<PAGE>
WEITZ PARTNERS, INC.
--------------------------------------------------------------------------------
PARTNERS VALUE FUND
QUARTERLY
REPORT
JUNE 30, 2000
ONE PACIFIC PLACE, SUITE 600
1125 SOUTH 103 STREET
OMAHA, NEBRASKA 68124-6008
402-391-1980
800-232-4161
402-391-2125 FAX
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, 2000, 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
<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
12/31/99 22.1 21.0
6/30/00++ 0.0 -0.4
Cumulative 1,504.2 1,376.9
Average
Annual
Compound
Growth
(Since
inception
June 1,
1983) 17.6 17.1
</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, 2000, was 3.1%, 24.8%, and 18.9%, respectively. These returns
assume redemption at the end of each period and reinvestment of dividends.
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 1/1/00 through 6/30/00
2
<PAGE>
WEITZ PARTNERS, INC. -- PARTNERS VALUE FUND
JUNE 30, 2000 - QUARTERLY REPORT
July 9, 2000
Dear Fellow Shareholder:
The 2nd quarter of 2000 was modestly positive for our fund. Our total
return was +1.8%. This compares to DECLINES in the S&P 500 (-2.7%), the Dow
(-4.0%), the NASDAQ (-13.2%), and the Russell 2000 (-3.8%). This modest recovery
brings us back to even for the 1st half of the year, while the picture for the
other averages is mixed: S&P -0.4%; Dow -8.4%; NASDAQ -2.5%; and the Russell
+3.0%.
The table below shows longer-term performance comparisons between our fund
and the S&P 500, a proxy for large capitalization stocks, the Russell 2000,
representing small cap stocks, and our peer group of funds, as calculated by
Lipper Analytical Services.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- -------- -------- --------
<S> <C> <C> <C> <C>
PARTNERS VALUE FUND 3.1% 23.9% 24.8% 18.9%
S&P 500 Index 7.2 19.7 23.8 17.8
Russell 2000 Index 14.3 10.6 14.3 13.6
Average Growth and Income Fund 2.1 12.8 17.9 14.4
</TABLE>
During the 2nd quarter of 2000, technology stocks suffered their first
serious correction in years. Investors, day traders, venture capitalists, and
underwriters of hot new issues (IPO's) began to have doubts about the future
profitability of Internet-related and other technology companies. Optimism and
rationalization gave way to fear and loathing, and many of the market's trading
sessions had the feel of a demolition derby.
In the face of this volatile market, our fund remained mostly above the
fray. We have spent the last year selling cable and telecom stocks that had
caught a touch of "dot-com" fever and buying interest rate sensitive stocks
(banks, thrifts, real estate, and mortgage companies) that were being dumped in
response to the Federal Reserve's raising of interest rates. Our relatively
defensive portfolio was somewhat insulated from the market correction, and was
probably helped slightly by investors seeking safe hiding places.
3
<PAGE>
MAY SHAREHOLDER MEETING -- THE BIG QUESTIONS
On May 24, over 400 shareholders gathered for our Shareholder Information
Meeting. There were nearly 100 questions submitted before or during the meeting,
but the vast majority seemed to cluster in a few areas:
1. TECHNOLOGY STOCKS -- Do we, or will we invest in tech stocks? Is the tech
boom over?
2. VALUE STOCKS -- Where are we finding "value" in the face of a technology
dominated market and an unfriendly Federal Reserve?
3. THE FUTURE -- Of the Economy? Of the Stock Market? Of our portfolio?
I suspect that these are questions of interest to most shareholders, so I
will try to summarize the answers that Rick, Tom and I gave at the meeting.
INVESTING IN TECHNOLOGY COMPANIES
All of our companies USE technology to improve their own products and
services and to lower their costs, but we tend to avoid the MANUFACTURERS of
high technology products. In a highly competitive, rapidly changing industry,
today's leader may be tomorrow's loser, and we find it very hard to predict
which companies have truly sustainable competitive advantages. Even if we
develop some conviction about a terrific company, other investors are invariably
willing to pay higher prices than we are, based on the EXPECTATION of future
profits, so we are usually priced out of the market. As Warren Buffett says,
"You pay a very high price for a cheery consensus." We are willing to miss out
on some great stocks if our discipline can help us avoid big losses when an
investment fad faces its inevitable "emperor's new clothes" moment. (We have
been through this before with other "hot" groups of stocks -- such as the "Nifty
Fifty" growth stocks of the early 1970s, energy stocks in the late 1970s, and
branded consumer products in the late 1980s.)
