WEITZ INVESTMENT PHILOSOPHY
Over the 30+ year history of Weitz Funds, we have seen many changes. Advancements in technology combined with economic, political and global events have continued to shape investors’ thoughts and actions.
Our mission has remained constant— we have an unwavering commitment to our shareholders and a focus on finding strong, well-managed companies priced significantly below their true business value.
We “eat our own cooking.”
We believe in putting our money where our mouth is. All of our employees and trustees have significant personal investments in our “family” of funds. This does not guarantee that the Funds will go up, but it does mean that we win or lose together and that shareholders definitely have our full attention.
We are patient, long-term investors.
When we analyze potential equity investments, we think about the business behind the stock. We buy shares only when we believe they are selling at a large discount to the company’s underlying business value. Ideally, the business value rises over time, and the stock price follows. This often allows us to hold the stock for many years.
Knowing what you don’t know is important in all aspects of life, but it is crucial in investing.
We think our odds of investment success are much higher when we invest in securities of companies we understand and where we may have an edge over other investors. As a result, our portfolios are not diversified among all the various sectors of the economy. Instead, we expect to have a deeper knowledge and understanding of the industries and companies in which we do invest. Our experienced research team has a broad “circle of competence,” and we believe in staying within it.
We worry about permanent loss of capital — not price volatility.
Our Funds are designed for long-term shareholders. We believe concentrating our portfolios in the most attractive investment ideas, although it may cause short-term price volatility, is the best way to earn consistent returns over the long term.
We believe in being flexible and using common sense.
We are often contrarian and do not pay attention to benchmarks when making investment decisions. We also believe that cash is sometimes the most attractive investment.
Our goal is to earn good absolute investment returns over long periods of time without exposing our clients’ and our own capital to undue risk.
2 Weitz Funds
TABLE OF CONTENTS
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Performance Summary
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4
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Letter to Shareholders
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5
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Analyst Corner
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7
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Fund Information
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Value Fund
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8
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Partners Value Fund
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12
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Partners III Opportunity Fund
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16
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Research Fund
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22
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Hickory Fund
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26
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Balanced Fund
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30
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Short-Intermediate Income
Fund
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36
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Nebraska Tax-Free Income F
u
nd
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46
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Government Money Market Fund
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52
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Index Descriptions
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54
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Annual Sh
arehol
der Information Meeting
Please plan to join us at the Scott Conference
Center
in Omaha at 4:30 p.m. on May 21
st
. The center is located at 6450 Pine Street on the Aksarben campus. There will be no formal business to conduct, so we can devote the entire meeting to answering your questions. Maps and driving
directions are
available from our client service representatives. We look forward to seeing you there.
The management of Weitz Funds has chosen paper for the 52 page body of this financial report from a paper manufacturer certified under the Sustainable Forestry Initiative standard.
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Portfolio composition is subject to change at any time and references to specific securities, industries, and sectors referenced in this report are not recommendations to purchase or sell any particular security. Current and future portfolio holdings are subject to risk. See the Schedules of Investments included in this report for the percent of assets in each of the Funds invested in particular industries or sectors.
weitzinvestments.com 3
PERFORMANCE SUMMARY
DECEMBER 31, 2013
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Total Returns
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Average Annual Total Returns
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Inception
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Since
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Fund Name
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Date
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3 Mos.
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1 Year
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3 Year
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5 Year
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10 Year
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15 Year
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20 Year
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25 Year
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30 Year
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Inception
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Value
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5/
09
/86
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8.78
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%
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31.75
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%
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16.53
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%
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19.35
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%
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5.84
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%
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6.93
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%
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10.41
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%
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11.32
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%
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—
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%
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10.89
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%
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Russell 1000
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10.23
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33.11
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16.30
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18.59
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7.78
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5.08
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9.38
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10.44
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—
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10.25
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Russell 1000 Value
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10.01
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32.53
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16.06
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16.67
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7.58
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6.23
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9.71
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10.55
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—
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10.64
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Partners Value
(a)
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6/01/83
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7.77
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30.87
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16.40
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21.43
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7.47
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7.92
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11.33
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12.13
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12.84
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12.92
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Partners III Opportunity
(a)
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6/01/83
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Institutional Class
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6.15
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32.81
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16.54
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24.50
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9.57
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10.80
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12.88
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13.47
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13.64
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13.66
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Investor Class
(b)
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6.06
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32.38
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16.28
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24
.33
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9.50
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10.75
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12.84
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13.44
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13.61
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13.63
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Research
(a)(c)
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4/01/05
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10.75
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39.03
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15.26
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22.59
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—
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—
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—
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—
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—
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8.87
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Russell 3000
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10.10
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33.55
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16.24
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18.71
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7.88
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5.32
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9.32
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10.39
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10.97
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—
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Russell 3000 Value
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9.95
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32.69
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15.93
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16.75
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7.66
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6.48
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9.74
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10.60
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11.50
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—
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Hickory
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4/01/93
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6.71
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27.83
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15.59
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23.93
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8.35
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6.34
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10.46
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—
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—
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11.04
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Russell 2500
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8.66
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36.80
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16.28
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21.77
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9.81
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9.67
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10.77
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—
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—
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10.92
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Russell 2500 Value
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8.83
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33.32
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15.38
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19.61
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9.29
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10.16
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11.44
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—
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—
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11.49
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S&P 500
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10.51
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32.39
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16.18
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17.94
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7.40
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4.68
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9.22
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10.25
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11.08
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—
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Balanced
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10/01/03
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4.00
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15.46
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9.41
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14.30
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5.81
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—
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—
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—
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—
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6.04
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Blended Index
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6.21
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18.09
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10.88
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12.48
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6.35
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—
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—
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—
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—
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6.91
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Short-Intermediate
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Income
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12/23/88
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Institutional Class
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0.23
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1.11
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2.41
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4.52
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3.92
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4.56
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5.04
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5.73
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—
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5.73
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Investor Class
(b)
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0.18
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0.93
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2.24
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4.41
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3.87
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4.52
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5.01
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5.71
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—
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5.71
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Barclays Intermediate Credit
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-0.02
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-0.86
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2.91
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3.96
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4.09
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4.94
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5.35
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6.35
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—
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6.35
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NebraskaTax-Free
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Income
(a)
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10/01/85
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0.37
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-0.25
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2.55
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3.42
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3.07
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3.67
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4.13
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4.77
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—
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5.10
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Barclays 5-Year Muni. Bond
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0.84
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0.81
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3.54
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4.27
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3.92
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4.47
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4.67
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5.50
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—
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—
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These performance numbers reflect the deduction of each Fund’s annual operating expenses. Annual operating expenses for each Fund, as stated in the most recent prospectus, and expressed as a percentage of each Fund’s net assets, are: Value, 1.20%; Partners Value, 1.19%; Partners III Opportunity – Institutional Class, 1.60%; Partners III Opportunity – Investor Class, 2.26% (gross); Research, 1.74% (gross); Hickory, 1.26%; Balanced, 1.13%; Short-Intermediate Income – Institutional Class, 0.63%; Short-Intermediate Income – Investor Class, 0.98% (gross); and Nebraska Tax-Free Income, 0.71%. The returns assume redemption at the end of each period and reinvestment of dividends. Total returns shown include fee waivers and expense reimbursements, if any; total returns would have been lower had there been no waiver of fees and/or reimbursement of expenses by the Adviser.
This information represents past performance and past performance does not guarantee future results.
The investment return and the principal value of an investment in any of the Funds will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. Current performance may be higher or lower than the performance data quoted above. Performance data current to the most recent month end may be obtained at www.weitzinvestments.com/funds_and_performance/fund_performance.fs. Index performance is hypothetical and is shown for illustrative purposes only. See page 54 for a description of all indicies.
(a)
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Performance of the Partners Value and Partners III Opportunity Funds is measured from June 1, 1983, the inception of Weitz Partners II Limited Partnership (“Partners II”) and Weitz Partners III Limited Partnership (“Partners III”), respectively. Performance of the Research Fund is measured from April 1, 2005, the inception of Weitz Research Fund, L.P. (“Research L.P.”). Performance of the Nebraska Tax-Free Income Fund is measured from October 1, 1985, the inception of Weitz Income Partners Limited Partnership (“Income Partners”). On the last business day of December 1993, 2005, 2006 and 2010, the Partners Value, Partners III Opportunity, Nebraska Tax-Free Income and Research Funds (the “Funds”) succeeded to substantially all of the assets of Partners II, Partners III, Income Partners and Research L.P. (the “Partnerships”), respectively. The investment objectives, policies and restrictions of the Funds are materially equivalent to those of the respective Partnerships and the Partnerships were managed at all times with full investment authority by Weitz Investment Management, Inc. The performance information includes performance for the period before the Funds became investment companies registered with the Securities and Exchange Commission. During these periods, none of the Partnerships were registered under the Investment Company Act of 1940 and therefore were not subject to certain investment or other restrictions or requirements imposed by the 1940 Act or the Internal Revenue Code. If any of the Partnerships had been registered under the 1940 Act during these periods, the respective Partnerships’ performance might have been adversely affected.
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(b)
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Investor Class shares first became available for sale on August 1, 2011. For performance prior to that date, this table includes the actual performance of the Fund’s Institutional Class (and uses the actual expenses of the Fund’s Institutional Class, for such period of time), without any adjustments. For any such period of time, the performance of the Fund’s Investor Class would have been substantially similar to, yet lower than, the performance of the Fund’s Institutional Class, because the shares of both classes are invested in the same portfolio of securities, but the classes bear different expenses.
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(c)
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Starting January 1, 2011, these performance numbers reflect the deduction of the Research Fund’s actual operating expenses. For periods of time prior to January 1, 2011, the performance numbers reflect the deduction of annual pro forma operating expenses of 1.50%. Annual operating expenses for the Research Fund, as stated in the Research Fund’s Prospectus, are 1.74% (gross) and 0.94% (net) of the Fund’s net assets. The investment adviser has agreed, in writing, to limit the total annual fund operating expenses (excluding taxes, interest, brokerage commissions, and acquired fund fees and expenses) to 0.90% of the Fund’s average daily net assets through July 31, 2014.
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4 Weitz Funds
LETTER TO SHAREHOLDERS
JANUARY 3, 2014
Dear Fellow Shareholder:
2013 was a terrific year for our stock funds. Gains for the year ranged from +28% for Hickory to +39% for Research. We are in the fifth year of economic recovery from the “Great Recession” of 2007-2009 and nearly five years from the bottom of the bear market that ended in March of 2009, so the table below showing one, three and five year results looks very good.
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Average Annual Returns
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1 Year
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3 Year
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5 Year
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Value
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31.75
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%
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16.53
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%
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19.35
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%
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Partners Value
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30.87
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16.40
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21.43
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Partners III –
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Institutional Class
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32.81
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16.54
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24.50
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Hickory
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27.83
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15.59
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23.93
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Research
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39.03
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15.26
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22.59
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S&P 500
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32.39
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16.18
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17.94
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Bonds faced significant headwinds throughout the year. Our bond funds have been very conservatively positioned for some time so they were able to hold their own nicely, but our expectations for bonds for the immediate future remain quite subdued. Tom and Nolan discuss current positioning of the Short-Intermediate Income Fund and Nebraska Tax-Free Income Fund later in this report.
The Federal Reserve continued its program of “quantitative easing,” injecting $85 billion
per month
into the bond market during the year. This artificial support for bond prices kept interest rates low and had a positive impact on the stock market. The image that comes to mind is that of a Fed “fire hose” pumping water (cash) into the securities market “swimming pool.” The general water level (stock and bond prices) rose more than it otherwise would have because of the quantity of new money added. As a result, bargains have disappeared and we enter the new year with elevated levels of cash reserves and a cautious outlook. The fact that the QE program will end at some point is well-known (the first $10 billion reduction was recently approved), and
all things being equal,
the “tapering” and eventual withdrawal of monetary stimulus will probably reduce demand for stocks. On the other hand, this is probably one of the least important factors determining our long-term results.
Our Game Plan for 2014
We like the companies we own. They are well-managed, have ample liquidity, and generate enough free cash flow to both fund their growth and return excess cash to shareholders. These companies have found ways to grow in a sluggish economic environment and “make their own breaks” through acquisitions and creative business strategies. Cheap and readily available credit has allowed companies with debt to lower their interest costs and extend their maturities. The world is a complicated and unpredictable place, but we believe that our companies have secure positions in their industries and are well-equipped to deal with unexpected challenges.
However
…we are not crazy about the
prices
of our stocks. Investment success depends on buying the right stocks
at the right prices
. The S&P 500 rose by over 32% in 2013, but aggregate S&P 500 earnings grew by only about 6%. It seems likely that stock prices in general have “borrowed from the future.” This is not a terrible thing—who doesn’t like a +30% year? The trick is to have realistic expectations.
We try to buy individual stocks at a deep discount to the price that an intelligent business owner might pay to buy the whole company. If a private buyer would gladly pay $100 per share to buy a whole company but the stock sells for $60, the “price-to-value ratio” (P/V) is 60/100 or 60%. We feel that we are buying a “60-cent dollar.” At the bear market bottom in early 2009, the weighted average estimated P/V of our stock portfolios was under 50%. Stocks were
very
cheap. Today, the weighted average estimated P/V of our portfolios is approaching 90%. We can still earn positive returns from today’s price levels, in large part because our companies’ values are growing, but the odds are better when we start at more attractive price levels. It would not be surprising if stock prices grew slower than the underlying businesses in 2014 as values “catch up” with prices.
As we begin a new year, we are patiently waiting for the opportunity to reinvest the cash that has accumulated in our portfolios. We would love to increase the size of many of our current positions at more attractive price levels and our analysts have been adding new names to our “on deck” list. We expect stock price volatility, which has been mostly absent over the past two years, to return in 2014—not because of any particular impending crisis, but
weitzinvestments.com 5
because volatility is normal. Periodic market corrections may be unsettling to investors, but they are a necessary part of value investing. So, as long as our companies are doing well, we welcome temporary price declines.
The table preceding this letter shows results for our funds over the past 30 years. During that period, we have experienced all manner of fads and bubbles, recessions and panics, credit and liquidity crises, political shenanigans and failures of leadership. Nevertheless, the long-term growth in global GDP and the value created by innovative and energetic company managements always seem to produce interesting investment opportunities.
The balance of this report is devoted to detailed information on each of our funds. We encourage shareholders to read the relevant sections so that they may get a sense of how each fund is positioned as we enter the new year. We also hope you will mark your calendars now for our annual shareholders meeting on May 21, 2014. We will be back at the
Scott Conference Center
and the meeting will begin at 4:30 p.m.
Thanks once again for entrusting your investment funds to us.
Sincerely,
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Wallace R. Weitz
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Bradley P. Hinton
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wally@weitzinvestments.com
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brad@weitzinvestments.com
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6 Weitz Funds
ANALYST CORNER
A PERSPECTIVE ON
THE ADT CORPORATION
By Drew Weitz
The ADT Corporation is the leading provider of monitored home security service in the United States and Canada. The company possesses the strongest brand in the security industry, evidenced by its 6.5 million residential and small business customers – more than five times the number of its next largest competitor. In addition to traditional alarm monitoring, ADT is expanding its offerings to include interactive services (e.g. remote arm/disarm) and home automation services (e.g. climate/lighting control, physical lock/unlock of doors) for an incremental fee. The company was spun-off from Tyco International in September 2012.
The Attraction of Subscription Businesses
As investors, we are qualitatively drawn to businesses that are leaders in their industries and possess strong competitive advantages. Quantitatively, we also look for companies that consistently generate strong, predictable and growing streams of cash beyond what is needed to reinvest in the business. Subscription models, characterized by customers (often under contract) that pay on regular intervals, often provide such predictability. Our investments in pay TV companies are examples of the marriage of these two traits. We believe that ADT, too, fits this bill. As described above, it is the undisputed heavyweight of the industry with the most trusted brand and scale that drives lower costs than competitors. New customers sign an initial three-year contract and pay monthly for service, creating a business with roughly 90% recurring revenue and highly visible cash flows. Thanks to their large subscriber base, the cash generated is more than sufficient to purchase equipment for new installations and compensate third-party authorized dealers for accounts generated. Lastly, these predictable cash flows support ADT’s ability to prudently issue debt. Excess cash and debt capital allow management plenty of flexibility to play offense.
Customers are Taking ADT’s Pulse
For years, industry growth has been slow and steady, if somewhat unexciting. Thanks to the proliferation of Internet-connected consumer devices, however, the company is enjoying a renaissance. ADT’s interactive and home automation service, dubbed Pulse, allows customers to remotely control lighting, adjust thermostats, monitor security cameras, or lock and unlock their doors in addition to simply arming or disarming a security system. Consumer response to the product has been strong: although only 8% of ADT subscribers have Pulse today, nearly one-third of new sales include the additional functionality (and higher price tag). Furthermore, the company estimates that roughly 20% of the installed base has interest in upgrading to automation services. Pulse’s 25% higher monthly fee and positive impact on retention more than offset the increased equipment and installation costs. Adoption by new customers and upgrades by existing subscribers will drive the mix of Pulse accounts higher over time, providing a multi-year earnings benefit to ADT.
Attractive Opportunities Attract Competition
No strangers to the benefits of subscription businesses themselves, pay TV and telecom companies have entered the market, looking to bundle home security and automation services with their video, broadband and telephony offerings. Their entrance is coincident with a period of elevated account attrition for the company, raising warning signs for investors and sending ADT’s shares lower. New competitors, however, do not appear to be the culprit for ADT’s higher attrition. Indeed, results for the last 12 months indicate that ADT has gained market share, while the modest gains made by pay TV and telecom companies have been at the expense of small, subscale firms. Instead, higher turnover in the housing market has led to greater account termination as subscribers change residences. ADT hopes to turn this challenge into an opportunity to both follow the old subscriber to their new address and sell service to the new occupant of the former premises. Furthermore, the company has taken steps to improve the long-term value of new subscribers, including tightening credit standards and optimizing its third-party dealer network by eliminating those not committed to following ADT’s Pulse strategy. In the short run, these actions have a negative impact on attrition by reducing the number of new customers available to offset losses. However, we believe this will be more than offset by a greater lifetime value of the prospective subscriber base.
What Matters Most is Value per Share
Investors initially cheered ADT’s separation from Tyco, bidding its shares up from the high $30s to over $50 in short order. However, as attrition rose and new customer growth fell below expectations, shareholders sold just as quickly. Despite these disappointments, in its first 16 months as a public company, ADT will have used its excess cash flow and balance sheet capacity to buy in nearly 20% of its own equity at reasonable prices, thereby driving a substantial increase in business value
per share
. Going forward, the pace of capital returns will likely diminish as management looks to prioritize investment in the growth of its business. Indeed, the specter of cable and telecom competition combined with the need to invest in new home automation services may drive a wave of consolidation of smaller players that lack the scale to keep up. At the right prices, we would expect (and encourage) ADT to participate, driving additional business value growth.
With the stock back in the high $30s, the recent growth in ADT’s business value per share makes today’s valuation a more attractive buying opportunity than a year ago. Compared with our current estimation of ADT’s business value in the low $50s, we believe the company’s shares represented an attractive investment for our shareholders.
