<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
SUB-TRANSFER AGENT
National Financial Data Services, Inc.
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.
508592
PARTNERS VALUE FUND
SEMI-ANNUAL
REPORT
JUNE 30, 1999
ONE PACIFIC PLACE, SUITE 600
1125 SOUTH 103 STREET
OMAHA, NEBRASKA 68124-6008
402-391-1980
800-232-4161 (INFORMATION)
800-773-6472 (AUTOMATED)
402-391-2125 (FACSMILE)
WWW.WEITZFUNDS.COM
<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 June 30, 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
6/30/99 18.3 12.4++
Cumulative 1,455.6 1,277.2
Average Annual Compound Growth
(Since inception June 1, 1983) 18.6 17.7
</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 June 30, 1999, was 23.4%, 28.1%, and 19.2%, respectively. These returns
assume redemption at the end of each period and reinvestment of dividend.
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 6/30/99
3
<PAGE>
WEITZ PARTNERS, INC. -- PARTNERS VALUE FUND
JUNE 30, 1999 - SEMI-ANNUAL REPORT
July 9, 1999
Dear Fellow Shareholder:
The 2nd quarter of 1999 was a good one for the Partners Value Fund. Our
total return, after deducting expenses, was +9.4% vs. +7.0% for the S&P 500.
This brings our gain for the first six months to +18.3% vs. +12.4% for the S&P.
The table below shows the fund's returns over various intervals, and
compares it to the performances of the S&P 500 (very large companies), the
Russell 2000 (an index of smaller company stocks), and our peer group of mutual
funds (according to Lipper Analytical Services). All of the performance data
assume reinvestment of dividends and are calculated after deducting expenses.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
PARTNERS VALUE FUND 23.4% 32.5% 28.1% 19.2%
S&P 500 Index 22.8 29.1 27.9 18.7
Russell 2000 Index 1.5 11.2 15.4 12.4
Average Growth and Income Fund 14.5 21.8 21.9 15.4
</TABLE>
PORTFOLIO REVIEW
During the quarter, net cash flows into the fund remained heavy and the
new cash was added primarily to existing positions in banks and other financial
services stocks. As a result, the names in the portfolio will look very
familiar, with HEAVY emphasis on financials, media, and telecommunications. The
percentage of assets in each area has shifted, however, with financial stocks
now accounting for over 30% of the portfolio. Cash (and other reserves) rose
slightly to 37%.
In the financials category, we added heavily to our holdings of Sallie
Mae, Countrywide Credit, Berkshire Hathaway, and Washington Mutual. (We also
bought Long Beach Financial as a way of buying Washington Mutual at a 7%
discount, on the assumption that their proposed merger will be completed.) These
companies have solid long-term growth prospects, and each was available at a
discount to its business value because of what we think are temporary or
misplaced investor fears.
We also made Citizens Utilities a "top 10" position during the quarter.
Citizens is in the process of dramatically increasing the size of its telephone
business, while selling its valuable but slower-growing electric, gas, and water
utility operations. We began buying Citizens at $8, believing that its business
value was at least $16 (and growing), and we hope that we have the
4
<PAGE>
opportunity to add to this position at reasonable prices over time. Although
Citizens is currently labeled a "utility" company, it will probably belong in
the "telecommunications" category in the future.
These second quarter additions are solid, growing, but rather defensive
investments. They, along with our (still) large cash position, betray the fact
that my expectations for near-term performance are very modest. What counts,
though, is total return over the next several years, and I feel very good about
the long-term prospects for our companies.
SHAREHOLDER MEETING
On May 26, about 450 investors attended our annual shareholder information
meeting and asked some very good questions. We did not make a transcript of the
Q&A session, but I thought this letter might be a good place to answer some of
the questions that came up at the meeting (plus some that are frequently asked
by callers).
IS THE CHANGE IN TRANSFER AGENT SYSTEMS GOOD NEWS FOR SHAREHOLDERS?
There are pluses and minuses, but I think the answer is clearly "yes, it's
good news." Our previous system was relatively unsophisticated, which allowed us
to over-ride it to provide clients with certain services that were unique in the
industry (though very inefficient to perform). We enjoyed being different and
surprising clients with these "extras." However, we wanted to be able to offer
new features, such as automated telephone access to account information and
statements that could show multiple accounts. We also needed a more powerful
computer system and stronger technical support, both for disaster recovery and
Y2K compliance and for developing new services and products. Finally, we needed
a system that could reliably accommodate our expanded client roster. Hence the
change.