We prefer companies that can USE new technology to improve the way they
run their own (more prosaic) businesses. Cellular telephone companies have
attracted far more subscribers, who use many more minutes of service, because
Nokia, Motorola, and others have competed fiercely to develop cheaper and better
cellular phones. Cable television companies were able to play Scientific Atlanta
off against General Instrument to spur development of digital technology at
affordable prices so that cable operators could offer more channels and earn
higher profits. Banks and insurance companies' cost savings through
computerization have undoubtedly exceeded aggregate profits of computer
manufacturers over the years.
4
<PAGE>
In short, we do not deny the upside potential of technology stock
investing, but we usually find that we can improve our odds of long-term success
by focusing in other areas.
VALUE INVESTING IN TODAY'S MARKET
Stocks generally sell at "bargain" prices only if investors disagree about
their desirability as investments. Sometimes they have understandable concerns
about the seriousness of real business problems. These stocks may, or may not,
deserve to be "cheap." However, in other cases, the difference is merely one of
investment "time horizon." I have actually heard sophisticated investment
professionals make comments such as, "The stock is very cheap and will go up a
lot, but don't buy it yet because there is no 'catalyst' to make it move up
right away." Or, "I would rather pay a higher price later when I know that it
has started to move." We have always been willing to be early in buying a stock
as long as the odds are good that we will earn high returns during our
(hopefully long) holding period.
This brings us to interest rates, interest-sensitive stocks, and the
Federal Reserve. One of the more deeply entrenched Wall St. maxims is "Don't
Fight the Fed." Investors have "learned" to sell financial services companies
and other "interest rate sensitive" stocks at the first sign of Fed tightening
and to avoid them until rates stop going up.
There are several problems with this approach. Some of these supposedly
"interest-sensitive" companies are NOT hurt by higher rates (some are even
helped). Many other financial companies whose earnings ARE depressed by higher
rates incur no lasting damage and the long-term returns on their stocks are
unaffected by short-term moves in rates. Waiting for a change in Fed policy is
usually futile, because the timing of their moves is unpredictable. Then, the
market reaction to a perceived policy reversal is usually so rapid, that those
who have waited are unable to buy meaningful positions before the stocks have
moved substantially higher.
The cost of being early in making an otherwise good investment is looking
foolish for a while. We are willing to go through protracted periods (like all
of 1994) with (figurative) egg on our faces in pursuit of better than average
long-term results. At any rate, for better or worse, we have (again) been
finding great "values" among financial services and real estate companies ever
since the Fed started raising rates a year ago. My last several quarterly
letters have cited chapter and verse on many of these stocks, and the letters
are available on our web site.
5
<PAGE>
THE FUTURE
We are very skeptical about predicting economic or stock market events and
trends, and we try never to make investments that depend on accurate
predictions. However, we do have some working assumptions about the next several
years:
1. The American economy has not had a recession in 10 years, and we assume we
will eventually have one. We have no idea when, or how severe it will be. A
moderate recession should not be a threat to the long-term performance of
most of our companies, but we are becoming more wary of credit risk and of
debt levels in economically sensitive businesses.
2. Stocks in the S&P 500 have risen at over 15% per year over the past 26
years. This is faster than the growth in the values of the underlying
businesses. If prices are to be brought in line with business values, stock
market returns will have to be substantially lower than 15% for many years.
Warren Buffett has suggested (FORTUNE, 11/99) that a plausible rate of S&P
500 total returns over the next 17 years might be 6% per year.
3. In a less ebullient market environment, speculation may lose some of its
appeal and portfolio indexing may be less popular. This might make
individual stock selection more important and active portfolio managers more
valuable to their clients.
This has been an odd 6-month period. Our portfolio has seemed strangely
disconnected from the general market (which has not been a bad thing). I really
don't know where we go from here, but as usual, I would encourage shareholders
not to be too concerned with near-term market movements. I believe that our
companies are worth more than their stock prices indicate and I feel good about
the prospects for reasonable long-term returns.