Andrew S. Weitz,
joined Weitz in 2008. He graduated from Carleton College and previously spent four years as a research analyst with Ariel Investments.
|
weitzinvestments.com 7
VALUE FUND
PORTFOLIO MANAGERS’ DISCUSSION & ANALYSIS
Co-Portfolio Managers:
Wallace R. Weitz, CFA; Bradley P. Hinton, CFA; & David A. Perkins, CFA
The Value Fund enjoyed a strong fourth quarter and calendar year. The Fund gained 8.8% during the quarter, versus gains of 10.5% and 10.2% for the S&P 500 and Russell 1000, respectively. For the calendar year, the Value Fund gained 31.7% versus advances of 32.4% for the S&P 500 and 33.1% for the Russell 1000. 2013 stands as the third strongest annual performance for the S&P 500 and the Fund since 1986 (the Value Fund’s inception). On the heels of a strong year for the stock market, we begin 2014 with the Fund at a narrower than usual discount (the aggregate estimated price-to-value ratio stands at 0.90) and elevated cash levels (27% of net assets).
Liberty Interactive (+25%), Valeant Pharmaceuticals (+13%) and Google (+28%) were the largest positive contributors to Fund performance during the fourth quarter. We added significantly to our Liberty Interactive position during early October as it ranked among the cheapest and highest conviction stocks in our portfolio. Subsequent news of a tracking stock for Liberty’s online properties (Liberty Digital Commerce) and a cleaner means of investing in multi-channel retailer QVC excited investors. Valeant capped a busy year with a nicely accretive tuck-in acquisition that should further its momentum in aesthetic dermatology. We anticipate a meaningful uptick in organic growth for Valeant in 2014. Google rallied on a strong third quarter earnings report and growing investor comfort with the ongoing shift toward mobile search. With shares nearing our estimate of business value, we wrote some call options on a portion of our position late in the quarter.
Tech giant Hewlett-Packard (+101%) and insurance broker Aon plc (+52%) joined Valeant Pharmaceuticals (+96%) as the largest contributors to full year Fund performance. HP made considerable progress in its turnaround efforts over the course of the past year, improving its balance sheet, stabilizing sales and positioning the company to play offense. Aon’s stock benefitted from improved organic growth, additional margin progress, continued optimism surrounding its position in the emerging private health exchange business and a strong fourth quarter outlook. We took advantage of the strength in Aon shares and reduced our position from 4.5% of Fund net assets to 2.5% during the fourth quarter.
The Fund initiated three relatively modest new investments during the final months of 2013. Oracle Corp. is the largest provider of database solutions to commercial enterprises around the globe. The database software business has many attractive attributes, including longer product cycles, burdensome switching costs and “mission critical” status for day-to-day business operations (which makes lucrative maintenance and support contracts non-discretionary, price inelastic budget items). Prior to purchase, the stock had largely treaded water for three years despite strong growth in operating earnings (+47%), cash flow (+74%) and free cash flow per share (+80%). As a result, we were able to purchase a well-entrenched, conservatively capitalized market leader for roughly 11 times free cash flow.
Endo Health Solutions is a specialty pharmaceutical and medical device company focused on the areas of urology, pain management and niche generics. Under the leadership of new CEO Rajiv De Silva, Endo has positioned itself as a consolidator in the fragmented and relatively inefficient world of specialty and generic pharmaceuticals. Much like we are witnessing in other corners of iconic American business (beer and packaged foods come specifically to mind), we believe portions of the drug industry are ripe for change. De Silva brings a familiar decentralized, low-cost operating model to Endo with the goal of generating more capital efficient growth. Ample balance sheet capacity and the likelihood of a new tax structure (via the purchase of Paladin Labs) should help drive strong business value growth over a period of years.
Finally, LabCorp is the second largest independent diagnostic laboratory in the U.S. The clinical lab business is characterized by relatively steady recurring revenues, healthy margins, high returns on tangible capital and significant excess cash generation, all of which are bread-and-butter Weitz attributes. Anemic testing volumes and elevated reimbursement pressure have been headwinds for LabCorp over the past several years and are likely to remain so throughout 2014. Longer-term, however, a gradually improving economy, an aging U.S. population and the introduction of new, more effective tests for cancer and various chronic diseases should lead to more attractive growth rates and improved investor sentiment.
The Value Fund invests primarily in our best larger company ideas. As of calendar year end, the Fund’s weighted average market cap was approximately $89 billion and its top twenty holdings represented just over 60% of net assets.
New and Eliminated Securities for Quarter Ended December 31, 2013
|
New ($mil)
|
|
Eliminations ($mil)
|
|
|
|
|
|
|
|
Oracle
|
|
$
|
21.2
|
|
None
|
|
Endo Health Solutions
|
|
|
11.5
|
|
|
|
Laboratory Corp. of America
|
|
|
11.0
|
|
|
|
8 Weitz Funds
VALUE FUND
PERFORMANCE • (UNAUDITED)
|
|
|
Total Returns
|
|
Average Annual Total Returns
|
|
|
|
3 Mos.
|
|
1 Year
|
|
3 Year
|
|
5 Year
|
|
10 Year
|
|
15 Year
|
|
20 Year
|
|
25 Year
|
|
Value
|
|
8.78
|
%
|
|
31.75
|
%
|
|
16.53
|
%
|
|
19.35
|
%
|
|
5.84
|
%
|
|
6.93
|
%
|
|
10.41
|
%
|
|
11.32
|
%
|
|
S&P 500
|
|
10.51
|
|
|
32.39
|
|
|
16.18
|
|
|
17.94
|
|
|
7.40
|
|
|
4.68
|
|
|
9.22
|
|
|
10.25
|
|
|
Russell 1000
|
|
10.23
|
|
|
33.11
|
|
|
16.30
|
|
|
18.59
|
|
|
7.78
|
|
|
5.08
|
|
|
9.38
|
|
|
10.44
|
|
|
Russell 1000 Value
|
|
10.01
|
|
|
32.53
|
|
|
16.06
|
|
|
16.67
|
|
|
7.58
|
|
|
6.23
|
|
|
9.71
|
|
|
10.55
|
|
Growth of $10,000 Since Inception
This chart depicts the change in the value of a $10,000 investment in the Value Fund for the period May 9, 1986 through December 31, 2013, as compared with the growth of the Standard & Poor’s 500 Index during the same period. Index performance is hypothetical and is shown for illustrative purposes only.
|
|
|
Value
|
|
S&P 500
|
|
Relative
|
|
Year
|
|
(1)
|
|
(2)
|
|
Results (1)-(2)
|
|
1986 (5/9/86)
|
|
3.45
|
%
|
|
4.14
|
%
|
|
-0.69
|
%
|
|
1987
|
|
-0.54
|
|
|
5.10
|
|
|
-5.64
|
|
|
1988
|
|
16.45
|
|
|
16.61
|
|
|
-0.16
|
|
|
1989
|
|
22.07
|
|
|
31.69
|
|
|
-9.62
|
|
|
1990
|
|
-5.22
|
|
|
-3.10
|
|
|
-2.12
|
|
|
1991
|
|
27.63
|
|
|
30.47
|
|
|
-2.84
|
|
|
1992
|
|
13.63
|
|
|
7.62
|
|
|
6.01
|
|
|
1993
|
|
20.04
|
|
|
10.08
|
|
|
9.96
|
|
|
1994
|
|
-9.83
|
|
|
1.32
|
|
|
-11.15
|
|
|
1995
|
|
38.37
|
|
|
37.58
|
|
|
0.79
|
|
|
1996
|
|
18.69
|
|
|
22.96
|
|
|
-4.27
|
|
|
1997
|
|
38.93
|
|
|
33.36
|
|
|
5.57
|
|
|
1998
|
|
28.94
|
|
|
28.58
|
|
|
0.36
|
|
|
1999
|
|
20.97
|
|
|
21.04
|
|
|
-0.07
|
|
|
2000
|
|
19.62
|
|
|
-9.10
|
|
|
28.72
|
|
|
2001
|
|
0.24
|
|
|
-11.89
|
|
|
12.13
|
|
|
2002
|
|
-17.10
|
|
|
-22.10
|
|
|
5.00
|
|
|
2003
|
|
28.73
|
|
|
28.68
|
|
|
0.05
|
|
|
2004
|
|
15.74
|
|
|
10.88
|
|
|
4.86
|
|
|
2005
|
|
-2.77
|
|
|
4.91
|
|
|
-7.68
|
|
|
2006
|
|
21.85
|
|
|
15.79
|
|
|
6.06
|
|
|
2007
|
|
-10.35
|
|
|
5.49
|
|
|
-15.84
|
|
|
2008
|
|
-40.74
|
|
|
-37.00
|
|
|
-3.74
|
|
|
2009
|
|
27.62
|
|
|
26.46
|
|
|
1.16
|
|
|
2010
|
|
19.94
|
|
|
15.06
|
|
|
4.88
|
|
|
2011
|
|
6.12
|
|
|
2.11
|
|
|
4.01
|
|
|
2012
|
|
13.17
|
|
|
16.00
|
|
|
-2.83
|
|
|
2013
|
|
31.75
|
|
|
32.39
|
|
|
-0.64
|
|
|
Since Inception:
|
|
|
|
|
|
|
|
|
|
|
Cumulative
|
|
1,647.86
|
|
|
1,365.54
|
|
|
282.32
|
|
|
Avg. Annual
|
|
|
|
|
|
|
|
|
|
|
Return
|
|
10.89
|
|
|
10.19
|
|
|
0.70
|
|
These performance numbers reflect the deduction of the Fund’s annual operating expenses which as stated in its most recent prospectus are 1.20% of the Fund’s net assets. The returns assume redemption at the end of each period and reinvestment of dividends. Total returns shown include fee waivers and expense reimbursements, if any; total returns would have been lower had there been no waiver of fees and/or reimbursement of expenses by the Adviser.
This information represents past performance and past performance does not guarantee future results.
The investment return and the principal value of an investment in this Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month-end may be obtained at www.weitzinvestments.com/funds_and_performance/fund_performance.fs.
See page 4 for additional performance disclosures. See page 54 for a description of all indices.
Performance information does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
weitzinvestments.com 9
VALUE FUND
PORTFOLIO PROFILE • (UNAUDITED)
Top Ten Stocks
|
|
Valeant Pharmaceuticals International, Inc.
|
|
|
7.0
|
%
|
Liberty Interactive Corp. - Series A
|
|
|
4.5
|
|
Berkshire Hathaway, Inc. - CL B
|
|
|
4.3
|
|
DIRECTV
|
|
|
4.0
|
|
Liberty Global plc - Series C
|
|
|
3.9
|
|
Express Scripts Holding Co.
|
|
|
3.3
|
|
Texas Instruments, Inc.
|
|
|
3.1
|
|
Wells Fargo & Co.
|
|
|
3.0
|
|
Range Resources Corp.
|
|
|
3.0
|
|
Google, Inc. - CL A
|
|
|
3.0
|
|
% of Net Assets
|
|
|
39.1
|
%
|
Industry Sectors
|
Consumer Discretionary
|
|
|
18.6
|
%
|
Information Technology
|
|
|
16.0
|
|
Health Care
|
|
|
12.3
|
|
Financials
|
|
|
9.8
|
|
Energy
|
|
|
7.0
|
|
Industrials
|
|
|
4.2
|
|
Materials
|
|
|
3.2
|
|
Consumer Staples
|
|
|
1.4
|
|
Cash Equivalents/Other
|
|
|
27.5
|
|
Net Assets
|
|
|
100.0
|
%
|
Top Performers for Quarter Ended December 31, 2013
|
|
|
|
QTD Return
|
|
Average Weight
|
|
Contribution to
|
Security Name
|
|
|
of Security
|
|
in Portfolio
|
|
Fund Performance
|
Liberty Interactive Corp. - Series A
|
|
|
25.1
|
%
|
|
4.3
|
%
|
|
0.97
|
%
|
Valeant Pharmaceuticals International, Inc.
|
|
|
12.5
|
|
|
7.1
|
|
|
0.94
|
|
Google, Inc. - CL A
|
|
|
27.9
|
|
|
3.0
|
|
|
0.79
|
|
Hewlett-Packard Co.
|
|
|
34.1
|
|
|
2.5
|
|
|
0.75
|
|
DIRECTV
|
|
|
15.6
|
|
|
3.9
|
|
|
0.58
|
|
Contributions to Fund performance are based on actual daily holdings. Securities may have been bought or sold during the quarter.
Source: FactSet Portfolio Analytics
Bottom Performers for Quarter Ended December 31, 2013
|
|
|
|
QTD Return
|
|
Average Weight
|
|
Contribution to
|
Security Name
|
|
|
of Security
|
|
in Portfolio
|
|
Fund Performance
|
Laboratory Corp. of America Holdings
|
|
|
(7.8
|
)%
|
|
0.8
|
%
|
|
(0.10
|
)%
|
Target Corp.
|
|
|
(0.5
|
)
|
|
2.5
|
|
|
(0.01
|
)
|
Contributions to Fund performance are based on actual daily holdings. Securities may have been bought or sold during the quarter.
Source : FactSet Portfolio Analytics
10 Weitz Funds
VALUE FUND
SCHEDULE OF INVESTMENTS • DECEMBER 31, 2013 • (UNAUDITED)
COMMON STOCKS — 72.5%
|
|
|
Shares
|
|
|
Value
|
|
Consumer Discretionary — 18.6%
|
|
|
|
|
|
|
|
Cable & Satellite — 7.9%
|
|
|
|
|
|
|
|
DIRECTV*
|
|
|
650,000
|
|
$
|
44,908,500
|
|
Liberty Global plc - Series C*
|
|
|
520,000
|
|
|
43,846,400
|
|
|
|
|
|
|
|
88,754,900
|
|
Internet & Catalog Retail — 4.5%
|
|
|
|
|
|
|
|
Liberty Interactive Corp. - Series A*
|
|
|
1,725,000
|
|
|
50,628,750
|
|
Multiline Retail — 2.5%
|
|
|
|
|
|
|
|
Target Corp.
|
|
|
430,000
|
|
|
27,206,100
|
|
Movies & Entertainment — 2.2%
|
|
|
|
|
|
|
|
The Walt Disney Co.
|
|
|
325,000
|
|
|
24,830,000
|
|
Advertising — 1.5%
|
|
|
|
|
|
|
|
Omnicom Group, Inc.
|
|
|
225,500
|
|
|
16,770,435
|
|
|
|
|
|
|
|
208,190,185
|
|
Information Technology — 16.0%
|
|
|
|
|
|
|
|
Software — 4.6%
|
|
|
|
|
|
|
|
Microsoft Corp.
|
|
|
715,000
|
|
|
26,762,450
|
|
Oracle Corp.
|
|
|
635,000
|
|
|
24,295,100
|
|
|
|
|
|
|
|
51,057,550
|
|
Semiconductors — 3.1%
|
|
|
|
|
|
|
|
Texas Instruments, Inc.
|
|
|
780,000
|
|
|
34,249,800
|
|
Internet Software & Services — 3.0%
|
|
|
|
|
|
|
|
Google, Inc. - CL A*
(c)
|
|
|
30,000
|
|
|
33,621,300
|
|
IT Services — 2.7%
|
|
|
|
|
|
|
|
Accenture plc - CL A
|
|
|
200,000
|
|
|
16,444,000
|
|
Fidelity National Information Services, Inc.
|
|
|
250,000
|
|
|
13,420,000
|
|
|
|
|
|
|
|
29,864,000
|
|
Computers & Peripherals — 2.6%
|
|
|
|
|
|
|
|
Hewlett-Packard Co.
|
|
|
1,060,000
|
|
|
29,658,800
|
|
|
|
|
|
|
|
178,451,450
|
|
Health Care — 12.3%
|
|
|
|
|
|
|
|
Pharmaceuticals — 8.1%
|
|
|
|
|
|
|
|
Valeant Pharmaceuticals International, Inc.*
|
|
|
670,000
|
|
|
78,658,000
|
|
Endo Health Solutions Inc.*
|
|
|
175,000
|
|
|
11,805,500
|
|
|
|
|
|
|
|
90,463,500
|
|
Health Care Services — 4.2%
|
|
|
|
|
|
|
|
Express Scripts Holding Co.*
|
|
|
530,000
|
|
|
37,227,200
|
|
Laboratory Corp. of America Holdings*
|
|
|
110,000
|
|
|
10,050,700
|
|
|
|
|
|
|
|
47,277,900
|
|
|
|
|
|
|
|
137,741,400
|
|
Financials — 9.8%
|
|
|
|
|
|
|
|
Property & Casualty Insurance — 4.3%
|
|
|
|
|
|
|
|
Berkshire Hathaway, Inc. - CL B*
|
|
|
410,000
|
|
|
48,609,600
|
|
Commercial Banks — 3.0%
|
|
|
|
|
|
|
|
Wells Fargo & Co.
|
|
|
745,000
|
|
|
33,823,000
|
|
Insurance Brokers — 2.5%
|
|
|
|
|
|
|
|
Aon plc - CL A
|
|
|
335,000
|
|
|
28,103,150
|
|
|
|
|
|
|
|
110,535,750
|
|
Energy — 7.0%
|
|
|
|
|
|
|
|
Oil & Gas Exploration & Production — 7.0%
|
|
|
|
|
|
|
|
Range Resources Corp.
|
|
|
400,000
|
|
|
33,724,000
|
|
Apache Corp.
|
|
|
391,000
|
|
|
33,602,540
|
|
Southwestern Energy Co.*
|
|
|
290,000
|
|
|
11,405,700
|
|
|
|
|
|
|
|
78,732,240
|
|
|
|
|
Principal
|
|
|
|
|
|
|
|
amount
|
|
|
|
|
|
|
|
or shares
|
|
|
Value
|
|
Industrials — 4.2%
|
|
|
|
|
|
|
|
Aerospace & Defense — 2.2%
|
|
|
|
|
|
|
|
TransDigm Group, Inc.
|
|
|
150,000
|
|
$
|
24,153,000
|
|
Air Freight & Logistics — 2.0%
|
|
|
|
|
|
|
|
United Parcel Service, Inc. - CL B
|
|
|
215,000
|
|
|
22,592,200
|
|
|
|
|
|
|
|
46,745,200
|
|
Materials — 3.2%
|
|
|
|
|
|
|
|
Construction Materials — 1.7%
|
|
|
|
|
|
|
|
Martin Marietta Materials, Inc.
|
|
|
195,000
|
|
|
19,488,300
|
|
Industrial Gases — 1.5%
|
|
|
|
|
|
|
|
Praxair, Inc.
|
|
|
125,000
|
|
|
16,253,750
|
|
|
|
|
|
|
|
35,742,050
|
|
Consumer Staples — 1.4%
|
|
|
|
|
|
|
|
Beverages — 1.4%
|
|
|
|
|
|
|
|
Diageo plc - Sponsored ADR
|
|
|
115,000
|
|
|
15,228,300
|
|
Total Common Stocks
|
|
|
|
|
|
|
|
(Cost $461,944,962)
|
|
|
|
|
|
811,366,575
|
|
CASH EQUIVALENTS — 27.3%
|
|
|
|
|
|
|
|
U.S. Treasury Bills — 22.8%
|
|
|
|
|
|
|
|
U.S. Treasury Bills, 0.03% to 0.09%,
|
|
|
|
|
|
|
|
1/09/14 to 5/22/14
(a)
|
|
$
|
255,000,000
|
|
|
254,978,170
|
|
Money Market Funds — 4.5%
|
|
|
|
|
|
|
|
Wells Fargo Advantage Government Money Market Fund -
|
|
|
|
|
|
|
|
Institutional Class 0.01%
(b)
|
|
|
50,833,417
|
|
|
50,833,417
|
|
Total Cash Equivalents
|
|
|
|
|
|
|
|
(Cost $305,802,150)
|
|
|
|
|
|
305,811,587
|
|
Total Investments in Securities
|
|
|
|
|
|
|
|
(Cost $767,747,112)
|
|
|
|
|
|
1,117,178,162
|
|
Options Written — 0.0%
|
|
|
|
|
|
(280,000
|
)
|
Other Assets Less Other Liabilities — 0.2%
|
|
|
|
|
|
2,022,761
|
|
Net Assets — 100.0%
|
|
|
|
|
$
|
1,118,920,923
|
|
Net Asset Value Per Share
|
|
|
|
|
$
|
44.86
|
|
|
|
|
Expiration
|
|
|
Shares
|
|
|
|
|
|
|
|
date/
|
|
|
subject
|
|
|
|
|
OPTIONS WRITTEN*
|
|
|
Strike price
|
|
|
to option
|
|
|
Value
|
|
Covered Call Options
|
|
|
|
|
|
|
|
|
|
|
Google, Inc. - CL A
|
|
|
March 2014/$1,100
|
|
|
5,000
|
|
$
|
(280,000
|
)
|
Total Options Written
|
|
|
|
|
|
|
|
|
|
|
(premiums received $241,871)
|
|
|
|
|
|
|
|
$
|
(280,000
|
)
|
*
|
Non-income producing
|
(a)
|
Interest rates presented represent the yield to maturity at the date of purchase.
|
(b)
|
Rate presented represents the annualized 7-day yield at December 31, 2013.
|
(c)
|
Fully or partially pledged as collateral on outstanding written options.
|
weitzinvestments.com 11
PARTNERS VALUE FUND
PORTFOLIO MANAGERS’ DISCUSSION & ANALYSIS
Co-Portfolio Managers:
Wallace R. Weitz, CFA & Bradley P. Hinton, CFA
The Partners Value Fund returned +7.8% in the fourth calendar quarter, compared to +10.5% for the S&P 500 and +10.1% for the Russell 3000. For the calendar year, the Fund returned +30.9% compared to +32.4% for the S&P 500 and +33.6% for the Russell 3000. It was a very good year, with stocks enjoying exceptional gains. The Fund’s absolute returns were terrific, and the relative results were acceptable especially in light of our cautious positioning throughout the year.