The new system is more sophisticated, and we expect that it will allow us
to provide better service, with better quality control, at a very reasonable
cost. In the meantime, the process of converting files from the old system to
the new is taking an enormous amount of staff energy. There have also been
occasional glitches that have annoyed some shareholders, and that is harder on
the staff than the long hours, because we do not like to disappoint clients.
We are confident that our selection of the DST system was a good decision
and that both clients and staff will be happy about the change ... hopefully
soon. In the meantime, thanks for your patience.
VALUE VS. GROWTH -- WHAT'S THE DIFFERENCE?
The words "value" and "growth" mean different things to different people.
For some, including many journalists, value stocks are cyclical, capital
intensive, heavy industry or
5
<PAGE>
extractive businesses that sell at low price-to-earnings (P/E) or low
price-to-book value (P/BV) ratios, while growth stocks are those whose earnings
are growing so fast that an investor can safely pay almost any price for them.
To these observers, value and growth are opposite poles, and investment managers
can be categorized according to which variety of stocks they buy.
When pressed to distinguish between value and growth investing, we
describe value investing as buying predictable businesses at a DISCOUNT to what
they are worth today, based on their current operations and very likely future
prospects -- "bird in the hand" investing. By contrast, growth stock investing
might be described as paying a PREMIUM today for business value that MIGHT
develop in the future -- "two birds in the bush" investing. In both cases,
future growth in earnings is an important consideration, and the distinction is
more about price sensitivity and the need for predictability than rigid
classifications of types of stocks.
The debate over definitions is much more important to consultants and the
financial press, who feel the need to make generalizations, than it is to
investors who ought to focus on what they want to pay to be a minority owner in
a particular business.
WILL THE PARTNERS VALUE FUND BE SAFER THAN OTHER STOCK FUNDS IN A BEAR MARKET?
In a bear market, most stocks go down together. When margin borrowers are
being forced to sell, mutual fund managers are selling to accommodate
redemptions, and many investors are scared value considerations are secondary.
The fact that we think our stocks are cheap will make no difference. If our cash
position remains large, it will cushion the fund in a decline. However, the
concentration of our portfolio in a few industries may make it more volatile and
more susceptible to weakness in those particular industries.
We do not try to guess when the market will go up or down (and we hope
market timers will not use our fund). By owning strong companies with good
long-term prospects, we hope to avoid PERMANENT losses, but there is nothing
about our fund that will protect it from temporary, but sharp, declines in a
bear market.
DO WE OWN INTERNET STOCKS? HOW WILL THE INTERNET AFFECT OUR COMPANIES?
The Internet will have a huge impact on our lives and our companies. The
trouble with "cashing in" on these changes is that the long-term impacts are
totally unpredictable (at least to me), and some of the changes will be very
harmful to corporate profits. In fact, the next bear market for stocks may be
caused by an "e-commerce"-induced profit squeeze.
We cannot begin to predict whether companies such as Yahoo, Amazon, Lycos,
and eBay, which are identified as "Internet Stocks," will prosper (or even
survive), so they are not candidates for our portfolio. Hardware and software
companies visibly involved in "building" the Internet are very expensive, and
will need to successfully "re-invent" themselves
6
<PAGE>
regularly -- so they are also too unpredictable for us. The closest company we
have to a direct play is Liberty Media, which holds venture capital investments
in many Internet companies and has been creative about monetizing its
investments.
A few of these stocks will probably be big winners, but as value
investors, insisting on a reasonably predictable future, we will forego our
chance to win the Internet lottery in the interest of avoiding large permanent
losses on the stocks that do not live up to speculators' expectations.
As for the companies we do own, we are both excited and concerned about
how they will use the Internet to increase revenues, cut expenses, and develop
new products and distribution channels. Nearly all industries are becoming more
competitive as new "virtual" companies enter markets. Price cutting is being
used as a primary competitive weapon, and comparison-shopping is becoming much
easier. A common result is shrinking profit margins. Some of our companies are
being very innovative, while others have work to do. Assessing the impact of the
Internet will be an ongoing challenge for us as we do our research.
