Total U.S. Government and Agency Securities 10,500,042 10,694,490
------------ ------------
SHORT-TERM SECURITIES -- 34.9%
4,289,235 Norwest U.S. Government Money Market Fund 4,289,235 4,289,235
10,000,000 Fannie Mae Discount Note 4/01/99 10,000,000 10,000,000
15,000,000 Federal Home Loan Bank Discount Note 4/14/99 14,974,488 14,974,050
25,000,000 U.S. Treasury Bill 4/15/99 24,958,019 24,953,150
15,000,000 Freddie Mac Discount Note 4/15/99 14,972,467 14,972,055
4,400,000 Federal Farm Credit Bank Discount Note 4/16/99 4,391,328 4,391,200
20,000,000 U.S. Treasury Bill 5/27/99 19,859,378 19,861,240
44,000,000 U.S. Treasury Bill 6/10/99 43,628,072 43,626,968
32,000,000 Freddie Mac Discount Note 9/09/99 31,318,791 31,317,376
------------ ------------
168,391,778 168,385,274
------------ ------------
Total Investments in Securities $409,858,337 491,612,242
------------ ------------
------------
Covered Call Options Written at Market Value -- (0.2%) (854,375)
Other Liabilities in Excess of Other Assets -- (1.6%) (7,822,292)
------------
Total Net Assets -- 100% $482,935,575
------------
------------
Net Asset Value Per Share $ 17.810
------------
------------
</TABLE>
9
<PAGE>
WEITZ PARTNERS, INC. -- PARTNERS VALUE FUND
SCHEDULE OF INVESTMENTS IN SECURITIES, CONTINUED
<TABLE>
<CAPTION>
EXPIRATION
NO. OF DATE/STRIKE
CONTRACTS PRICE VALUE
---------- ---------------- ------------
<C> <S> <C> <C>
COVERED CALL OPTIONS WRITTEN AT MARKET VALUE
200 American Express Co. Apr. 1999/100 $ (356,250)
200 Century Communications Corp. CL A May 1999/35 (235,000)
140 Comcast Corp. Special Class A July 1999/60 (113,750)
200 Countrywide Credit Industries, Inc. Apr. 1999/50 (5,000)
200 Valassis Communications, Inc. Apr. 1999/45 (138,750)
20 Valassis Communications, Inc. Apr. 1999/50 (5,625)
------------
Total call options written (premiums received $564,308) $ (854,375)
------------
------------
</TABLE>
*Non-income producing
**Each unit, which is restricted as to sale, consists of five shares of common
stock and one stock purchase warrant. The company distributed an additional
warrant per unit to unitholders during 1998. The warrants currently have no
value or cost assigned to them.
10
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(This page has been left blank intentionally.)
11
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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.