Our consumer discretionary holdings fueled the Fund’s fourth quarter gains. Interval Leisure Group (+31%) continued to add resorts to its vacation exchange network, and investor confidence in the shared ownership industry recovered along with the economy. Liberty Interactive Corp. (+25%) surged after announcing plans to create a tracking stock for its ecommerce assets and posting solid quarterly results at QVC U.S. Both Iconix Brand Group (+20%) and DIRECTV (+16%) enhanced per share value growth by repurchasing stock at attractive prices.
The Fund’s relative results trailed the market during the fourth quarter for three primary reasons. First, LabCorp (-8%) and FLIR Systems (-4%) provided disappointing 2014 and fourth quarter outlooks, respectively. While both companies face industry headwinds, we don’t think either setback derails our longer-term investment thesis. Second, several of our stocks simply didn’t keep pace with the year-end market rally, which is neither unusual nor disturbing over a short time frame. For example, Redwood Trust, Liberty Media Corp. and Target were all roughly flat during the quarter. Third, residual cash was a performance drag in a strongly rising market. As always, our goal is to outperform the broader indices over the long haul, regardless of whether cash levels are high or low along the way.
Valeant Pharmaceuticals was by far the largest contributor to full year results. Valeant (+96%) nearly doubled as the company acquired Bausch + Lomb (eye health), integrated Medicis (dermatology) and reported organic growth across its expanded platform. The Fund’s large consumer discretionary weighting also buoyed results, as the sector was the market’s top performer for the year. Standout contributors included Iconix (+78%), Interval Leisure (+62%), Liberty Global (+44%) and Live Nation (+112%). Stock picking drove solid performance within the technology sector. Google (+58%), Microsoft (+44%), Texas Instruments (+46%) and XO Group (+60%) all delivered returns well above the tech sector average. While outright detractors were scarce, returns for the year could have been even higher with less cash, more industrial exposure and improved security selection in the energy sector.
Portfolio activity was moderate during the quarter. We bought shares of Oracle, the world’s largest enterprise software company. Oracle continues to sell more software licenses, increase its installed base, and drive recurring revenue through attached support agreements. The high margin support business generates tremendous free cash flow, and capital allocation remains shareholder friendly. The company has been reinvesting in productive R&D, acquiring complementary businesses and shrinking the share count at attractive prices. We think Oracle is well positioned for the future with a strong cloud offering and entrenched advantages in database scalability and reliability. We also added to our holdings of Liberty Interactive before the company hosted an upbeat investor day, and to Liberty Global when the stock drifted down into the low $70’s.
We sold two stocks at healthy gains during the quarter. CVS Caremark traded above our value estimate as the company executed on its operating plan and won over investors. Outerwall has a wider range of potential business outcomes, and we booked profits on the volatile stock after it spiked post-earnings. We also reduced our Aon plc position materially as the shares continued to gain momentum. Other trims due to valuation included Texas Instruments, Southwestern Energy and Live Nation. Despite this activity, the Fund’s residual cash remained unchanged at 29% of net assets at year end.
Partners Value is a flexible, multi-cap fund that invests in companies of all sizes. The portfolio remains tilted to larger companies with strong competitive positions, relatively stable cash flows, able managements and sturdy balance sheets. Nearly seventy percent of the Fund’s equity holdings are in large-cap companies (market capitalization greater than $10B), with the remainder split between medium-sized and smaller businesses.
New and Eliminated Securities for Quarter Ended December 31, 2013
|
New ($mil)
|
|
Eliminations ($mil
)
|
Oracle
|
|
$
|
14.3
|
|
Outerwall
|
|
$
|
16.4
|
|
|
|
|
|
|
CVS Caremark
|
|
|
9.2
|
|
12 Weitz Funds
PARTNERS VALUE FUND
PERFORMANCE • (UNAUDITED)
|
|
Total Returns
|
|
Average Annual Total Returns
|
|
|
|
3 Mos.
|
|
1 Year
|
|
3 Year
|
|
5 Year
|
|
10 Year
|
|
15 Year
|
|
20 Year
|
|
25 Year
|
|
30 Year
|
|
Partners Value
|
|
7.77
|
%
|
|
30.87
|
%
|
|
16.40
|
%
|
|
21.43
|
%
|
|
7.47
|
%
|
|
7.92
|
%
|
|
11.33
|
%
|
|
12.13
|
%
|
|
12.84
|
%
|
|
S&P 500
|
|
10.51
|
|
|
32.39
|
|
|
16.18
|
|
|
17.94
|
|
|
7.40
|
|
|
4.68
|
|
|
9.22
|
|
|
10.25
|
|
|
11.08
|
|
|
Russell 3000
|
|
10.10
|
|
|
33.55
|
|
|
16.24
|
|
|
18.71
|
|
|
7.88
|
|
|
5.32
|
|
|
9.32
|
|
|
10.39
|
|
|
10.97
|
|
|
Russell 3000 Value
|
|
9.95
|
|
|
32.69
|
|
|
15.93
|
|
|
16.75
|
|
|
7.66
|
|
|
6.48
|
|
|
9.74
|
|
|
10.60
|
|
|
11.50
|
|
Growth of $10,000 Since Inception
This chart depicts the change in the value of a $10,000 investment in the Partners Value Fund for the period June 1, 1983 through December 31, 2013, as compared with the growth of the Standard & Poor’s 500 Index during the same period. Index performance is hypothetical and is shown for illustrative purposes only.
|
|
|
Partners
|
|
|
|
Relative
|
|
|
|
Value
|
|
S&P 500
|
|
Results
|
|
Year
|
|
(1)
|
|
(2)
|
|
(1)-(2)
|
|
1983 (6/1/83)
|
|
9.90
|
%
|
|
4.15
|
%
|
|
5.75
|
%
|
|
1984
|
|
14.50
|
|
|
6.10
|
|
|
8.40
|
|
|
1985
|
|
40.70
|
|
|
31.60
|
|
|
9.10
|
|
|
1986
|
|
11.10
|
|
|
18.60
|
|
|
-7.50
|
|
|
1987
|
|
4.30
|
|
|
5.10
|
|
|
-0.80
|
|
|
1988
|
|
14.90
|
|
|
16.61
|
|
|
-1.71
|
|
|
1989
|
|
20.30
|
|
|
31.69
|
|
|
-11.39
|
|
|
1990
|
|
-6.30
|
|
|
-3.10
|
|
|
-3.20
|
|
|
1991
|
|
28.10
|
|
|
30.47
|
|
|
-2.37
|
|
|
1992
|
|
15.10
|
|
|
7.62
|
|
|
7.48
|
|
|
1993
|
|
23.00
|
|
|
10.08
|
|
|
12.92
|
|
|
1994
|
|
-9.03
|
|
|
1.32
|
|
|
-10.35
|
|
|
1995
|
|
38.67
|
|
|
37.58
|
|
|
1.09
|
|
|
1996
|
|
19.14
|
|
|
22.96
|
|
|
-3.82
|
|
|
1997
|
|
40.62
|
|
|
33.36
|
|
|
7.26
|
|
|
1998
|
|
29.07
|
|
|
28.58
|
|
|
0.49
|
|
|
1999
|
|
22.05
|
|
|
21.04
|
|
|
1.01
|
|
|
2000
|
|
21.07
|
|
|
-9.10
|
|
|
30.17
|
|
|
2001
|
|
-0.86
|
|
|
-11.89
|
|
|
11.03
|
|
|
2002
|
|
-16.99
|
|
|
-22.10
|
|
|
5.11
|
|
|
2003
|
|
25.38
|
|
|
28.68
|
|
|
-3.30
|
|
|
2004
|
|
14.99
|
|
|
10.88
|
|
|
4.11
|
|
|
2005
|
|
-2.42
|
|
|
4.91
|
|
|
-7.33
|
|
|
2006
|
|
22.53
|
|
|
15.79
|
|
|
6.74
|
|
|
2007
|
|
-8.54
|
|
|
5.49
|
|
|
-14.03
|
|
|
2008
|
|
-38.06
|
|
|
-37.00
|
|
|
-1.06
|
|
|
2009
|
|
31.30
|
|
|
26.46
|
|
|
4.84
|
|
|
2010
|
|
27.49
|
|
|
15.06
|
|
|
12.43
|
|
|
2011
|
|
2.19
|
|
|
2.11
|
|
|
0.08
|
|
|
2012
|
|
17.92
|
|
|
16.00
|
|
|
1.92
|
|
|
2013
|
|
30.87
|
|
|
32.39
|
|
|
-1.52
|
|
|
Since Inception:
|
|
|
|
|
|
|
|
|
|
|
Cumulative
|
|
|
|
|
|
|
|
|
|
|
Return
|
|
4,021.52
|
|
|
2,333.97
|
|
|
1,687.55
|
|
|
Avg. Annual
|
|
|
|
|
|
|
|
|
|
|
Return
|
|
12.92
|
|
|
10.99
|
|
|
1.93
|
|
These performance numbers reflect the deduction of the Fund’s annual operating expenses which as stated in its most recent prospectus are 1.19% of the Fund’s net assets. The returns assume redemption at the end of each period and reinvestment of dividends. Total returns shown include fee waivers and expense reimbursements, if any; total returns would have been lower had there been no waiver of fees and/or reimbursement of expenses by the Adviser.
This information represents past performance and past performance does not guarantee future results.
The investment return and the principal value of an investment in this Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month-end may be obtained at www.weitzinvestments.com/funds_and_performance/fund_performance.fs.
See page 4 for additional performance disclosures. See page 54 for a description of all indices.
Performance information does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
weitzinvestments.com 13
PARTNERS VALUE FUND
PORTFOLIO PROFILE • (UNAUDITED)
Top Ten Stocks
|
Valeant Pharmaceuticals International, Inc.
|
|
|
4.9
|
%
|
Liberty Global plc - Series C
|
|
|
4.1
|
|
Berkshire Hathaway, Inc. - CL B
|
|
|
3.9
|
|
DIRECTV
|
|
|
3.8
|
|
Iconix Brand Group, Inc.
|
|
|
3.7
|
|
Liberty Interactive Corp. - Series A
|
|
|
3.4
|
|
FLIR Systems, Inc.
|
|
|
3.3
|
|
Redwood Trust, Inc.
|
|
|
3.2
|
|
Wells Fargo & Co.
|
|
|
3.1
|
|
Google, Inc. - CL A
|
|
|
3.0
|
|
% of Net Assets
|
|
|
36.4
|
%
|
Industry Sectors
|
Consumer Discretionary
|
|
|
24.8
|
%
|
Information Technology
|
|
|
15.6
|
|
Financials
|
|
|
12.7
|
|
Health Care
|
|
|
9.7
|
|
Energy
|
|
|
5.4
|
|
Materials
|
|
|
1.9
|
|
Industrials
|
|
|
1.1
|
|
Cash Equivalents/Other
|
|
|
28.8
|
|
Net Assets
|
|
|
100.0
|
%
|
Top Performers for Quarter Ended December 31, 2013
|
|
|
QTD Return
|
|
Average Weight
|
|
Contribution to
|
Security Name
|
|
of Security
|
|
in Portfolio
|
|
Fund Performance
|
Interval Leisure Group, Inc.
|
|
31.3
|
%
|
|
2.6
|
%
|
|
0.76
|
%
|
Liberty Interactive Corp. - Series A
|
|
25.1
|
|
|
3.2
|
|
|
0.74
|
|
Google, Inc. - CL A
|
|
27.9
|
|
|
2.9
|
|
|
0.72
|
|
Iconix Brand Group, Inc.
|
|
19.5
|
|
|
3.7
|
|
|
0.68
|
|
Valeant Pharmaceuticals International, Inc.
|
|
12.5
|
|
|
4.8
|
|
|
0.62
|
|
Contributions to Fund performance are based on actual daily holdings. Securities may have been bought or sold during the quarter.
Source: FactSet Portfolio Analytics
Bottom Performers for Quarter Ended December 31, 2013
|
|
|
QTD Return
|
|
Average Weight
|
|
Contribution to
|
Security Name
|
|
of Security
|
|
in Portfolio
|
|
Fund Performance
|
Laboratory Corp. of America Holdings
|
|
(7.8
|
)%
|
|
2.1
|
%
|
|
(0.15
|
)%
|
FLIR Systems, Inc.
|
|
(3.8
|
)
|
|
3.3
|
|
|
(0.15
|
)
|
Redwood Trust, Inc.
|
|
(0.1
|
)
|
|
3.2
|
|
|
(0.04
|
)
|
Target Corp.
|
|
(0.5
|
)
|
|
2.1
|
|
|
(0.01
|
)
|
Contributions to Fund performance are based on actual daily holdings. Securities may have been bought or sold during the quarter.
Source: FactSet Portfolio Analytics
14 Weitz Funds
PARTNERS VALUE FUND
SCHEDULE OF INVESTMENTS • DECEMBER 31, 2013 • (UNAUDITED)
COMMON STOCKS — 71.2%
|
|
|
Shares
|
|
|
Value
|
|
Consumer Discretionary — 24.8%
|
|
|
|
|
|
|
|
Cable & Satellite — 7.9%
|
|
|
|
|
|
|
|
Liberty Global plc - Series C*
|
|
|
500,000
|
|
$
|
42,160,000
|
|
DIRECTV*
|
|
|
575,000
|
|
|
39,726,750
|
|
|
|
|
|
|
|
81,886,750
|
|
Internet & Catalog Retail — 4.3%
|
|
|
|
|
|
|
|
Liberty Interactive Corp. - Series A*
|
|
|
1,200,000
|
|
|
35,220,000
|
|
Liberty Ventures - Series A*
|
|
|
80,000
|
|
|
9,807,200
|
|
|
|
|
|
|
|
45,027,200
|
|
Textiles, Apparel & Luxury Goods — 3.7%
|
|
|
|
|
|
|
|
Iconix Brand Group, Inc.*
|
|
|
970,000
|
|
|
38,509,000
|
|
Hotels, Restaurants & Leisure — 3.0%
|
|
|
|
|
|
|
|
Interval Leisure Group, Inc.
|
|
|
1,000,000
|
|
|
30,900,000
|
|
Broadcasting — 2.8%
|
|
|
|
|
|
|
|
Liberty Media Corp. - Series A*
|
|
|
200,000
|
|
|
29,290,000
|
|
Multiline Retail — 2.0%
|
|
|
|
|
|
|
|
Target Corp.
|
|
|
325,000
|
|
|
20,562,750
|
|
Movies & Entertainment — 1.1%
|
|
|
|
|
|
|
|
Live Nation Entertainment, Inc.*
|
|
|
600,000
|
|
|
11,856,000
|
|
|
|
|
|
|
|
258,031,700
|
|
Information Technology — 15.6%
|
|
|
|
|
|
|
|
Internet Software & Services — 4.4%
|
|
|
|
|
|
|
|
Google, Inc. - CL A*
|
|
|
28,000
|
|
|
31,379,880
|
|
XO Group, Inc.*
|
|
|
975,000
|
|
|
14,488,500
|
|
|
|
|
|
|
|
45,868,380
|
|
Software — 3.6%
|
|
|
|
|
|
|
|
Microsoft Corp.
|
|
|
575,000
|
|
|
21,522,250
|
|
Oracle Corp.
|
|
|
425,000
|
|
|
16,260,500
|
|
|
|
|
|
|
|
37,782,750
|
|
Electronic Equipment & Instruments — 3.3%
|
|
|
|
|
|
|
|
FLIR Systems, Inc.
|
|
|
1,150,000
|
|
|
34,615,000
|
|
Semiconductors — 3.0%
|
|
|
|
|
|
|
|
Texas Instruments, Inc.
|
|
|
700,000
|
|
|
30,737,000
|
|
IT Services — 1.3%
|
|
|
|
|
|
|
|
Fidelity National Information Services, Inc.
|
|
|
250,000
|
|
|
13,420,000
|
|
|
|
|
|
|
|
162,423,130
|
|
Financials — 12.7%
|
|
|
|
|
|
|
|
Property & Casualty Insurance — 3.9%
|
|
|
|
|
|
|
|
Berkshire Hathaway, Inc. - CL B*
|
|
|
340,000
|
|
|
40,310,400
|
|
Mortgage REITs — 3.2%
|
|
|
|
|
|
|
|
Redwood Trust, Inc.
|
|
|
1,700,000
|
|
|
32,929,000
|
|
Commercial Banks — 3.1%
|
|
|
|
|
|
|
|
Wells Fargo & Co.