AN INVITATION TO SHAREHOLDERS
As we continue our conversion to the new transfer agent system, we want to
make sure you understand the new procedures and that you know how to take
advantage of the new features. Please call or send us a note if we can help make
the new system more user-friendly.
Sincerely,
/s/ WALLACE R. WEITZ
Wallace R. Weitz
President, Portfolio
Manager
7
<PAGE>
WEITZ PARTNERS, INC. -- PARTNERS VALUE FUND
SCHEDULE OF INVESTMENTS IN SECURITIES
JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES
OR UNITS COST VALUE
---------- ------------ ------------
<C> <S> <C> <C>
COMMON STOCKS -- 62.7%
AUTO SERVICES -- 0.3%
173,000 Insurance Auto Auctions, Inc.* $ 2,024,761 $ 2,789,625
------------ ------------
BANKING -- 7.5%
28,000 Astoria Financial Corp. 1,060,368 1,230,250
382,000 Commercial Federal Corp. 8,805,751 8,857,625
80,000 East West Bancorp, Inc. 732,500 805,000
20,000 First Federal Bankshares, Inc. 200,000 193,750
154,000 First Place Financial Corp.* 1,645,625 1,896,125
766,800 Golden State Bancorp, Inc.* 14,976,529 16,869,600
192,900 Greenpoint Financial Corp. 6,064,094 6,329,531
25,000 Roslyn Bancorp, Inc. 430,000 429,687
70,000 South Jersey Financial Corp. Inc.* 759,006 980,000
100,000 Troy Financial Corp.* 994,436 1,043,750
108,000 Virginia Capital Bancshares, Inc. 1,387,313 1,647,000
497,300 Washington Mutual, Inc. 18,379,295 17,591,987
------------ ------------
55,434,917 57,874,305
------------ ------------
CABLE TELEVISION -- 4.3%
64,000 Adelphia Communications Corp. CL A* 485,512 4,072,000
453,000 Century Communications Corp. CL A* 2,639,636 20,838,000
60,000 Comcast Corp. Special CL A 268,805 2,306,250
80,000 MediaOne Group, Inc.* 1,340,420 5,950,000
------------ ------------
4,734,373 33,166,250
------------ ------------
CONSUMER PRODUCTS AND SERVICES -- 1.4%
200,000 American Classic Voyages Co.* 3,220,347 4,800,000
105,000 Lab Holdings, Inc. 2,768,122 1,456,875
6,650 Lady Baltimore Foods, Inc. 212,725 410,637
747,500 Protection One, Inc. 3,938,290 4,017,812
------------ ------------
10,139,484 10,685,324
------------ ------------
FEDERAL AGENCIES -- 4.0%
40,000 Fannie Mae 759,888 2,735,000
50,000 Freddie Mac 138,785 2,900,000
556,000 SLM Holding Corp. 19,832,093 25,471,750
------------ ------------
20,730,766 31,106,750
------------ ------------
</TABLE>
See accompanying notes to financial statements.
8
<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 -- 10.5%
1,001,000 Allied Capital Corp. $ 18,218,541 $ 24,024,000
25,000 American Express Co. 660,934 3,253,125
75 Berkshire Hathaway, Inc. CL A* 1,163,348 5,167,500
4,412 Berkshire Hathaway, Inc. CL B* 10,105,946 9,882,880
115,000 Healthcare Financial Partners, Inc. 2,630,949 3,938,750
751,000 Imperial Credit Industries, Inc.* 10,380,152 5,327,406
303,000 The PMI Group, Inc. 13,165,488 19,032,187
20,000 PS Group Holdings, Inc. 104,200 218,750
442,100 United Asset Management Corp. 10,400,655 10,057,775
60,000 United Panam Financial Corp.* 607,346 195,000
------------ ------------
67,437,559 81,097,373
------------ ------------
INFORMATION AND DATA PROCESSING -- 1.0%
270,100 Data Transmission Network Corp.* 6,017,754 7,596,562
175,000 Intelligent Systems Corp.* 164,183 525,000
------------ ------------
6,181,937 8,121,562
------------ ------------
LODGING AND GAMING -- 3.1%
145,000 Harrah's Entertainment, Inc.* 2,120,444 3,190,000
430,000 Hilton Hotels Corp. 5,191,782 6,100,625
203,000 Mandalay Resort Group* 2,601,553 4,288,375
1,085,000 Park Place Entertainment Corp.* 6,731,752 10,510,937
------------ ------------
16,645,531 24,089,937
------------ ------------
MEDIA AND ENTERTAINMENT -- 6.3%
895,200 AT&T Corp. - Liberty Media Group A* 11,715,460 32,898,600
57,165 Chris-Craft Industries, Inc.* 2,353,719 2,693,901
23,000 Daily Journal Corp.* 231,501 853,875
333,000 Valassis Communications, Inc.* 5,743,634 12,196,125
------------ ------------
20,044,314 48,642,501
------------ ------------
MORTGAGE BANKING -- 6.2%
678,700 Countrywide Credit Industries, Inc. 25,282,583 29,014,425
173,000 Franchise Mortgage Acceptance Co.* 1,602,670 1,513,750
781,000 Long Beach Financial Corp. 10,960,618 11,470,938
128,000 New Century Financial Corp.* 1,262,250 2,320,000
322,000 Resource Bancshares Mtg. Grp., Inc. 4,096,395 3,300,500
85,882 WMF Group, Limited* 601,423 536,763
------------ ------------
43,805,939 48,156,376
------------ ------------
</TABLE>
See accompanying notes to financial statements.