Sincerely,
/s/ Wallace R. Weitz
Wallace R. Weitz
President, Portfolio
Manager
6
<PAGE>
WEITZ PARTNERS, INC. -- PARTNERS VALUE FUND
SCHEDULE OF INVESTMENTS IN SECURITIES
JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES
OR UNITS COST VALUE
----------- -------------- --------------
<C> <S> <C> <C>
COMMON STOCKS -- 80.1%
AUTO SERVICES -- 0.3%
173,000 Insurance Auto Auctions, Inc.* $ 2,024,761 $ 3,654,625
-------------- --------------
BANKING -- 19.7%
537,300 Astoria Financial Corp. 13,659,355 13,835,475
874,200 Commercial Federal Corp. 18,004,781 13,604,737
82,500 Dime Bancorp, Inc. 1,174,594 1,299,375
20,000 First Federal Bankshares, Inc. 200,000 157,500
42,000 First Place Financial Corp. 467,250 451,500
2,978,400 Golden State Bancorp, Inc.* 53,079,624 53,611,200
2,572,700 Greenpoint Financial Corp. 58,592,833 48,238,125
124,000 Local Financial Corp.* 1,254,619 1,034,625
2,892,000 North Fork Bancorporation, Inc. 50,020,469 43,741,500
243,000 Port Financial Corp.* 2,676,575 3,371,625
100,000 Troy Financial Corp.* 994,436 987,500
1,432,800 U.S. Bancorp 31,271,486 27,581,400
82,000 Virginia Capital Bancshares, Inc. 1,049,688 1,250,500
1,902,280 Washington Mutual, Inc. 55,497,190 54,928,335
-------------- --------------
287,942,900 264,093,397
-------------- --------------
CABLE TELEVISION -- 4.2%
1,177,895 Adelphia Communications Corp. CL A* 44,476,457 55,213,828
109,700 Insight Communications Co.* 1,550,874 1,714,063
-------------- --------------
46,027,331 56,927,891
-------------- --------------
CONSUMER PRODUCTS AND SERVICES -- 2.0%
285,000 American Classic Voyages Co.* 4,853,519 5,878,125
6,650 Lady Baltimore Foods, Inc. CL A 212,725 329,175
832,000 Premier Parks, Inc.* 19,101,800 18,928,000
872,000 Protection One, Inc.* 4,389,808 1,907,500
-------------- --------------
28,557,852 27,042,800
-------------- --------------
</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>
FEDERAL AGENCIES -- 3.1%
1,126,300 SLM Holding Corp. $ 40,644,712 $ 42,165,856
-------------- --------------
FINANCIAL SERVICES -- 9.3%
1,001,000 Allied Capital Corp. 18,218,541 17,017,000
150,000 American Capital Strategies, Ltd. 2,550,000 3,581,250
292 Berkshire Hathaway, Inc. CL A* 11,043,944 15,709,600
30,849 Berkshire Hathaway, Inc. CL B* 58,598,844 54,294,240
751,000 Imperial Credit Industries, Inc.* 10,380,151 3,191,750
454,500 The PMI Group, Inc. 13,165,488 21,588,750
405,200 United Asset Management Corp. 7,253,458 9,471,550
60,000 United Panam Financial Corp.* 607,346 61,875
-------------- --------------
121,817,772 124,916,015
-------------- --------------
INFORMATION AND DATA PROCESSING -- 0.1%
175,000 Intelligent Systems Corp.* 164,183 743,750
-------------- --------------
HEALTH CARE -- 0.2%
185,200 LabOne, Inc. 3,007,384 1,041,750
41,000 Lincare Holdings, Inc.* 1,014,735 1,009,625
-------------- --------------
4,022,119 2,051,375
-------------- --------------
LODGING AND GAMING -- 7.1%
2,108,200 Extended Stay America, Inc.* 13,836,739 19,500,850
145,000 Harrah's Entertainment, Inc.* 2,120,444 3,035,938
4,204,800 Hilton Hotels Corp. 38,569,024 39,420,000
476,000 Mandalay Resort Group* 6,899,002 9,520,000
2,002,400 Park Place Entertainment Corp.* 16,467,700 24,404,250
-------------- --------------
77,892,909 95,881,038
-------------- --------------
</TABLE>
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>
MEDIA AND ENTERTAINMENT -- 6.2%
1,947,800 AT&T Corp. -- Liberty Media Group A* $ 18,795,858 $ 47,234,150
58,879 Chris-Craft Industries, Inc.* 2,353,719 3,889,694
56,100 Daily Journal Corp.* 1,271,126 1,640,925
787,300 Valassis Communications, Inc.* 18,340,392 30,015,813
-------------- --------------
40,761,095 82,780,582
-------------- --------------
MORTGAGE BANKING -- 5.1%
2,220,200 Countrywide Credit Industries, Inc. 68,441,206 67,299,812
10,000 New Century Financial Corp.* 86,250 87,187
322,000 Resource Bancshares Mtg. Grp., Inc. 4,096,395 1,348,375
-------------- --------------