|
|
|
700,000
|
|
|
31,780,000
|
|
Insurance Brokers — 2.5%
|
|
|
|
|
|
|
|
Aon plc - CL A
|
|
|
310,000
|
|
|
26,005,900
|
|
|
|
|
|
|
|
131,025,300
|
|
Health Care — 9.7%
|
|
|
|
|
|
|
|
Pharmaceuticals — 4.9%
|
|
|
|
|
|
|
|
Valeant Pharmaceuticals International, Inc.*
|
|
|
430,000
|
|
|
50,482,000
|
|
Health Care Services — 4.8%
|
|
|
|
|
|
|
|
Express Scripts Holding Co.*
|
|
|
425,000
|
|
|
29,852,000
|
|
Laboratory Corp. of America Holdings*
|
|
|
225,000
|
|
|
20,558,250
|
|
|
|
|
|
|
|
50,410,250
|
|
|
|
|
|
|
|
100,892,250
|
|
|
|
|
Principal
|
|
|
|
|
|
|
|
amount
|
|
|
|
|
|
|
|
or shares
|
|
|
Value
|
|
Energy — 5.4%
|
|
|
|
|
|
|
|
Oil & Gas Exploration & Production — 5.4%
|
|
|
|
|
|
|
|
Apache Corp.
|
|
|
300,000
|
|
$
|
25,782,000
|
|
Southwestern Energy Co.*
|
|
|
400,000
|
|
|
15,732,000
|
|
Range Resources Corp.
|
|
|
175,000
|
|
|
14,754,250
|
|
|
|
|
|
|
|
56,268,250
|
|
Materials — 1.9%
|
|
|
|
|
|
|
|
Construction Materials — 1.9%
|
|
|
|
|
|
|
|
Martin Marietta Materials, Inc.
|
|
|
203,041
|
|
|
20,291,918
|
|
Industrials — 1.1%
|
|
|
|
|
|
|
|
Aerospace & Defense — 1.1%
|
|
|
|
|
|
|
|
TransDigm Group, Inc.
|
|
|
70,000
|
|
|
11,271,400
|
|
Total Common Stocks
|
|
|
|
|
|
|
|
(Cost $434,921,946)
|
|
|
|
|
|
740,203,948
|
|
CASH EQUIVALENTS — 28.7%
|
|
|
|
|
|
|
|
U.S. Treasury Bills — 25.0%
|
|
|
|
|
|
|
|
U.S. Treasury Bills, 0.03% to 0.09%,
|
|
|
|
|
|
|
|
1/09/14 to 5/22/14
(a)
|
|
$
|
260,000,000
|
|
|
259,977,985
|
|
Money Market Funds — 3.7%
|
|
|
|
|
|
|
|
Wells Fargo Advantage Government Money Market Fund -
|
|
|
|
|
|
|
|
Institutional Class 0.01%
(b)
|
|
|
38,405,422
|
|
|
38,405,422
|
|
Total Cash Equivalents
|
|
|
|
|
|
|
|
(Cost $298,373,308)
|
|
|
|
|
|
298,383,407
|
|
Total Investments in Securities
|
|
|
|
|
|
|
|
(Cost $733,295,254)
|
|
|
|
|
|
1,038,587,355
|
|
Other Assets Less Other Liabilities — 0.1%
|
|
|
|
|
|
1,184,332
|
|
Net Assets — 100.0%
|
|
|
|
|
$
|
1,039,771,687
|
|
Net Asset Value Per Share
|
|
|
|
|
$
|
32.47
|
|
*
|
Non-income producing
|
(a)
|
Interest rates presented represent the yield to maturity at the date of purchase.
|
(b)
|
Rate presented represents the annualized 7-day yield at December 31, 2013.
|
weitzinvestments.com 15
PARTNERS III OPPORTUNITY FUND
PORTFOLIO MANAGER’S DISCUSSION & ANALYSIS
Portfolio Manager: Wallace R. Weitz, CFA
The Partners III Opportunity Fund’s Institutional Class returned +6.2% in the fourth calendar quarter, compared to +10.5% for the S&P 500 and +10.1% for the Russell 3000. For the calendar year, the Fund returned +32.8% compared to +32.4% for the S&P 500 and +33.6% for the Russell 3000. It was a very good year, with stocks enjoying exceptional gains. The Fund’s absolute returns were terrific, and the relative results were solid as well.
Our consumer discretionary holdings fueled the Fund’s fourth quarter gains. Liberty Interactive Corp. (+25%) announced plans to create a tracking stock for its ecommerce assets and posted solid quarterly earnings at QVC U.S. Liberty Ventures (+39%) surged due to an improved operating report from core investment Expedia and enthusiasm over the pending spinout of Liberty TripAdvisor Holdings. Both Iconix Brand Group (+20%) and DIRECTV (+16%) enhanced per share value growth by repurchasing stock at attractive prices. The Fund’s short positions in broad-based stock ETF’s detracted from results, as expected in a uniformly rising market. Our cautious portfolio positioning due to higher valuation levels also muted the Fund’s quarterly returns.
Valeant Pharmaceuticals was by far the largest contributor to full year results. Valeant (+96%) nearly doubled as the company acquired Bausch + Lomb (eye health), integrated Medicis (dermatology) and reported organic growth across its expanded platform. The Fund’s large consumer discretionary weighting also buoyed results, as the sector was the market’s top performer for the year. Standout contributors included Live Nation (+112%), Iconix (+78%), Liberty Global (+44%) and Cumulus Media (+190%). Security selection drove strong performance from the technology sector. The Fund no longer owns Hewlett-Packard or Dell, but both posted healthy gains from very depressed levels early in the year. Texas Instruments (+46%), Google (+58%) and Microsoft (+44%) also delivered returns well above the tech sector average. The Fund’s short positions were a moderate yet manageable drag on full year results.
We bought five new stocks during the quarter. Oracle is the world’s largest enterprise software company. Oracle continues to sell more software licenses, increase its installed base, and drive recurring revenue through attached support agreements. The high margin support business generates tremendous free cash flow, and capital allocation remains shareholder friendly.
The company has been reinvesting in productive R&D, acquiring complementary businesses and shrinking the share count at attractive prices. We think Oracle is well positioned for the future with a strong cloud offering and entrenched advantages in database scalability and reliability.
Endo Health Solutions is a specialty pharmaceutical and device company seeking to consolidate niche drug categories in attractive markets where it can use scale to eliminate costs and ramp distribution. The company’s durable assets include its urology platform, pain franchise and controlled substance generics business. Endo’s proposed acquisition of Paladin Laboratories will accelerate its strategy by creating an Irish domiciled company with a more attractive tax structure. We expect CEO Rajiv De Silva and his team to compound business value at a healthy clip over the next several years. We also initiated smaller positions in Express Scripts (pharmacy benefit management), Avon Products (beauty products) and The ADT Corporation (home alarm monitoring). We would own more of each company at the right price.
During the quarter we closed out the Fund’s short position in the Russell 2000 Value ETF, replacing it with additional short exposure to the Russell Midcap ETF to better balance our short positions across the market cap spectrum. We reduced our Aon plc position materially as the shares continued to gain momentum. We also trimmed Live Nation as the stock rallied, and exited our small holdings of FTI Consulting at a gain.
We often describe Partners III as a long-biased equity fund with additional tools. We reduced our long stock exposure from nearly 100% a year ago to 73% today in response to rising valuation levels. This long exposure is near the low end of our historical range, as stock prices simply increased much faster than our business value estimates throughout the year. With compelling bargains scarce, we own far fewer outsized positions than normal in the Fund. We would gladly increase our holdings of most portfolio companies at lower prices and welcome additional stock price volatility in the coming year.
Partners III Opportunity has the broadest toolkit of our equity funds. The Fund invests in companies of all sizes and typically maintains short positions. Partners III is approximately 58% “net long” at year end, up slightly from September. Our long positions are 73% of net assets, while our effective short positions represent 15% of net assets. The Fund’s shorts include small, mid and large-cap stock ETF’s.
New and Eliminated Securities for Quarter Ended December 31, 2013
|
New ($mil
)
|
|
Eliminations ($mil)
|
Oracle
|
|
$
|
18.6
|
|
Ishares Russell 2000 Value Fund (short)
|
|
$
|
12.5
|
|
Endo Health Solutions
|
|
|
11.1
|
|
FTI Consulting
|
|
|
1.0
|
|
Express Scripts
|
|
|
8.8
|
|
|
|
|
|
|
Avon Products
|
|
|
5.2
|
|
|
|
|
|
|
ADT
|
|
|
4.0
|
|
|
|
|
|
|
16 Weitz Funds
PARTNERS III OPPORTUNITY FUND
PERFORMANCE • (UNAUDITED)
|
|
Total Returns
|
|
Average Annual Total Returns
|
|
|
|
3 Mos.
|
|
1 Year
|
|
3 Year
|
|
5 Year
|
|
10 Year
|
|
15 Year
|
|
20 Year
|
|
25 Year
|
|
30 Year
|
|
Partners III –
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Institutional Class
|
|
6.15
|
%
|
|
32.81
|
%
|
|
16.54
|
%
|
|
24.50
|
%
|
|
9.57
|
%
|
|
10.80
|
%
|
|
12.88
|
%
|
|
13.47
|
%
|
|
13.64
|
%
|
|
S&P 500
|
|
10.51
|
|
|
32.39
|
|
|
16.18
|
|
|
17.94
|
|
|
7.40
|
|
|
4.68
|
|
|
9.22
|
|
|
10.25
|
|
|
11.08
|
|
|
Russell 3000
|
|
10.10
|
|
|
33.55
|
|
|
16.24
|
|
|
18.71
|
|
|
7.88
|
|
|
5.32
|
|
|
9.32
|
|
|
10.39
|
|
|
10.97
|
|
|
Russell 3000 Value
|
|
9.95
|
|
|
32.69
|
|
|
15.93
|
|
|
16.75
|
|
|
7.66
|
|
|
6.48
|
|
|
9.74
|
|
|
10.60
|
|
|
11.50
|
|
Growth of $10,000 Since Inception
This chart depicts the change in the value of a $10,000 investment in Partners III – Institutional Class for the period June 1, 1983 through December 31, 2013, as compared with the growth of the Standard & Poor’s 500 Index during the same period. Index performance is hypothetical and is shown for illustrative purposes only.
|
|
|
Partners III
|
|
S&P 500
|
|
Relative
|
|
Year
|
|
(1)
|
|
(2)
|
|
Results (1)-(2)
|
|
1983 (6/1/83)
|
|
8.60
|
%
|
|
4.15
|
%
|
|
4.45
|
%
|
|
1984
|
|
11.20
|
|
|
6.10
|
|
|
5.10
|
|
|
1985
|
|
38.55
|
|
|
31.60
|
|
|
6.95
|
|
|
1986
|
|
8.45
|
|
|
18.60
|
|
|
-10.15
|
|
|
1987
|
|
-1.38
|
|
|
5.10
|
|
|
-6.48
|
|
|
1988
|
|
19.48
|
|
|
16.61
|
|
|
2.87
|
|
|
1989
|
|
19.36
|
|
|
31.69
|
|
|
-12.33
|
|
|
1990
|
|
-5.47
|
|
|
-3.10
|
|
|
-2.37
|
|
|
1991
|
|
23.19
|
|
|
30.47
|
|
|
-7.28
|
|
|
1992
|
|
13.53
|
|
|
7.62
|
|
|
5.91
|
|
|
1993
|
|
32.29
|
|
|
10.08
|
|
|
22.21
|
|
|
1994
|
|
-11.13
|
|
|
1.32
|
|
|
-12.45
|
|
|
1995
|
|
43.33
|
|
|
37.58
|
|
|
5.75
|
|
|
1996
|
|
25.02
|
|
|
22.96
|
|
|
2.06
|
|
|
1997
|
|
37.07
|
|
|
33.36
|
|
|
3.71
|
|
|
1998
|
|
10.88
|
|
|
28.58
|
|
|
-17.70
|
|
|
1999
|
|
10.56
|
|
|
21.04
|
|
|
-10.48
|
|
|
2000
|
|
32.40
|
|
|
-9.10
|
|
|
41.50
|
|
|
2001
|
|
6.63
|
|
|
-11.89
|
|
|
18.52
|
|
|
2002
|
|
-16.12
|
|
|
-22.10
|
|
|
5.98
|
|
|
2003
|
|
42.64
|
|
|
28.68
|
|
|
13.96
|
|
|
2004
|
|
22.11
|
|
|
10.88
|
|
|
11.23
|
|
|
2005
|
|
-0.69
|
|
|
4.91
|
|
|
-5.60
|
|
|
2006
|
|
20.39
|
|
|
15.79
|
|
|
4.60
|
|
|
2007
|
|
-12.86
|
|
|
5.49
|
|
|
-18.35
|
|
|
2008
|
|
-34.45
|
|
|
-37.00
|
|
|
2.55
|
|
|
2009
|
|
42.05
|
|
|
26.46
|
|
|
15.59
|
|
|
2010
|
|
33.03
|
|
|
15.06
|
|
|
17.97
|
|
|
2011
|
|
5.56
|
|
|
2.11
|
|
|
3.45
|
|
|
2012
|
|
12.91
|
|
|
16.00
|
|
|
-3.09
|
|
|
2013
|
|
32.81
|
|
|
32.39
|
|
|
0.42
|
|
|
Since Inception:
|
|
|
|
|
|
|
|
|
|
|
Cumulative
|
|
|
|
|
|
|
|
|
|
|
Return
|
|
4,933.23
|
|
|
2,333.97
|
|
|
2,599.26
|
|
|
Avg. Annual
|
|
|
|
|
|
|
|
|
|
|
Return
|
|
13.66
|
|
|
10.99
|
|
|
2.67
|
|
These performance numbers reflect the deduction of the Fund’s Institutional Class annual operating expenses which as stated in its most recent prospectus are 1.60% of the Fund’s net assets. The returns assume redemption at the end of each period and reinvestment of dividends. Total returns shown include fee waivers and expense reimbursements, if any; total returns would have been lower had there been no waiver of fees and/or reimbursement of expenses by the Adviser.
This information represents past performance and past performance does not guarantee future results.
The investment return and the principal value of an investment in this Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month-end may be obtained at www.weitzinvestments.com/funds_and_performance/fund_performance.fs.
See page 4 for additional performance disclosures. See page 54 for a description of all indices.
Performance information does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
weitzinvestments.com 17
PARTNERS III OPPORTUNITY FUND
PORTFOLIO PROFILE • (UNAUDITED)
Top Ten
Stocks
|
Valeant Pharmaceuticals International, Inc.
|
|
|
6.9
|
%
|
DIRECTV
|
|
|
4.4
|
|
Wells Fargo & Co.
|
|
|
3.7
|
|
Redwood Trust, Inc.
|
|
|
3.5
|
|
Liberty Global plc - Series C
|
|
|
3.4
|
|
Liberty Media Corp. - Series A
|
|
|
3.3
|
|
Iconix Brand Group, Inc.
|
|
|
3.2
|
|
Berkshire Hathaway, Inc. - CL B
|
|
|
3.2
|
|
TransDigm Group, Inc.
|
|
|
3.2
|
|
Texas Instruments, Inc.
|
|
|
3.0
|
|
% of Net Assets
|
|
|
37.8
|
%
|
|
|
|
|
|
Industry Sectors
|
Consumer Discretionary
|
|
|
27.1
|
%
|
Financials
|
|
|
11.9
|
|
Health Care
|
|
|
11.4
|
|
Information Technology
|
|
|
10.6
|
|
Energy
|
|
|
5.4
|
|
Industrials
|
|
|
3.9
|
|
Materials
|
|
|
2.3
|
|
Consumer Staples
|
|
|
0.5
|
|
Exchange Traded Funds
|
|
|
1.5
|
|
Securities Sold Short
|
|
|
(9.0
|
)
|
Short Proceeds/Other
|
|
|
34.4
|
|
Net Assets
|
|
|
100.0
|
%
|
Top Performers for Quarter Ended December 31, 2013
|
|
|
|
QTD Return
|
|
Average Weight
|
|
Contribution to
|
Security Name
|
|
|
of Security
|
|
in Portfolio
|
|
Fund Performance
|
Valeant Pharmaceuticals International, Inc.
|
|
|
12.5
|
%
|
|
6.9
|
%
|
|
0.85
|
%
|
Liberty Interactive Corp. - Series A
|
|
|
25.1
|
|
|
2.9
|
|
|
0.66
|
|
DIRECTV
|
|
|
15.6
|
|
|
4.2
|
|
|
0.63
|
|
Liberty Ventures - Series A
|
|
|
39.0
|
|
|
1.8
|
|
|
0.60
|
|
Iconix Brand Group, Inc.
|
|
|
19.5
|
|
|
3.2
|
|
|
0.58
|
|
Contributions to Fund performance are based on actual daily holdings. Securities may have been bought or sold during the quarter.
Source: FactSet Portfolio Analytics
|
|
|
|
|
|
|
|
|
|
|
Bottom Performers for Quarter Ended December 31, 2013
|
|
|
|
QTD Return
|
|
Average Weight
|
|
Contribution to
|
Security Name
|
|
|
of Security
|
|
in Portfolio
|
|
Fund Performance
|
Ishares Russell 2000 Fund (short)
|
|
|
8.6
|
%
|
|
(3.4
|
)%
|
|
(0.29
|
)%
|
SPDR S&P 500 ETF Trust (short)
|
|
|
10.5
|
|
|
(2.6
|
)
|
|
(0.27
|
)
|
Ishares Russell Midcap Fund (short)
|
|
|
8.3
|
|
|
(2.5
|
)
|
|
(0.21
|
)
|
Laboratory Corp. of America Holdings
|
|
|
(7.8
|
)
|
|
2.5
|
|
|
(0.19
|
)
|
FLIR Systems, Inc.
|
|
|
(3.8
|
)
|
|
1.6
|
|
|
(0.08
|
)
|
Contributions to Fund performance are based on actual daily holdings. Securities may have been bought or sold during the quarter.
Source: FactSet Portfolio Analytics
18 Weitz Funds
PARTNERS III OPPORTUNITY FUND
SCHEDULE OF INVESTMENTS • DECEMBER 31, 2013 • (UNAUDITED)
COMMON STOCKS — 73.1%
|
|
|
Shares
|
|
|
Value
|
|
Consumer Discretionary — 27.1%
|
|
|
|
|
|
|
|
Cable & Satellite — 7.8%
|
|
|
|
|
|
|
|
DIRECTV*
|
|
|
700,000
|
|
$
|
48,363,000
|
|
Liberty Global plc - Series C*
(b)
|
|
|
450,000
|
|
|
37,944,000
|
|
|
|
|
|
|
|
86,307,000
|
|
Internet & Catalog Retail — 4.9%
|
|
|
|
|
|
|
|
Liberty Interactive Corp. - Series A*
(b)
|
|
|
1,100,000
|
|
|
32,285,000
|
|
Liberty Ventures - Series A*
(b)
|
|
|
180,000
|
|
|
22,066,200
|
|
|
|
|
|
|
|
54,351,200
|
|
Broadcasting — 4.8%
|
|
|
|
|
|
|
|
Liberty Media Corp. - Series A*
(b)
|
|
|
250,000
|
|
|
36,612,500
|
|
Cumulus Media, Inc. - CL A*
|
|
|
2,100,000
|
|
|
16,233,000
|
|
|
|
|
|
|
|
52,845,500
|
|
Textiles, Apparel & Luxury Goods — 3.2%
|
|
|
|
|
|
|
|
Iconix Brand Group, Inc.*
|
|
|
900,000
|
|
|
35,730,000
|
|
Movies & Entertainment — 2.5%
|
|
|
|
|
|
|
|
Live Nation Entertainment, Inc.*
|
|
|
1,400,000
|
|
|
27,664,000
|
|
Hotels, Restaurants & Leisure — 2.2%
|
|
|
|
|
|
|
|
Interval Leisure Group, Inc.
|
|
|
775,000
|
|
|
23,947,500
|
|
Advertising — 1.7%
|
|
|
|
|
|
|
|
National CineMedia, Inc.
|
|
|
940,000
|
|
|
18,762,400
|
|
|
|
|
|
|
|
299,607,600
|
|
Financials — 11.9%
|
|
|
|
|
|
|
|
Commercial Banks — 3.7%
|
|
|
|
|
|
|
|
Wells Fargo & Co.