9
<PAGE>
WEITZ PARTNERS, INC. -- PARTNERS VALUE FUND
SCHEDULE OF INVESTMENTS IN SECURITIES, CONTINUED
<TABLE>
<CAPTION>
SHARES
OR UNITS COST VALUE
---------- ------------ ------------
<C> <S> <C> <C>
PRINTING SERVICES -- 0.2%
112,300 Mail-Well Inc. $ 1,504,402 $ 1,817,856
------------ ------------
REAL ESTATE AND CONSTRUCTION -- 1.1%
366,200 Catellus Development Corp.* 4,629,481 5,676,100
114,600 Forest City Enterprises, Inc. CL A 2,050,180 3,208,800
10,000 Syntroleum Corp.* 31,917 89,375
------------ ------------
6,711,578 8,974,275
------------ ------------
REAL ESTATE INVESTMENT TRUSTS -- 3.6%
400,000 Capital Automotive REIT 4,654,203 5,300,000
400,000 Dynex Capital, Inc. 1,803,500 800,000
407,830 Fortress Investment Corp. 8,037,274 6,933,110
245,500 Hanover Capital Mortgage Holdings, Inc. 3,709,440 1,319,563
24,000 Healthcare Financial Partners Units** 2,400,000 2,400,000
190,000 Imperial Credit Commercial Mtg. Inv. Corp. 1,700,500 2,054,375
367,300 NovaStar Financial, Inc. 6,013,405 2,341,538
423,952 Redwood Trust, Inc. 9,571,344 7,021,705
------------ ------------
37,889,666 28,170,291
------------ ------------
RESTAURANTS -- 0.3%
115,000 CBRL Group, Inc. 2,083,750 1,990,938
------------ ------------
TELECOMMUNICATIONS -- 8.7%
84,900 Alltel Corp. 2,046,370 6,070,350
241,400 Cellular Communications of Puerto Rico* 2,359,495 6,879,900
126,564 Centennial Cellular Corp. CL A* 1,750,211 4,508,843
157,900 Corecomm, Limited* 1,350,198 7,618,675
427,000 Telephone and Data Systems, Inc. 18,709,949 31,197,688
205,400 United States Cellular Corp.* 7,109,621 10,988,900
------------ ------------
33,325,844 67,264,356
------------ ------------
UTILITIES -- 4.2%
1,797,000 Citizens Utilities Co. CL B 17,538,977 19,991,625
466,000 Western Resources Inc. 12,198,995 12,407,250
------------ ------------
29,737,972 32,398,875
------------ ------------
Total Common Stocks 358,432,793 486,346,594
------------ ------------
</TABLE>
See accompanying notes to financial statements.