72,623,851 68,735,374
-------------- --------------
PRINTING SERVICES -- 1.1%
1,786,000 Mail-Well, Inc.* 18,539,088 15,404,250
-------------- --------------
REAL ESTATE AND CONSTRUCTION -- 2.3%
1,513,500 Catellus Development Corp.* 19,496,929 22,702,500
246,200 Forest City Enterprises, Inc. CL A 5,137,132 8,216,925
-------------- --------------
24,634,061 30,919,425
-------------- --------------
REAL ESTATE INVESTMENT TRUSTS -- 6.5%
400,000 Capital Automotive REIT 4,654,203 5,650,000
100,000 Dynex Capital, Inc.* 1,803,500 156,250
457,830 Fortress Investment Corp. 8,337,081 6,867,450
215,500 Hanover Capital Mortgage Holdings, Inc. 3,192,299 969,750
20,935 Healthcare Financial Partners Units** 2,088,266 2,093,500
6,319,500 Host Marriott Corp. 56,988,534 59,245,313
393,300 NovaStar Financial, Inc.* 6,103,300 1,499,456
800,352 Redwood Trust, Inc. 14,816,234 11,204,928
-------------- --------------
97,983,417 87,686,647
-------------- --------------
RESTAURANTS -- 0.2%
145,000 CBRL Group, Inc. 2,110,864 2,129,687
-------------- --------------
</TABLE>
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>
RETAIL DISCOUNT -- 1.2%
1,375,700 Consolidated Stores Corp.* $ 19,655,546 $ 16,508,400
-------------- --------------
SATELLITE SERVICES -- 0.5%
556,200 Orbital Sciences Corp.* 7,575,833 6,778,688
-------------- --------------
TELECOMMUNICATIONS -- 9.2%
485,292 Centennial Communications Corp.* 4,475,297 6,672,765
3,245,300 Citizens Communications Co.* 36,578,520 55,981,425
220,775 Corecomm, Ltd.* 675,989 4,305,112
530,800 Telephone and Data Systems, Inc. 28,619,621 53,212,700
61,100 United States Cellular Corp.* 3,347,245 3,849,300
-------------- --------------
73,696,672 124,021,302
-------------- --------------
UTILITIES -- 1.8%
1,549,100 Western Resources, Inc. 34,471,427 24,011,050
-------------- --------------
Total Common Stocks 1,001,146,393 1,076,452,152
-------------- --------------
WARRANTS -- 0.0%
399,500 Hanover Capital Mtg. Holdings, Inc., Expiring 9/15/00* 31,211 1,561
370,000 NovaStar Financial, Inc., Expiring 2/03/01* 185,000 370
-------------- --------------
Total Warrants 216,211 1,931
-------------- --------------
CONVERTIBLE PREFERRED STOCKS -- 0.2%
500,000 NovaStar Financial, Inc. 7% Pfd. Class B Cumulative* 3,312,167 2,690,000
-------------- --------------
</TABLE>
10
<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 -- 1.3%
$ 2,000,000 Fannie Mae 6.625% 7/12/00 $ 2,000,000 $ 1,999,888
10,000,000 Freddie Mac 5.0% 2/15/01 9,947,461 9,892,190
2,500,000 Federal Home Loan Bank 6.44% 11/28/05 2,502,211 2,435,843
3,000,000 Fannie Mae 6.56% 11/26/07 3,000,000 2,853,690
-------------- --------------
Total U.S. Government and Agency Securities 17,449,672 17,181,611
-------------- --------------
SHORT-TERM SECURITIES -- 18.2%
53,111,612 Wells Fargo Government Money Market Fund 53,111,612 53,111,612
25,000,000 Fannie Mae Discount Note 7/13/00 24,949,500 24,954,800
25,000,000 Freddie Mac Discount Note 7/27/00 24,889,608 24,891,500
31,000,000 U.S. Treasury Bill 8/24/00 30,729,002 30,752,837
9,000,000 U.S. Treasury Bill 9/07/00 8,902,505 8,906,778
25,000,000 Fannie Mae Discount Note 9/07/00 24,695,417 24,704,825
30,000,000 Freddie Mac Discount Note 9/21/00 29,557,542 29,570,670
25,000,000 Freddie Mac Discount Note 9/28/00 24,600,118 24,592,500
23,500,000 U.S. Treasury Bill 10/19/00 23,087,118 23,096,740
-------------- --------------
Total Short-Term Securities 244,522,422 244,582,262
-------------- --------------
Total Investments in Securities $1,266,646,865 1,340,907,956
==============
Other Assets Less Liabilities -- 0.2% 2,576,789
--------------
Total Net Assets -- 100% $1,343,484,745
==============
Net Asset Value Per Share $ 18.37
==============
</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.
11
<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
Wells Fargo Bank Minnesota,
National Association
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.
8/02/2000
514358