(b)
|
|
|
900,000
|
|
|
40,860,000
|
|
Mortgage REITs — 3.5%
|
|
|
|
|
|
|
|
Redwood Trust, Inc.
(b)
|
|
|
2,001,200
|
|
|
38,763,244
|
|
Property & Casualty Insurance — 3.2%
|
|
|
|
|
|
|
|
Berkshire Hathaway, Inc. - CL B*
(b)
|
|
|
300,000
|
|
|
35,568,000
|
|
Insurance Brokers — 1.5%
|
|
|
|
|
|
|
|
Aon plc - CL A
(b)
|
|
|
200,000
|
|
|
16,778,000
|
|
|
|
|
|
|
|
131,969,244
|
|
Health Care — 11.4%
|
|
|
|
|
|
|
|
Pharmaceuticals — 7.9%
|
|
|
|
|
|
|
|
Valeant Pharmaceuticals International, Inc.*
(b)
|
|
|
650,000
|
|
|
76,310,000
|
|
Endo Health Solutions Inc.*
|
|
|
170,000
|
|
|
11,468,200
|
|
|
|
|
|
|
|
87,778,200
|
|
Health Care Services — 3.5%
|
|
|
|
|
|
|
|
Laboratory Corp. of America Holdings*
(b)
|
|
|
320,000
|
|
|
29,238,400
|
|
Express Scripts Holding Co.*
|
|
|
140,000
|
|
|
9,833,600
|
|
|
|
|
|
|
|
39,072,000
|
|
|
|
|
|
|
|
126,850,200
|
|
Information Technology — 10.6%
|
|
|
|
|
|
|
|
Software — 3.2%
|
|
|
|
|
|
|
|
Oracle Corp.
|
|
|
550,000
|
|
|
21,043,000
|
|
Microsoft Corp.
|
|
|
380,000
|
|
|
14,223,400
|
|
|
|
|
|
|
|
35,266,400
|
|
Semiconductors — 3.0%
|
|
|
|
|
|
|
|
Texas Instruments, Inc.
|
|
|
750,000
|
|
|
32,932,500
|
|
Internet Software & Services — 2.0%
|
|
|
|
|
|
|
|
Google, Inc. - CL A*
(b)
|
|
|
10,000
|
|
|
11,207,100
|
|
XO Group, Inc.*
|
|
|
730,000
|
|
|
10,847,800
|
|
|
|
|
|
|
|
22,054,900
|
|
|
|
|
Shares
|
|
|
Value
|
|
Electronic Equipment & Instruments — 1.5%
|
|
|
|
|
|
|
|
FLIR Systems, Inc.
|
|
|
570,000
|
|
$
|
17,157,000
|
|
IT Services — 0.9%
|
|
|
|
|
|
|
|
CACI International, Inc. - CL A*
|
|
|
130,000
|
|
|
9,518,600
|
|
|
|
|
|
|
|
116,929,400
|
|
Energy — 5.4%
|
|
|
|
|
|
|
|
Oil & Gas Exploration & Production — 4.9%
|
|
|
|
|
|
|
|
Apache Corp.
(b)
|
|
|
300,000
|
|
|
25,782,000
|
|
Range Resources Corp.
(b)
|
|
|
240,000
|
|
|
20,234,400
|
|
Southwestern Energy Co.*
|
|
|
200,000
|
|
|
7,866,000
|
|
|
|
|
|
|
|
53,882,400
|
|
Oil & Gas Refining & Marketing — 0.5%
|
|
|
|
|
|
|
|
World Fuel Services Corp.
|
|
|
130,000
|
|
|
5,610,800
|
|
|
|
|
|
|
|
59,493,200
|
|
Industrials — 3.9%
|
|
|
|
|
|
|
|
Aerospace & Defense — 3.2%
|
|
|
|
|
|
|
|
TransDigm Group, Inc.
(b)
|
|
|
220,000
|
|
|
35,424,400
|
|
Commercial Services & Supplies — 0.4%
|
|
|
|
|
|
|
|
The ADT Corp.
|
|
|
100,000
|
|
|
4,047,000
|
|
Machinery — 0.3%
|
|
|
|
|
|
|
|
Intelligent Systems Corp.* # †
|
|
|
2,270,000
|
|
|
3,677,400
|
|
|
|
|
|
|
|
43,148,800
|
|
Materials — 2.3%
|
|
|
|
|
|
|
|
Construction Materials — 2.3%
|
|
|
|
|
|
|
|
Martin Marietta Materials, Inc.
(b)
|
|
|
260,000
|
|
|
25,984,400
|
|
Consumer Staples — 0.5%
|
|
|
|
|
|
|
|
Personal Products — 0.5%
|
|
|
|
|
|
|
|
Avon Products, Inc.
|
|
|
300,000
|
|
|
5,166,000
|
|
Total Common Stocks
|
|
|
|
|
|
|
|
(Cost $479,891,081)
|
|
|
|
|
|
809,148,844
|
|
EXCHANGE TRADED FUNDS — 1.5%
|
|
|
|
|
|
|
|
ProShares Short 20+ Year Treasury Fund*
|
|
|
|
|
|
|
|
(Cost $15,848,839)
|
|
|
500,000
|
|
|
16,455,000
|
|
|
|
|
Expiration
|
|
|
Shares
|
|
|
|
|
PUT
|
|
|
date/
|
|
|
subject
|
|
|
|
|
OPTIONS* — 0.0%
|
|
|
Strike price
|
|
|
to option
|
|
|
|
|
Put Options
|
|
|
|
|
|
|
|
|
|
|
Ishares Russell
|
|
|
|
|
|
|
|
|
|
|
Midcap Fund
|
|
|
Feb. 2014 / $140
|
|
|
100,000
|
|
|
62,500
|
|
Ishares Russell
|
|
|
|
|
|
|
|
|
|
|
Midcap Fund
|
|
|
Feb. 2014 / $146
|
|
|
50,000
|
|
|
75,000
|
|
S&P 500 Index
|
|
|
Jan. 2014 / $1,650
|
|
|
10,000
|
|
|
9,500
|
|
S&P 500 Index
|
|
|
March 2014 / $1,800
|
|
|
10,000
|
|
|
269,000
|
|
Total Put Options
|
|
|
|
|
|
|
|
|
|
|
(premiums paid $1,878,714)
|
|
|
|
|
|
|
|
|
416,000
|
|
weitzinvestments.com 19
PARTNERS III OPPORTUNITY FUND
SCHEDULE OF INVESTMENTS • (CONTINUED)
CASH EQUIVALENTS — 26.6%
|
|
|
Shares
|
|
|
Value
|
|
Wells Fargo Advantage Government Money Market Fund -
|
|
|
|
|
|
|
|
Institutional Class 0.01%
(a)
|
|
|
|
|
|
|
|
(Cost $294,183,302)
|
|
|
294,183,302
|
|
$
|
294,183,302
|
|
Total Investments in Securities
|
|
|
|
|
|
|
|
(Cost $791,801,936)
|
|
|
|
|
|
1,120,203,146
|
|
Due From Broker
(b)
— 8.4%
|
|
|
|
|
|
93,189,252
|
|
Securities Sold Short — (8.3%)
|
|
|
|
|
|
(91,596,100
|
)
|
Options Written — (0.7%)
|
|
|
|
|
|
(7,963,500
|
)
|
Other Liabilities in Excess of Other Assets — (0.6%)
|
|
|
|
|
|
(7,072,522
|
)
|
Net Assets — 100.0%
|
|
|
|
|
$
|
1,106,760,276
|
|
Net Asset Value Per Share - Institutional Class
|
|
|
|
|
$
|
16.35
|
|
Net Asset Value Per Share - Investor Class
|
|
|
|
|
$
|
16.23
|
|
SECURITIES SOLD SHORT — (8.3%)
|
|
|
|
|
|
|
|
Ishares Russell 2000 Fund
|
|
|
320,000
|
|
|
(36,899,200
|
)
|
Ishares Russell Midcap Fund
|
|
|
180,000
|
|
|
(26,996,400
|
)
|
SPDR S&P 500 ETF Trust
|
|
|
150,000
|
|
|
(27,700,500
|
)
|
Total Securities Sold Short
|
|
|
|
|
|
|
|
(proceeds $62,157,774)
|
|
|
|
|
|
(91,596,100
|
)
|
|
|
|
Expiration
|
|
|
Shares
|
|
|
|
|
|
|
|
date/
|
|
|
subject
|
|
|
|
|
OPTIONS WRITTEN*
|
|
|
Strike price
|
|
|
to option
|
|
|
Value
|
|
Covered Call Options
|
|
|
|
|
|
|
|
|
|
|
Google, Inc. - CL A
|
|
|
March 2014 / $1,115
|
|
|
10,000
|
|
$
|
(476,000
|
)
|
Valeant Pharmaceuticals
|
|
|
|
|
|
|
|
|
|
|
International, Inc.
|
|
|
April 2014 / $105
|
|
|
200,000
|
|
|
(3,400,000
|
)
|
|
|
|
|
|
|
|
|
|
(3,876,000
|
)
|
Uncovered Call Options
|
|
|
|
|
|
|
|
|
|
|
Ishares Russell
|
|
|
|
|
|
|
|
|
|
|
Midcap Fund
|
|
|
Feb. 2014 / $140
|
|
|
100,000
|
|
|
(1,060,000
|
)
|
Ishares Russell
|
|
|
|
|
|
|
|
|
|
|
Midcap Fund
|
|
|
Feb. 2014 / $146
|
|
|
50,000
|
|
|
(275,000
|
)
|
S&P 500 Index
|
|
|
Jan. 2014 / $1,650
|
|
|
10,000
|
|
|
(2,021,500
|
)
|
S&P 500 Index
|
|
|
March 2014 / $1,800
|
|
|
10,000
|
|
|
(731,000
|
)
|
|
|
|
|
|
|
|
|
|
(4,087,500
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total Options Written
|
|
|
|
|
|
|
|
|
|
|
(premiums received $4,974,430)
|
|
|
|
|
|
|
|
$
|
(7,963,500
|
)
|
*
|
Non-income producing
|
†
|
Controlled affiliate
|
#
|
Illiquid and/or restricted security that has been fair valued.
|
(a)
|
Rate presented represents the annualized 7-day yield at December 31, 2013.
|
(b)
|
Fully or partially pledged as collateral on securities sold short and outstanding written options.
|
20 Weitz Funds
This page has been left blank intentionally.
weitzinvestments.com 21
RESEARCH FUND
PORTFOLIO MANAGERS’ DISCUSSION & ANALYSIS
Co-Portfolio Managers:
Jonathan A. Baker, CFA; Barton B. Hooper, CFA;
David A. Perkins, CFA; & Andrew S. Weitz
The Research Fund returned +10.7% in the fourth calendar quarter, compared to +10.5% for the S&P 500, +10.1% for the Russell 3000 and +10.0% for the Russell 3000 Value. For the full calendar year, the Fund returned +39.0%, compared to +32.4% for the S&P 500, +33.6% for the Russell 3000 and +32.7% for the Russell 3000 Value.
The Fund’s consumer and technology holdings carried the quarter, just as they have the year. Last period’s laggards Outerwall (+35%) and Hewlett-Packard (+34%) combined with Interval Leisure (+31%) and Google (+28%) to put a bow on the final quarter of an exceptional year of returns for the Fund and U.S. equities alike. Liberty Interactive’s (+21% since initial purchase) reintroduction to the portfolio early in the quarter was met with near-immediate results, as investors cheered management’s plans to highlight the value of its global shopping network, QVC. We welcomed the opportunity to reacquire this uniquely advantaged retail model: offering excellent financial characteristics, global scale, a wonderful brand and, sitting in the Chairman’s seat, one of the best capital allocators available to public investors.
While reprising the Liberty investment has already proved rewarding, the Fund’s only other new addition for the quarter has, to date, not. Liquidity Services’ (-14% since initial purchase) online auctions match buyers with sellers of everything from retail returns to used capital assets to government agencies’ surplus goods. We believe Liquidity can continue to take share of this fragmented, still mostly “off-line” industry. The company is currently engaged in a competitive process to renew the contracts of its largest supplier, the U.S. Department of Defense, and the heightened uncertainty around the renewal has likely reduced the share price. We believe Liquidity’s multi-year track record of success, serving this highly sensitive customer, positions them well to win these contracts and retain the business.
The shares of other newer “vintage” portfolio holdings Brown & Brown (-2%) and Avon Products (-16%) have, like Liquidity’s, declined from the Fund’s initial purchase prices. We subsequently added to the Fund’s holdings of all three of these recent detractors. Whereas these flagging shares have invited further investment, the share prices of holdings such as Outerwall, Aon and FTI Consulting have accelerated toward our notions of fair value, and we trimmed the Fund’s positions in each accordingly.
Digital marketing agency Sapient was the only portfolio position we exited completely. The Fund’s ownership experience with Sapient was certainly a rewarding one, and it remains a business we would happily revisit at a renewed discount to our estimate of value.
Purchase activity across the portfolio exceeded the combined contribution from cash sources. As a result, residual cash balances declined from 22% of Fund net assets at the end of the prior quarter to 21% at the calendar year end.
Research is a focused, multi-cap equity fund that invests in companies of all sizes. The Fund is managed in a “sleeve” format, with each co-manager responsible for all decisions related to their portion of the portfolio’s assets. In addition to the unique portfolio management structure, the Fund has several characteristics that may further distinguish it from our other equity funds, including potentially higher levels of concentration, position sizes and turnover.
|
|
|
|
|
|
|
|
|
|
New and Eliminated Securities for Quarter Ended December 31, 2013
|
New ($000’s)
|
|
Eliminations ($000’s)
|
Liberty Interactive
|
|
$
|
1,029
|
|
Sapient
|
|
$
|
333
|
|
Liquidity Services
|
|
|
391
|
|
|
|
|
|
|
22 Weitz Funds
RESEARCH FUND
PERFORMANCE • (UNAUDITED)
|
|
Total Returns
|
|
Average Annual Total Returns
|
|
|
|
3 Mos.
|
|
1 Year
|
|
3 Year
|
|
5 Year
|
|
Since
Inception
|
|
Research
|
|
10.75
|
%
|
|
39.03
|
%
|
|
15.26
|
%
|
|
22.59
|
%
|
|
8.87
|
%
|
|
S&P 500
|
|
10.51
|
|
|
32.39
|
|
|
16.18
|
|
|
17.94
|
|
|
7.48
|
|
|
Russell 3000
|
|
10.10
|
|
|
33.55
|
|
|
16.24
|
|
|
18.71
|
|
|
7.94
|
|
|
Russell 3000 Value
|
|
9.95
|
|
|
32.69
|
|
|
15.93
|
|
|
16.75
|
|
|
6.91
|
|
Growth of $10,000 Since Inception
This chart depicts the change in the value of a $10,000 investment in the Research Fund for the period April 1, 2005 through December 31, 2013, as compared with the growth of the Standard & Poor’s 500 Index during the same period. Index performance is hypothetical and is shown for illustrative purposes only.
|
|
|
Research
|
|
S&P 500
|
|
Relative
|
|
Year
|
|
(1)
|
|
(2)
|
|
Results (1)-(2)
|
|
2005 (4/1/05)
|
|
4.01
|
%
|
|
7.22
|
%
|
|
-3.21
|
%
|
|
2006
|
|
21.83
|
|
|
15.79
|
|
|
6.04
|
|
|
2007
|
|
-13.41
|
|
|
5.49
|
|
|
-18.90
|
|
|
2008
|
|
-30.72
|
|
|
-37.00
|
|
|
6.28
|
|
|
2009
|
|
38.84
|
|
|
26.46
|
|
|
12.38
|
|
|
2010
|
|
30.32
|
|
|
15.06
|
|
|
15.26
|
|
|
2011
|
|
4.16
|
|
|
2.11
|
|
|
2.05
|
|
|
2012
|
|
5.74
|
|
|
16.00
|
|
|
-10.26
|
|
|
2013
|
|
39.03
|
|
|
32.39
|
|
|
6.64
|
|
|
Since Inception:
|
|
|
|
|
|
|
|
|
|
|
Cumulative
|
|
|
|
|
|
|
|
|
|
|
Return
|
|
110.57
|
|
|
88.17
|
|
|
22.40
|
|
|
Avg. Annual
|
|
|
|
|
|
|
|
|
|
|
Return
|
|
8.87
|
|
|
7.48
|
|
|
1.39
|
|
Starting January 1, 2011, these performance numbers reflect the deduction of the Fund’s actual operating expenses. For periods of time prior to January 1, 2011, the performance numbers reflect the deduction of annual pro forma operating expenses of 1.50%. Annual operating expenses for the Fund as stated in its most recent prospectus are 1.74% (gross) and 0.94% (net) of the Fund’s net assets. The investment adviser has agreed, in writing, to limit the total annual fund operating expenses (excluding taxes, interest, brokerage commissions, and acquired fund fees and expenses) to 0.90% of the Fund’s average daily net assets through July 31, 2014. The returns assume redemption at the end of each period and reinvestment of dividends. Total returns shown include fee waivers and expense reimbursements, if any; total returns would have been lower had there been no waiver of fees and/or reimbursement of expenses by the Adviser.
This information represents past performance and past performance does not guarantee future results.
The investment return and the principal value of an investment in this Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month-end may be obtained at www.weitzinvestments.com/funds_and_performance/fund_performance.fs.
See page 4 for additional performance disclosures. See page 54 for a description of all indices.
Performance information does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
weitzinvestments.com 23
RESEARCH FUND
PORTFOLIO PROFILE • (UNAUDITED)
Top Ten Stocks
|
Outerwall, Inc.
|
|
|
6.1
|
%
|
Liberty Interactive Corp. - Series A
|
|
|
5.3
|
|
Valeant Pharmaceuticals International, Inc.
|
|
|
4.7
|
|
Microsoft Corp.
|
|
|
4.1
|
|
FLIR Systems, Inc.
|
|
|
4.1
|
|
DIRECTV
|
|
|
3.6
|
|
Berkshire Hathaway, Inc. - CL B
|
|
|
3.5
|
|
FTI Consulting, Inc.
|
|
|
3.5
|
|
Hewlett-Packard Co.
|
|
|
3.4
|
|
Apache Corp.
|
|
|
3.3
|
|
% of Net Assets
|
|
|
41.6
|
%
|
|
|
|
|
|
Industry Sectors
|
Information Technology
|
|
|
28.4
|
%
|
Consumer Discretionary
|
|
|
24.9
|
|
Financials
|
|
|
7.7
|
|
Health Care
|
|
|
6.0
|
|
Industrials
|
|
|
5.2
|
|
Energy
|
|
|
5.1
|
|
Consumer Staples
|
|
|
2.1
|
|
Cash Equivalents/Other
|
|
|
20.6
|
|
Net Assets
|
|
|
100.0
|
%
|
Top Performers for Quarter Ended December 31, 2013
|
|
|
|
QTD Return
|
|
Average Weight
|
|
Contribution to
|
Security Name
|
|
|
of Security
|
|
in Portfolio
|
|
Fund Performance
|
Outerwall, Inc.
|
|
|
34.6
|
%
|
|
7.1
|
%
|
|
2.81
|
%
|
Liberty Interactive Corp. - Series A
|
|
|
25.1
|
|
|
4.7
|
|
|
1.13
|
|
Hewlett-Packard Co.
|
|
|
34.1
|
|
|
3.2
|
|
|
0.96
|
|
Valeant Pharmaceuticals International, Inc.
|
|
|
12.5
|
|
|
4.6
|
|
|
0.61
|
|
Microsoft Corp.
|
|
|
13.2
|
|
|
4.4
|
|
|
0.58
|
|
Contributions to Fund performance are based on actual daily holdings. Securities may have been bought or sold during the quarter.