10
<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 -- 0.0%
399,500 Hanover Capital Mtg. Holdings, Inc., Expiring 9/15/00 $ 31,211 $ 49,938
370,000 NovaStar Financial, Inc., Expiring 2/03/01 185,000 185,000
------------ ------------
216,211 234,938
------------ ------------
CONVERTIBLE PREFERRED STOCKS -- 0.5%
500,000 NovaStar Financial, Inc. 7% Pfd. Class B Cumulative 3,500,000 3,500,000
------------ ------------
<CAPTION>
FACE
AMOUNT
----------
<C> <S> <C> <C>
U.S. GOVERNMENT AND AGENCY SECURITIES -- 2.6%
$3,000,000 U.S. Treasury Note 5.50% 3/31/00 2,998,049 3,007,500
2,000,000 Fannie Mae 6.625% 7/12/00 2,000,000 2,019,774
10,000,000 Freddie Mac 5.0% 2/15/01 9,867,374 9,882,850
2,500,000 Federal Home Loan Bank 6.44% 11/28/05 2,502,544 2,524,320
3,000,000 Fannie Mae 6.56% 11/26/07 3,000,000 2,950,932
------------ ------------
Total U.S. Government and Agency Securities 20,367,967 20,385,376
------------ ------------
SHORT-TERM SECURITIES -- 34.4%
47,909,783 Norwest U.S. Government Money Market Fund 47,909,783 47,909,783
25,000,000 Freddie Mac Discount Note 8/6/99 24,882,500 24,880,250
50,000,000 U.S. Treasury Note 5.875% 8/31/99 50,097,880 50,093,750
32,000,000 Freddie Mac Discount Note 9/9/99 31,703,823 31,698,848
25,000,000 U.S. Treasury Bill 11/04/99 24,606,688 24,592,250
23,000,000 U.S. Treasury Bill 11/12/99 22,626,736 22,596,764
25,000,000 Freddie Mac Discount Note 11/22/99 24,517,000 24,513,000
10,000,000 Freddie Mac Discount Note 12/9/99 9,778,178 9,781,310
30,807,000 Fannie Mae Discount Note 12/10/99 30,093,048 30,126,165
------------ ------------
266,215,636 266,192,120
------------ ------------
Total Investments in Securities $648,732,607 776,659,028
------------ ------------
------------
Covered Call Options Written at Market Value -- (0.0%) (245,000)
Securities Sold Short -- (0.3%) (2,232,500)
Other Assets Less Liabilities -- 0.1% 950,339
------------
Total Net Assets -- 100% $775,131,867
------------
------------
Net Asset Value Per Share $ 19.41
------------
------------
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
WEITZ PARTNERS, INC. -- PARTNERS VALUE FUND
SCHEDULE OF INVESTMENTS IN SECURITIES, CONTINUED
<TABLE>
<CAPTION>
SHARES
OR UNITS PROCEEDS VALUE
---------- ---------------- ------------
<C> <S> <C> <C>
SECURITIES SOLD SHORT
40,000 AT&T Corp. $ (2,422,275) $ (2,232,500)
---------------- ------------
---------------- ------------
</TABLE>
<TABLE>
<CAPTION>
NO. OF EXPIRATION DATE/
CONTRACTS STRIKE PRICE
---------- ----------------
<C> <S> <C> <C>
COVERED CALL OPTIONS WRITTEN AT MARKET VALUE
280 Comcast Corp. Special Class A (premiums received $100,202) July 1999/30 $ (245,000)
------------
------------
</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.
See accompanying notes to financial statements.
12
<PAGE>
WEITZ PARTNERS, INC. -- PARTNERS VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999
(UNAUDITED)
<TABLE>
<S> <C>
Assets:
Investment in securities at value (cost $648,732,607) $776,659,028
Deposits with brokers for covered call options written
and securities sold short 5,226,871
Cash 405,541
Accrued interest and dividends receivable 2,128,973
Other 10,495
------------
Total assets 784,430,908
------------
Liabilities:
Securities sold short, at value (proceeds received $2,422,275) 2,232,500
Due to adviser 758,170
Payable for securities purchased 6,054,571
Covered call options written, at value (proceeds received $100,202) 245,000
Other expenses 8,800
------------
Total liabilities 9,299,041
------------
Net assets applicable to outstanding capital stock $775,131,867
------------
------------
Net assets represented by:
Additional paid-in capital (note 4) 622,571,779
Accumulated undistributed net investment income 3,723,181
Accumulated undistributed net realized gains 20,865,507
Net unrealized appreciation of investments 127,971,400
------------
Total representing net assets applicable to shares outstanding $775,131,867
------------
------------
Net asset value per share of outstanding
capital stock (39,936,898 shares outstanding) $ 19.41
------------
------------
</TABLE>
See accompanying notes to financial statements.
13
<PAGE>
WEITZ PARTNERS, INC. -- PARTNERS VALUE FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1999
(UNAUDITED)
<TABLE>
<S> <C> <C>
Investment income:
Dividends $ 2,545,716
Interest 4,351,977
-----------
Total investment income 6,897,693
-----------
Expenses:
Investment advisory fee 2,510,874
Administrative fee 376,631
Directors fees 4,000
Dividends on securities sold short 8,800
Other expenses 153,967
-----------
Total expenses 3,054,272
-----------
Net investment income 3,843,421
-----------
Realized and unrealized gain on investments:
Net realized gain on securities $22,496,728
Net realized gain on options written 104,302
Net realized loss on securities sold short (1,597,787)
-----------
Net realized gain 21,003,243
Net unrealized appreciation of investments 57,310,108
-----------
Net realized and unrealized gain on investments 78,313,351
-----------
Net increase in net assets resulting from operations $82,156,772
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
14
<PAGE>
WEITZ PARTNERS, INC. -- PARTNERS VALUE FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1999 YEAR ENDED
(UNAUDITED) DEC. 31, 1998
----------------- --------------
<S> <C> <C>
Increase in net assets:
From operations:
Net investment income $ 3,843,421 $ 651,484
Net realized gain 21,003,243 22,139,768
Net unrealized appreciation 57,310,108 25,105,776
----------------- --------------
Net increase in net assets resulting from operations 82,156,772 47,897,028
----------------- --------------
Distributions to shareholders from:
Net investment income (815,990) (1,206,568)
Net realized gains (22,157,574) (15,264,855)
----------------- --------------
Total distributions (22,973,564) (16,471,423)
----------------- --------------
Capital share transactions:
Proceeds from sales 462,057,658 145,291,184
Payments for redemptions (57,290,104) (31,930,637)
Reinvestment of distributions 18,849,624 13,808,275
----------------- --------------
Total increase from capital share transactions 423,617,178 127,168,822
----------------- --------------
Total increase in net assets 482,800,386 158,594,427
----------------- --------------
Net assets:
Beginning of period 292,331,481 133,737,054
----------------- --------------
End of period $ 775,131,867 $ 292,331,481
----------------- --------------
----------------- --------------
</TABLE>
See accompanying notes to financial statements.
15
<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>
SIX MONTHS ENDED
JUNE 30, 1999 YEAR ENDED DECEMBER 31,
(UNAUDITED) 1998 1997 1996 1995 1994*
----------------- ---------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD: $ 17.68 $ 15.45 $ 11.52 $ 10.38 $ 8.28 $ 10.00
-------- ---------- ---------- --------- --------- ---------
INCOME (LOSS) FROM INVESTMENT
OPERATIONS:
Net investment income 0.10 0.06 0.13 0.06 0.08 0.06
Net gains or losses on securities
(realized and unrealized) 2.92 4.00 4.33 1.93 3.11 (0.96)
-------- ---------- ---------- --------- --------- ---------
Total from investment operations 3.02 4.06 4.46 1.99 3.19 (0.90)
-------- ---------- ---------- --------- --------- ---------
-------- ---------- ---------- --------- --------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income (0.05) (0.16) -- (0.06) (0.24) --
Distributions from realized gains (1.24) (1.67) (0.53) (0.79) (0.85) (0.82)
-------- ---------- ---------- --------- --------- ---------
Total distributions (1.29) (1.83) (0.53) (0.85) (1.09) (0.82)
-------- ---------- ---------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 19.41 $ 17.68 $ 15.45 $ 11.52 $ 10.38 $ 8.28
-------- ---------- ---------- --------- --------- ---------
-------- ---------- ---------- --------- --------- ---------
TOTAL RETURN 18.3% 29.1% 40.6% 19.2% 38.7% -9.0%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period ($000) 775,132 292,331 133,737 94,846 73,781 51,287
Ratio of expenses to average net assets 1.21%** 1.25% 1.24% 1.23% 1.27% 1.29%
Ratio of net investment income to
average net assets 1.53%** 0.34% 1.11% 0.51% 0.82% 0.67%
Portfolio turnover rate 10% 36% 30% 37% 51% 33%
</TABLE>
*Fund commenced public offering of shares on January 1, 1994
**Annualized
See accompanying notes to financial statements.