Source: FactSet Portfolio Analytics
|
|
|
|
|
|
|
|
|
|
|
Bottom Performers for Quarter Ended December 31, 2013
|
|
|
|
QTD Return
|
|
Average Weight
|
|
Contribution to
|
Security Name
|
|
|
of Security
|
|
in Portfolio
|
|
Fund Performance
|
Avon Products, Inc.
|
|
|
(16.1
|
)%
|
|
1.7
|
%
|
|
(0.29
|
)%
|
FLIR Systems, Inc.
|
|
|
(3.8
|
)
|
|
4.2
|
|
|
(0.20
|
)
|
Liquidity Services, Inc.
|
|
|
(32.4
|
)
|
|
1.2
|
|
|
(0.19
|
)
|
Brown & Brown, Inc.
|
|
|
(1.9
|
)
|
|
2.0
|
|
|
(0.05
|
)
|
Target Corp.
|
|
|
(0.5
|
)
|
|
1.4
|
|
|
(0.01
|
)
|
Contributions to Fund performance are based on actual daily holdings. Securities may have been bought or sold during the quarter.
Source: FactSet Portfolio Analytics
24 Weitz Funds
RESEARCH FUND
SCHEDULE OF INVESTMENTS • DECEMBER 31, 2013 • (UNAUDITED)
COMMON STOCKS — 79.4%
|
|
|
Shares
|
|
|
Value
|
|
Information Technology — 28.4%
|
|
|
|
|
|
|
|
Software — 7.8%
|
|
|
|
|
|
|
|
Microsoft Corp.
|
|
|
26,415
|
|
$
|
988,714
|
|
ACI Worldwide, Inc.*
|
|
|
7,000
|
|
|
455,000
|
|
Oracle Corp.
|
|
|
11,000
|
|
|
420,860
|
|
|
|
|
|
|
|
1,864,574
|
|
Internet Software & Services — 5.6%
|
|
|
|
|
|
|
|
XO Group, Inc.*
|
|
|
45,803
|
|
|
680,633
|
|
Liquidity Services, Inc.*
|
|
|
15,000
|
|
|
339,900
|
|
Google, Inc. - CL A*
|
|
|
300
|
|
|
336,213
|
|
|
|
|
|
|
|
1,356,746
|
|
Computers & Peripherals — 5.3%
|
|
|
|
|
|
|
|
Hewlett-Packard Co.
|
|
|
29,530
|
|
|
826,249
|
|
Apple Inc.
|
|
|
800
|
|
|
448,888
|
|
|
|
|
|
|
|
1,275,137
|
|
Electronic Equipment & Instruments — 4.1%
|
|
|
|
|
|
|
|
FLIR Systems, Inc.
|
|
|
32,650
|
|
|
982,765
|
|
IT Services — 4.1%
|
|
|
|
|
|
|
|
Fidelity National Information Services, Inc.
|
|
|
7,200
|
|
|
386,496
|
|
CACI International, Inc. - CL A*
|
|
|
4,400
|
|
|
322,168
|
|
Accenture plc - CL A
|
|
|
3,300
|
|
|
271,326
|
|
|
|
|
|
|
|
979,990
|
|
Semiconductors — 1.5%
|
|
|
|
|
|
|
|
Texas Instruments, Inc.
|
|
|
8,000
|
|
|
351,280
|
|
|
|
|
|
|
|
6,810,492
|
|
Consumer Discretionary — 24.9%
|
|
|
|
|
|
|
|
Specialized Consumer Services — 6.1%
|
|
|
|
|
|
|
|
Outerwall, Inc.*
|
|
|
21,804
|
|
|
1,466,755
|
|
Internet & Catalog Retail — 5.3%
|
|
|
|
|
|
|
|
Liberty Interactive Corp. - Series A*
|
|
|
43,050
|
|
|
1,263,518
|
|
Cable & Satellite — 3.6%
|
|
|
|
|
|
|
|
DIRECTV*
|
|
|
12,570
|
|
|
868,461
|
|
Education Services — 2.4%
|
|
|
|
|
|
|
|
ITT Educational Services, Inc.*
|
|
|
17,360
|
|
|
582,949
|
|
Textiles, Apparel & Luxury Goods — 1.7%
|
|
|
|
|
|
|
|
Iconix Brand Group, Inc.*
|
|
|
10,000
|
|
|
397,000
|
|
Hotels, Restaurants & Leisure — 1.6%
|
|
|
|
|
|
|
|
Interval Leisure Group, Inc.
|
|
|
11,966
|
|
|
369,749
|
|
Movies & Entertainment — 1.5%
|
|
|
|
|
|
|
|
The Walt Disney Co.
|
|
|
4,800
|
|
|
366,720
|
|
Advertising — 1.4%
|
|
|
|
|
|
|
|
National CineMedia, Inc.
|
|
|
17,000
|
|
|
339,320
|
|
Multiline Retail — 1.3%
|
|
|
|
|
|
|
|
Target Corp.
|
|
|
5,000
|
|
|
316,350
|
|
|
|
|
|
|
|
5,970,822
|
|
Financials — 7.7%
|
|
|
|
|
|
|
|
Insurance Brokers — 4.2%
|
|
|
|
|
|
|
|
Brown & Brown, Inc.
|
|
|
21,718
|
|
|
681,728
|
|
Aon plc - CL A
|
|
|
3,930
|
|
|
329,688
|
|
|
|
|
|
|
|
1,011,416
|
|
Property & Casualty Insurance — 3.5%
|
|
|
|
|
|
|
|
Berkshire Hathaway, Inc. - CL B*
|
|
|
7,111
|
|
|
843,080
|
|
|
|
|
|
|
|
1,854,496
|
|
|
|
|
Shares
|
|
|
Value
|
|
Health Care — 6.0%
|
|
|
|
|
|
|
|
Pharmaceuticals — 4.7%
|
|
|
|
|
|
|
|
Valeant Pharmaceuticals International, Inc.*
|
|
|
9,585
|
|
$
|
1,125,279
|
|
Health Care Services — 1.3%
|
|
|
|
|
|
|
|
Express Scripts Holding Co.*
|
|
|
4,500
|
|
|
316,080
|
|
|
|
|
|
|
|
1,441,359
|
|
Industrials — 5.2%
|
|
|
|
|
|
|
|
Research & Consulting Services — 3.5%
|
|
|
|
|
|
|
|
FTI Consulting, Inc.*
|
|
|
20,266
|
|
|
833,743
|
|
Aerospace & Defense — 1.7%
|
|
|
|
|
|
|
|
TransDigm Group, Inc.
|
|
|
2,500
|
|
|
402,550
|
|
|
|
|
|
|
|
1,236,293
|
|
Energy — 5.1%
|
|
|
|
|
|
|
|
Oil & Gas Exploration & Production — 3.3%
|
|
|
|
|
|
|
|
Apache Corp.
|
|
|
9,176
|
|
|
788,585
|
|
Oil & Gas Refining & Marketing — 1.8%
|
|
|
|
|
|
|
|
World Fuel Services Corp.
|
|
|
10,000
|
|
|
431,600
|
|
|
|
|
|
|
|
1,220,185
|
|
Consumer Staples — 2.1%
|
|
|
|
|
|
|
|
Personal Products — 2.1%
|
|
|
|
|
|
|
|
Avon Products, Inc.
|
|
|
30,000
|
|
|
516,600
|
|
Total Common Stocks
|
|
|
|
|
|
|
|
(Cost $13,281,856)
|
|
|
|
|
|
19,050,247
|
|
CASH EQUIVALENTS — 21.2%
|
|
|
|
|
|
|
|
Wells Fargo Advantage Government Money Market Fund -
|
|
|
|
|
|
|
|
Institutional Class 0.01%
(a)
|
|
|
|
|
|
|
|
(Cost $5,075,820)
|
|
|
5,075,820
|
|
|
5,075,820
|
|
Total Investments in Securities
|
|
|
|
|
|
|
|
(Cost $18,357,676)
|
|
|
|
|
|
24,126,067
|
|
Other Liabilities in Excess of Other Assets — (0.6%)
|
|
|
|
|
|
(137,058
|
)
|
Net Assets — 100.0%
|
|
|
|
|
$
|
23,989,009
|
|
Net Asset Value Per Share
|
|
|
|
|
$
|
12.90
|
|
*
|
Non-income producing
|
(a)
|
Rate presented represents the annualized 7-day yield at December 31, 2013.
|
weitzinvestments.com 25
HICKORY FUND
PORTFOLIO MANAGERS’ DISCUSSION & ANALYSIS
Co-Portfolio Managers:
Wallace R. Weitz, CFA & Andrew S. Weitz
The Hickory Fund posted strong gains in the fourth quarter and calendar year. The Fund returned +6.7% in the quarter, compared with +8.7% for the Russell 2500. For the calendar year, the Fund returned +27.8% while the Russell 2500 rose 36.8%. We are pleased with this level of absolute performance, particularly given the defensive positioning of the Fund. Although the Fund’s residual cash position (30.8%) created a headwind relative to the benchmark’s stronger 2013 results, we believe we are well positioned to capitalize on new opportunities as they arise in 2014.
Our consumer-oriented businesses again led the way this quarter, including top contributors Cumulus Media (+46%), Interval Leisure (+31%), Liberty Interactive (+25%) and Iconix Brand Group (+20%) all finishing a strong year on a high note. We sold our remaining holdings of strong contributor Outerwall as shares more than recovered from the steep declines suffered in the third quarter. Outerwall has been a successful investment, despite being a volatile stock, and at the right valuation we would gladly be shareholders again.
Lab Corp (-8%) was the Fund’s largest detractor in the quarter. Shares fell as the company forecast 2014 earnings below Wall Street’s expectations. Testing volumes have remained below what the company needs to offset annual cost increases. This, combined with additional changes in Medicare reimbursement, creates margin headwinds for all industry participants. Many smaller players lack the scale and efficiency to adapt to these changes. As smaller operators close or are consolidated, we believe Lab Corp will benefit given its scale and position as an industry leader. The Fund’s remaining detractors in the quarter consist of one new holding (Liquidity Services described below) and a collection of others that experienced minor price declines in an otherwise strong equity market.
Portfolio activity picked up in the fourth quarter as the Fund initiated four new positions and exited three investments. Endo Health Solutions is a specialty pharmaceutical and device company seeking to consolidate niche drug categories in attractive markets (e.g. emerging markets or cash pay) where it can use its scale to eliminate costs and quickly ramp distribution. Endo’s proposed acquisition of Paladin Laboratories will accelerate its strategy by creating an Irish domiciled company with a more attractive tax structure. CEO Rajiv de Silva has an impressive resume, including his tenure as President and COO of Valeant Pharmaceuticals (another Weitz holding) and we believe he knows this playbook very well.
Liquidity Services operates online auctions of returned and surplus retail goods, as well as used capital assets and equipment for retail and manufacturing companies, and surplus and scrap materials for state, local and federal government agencies. We believe the company can continue to take share of a highly fragmented industry that has remained largely “off-line.” Lately, shares have been pressured as the company is engaged in a competitive process to renew its contracts with its largest supplier, the U.S. Department of Defense. We added to our initial position as its shares declined. We believe Liquidity’s multi-year track record of success, serving this highly sensitive customer, positions them well to win the contracts and retain the business.
Avon Products returned to the portfolio in the fourth quarter. Since the sale of our holdings, progress on Avon’s turnaround has continued, though the pace has disappointed investors. We continue to believe that CEO Sheri McCoy has the skill required to execute a turnaround and is building a strong and deep executive team. Avon’s investigation and potential settlements regarding non-compliance with the Foreign Corrupt Practices Act remains an ongoing issue and reared its head again in the fourth quarter. With the investigations and reviews substantially complete, Avon, the SEC and the Department of Justice are now negotiating potential penalties that, at their most extreme, could have a materially adverse impact on Avon. We think this “worst case scenario” is unlikely, but the market has been less forgiving. At the current, lower share price we believe this risk is more than adequately incorporated, offering investors the chance to purchase shares at a discount to potential business value.
Lastly, the Fund initiated a position in The ADT Corporation, the leader in home alarm monitoring. The investment thesis for ADT is presented in greater detail in this quarter’s Analyst Corner. Residual cash holdings declined in the quarter to 30.8% from 33.1% as net impact of the above purchases were greater than the sales of our successful investments in Outerwall, Aon and Omnicare as they approached our business values.
The Hickory Fund invests in our firm’s best smaller company ideas. The Fund’s weighted average market cap is approximately $6.2 billion, reflecting Hickory’s diverse mix of mid-cap and small-cap stocks. The Fund remains relatively concentrated, with the ten largest positions accounting for 33% of net assets.
|
New and Eliminated Securities for Quarter Ended December 31, 2013
|
New ($mil)
|
|
Eliminations ($mil)
|
ADT
|
|
$
|
11.0
|
|
Outerwall
|
|
$
|
16.3
|
|
Liquidity Services
|
|
|
8.5
|
|
Aon
|
|
|
7.7
|
|
Avon Products
|
|
|
7.0
|
|
Omnicare
|
|
|
6.3
|
|
Endo Health Solutions
|
|
|
6.6
|
|
|
|
|
|
|
26 Weitz Funds
HICKORY FUND
PERFORMANCE • (UNAUDITED)
|
|
Total Returns
|
|
Average Annual Total Returns
|
|
|
|
3 Mos.
|
|
1 Year
|
|
3 Year
|
|
5 Year
|
|
10 Year
|
|
15 Year
|
|
20 Year
|
|
Hickory
|
|
6.71
|
%
|
|
27.83
|
%
|
|
15.59
|
%
|
|
23.93
|
%
|
|
8.35
|
%
|
|
6.34
|
%
|
|
10.46
|
%
|
|
Russell 2500
|
|
8.66
|
|
|
36.80
|
|
|
16.28
|
|
|
21.77
|
|
|
9.81
|
|
|
9.67
|
|
|
10.77
|
|
|
Russell 2500 Value
|
|
8.83
|
|
|
33.32
|
|
|
15.38
|
|
|
19.61
|
|
|
9.29
|
|
|
10.16
|
|
|
11.44
|
|
|
S&P 500
|
|
10.51
|
|
|
32.39
|
|
|
16.18
|
|
|
17.94
|
|
|
7.40
|
|
|
4.68
|
|
|
9.22
|
|
Growth of $10,000
Effective June 30, 2008, the Hickory Fund adopted its current principal investment strategy of investing the majority of its assets in smaller and medium sized companies, those with a market capitalization of less than $10 billion at the time of purchase. Prior to July 1, 2008, the Fund’s primary benchmark was the S&P 500.
This chart depicts the change in the value of a $10,000 investment in the Hickory Fund for the period July 1, 2008 through December 31, 2013, as compared with the growth of the Russell 2500 Index during the same period. Index performance is hypothetical and is shown for illustrative purposes only.
|
|
|
Hickory
|
|
Russell
|
|
Relative
|
|
Year
|
|
(1)
|
|
2500 (2)
|
|
Results (1)-(2)
|
|
2008 (7/1/08)
|
|
-28.92
|
%
|
|
-31.21
|
%
|
|
2.29
|
%
|
|
2009
|
|
36.54
|
|
|
34.39
|
|
|
2.15
|
|
|
2010
|
|
38.66
|
|
|
26.71
|
|
|
11.95
|
|
|
2011
|
|
1.53
|
|
|
-2.51
|
|
|
4.04
|
|
|
2012
|
|
18.98
|
|
|
17.88
|
|
|
1.10
|
|
|
2013
|
|
27.83
|
|
|
36.80
|
|
|
-8.97
|
|
|
Since 7/1/08:
|
|
|
|
|
|
|
|
|
|
|
Cumulative
|
|
|
|
|
|
|
|
|
|
|
Return
|
|
107.83
|
|
|
84.15
|
|
|
23.68
|
|
|
Avg. Annual
|
|
|
|
|
|
|
|
|
|
|
Return
|
|
14.21
|
|
|
11.73
|
|
|
2.48
|
|
|
|
|
Hickory
|
|
S&P 500
|
|
Relative
|
|
Year
|
|
(1)
|
|
(2)
|
|
Results (1)-(2)
|
|
1993 (4/1/93)
|
|
20.27
|
%
|
|
5.45
|
%
|
|
14.82
|
%
|
|
1994
|
|
-17.29
|
|
|
1.32
|
|
|
-18.61
|
|
|
1995
|
|
40.48
|
|
|
37.58
|
|
|
2.90
|
|
|
1996
|
|
35.33
|
|
|
22.96
|
|
|
12.37
|
|
|
1997
|
|
39.17
|
|
|
33.36
|
|
|
5.81
|
|
|
1998
|
|
33.01
|
|
|
28.58
|
|
|
4.43
|
|
|
1999
|
|
36.67
|
|
|
21.04
|
|
|
15.63
|
|
|
2000
|
|
-17.24
|
|
|
-9.10
|
|
|
-8.14
|
|
|
2001
|
|
-4.65
|
|
|
-11.89
|
|
|
7.24
|
|
|
2002
|
|
-29.31
|
|
|
-22.10
|
|
|
-7.21
|
|
|
2003
|
|
47.95
|
|
|
28.68
|
|
|
19.27
|
|
|
2004
|
|
22.61
|
|
|
10.88
|
|
|
11.73
|
|
|
2005
|
|
-0.22
|
|
|
4.91
|
|
|
-5.13
|
|
|
2006
|
|
22.80
|
|
|
15.79
|
|
|
7.01
|
|
|
2007
|
|
-13.12
|
|
|
5.49
|
|
|
-18.61
|
|
|
2008
|
|
-41.59
|
|
|
-37.00
|
|
|
-4.59
|
|
|
2009
|
|
36.54
|
|
|
26.46
|
|
|
10.08
|
|
|
2010
|
|
38.66
|
|
|
15.06
|
|
|
23.60
|
|
|
2011
|
|
1.53
|
|
|
2.11
|
|
|
-0.58
|
|
|
2012
|
|
18.98
|
|
|
16.00
|
|
|
2.98
|
|
|
2013
|
|
27.83
|
|
|
32.39
|
|
|
-4.56
|
|
|
Since Inception:
|
|
|
|
|
|
|
|
|
|
|
Cumulative
|
|
|
|
|
|
|
|
|
|
|
Return
|
|
780.13
|
|
|
515.09
|
|
|
265.04
|
|
|
Avg. Annual
|
|
|
|
|
|
|
|
|
|
|
Return
|
|
11.04
|
|
|
9.14
|
|
|
1.90
|
|
These performance numbers reflect the deduction of the Fund’s annual operating expenses which as stated in its most recent prospectus are 1.26% of the Fund’s net assets. The returns assume redemption at the end of each period and reinvestment of dividends. Total returns shown include fee waivers and expense reimbursements, if any; total returns would have been lower had there been no waiver of fees and/or reimbursement of expenses by the Adviser.
This information represents past performance and past performance does not guarantee future results.
The investment return and the principal value of an investment in this Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month-end may be obtained at www.weitzinvestments.com/funds_and_performance/fund_performance.fs.
See page 4 for additional performance disclosures. See page 54 for a description of all indices.
Performance information does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
weitzinvestments.com 27
HICKORY FUND
PORTFOLIO PROFILE • (UNAUDITED)
Top Ten Stocks
|
Iconix Brand Group, Inc.
|
|
|
4.0
|
%
|
TransDigm Group, Inc.
|
|
|
4.0
|
|
Interval Leisure Group, Inc.
|
|
|
3.5
|
|
Liberty Interactive Corp. - Series A
|
|
|
3.3
|
|
Laboratory Corp. of America Holdings
|
|
|
3.3
|
|
Redwood Trust, Inc.
|
|
|
3.2
|
|
FLIR Systems, Inc.
|
|
|
3.1
|
|
Martin Marietta Materials, Inc.
|
|
|
3.0
|
|
Liberty Media Corp. - Series A
|
|
|
2.9
|
|
Live Nation Entertainment, Inc.
|
|
|
2.9
|
|
% of Net Assets
|
|
|
33.2
|
%
|
|
|
|
|
|
Industry Sectors
|
Consumer Discretionary
|
|
|
25.1
|
%
|
Information Technology
|
|
|
12.5
|
|
Industrials
|
|
|
9.0
|
|
Financials
|
|
|
8.3
|
|
Health Care
|
|
|
4.6
|
|
Materials
|
|
|
4.2
|
|
Energy
|
|
|
2.8
|
|
Consumer Staples
|
|
|
2.2
|
|
Telecommunication Services
|
|
|
0.5
|
|
Cash Equivalents/Other
|
|
|
30.8
|
|
Net Assets
|
|
|
100.0
|
%
|
Top Performers for Quarter Ended December 31, 2013
|
|
|
|
QTD Return
|
|
Average Weight
|
|
Contribution to
|
Security Name
|
|
|
of Security
|
|
in Portfolio
|
|
Fund Performance
|
Interval Leisure Group, Inc.
|
|
|
31.3
|
%
|
|
3.2
|
%
|
|
0.93
|
%
|
Outerwall, Inc.
|
|
|
34.6
|
|
|
0.8
|
|
|
0.80
|
|
Iconix Brand Group, Inc.
|
|
|
19.5
|
|
|
4.3
|
|
|
0.79
|
|
Liberty Interactive Corp. - Series A
|
|
|
25.1
|
|
|
3.2
|
|
|
0.73
|
|
Cumulus Media, Inc. - CL A
|
|
|
45.8
|
|
|
1.5
|
|
|
0.57
|
|
Contributions to Fund performance are based on actual daily holdings. Securities may have been bought or sold during the quarter.
Source: FactSet Portfolio Analytics
|
|
|
|
|
|
|
|
|
|
|
Bottom Performers for Quarter Ended December 31, 2013
|
|
|
|
QTD Return
|
|
Average Weight
|
|
Contribution to
|
Security Name
|
|
|
of Security
|
|
in Portfolio
|
|
Fund Performance
|
Laboratory Corp. of America Holdings
|
|
|
(7.8
|
)%
|
|
3.4
|
%
|
|
(0.25
|
)%
|
Liquidity Services, Inc.
|
|
|
(32.4
|
)
|
|
1.0
|
|
|
(0.20
|
)
|
FLIR Systems, Inc.
|
|
|
(3.8
|
)
|
|
3.2
|
|
|
(0.15
|
)
|
Brown & Brown, Inc.
|
|
|
(1.9
|
)
|
|
2.5
|
|
|
(0.07
|
)
|
Redwood Trust, Inc.
|
|
|
(0.1
|
)
|
|
3.1
|
|
|
(0.03
|
)
|
Contributions to Fund performance are based on actual daily holdings. Securities may have been bought or sold during the quarter.
Source: FactSet Portfolio Analytics
28 Weitz Funds
HICKORY FUND
SCHEDULE OF INVESTMENTS • DECEMBER 31, 2013 • (UNAUDITED)
COMMON STOCKS — 69.2%
|
|
Shares
|
|
Value
|
|
Consumer Discretionary — 25.1%
|
|
|
|
|
|
|
|
Broadcasting — 4.6%
|
|
|
|
|
|
|
|
Liberty Media Corp. - Series A*
|
|
|
110,000
|
|
$
|
16,109,500
|
|
Cumulus Media, Inc. - CL A*
|
|
|
1,200,000
|
|
|
9,276,000
|
|
|
|
|
|
|
|
25,385,500
|
|
Internet & Catalog Retail — 4.6%
|
|
|
|
|
|
|
|
Liberty Interactive Corp. - Series A*
|
|
|
625,000
|
|
|
18,343,750
|
|
Liberty Ventures - Series A*
|
|
|
55,000
|
|
|
6,742,450
|
|
|
|
|
|
|
|
25,086,200
|
|
Textiles, Apparel & Luxury Goods — 4.0%
|
|
|
|
|
|
|
|
Iconix Brand Group, Inc.*
|
|
|
550,000
|
|
|
21,835,000
|
|
Hotels, Restaurants & Leisure — 3.5%
|
|
|
|
|
|
|
|
Interval Leisure Group, Inc.
|
|
|
625,000
|
|
|
19,312,500
|
|
Movies & Entertainment — 2.9%
|
|
|
|
|
|
|
|
Live Nation Entertainment, Inc.*
|
|
|
800,000
|
|
|
15,808,000
|
|
Cable & Satellite — 2.8%
|
|
|
|
|
|
|
|
Liberty Global plc - Series C*
|
|
|
180,000
|
|
|
15,177,600
|
|
Advertising — 2.7%
|
|
|
|
|
|
|
|
National CineMedia, Inc.
|
|
|
750,000
|
|
|
14,970,000
|
|
|
|
|
|
|
|
137,574,800
|
|
Information Technology — 12.5%
|
|
|
|
|
|
|
|
IT Services — 4.2%
|
|
|
|
|
|
|
|
CACI International, Inc. - CL A*
|
|
|
180,000
|
|
|
13,179,600
|
|
Sapient Corp.*
|
|
|
550,000
|
|
|
9,548,000
|
|
|
|
|
|
|
|
22,727,600
|
|
Internet Software & Services — 3.5%
|
|
|
|
|
|
|
|
XO Group, Inc.*
|
|
|
800,000
|
|
|
11,888,000
|
|
Liquidity Services, Inc.*
|
|
|
325,000
|
|
|
7,364,500
|
|
|
|
|
|
|
|
19,252,500
|
|
Electronic Equipment & Instruments — 3.1%
|
|
|
|
|
|
|
|
FLIR Systems, Inc.
|
|
|
570,000
|
|
|
17,157,000
|
|
Software — 1.7%
|
|
|
|
|
|
|
|
ACI Worldwide, Inc.*
|
|
|
143,944
|
|
|
9,356,360
|
|
|
|
|
|
|
|
68,493,460
|
|
Industrials — 9.0%
|
|
|
|
|
|
|
|
Aerospace & Defense — 4.0%
|
|
|
|
|
|
|
|
TransDigm Group, Inc.
|
|
|
135,000
|
|
|
21,737,700
|
|
Commercial Services & Supplies — 2.9%
|
|
|
|
|
|
|
|
The ADT Corp.
|
|
|
275,000
|
|
|
11,129,250
|
|
Ascent Capital Group, Inc. - CL A*
|
|
|
60,000
|
|
|
5,133,600
|
|
|
|
|
|
|
|
16,262,850
|
|
Research & Consulting Services — 2.1%
|
|
|
|
|
|
|
|
FTI Consulting, Inc.*
|
|
|
280,000
|
|
|
11,519,200
|
|
|
|
|
|
|
|
49,519,750
|
|
Financials — 8.3%
|
|
|
|
|
|
|
|
Insurance Brokers — 3.3%
|
|
|
|
|
|
|
|
Brown & Brown, Inc.
|
|
|
440,000
|
|
|
13,811,600
|
|
Willis Group Holdings Ltd.
|
|
|
100,000
|
|
|
4,481,000
|
|
|
|
|
|
|
|
18,292,600
|
|
Mortgage REITs — 3.2%
|
|
|
|
|
|
|
|
Redwood Trust, Inc.
|
|
|
900,000
|
|
|
17,433,000
|
|
Property & Casualty Insurance — 1.8%
|
|
|
|
|
|
|
|
CNA Financial Corp.
|
|
|
230,000
|
|
|
9,864,700
|
|
|
|
|
|
|
|
45,590,300
|
|
|
|
|
Principal
|
|
|
|
|
|
|
|
amount
|
|
|
|
|
|
|
|
or shares
|
|
|
Value
|
|
Health Care — 4.6%
|
|
|
|
|
|
|
|
Health Care Services — 3.3%
|
|
|
|
|
|
|
|
Laboratory Corp. of America Holdings*
|
|
|
200,000
|
|
$
|
18,274,000
|
|
Pharmaceuticals — 1.3%
|
|
|
|
|
|
|
|
Endo Health Solutions Inc.*
|
|
|
100,000
|
|
|
6,746,000
|
|
|
|
|
|
|
|
25,020,000
|
|
Materials — 4.2%
|
|
|
|
|
|
|
|
Construction Materials — 3.0%
|
|
|
|
|
|
|
|
Martin Marietta Materials, Inc.
|
|
|
165,000
|
|
|
16,490,100
|
|
Metals & Mining — 1.2%
|
|
|
|
|
|
|
|
Compass Minerals International, Inc.
|
|
|
80,000
|
|
|
6,404,000
|
|
|
|
|
|
|
|
22,894,100
|
|
Energy — 2.8%
|
|
|
|
|
|
|
|
Oil & Gas Refining & Marketing — 2.8%
|
|
|
|
|
|
|
|
World Fuel Services Corp.
|
|
|
360,000
|
|
|
15,537,600
|
|
Consumer Staples — 2.2%
|
|
|
|
|
|
|
|
Personal Products — 2.2%
|
|
|
|
|
|
|
|
Avon Products, Inc.
|
|
|
400,000
|
|
|
6,888,000
|
|
Prestige Brands Holdings, Inc.*
|
|
|
150,000
|
|
|
5,370,000
|
|
|
|
|
|
|
|
12,258,000
|
|
Telecommunication Services — 0.5%
|
|
|
|
|
|
|
|
Diversified Telecommunication Services — 0.5%
|
|
|
|
|
|
|
|
LICT Corp.* #
|
|
|
1,005
|
|
|
2,449,562
|
|
Total Common Stocks
|
|
|
|
|
|
|
|
(Cost $237,666,646)
|
|
|
|
|
|
379,337,572
|
|
|
|
|
|
|
|
|
|
CASH EQUIVALENTS — 30.9%
|
|
|
|
|
|
|
|
U.S. Treasury Bills — 23.7%
|
|
|
|
|
|
|
|
U.S. Treasury Bills, 0.03% to 0.09%,
|
|
|
|
|
|
|
|
1/09/14 to 5/22/14
(a)
|
|
$
|
130,000,000
|
|
|
129,989,060
|
|
Money Market Funds — 7.2%
|
|
|
|
|
|
|
|
Wells Fargo Advantage Government Money Market Fund -
|
|
|
|
|
|
|
|
Institutional Class 0.01%
(b)
|
|
|
39,482,255
|
|
|
39,482,255
|
|
Total Cash Equivalents
|
|
|
|
|
|
|
|
(Cost $169,466,079)
|
|
|
|
|
|
169,471,315
|
|
Total Investments in Securities
|
|
|
|
|
|
|
|
(Cost $407,132,725)
|
|
|
|
|
|
548,808,887
|
|
Other Liabilities in Excess of Other Assets — (0.1%)
|
|
|
|
|
|
(773,062
|
)
|
Net Assets — 100.0%
|
|
|
|
|
$
|
548,035,825
|
|
Net Asset Value Per Share
|
|
|
|
|
$
|
58.65
|
|
*
|
Non-income producing
|
#
|
Illiquid and/or restricted security that has been fair valued.
|
(a)
|
Interest rates presented represent the yield to maturity at the date of purchase.
|
(b)
|
Rate presented represents the annualized 7-day yield at December 31, 2013.
|
weitzinvestments.com 29
BALANCED FUND
PORTFOLIO MANAGER’S DISCUSSION & ANALYSIS
Portfolio Manager: Bradley P. Hinton, CFA
The Balanced Fund returned +4.0% in the fourth calendar quarter, compared to +6.2% for the Blended Index. For the calendar year, the Fund returned +15.5% compared to +18.1% for the Blended Index. We viewed 2013 as a respectable year for the Fund. Absolute returns were
very
good for a balanced investment approach, while relative returns were sub-optimal due to our cautious portfolio positioning. Stocks posted exceptional gains during the year, whereas bonds generally declined in value. We didn’t own enough of the former, though we also avoided trouble in the latter. Neither outstanding nor poor, the “respectable” label seems to fit.
Well-known brands Google (+28%), Walt Disney (+20%) and United Parcel Service (+16%) reported solid operating results and helped pace the Fund’s fourth quarter returns. We booked profits on leading contributor Outerwall after the volatile stock jumped more than 30% during the quarter. New holdings Liberty Interactive and Oracle also posted strong gains from their initial purchase prices. While most stocks rose, LabCorp (-8%) and FLIR Systems (-4%) detracted from results after providing disappointing outlooks. Both companies face industry headwinds, but we don’t think either setback derails our longer-term investment thesis.
Valeant Pharmaceuticals was by far the largest contributor to full year results. Valeant (+96%) nearly doubled as the company acquired Bausch + Lomb (eye health), integrated Medicis (dermatology) and reported organic growth across its expanded platform. FLIR Systems (+37%), Google (+58%) and Texas Instruments (+46%) led a long list of technology stocks that added to returns. Standouts in the consumer sector included Walt Disney (+55%), National CineMedia (+49%) and Omnicom (+53%). Financial companies Aon plc (+52%), Berkshire Hathaway (+32%) and Redwood Trust (+21%) also were significant contributors. As a sign of the times, no stocks detracted from calendar year returns.
Portfolio activity increased during the quarter. We bought shares of Oracle, the world’s largest enterprise software company. Oracle continues to sell more software licenses, increase its installed base, and drive recurring revenue through attached support agreements. The high margin support business generates tremendous free cash flow, and capital allocation remains shareholder friendly. The company has been reinvesting in productive R&D, acquiring complementary businesses and shrinking the share count at attractive prices. We think Oracle is well positioned for the future with a strong cloud offering and entrenched advantages in database scalability and reliability.
We repurchased two former holdings at reasonable-to-attractive prices. We added a full position in Liberty Interactive as the stock drifted below $24 before the company hosted an upbeat investor day. Core asset QVC is a classic Weitz business, and we are pleased to again partner with the world-class capital allocators at Liberty. We also sold some of our Aon plc holdings and bought shares of fellow insurance broker Brown & Brown, which we think trades at a larger discount to value. Finally, we exited positions in CVS Caremark and FTI Consulting at healthy gains.
At year end, the Fund’s asset allocation was 42% stocks, 20% bonds and 38% residual cash. Our fixed income investments remain focused on shorter maturity, higher quality cash flows. We did not purchase any new bonds in the fourth quarter. While the December rise in interest rates was a step in the right direction, we would want to see higher base rates and/or wider credit spreads before investing additional capital in longer-dated bonds.
The Fund’s cautious positioning is a result of our bottom-up valuation work. Stock prices continue to rise faster than underlying business values. We are not saying that stocks are overpriced, simply that few are cheap. The stocks that we own have done quite well, and we like the long-term prospects for these businesses. Still, when virtually nothing goes down, our vigilance goes up. While we look forward to investing cash reserves opportunistically on your behalf, we will stay patient and disciplined in our search for value.
|
|
|
|
|
|
|
|
|
|
New and Eliminated Stocks for Quarter Ended December 31, 2013
|
New ($mil)
|
|
Eliminations ($mil)
|
Liberty Interactive
|
|
$
|
2.4
|
|
Outerwall
|
|
$
|
2.9
|
|
Brown & Brown
|
|
|
2.1
|
|
FTI Consulting
|
|
|
1.3
|
|
Oracle
|
|
|
2.0
|
|
CVS Caremark
|
|
|
1.1
|
|
30 Weitz Funds
BALANCED FUND
PERFORMANCE • (UNAUDITED)
|
|
Total Returns
|
Average Annual Total Returns
|
|
|
|
|
3 Mos.
|
|
1 Year
|
|
3 Year
|
|
5 Year
|
|
10 Year
|
|
Balanced Fund
|
|
|
4.00
|
%
|
|
15.46
|
%
|
|
9.41
|
%
|
|
14.30
|
%
|
|
5.81
|
%
|
|
Blended Index
|
|
|
6.21
|
|
|
18.09
|
|
|
10.88
|
|
|
12.48
|
|
|
6.35
|
|
|
S&P 500
|
|
|
10.51
|
|
|
32.39
|
|
|
16.18
|
|
|
17.94
|
|
|
7.40
|
|
|
Barclays Intermediate Credit
|
|
|
-0.02
|
|
|
-0.86
|
|
|
2.91
|
|
|
3.96
|
|
|
4.09
|
|
Growth of $10,000 Since Inception
This chart depicts the change in the value of a $10,000 investment in the Balanced Fund for the period October 1, 2003 through December 31, 2013, as compared with the growth of the Blended Index during the same period. Index performance is hypothetical and is shown for illustrative purposes only.
|
|
|
Balanced
|
|
Blended
|
|
Relative
|
|
Year
|
|
(1)
|
|
(2)
|
|
Results (1)-(2)
|
|
2003 (10/1/03)
|
|
3.78
|
%
|
|
7.23
|
%
|
|
-3.45
|
%
|
|
2004
|
|
11.84
|
|
|
7.75
|
|
|
4.09
|
|
|
2005
|
|
1.73
|
|
|
3.66
|
|
|
-1.93
|
|
|
2006
|
|
14.33
|
|
|
11.00
|
|
|
3.33
|
|
|
2007
|
|
-5.26
|
|
|
6.39
|
|
|
-11.65
|
|
|
2008
|
|
-26.82
|
|
|
-22.07
|
|
|
-4.75
|
|
|
2009
|
|
28.77
|
|
|
18.11
|
|
|
10.66
|
|
|
2010
|
|
15.66
|
|
|
11.85
|
|
|
3.81
|
|
|
2011
|
|
2.27
|
|
|
3.85
|
|
|
-1.58
|
|
|
2012
|
|
10.91
|
|
|
11.15
|
|
|
-0.24
|
|
|
2013
|
|
15.46
|
|
|
18.09
|
|
|
-2.63
|
|
|
Since Inception:
|
|
|
|
|
|
|
|
|
|
|
Cumulative
|
|
|
|
|
|
|
|
|
|
|
Return
|
|
82.57
|
|
|
98.47
|
|
|
-15.90
|
|
|
Avg. Annual
|
|
|
|
|
|
|
|
|
|
|
Return
|
|
6.04
|
|
|
6.91
|
|
|
-0.87
|
|
These performance numbers reflect the deduction of the Fund’s annual operating expenses which as stated in its most recent prospectus are 1.13% of the Fund’s net assets. The returns assume redemption at the end of each period and reinvestment of dividends. Total returns shown include fee waivers and expense reimbursements, if any; total returns would have been lower had there been no waiver of fees and/or reimbursement of expenses by the Adviser.