16
<PAGE>
WEITZ PARTNERS, INC. -- PARTNERS VALUE FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
(UNAUDITED)
(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's investment objective is capital appreciation. The Fund invests
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 value determined using the following valuation
methods:
- Securities traded on a national or regional securities exchange
and over-the-counter securities traded on the NASDAQ national
market are valued at the last sales price; if there were no sales
on that day, securities are valued at the mean between the latest
available and representative bid and asked prices.
- Securities not listed on an exchange are valued at the mean
between the latest available and representative bid and ask
prices.
- The value of certain debt securities for which market quotations
are not readily available may be based upon current market prices
of securities which are comparable in coupon, rating and maturity
or an appropriate matrix utilizing similar factors.
- The value of securities for which market quotations are not
readily available, including restricted and not readily marketable
securities, is determined in good faith under the supervision of
the Fund's Board of Directors.
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 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
17
<PAGE>
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.
The risk in writing a call option is that the Fund gives up the
opportunity of profit if the market price of the security increases. The
Fund 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 AND DISTRIBUTIONS TO SHAREHOLDERS
Security transactions are accounted for on the date the securities are
purchased or sold (trade date). Income dividends and dividends on short
positions are recorded on the ex-dividend date. Interest, including
amortization of discount and premium, is accrued as earned. Distributions
to shareholders are recorded on the ex-dividend date.
Realized gains or losses are determined by specifically identifying the
issue sold.
(d) 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.
(e) SECURITIES SOLD SHORT
The Fund periodically engages in selling securities short, which
obligates the Fund to replace a security borrowed by purchasing the same
security at the current market value. The Fund would incur a loss if the
price of the security increases between the date of the short sale and
the date on which the Fund replaces the borrowed security. The Fund would
realize a gain if the price of the security declines between those dates.
The Fund is required to establish a margin account with the broker
lending the security sold short. While the short sale is outstanding, the
broker retains the proceeds of the
18
<PAGE>
short sale. The Fund will place in a segregated account a sufficient
amount of cash and securities as required by applicable federal
securities regulations in order to cover the transaction.
(3) RELATED PARTY TRANSACTIONS
The Fund has retained Wallace R. Weitz & Company (the "Adviser") as its
exclusive investment adviser. In addition, the Company has an agreement with
Weitz Securities, Inc. (the "Distributor") 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 the Distributor.
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 six months ended June 30, 1999.
Under the terms of an administration agreement, the Adviser provides certain
services including the transfer of shares, disbursement of dividends, fund
accounting and related administrative services of the Fund. The Adviser
receives an administration fee equal to 0.15% per annum of the Fund's
average daily net asset value.
The Distributor received no compensation for distribution of the Fund's
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 by the Fund. 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 YEAR ENDED
JUNE 30, 1999 DEC. 31,
(UNAUDITED) 1998
----------------- ------------
<S> <C> <C>
Transactions in shares:
Shares issued.................................................... 25,413,794 8,950,496
Shares redeemed.................................................. (3,137,818) (2,006,948)
Reinvested dividends............................................. 1,122,147 940,686
----------------- ------------
Net increase................................................... 23,398,123 7,884,234
----------------- ------------
----------------- ------------
</TABLE>
19
<PAGE>
(5) SECURITIES TRANSACTIONS
Purchases and proceeds from maturities or sales of investment securities of
the Fund, other than short-term securities, aggregated $622,274,782 and
$34,954,865, respectively. The cost of investments for Federal income tax
purposes is $648,768,942. At June 30, 1999, the aggregate gross unrealized
appreciation and depreciation, based on cost for Federal income tax
purposes, were $147,928,493 and $20,038,405, respectively.
Transactions relating to covered call options during the six months ended
June 30, 1999, are summarized as follows:
<TABLE>
<CAPTION>
NUMBER OF
OPTIONS PREMIUM
----------- -----------
<S> <C> <C>
Options written, beginning of period........................................ 880,000 $ 542,361
Options written, during the period.......................................... 440,000 215,843
Options exercised, during the period........................................ (440,000) (306,983)
Options expired, during the period.......................................... (200,000) (99,823)
Options closed, during the period........................................... (400,000) (251,196)
----------- -----------
Options outstanding, end of period.......................................... 280,000 $ 100,202
----------- -----------
----------- -----------
</TABLE>
20