This information represents past performance and past performance does not guarantee future results.
The investment return and the principal value of an investment in this Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month-end may be obtained at www.weitzinvestments.com/funds_and_performance/fund_performance.fs.
See page 4 for additional performance disclosures. See page 54 for a description of all indices.
Performance information does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
weitzinvestments.com 31
BALANCED FUND
PORTFOLIO PROFILE • (UNAUDITED)
Top Ten Stocks
|
FLIR Systems, Inc.
|
|
|
2.6
|
%
|
Berkshire Hathaway, Inc. - CL B
|
|
|
2.2
|
|
Liberty Interactive Corp. - Series A
|
|
|
2.2
|
|
Redwood Trust, Inc.
|
|
|
2.2
|
|
Express Scripts Holding Co.
|
|
|
2.1
|
|
Valeant Pharmaceuticals International, Inc.
|
|
|
2.0
|
|
Martin Marietta Materials, Inc.
|
|
|
1.9
|
|
Apache Corp.
|
|
|
1.8
|
|
Oracle Corp.
|
|
|
1.7
|
|
The Walt Disney Co.
|
|
|
1.7
|
|
% of Net Assets
|
|
|
20.4
|
%
|
Industry Sectors
|
Information Technology
|
|
|
11.0
|
%
|
Financials
|
|
|
8.2
|
|
Consumer Discretionary
|
|
|
7.1
|
|
Health Care
|
|
|
5.8
|
|
Energy
|
|
|
4.0
|
|
Materials
|
|
|
2.2
|
|
Consumer Staples
|
|
|
2.2
|
|
Industrials
|
|
|
1.4
|
|
Total Common Stocks
|
|
|
41.9
|
|
Cash Equivalents/Other
|
|
|
38.0
|
|
U.S. Treasury Notes
|
|
|
8.7
|
|
Corporate Bonds
|
|
|
6.8
|
|
Mortgage-Backed Securities
|
|
|
3.9
|
|
Asset-Backed & Commercial Mortgage-Backed Securities
|
|
|
0.7
|
|
Total Bonds & Cash Equivalents
|
|
|
58.1
|
|
Net Assets
|
|
|
100.0
|
%
|
Top Performers for Quarter Ended December 31, 2013
|
|
|
|
QTD Return
|
|
Average Weight
|
|
Contribution to
|
Security Name
|
|
|
of Security
|
|
in Portfolio
|
|
Fund Performance
|
Outerwall, Inc.
|
|
|
34.6
|
%
|
|
0.5
|
%
|
|
0.55
|
%
|
Liberty Interactive Corp. - Series A
|
|
|
25.1
|
|
|
1.9
|
|
|
0.48
|
|
Google, Inc. - CL A
|
|
|
27.9
|
|
|
1.6
|
|
|
0.40
|
|
The Walt Disney Co.
|
|
|
19.9
|
|
|
1.6
|
|
|
0.30
|
|
Valeant Pharmaceuticals International, Inc.
|
|
|
12.5
|
|
|
1.8
|
|
|
0.28
|
|
Contributions to Fund performance are based on actual daily holdings. Securities may have been bought or sold during the quarter.
Source: FactSet Portfolio Analytics
|
|
|
|
|
|
|
|
|
|
|
Bottom Performers for Quarter Ended December 31, 2013
|
|
|
|
QTD Return
|
|
Average Weight
|
|
Contribution to
|
Security Name
|
|
|
of Security
|
|
in Portfolio
|
|
Fund Performance
|
Laboratory Corp. of America Holdings
|
|
|
(7.8
|
)%
|
|
1.9
|
%
|
|
(0.15
|
)%
|
FLIR Systems, Inc.
|
|
|
(3.8
|
)
|
|
2.5
|
|
|
(0.08
|
)
|
Redwood Trust, Inc.
|
|
|
(0.1
|
)
|
|
2.1
|
|
|
(0.01
|
)
|
Brown & Brown, Inc.
|
|
|
(1.9
|
)
|
|
0.8
|
|
|
(0.01
|
)
|
Hewlett-Packard Co. 4.75% 6/02/14 bond
|
|
|
(1.0
|
)
|
|
0.6
|
|
|
(0.01
|
)
|
Contributions to Fund performance are based on actual daily holdings. Securities may have been bought or sold during the quarter.
Source: FactSet Portfolio Analytics
32 Weitz Funds
BALANCED FUND
SCHEDULE OF INVESTMENTS • DECEMBER 31, 2013 • (UNAUDITED)
COMMON STOCKS — 41.9%
|
|
|
Shares
|
|
|
Value
|
|
Information Technology — 11.0%
|
|
|
|
|
|
|
|
Software — 2.9%
|
|
|
|
|
|
|
|
Oracle Corp.
|
|
|
60,000
|
|
$
|
2,295,600
|
|
Microsoft Corp.
|
|
|
40,000
|
|
|
1,497,200
|
|
|
|
|
|
|
|
3,792,800
|
|
Electronic Equipment & Instruments — 2.6%
|
|
|
|
|
|
|
|
FLIR Systems, Inc.
|
|
|
115,000
|
|
|
3,461,500
|
|
IT Services — 2.4%
|
|
|
|
|
|
|
|
Fidelity National Information Services, Inc.
|
|
|
35,000
|
|
|
1,878,800
|
|
Accenture plc - CL A
|
|
|
16,000
|
|
|
1,315,520
|
|
|
|
|
|
|
|
3,194,320
|
|
Semiconductors — 1.7%
|
|
|
|
|
|
|
|
Texas Instruments, Inc.
|
|
|
50,000
|
|
|
2,195,500
|
|
Internet Software & Services — 1.4%
|
|
|
|
|
|
|
|
Google, Inc. - CL A*
|
|
|
1,700
|
|
|
1,905,207
|
|
|
|
|
|
|
|
14,549,327
|
|
Financials — 8.2%
|
|
|
|
|
|
|
|
Insurance Brokers — 2.9%
|
|
|
|
|
|
|
|
Brown & Brown, Inc.
|
|
|
65,000
|
|
|
2,040,350
|
|
Aon plc - CL A
|
|
|
22,500
|
|
|
1,887,525
|
|
|
|
|
|
|
|
3,927,875
|
|
Property & Casualty Insurance — 2.2%
|
|
|
|
|
|
|
|
Berkshire Hathaway, Inc. - CL B*
|
|
|
25,000
|
|
|
2,964,000
|
|
Mortgage REITs — 2.2%
|
|
|
|
|
|
|
|
Redwood Trust, Inc.
|
|
|
150,000
|
|
|
2,905,500
|
|
Commercial Banks — 0.9%
|
|
|
|
|
|
|
|
Wells Fargo & Co.
|
|
|
25,000
|
|
|
1,135,000
|
|
|
|
|
|
|
|
10,932,375
|
|
Consumer Discretionary — 7.1%
|
|
|
|
|
|
|
|
Internet & Catalog Retail — 2.2%
|
|
|
|
|
|
|
|
Liberty Interactive Corp. - Series A*
|
|
|
100,000
|
|
|
2,935,000
|
|
Advertising — 2.1%
|
|
|
|
|
|
|
|
National CineMedia, Inc.
|
|
|
75,000
|
|
|
1,497,000
|
|
Omnicom Group, Inc.
|
|
|
17,500
|
|
|
1,301,475
|
|
|
|
|
|
|
|
2,798,475
|
|
Movies & Entertainment — 1.7%
|
|
|
|
|
|
|
|
The Walt Disney Co.
|
|
|
30,000
|
|
|
2,292,000
|
|
Multiline Retail — 1.1%
|
|
|
|
|
|
|
|
Target Corp.
|
|
|
21,500
|
|
|
1,360,305
|
|
|
|
|
|
|
|
9,385,780
|
|
Health Care — 5.8%
|
|
|
|
|
|
|
|
Health Care Services — 3.8%
|
|
|
|
|
|
|
|
Express Scripts Holding Co.*
|
|
|
40,000
|
|
|
2,809,600
|
|
Laboratory Corp. of America Holdings*
|
|
|
25,000
|
|
|
2,284,250
|
|
|
|
|
|
|
|
5,093,850
|
|
Pharmaceuticals — 2.0%
|
|
|
|
|
|
|
|
ValeantPharmaceuticalsInternational,Inc.*
|
|
|
22,500
|
|
|
2,641,500
|
|
|
|
|
|
|
|
7,735,350
|
|
Energy — 4.0%
|
|
|
|
|
|
|
|
Oil & Gas Exploration & Production — 4.0%
|
|
|
|
|
|
|
|
Apache Corp.
|
|
|
27,500
|
|
|
2,363,350
|
|
Range Resources Corp.
|
|
|
22,500
|
|
|
1,896,975
|
|
Southwestern Energy Co.*
|
|
|
25,000
|
|
|
983,250
|
|
|
|
|
|
|
|
5,243,575
|
|
|
|
|
Principal
|
|
|
|
|
|
|
|
amount
|
|
|
|
|
|
|
|
or shares
|
|
|
Value
|
|
Materials — 2.2%
|
|
|
|
|
|
|
|
Construction Materials — 1.9%
|
|
|
|
|
|
|
|
Martin Marietta Materials, Inc.
|
|
|
25,000
|
|
$
|
2,498,500
|
|
Metals & Mining — 0.3%
|
|
|
|
|
|
|
|
Compass Minerals International, Inc.
|
|
|
5,000
|
|
|
400,250
|
|
|
|
|
|
|
|
2,898,750
|
|
Consumer Staples — 2.2%
|
|
|
|
|
|
|
|
Beverages — 2.2%
|
|
|
|
|
|
|
|
Diageo plc - Sponsored ADR
|
|
|
11,200
|
|
|
1,483,104
|
|
Anheuser-BuschInBevSA/NV-SponsoredADR
|
|
|
13,000
|
|
|
1,383,980
|
|
|
|
|
|
|
|
2,867,084
|
|
Industrials — 1.4%
|
|
|
|
|
|
|
|
Air Freight & Logistics — 1.4%
|
|
|
|
|
|
|
|
United Parcel Service, Inc. - CL B
|
|
|
18,000
|
|
|
1,891,440
|
|
Total Common Stocks
|
|
|
|
|
|
|
|
(Cost $37,444,440)
|
|
|
|
|
|
55,503,681
|
|
CORPORATE BONDS — 6.8%
|
|
|
|
|
|
|
|
American Express Credit Corp.
|
|
|
|
|
|
|
|
1.75% 6/12/15
|
|
$
|
500,000
|
|
|
508,249
|
|
Berkshire Hathaway Finance Corp.
|
|
|
|
|
|
|
|
0.95% 8/15/16
|
|
|
1,000,000
|
|
|
1,005,184
|
|
2.0% 8/15/18
|
|
|
500,000
|
|
|
500,849
|
|
Comcast Corp.
|
|
|
|
|
|
|
|
6.5% 1/15/15
|
|
|
300,000
|
|
|
318,177
|
|
4.95% 6/15/16
|
|
|
193,000
|
|
|
210,865
|
|
Hewlett-Packard Co.
|
|
|
|
|
|
|
|
4.75% 6/02/14
|
|
|
750,000
|
|
|
762,089
|
|
Markel Corp.
|
|
|
|
|
|
|
|
7.125% 9/30/19
|
|
|
500,000
|
|
|
596,050
|
|
Time Warner Cable, Inc.
|
|
|
|
|
|
|
|
7.5% 4/01/14
|
|
|
120,000
|
|
|
122,000
|
|
U.S. Bancorp
|
|
|
|
|
|
|
|
2.2% 11/15/16
|
|
|
750,000
|
|
|
775,048
|
|
U.S. Bank, N.A.
|
|
|
|
|
|
|
|
4.95% 10/30/14
|
|
|
500,000
|
|
|
519,128
|
|
3.778% 4/29/20
|
|
|
870,000
|
|
|
900,621
|
|
Verizon Communications, Inc.
|
|
|
|
|
|
|
|
2.5% 9/15/16
|
|
|
1,250,000
|
|
|
1,293,390
|
|
Wells Fargo & Co.
|
|
|
|
|
|
|
|
1.25% 2/13/15
|
|
|
750,000
|
|
|
756,400
|
|
Wells Fargo Bank, N.A.
|
|
|
|
|
|
|
|
0.622% 11/03/14 (Wachovia Bank)
|
|
|
|
|
|
|
|
Floating Rate Security
|
|
|
550,000
|
|
|
551,044
|
|
0.44845% 5/16/16 Floating Rate Security
|
|
|
250,000
|
|
|
247,810
|
|
Total Corporate Bonds
|
|
|
|
|
|
|
|
(Cost $8,911,870)
|
|
|
|
|
|
9,066,904
|
|
weitzinvestments.com 33
BALANCED FUND
SCHEDULE OF INVESTMENTS • (CONTINUED)
|
|
|
|
|
|
|
|
MORTGAGE-BACKED
|
|
|
Principal
|
|
|
|
|
SECURITIES — 3.9%
(c)
|
|
|
amount
|
|
|
Value
|
|
Federal Home Loan Mortgage Corporation — 1.1%
|
|
|
|
|
|
|
|
Collateralized Mortgage Obligations — 0.2%
|
|
|
|
|
|
|
|
3649 CL BW — 4.0% 2025 (3.4 years)
|
|
$
|
256,713
|
|
$
|
270,757
|
|
Pass-Through Securities — 0.9%
|
|
|
|
|
|
|
|
J14649 — 3.5% 2026 (3.9 years)
|
|
|
314,865
|
|
|
329,017
|
|
E02948 — 3.5% 2026 (3.9 years)
|
|
|
499,678
|
|
|
521,998
|
|
J16663 — 3.5% 2026 (3.9 years)
|
|
|
303,050
|
|
|
316,718
|
|
|
|
|
|
|
|
1,167,733
|
|
|
|
|
|
|
|
1,438,490
|
|
Federal National Mortgage Association — 2.1%
|
|
|
|
|
|
|
|
Collateralized Mortgage Obligations — 0.3%
|
|
|
|
|
|
|
|
2002-91 CL QG — 5.0% 2018 (1.5 years)
|
|
|
171,519
|
|
|
182,015
|
|
2003-9 CL DB — 5.0% 2018 (1.5 years)
|
|
|
176,223
|
|
|
187,399
|
|
|
|
|
|
|
|
369,414
|
|
Pass-Through Securities — 1.8%
|
|
|
|
|
|
|
|
MA0464 — 3.5% 2020 (2.3 years)
|
|
|
402,636
|
|
|
423,280
|
|
995755 — 4.5% 2024 (3.2 years)
|
|
|
65,303
|
|
|
69,650
|
|
AR8198 — 2.5% 2023 (3.6 years)
|
|
|
456,324
|
|
|
466,047
|
|
MA1502 — 2.5% 2023 (3.8 years)
|
|
|
375,163
|
|
|
383,127
|
|
AB1769 — 3.0% 2025 (4.0 years)
|
|
|
258,100
|
|
|
263,764
|
|
AB3902 — 3.0% 2026 (4.4 years)
|
|
|
440,892
|
|
|
451,113
|
|
AK3264 — 3.0% 2027 (4.5 years)
|
|
|
340,684
|
|
|
348,686
|
|
|
|
|
|
|
|
2,405,667
|
|
|
|
|
|
|
|
2,775,081
|
|
Government National Mortgage Association — 0.4%
|
|
|
|
|
|
|
|
Pass-Through Securities — 0.4%
|
|
|
|
|
|
|
|
5255 — 3.0% 2026 (4.5 years)
|
|
|
487,751
|
|
|
501,555
|
|
Non-Government Agency — 0.3%
|
|
|
|
|
|
|
|
Collateralized Mortgage Obligations — 0.3%
|
|
|
|
|
|
|
|
Sequoia Mortgage Trust (SEMT) 2011-1
|
|
|
|
|
|
|
|
CL A1 — 4.125% 2041 (0.1 years)
|
|
|
44,248
|
|
|
44,340
|
|
Sequoia Mortgage Trust (SEMT) 2010-H1
|
|
|
|
|
|
|
|
CL A1 — 3.75% 2040 (1.1 years)
|
|
|
108,115
|
|
|
106,531
|
|
Chase Mortgage Finance Corp. (Chase)
|
|
|
|
|
|
|
|
2004-S1 CL A6 — 4.5% 2019
|
|
|
|
|
|
|
|
(2.1 years)
|
|
|
50,612
|
|
|
50,181
|
|
Sequoia Mortgage Trust (SEMT) 2012-1
|
|
|
|
|
|
|
|
CL 1A1 — 2.865% 2042 (2.3 years)
|
|
|
213,117
|
|
|
212,437
|
|
|
|
|
|
|
|
413,489
|
|
Total Mortgage-Backed Securities
|
|
|
|
|
|
|
|
(Cost $5,057,457)
|
|
|
|
|
|
5,128,615
|
|
|
|
|
|
|
|
|
|
COMMERCIAL MORTGAGE-BACKED SECURITIES — 0.3%
(c)
|
|
|
|
|
|
|
|
Redwood Commercial Mortgage Corp.
|
|
|
|
|
|
|
|
(RCMC) 2012-CRE1 CL A — 5.62346%
|
|
|
|
|
|
|
|
2044 (1.9 years)
(d)
|
|
|
|
|
|
|
|
(Cost $357,953)
|
|
|
357,953
|
|
|
359,372
|
|
|
|
|
|
|
|
|
|
ASSET-BACKED SECURITIES — 0.4%
(c)
|
|
|
|
|
|
|
|
Cabela’s Master Credit Card Trust (CABMT)
|
|
|
|
|
|
|
|
2011-2A CL A2 — 0.7666% 2019 Floating
|
|
|
|
|
|
|
|
Rate Security (2.4 years)
(d)
|
|
|
|
|
|
|
|
(Cost $500,000)
|
|
|
500,000
|
|
|
503,426
|
|
|
|
|
Principal
|
|
|
|
|
|
|
|
amount
|
|
|
|
|
U.S. TREASURY NOTES — 8.7%
|
|
|
or shares
|
|
|
Value
|
|
U.S. Treasury Note
|
|
|
|
|
|
|
|
0.25% 10/31/14
|
|
$
|
2,000,000
|
|
$
|
2,001,876
|
|
0.375% 11/15/14
|
|
|
2,000,000
|
|
|
2,003,946
|
|
0.25% 12/15/14
|
|
|
2,000,000
|
|
|
2,001,796
|
|
0.375% 3/15/15
|
|
|
3,000,000
|
|
|
3,006,444
|
|
0.375% 2/15/16
|
|
|
2,500,000
|
|
|
2,498,047
|
|
Total U.S. Treasury Notes
|
|
|
|
|
|
|
|
(Cost $11,492,823)
|
|
|
|
|
|
11,512,109
|
|
|
|
|
|
|
|
|
|
CASH EQUIVALENTS — 38.1%
|
|
|
|
|
|
|
|
U.S. Treasury Bills — 32.0%
|
|
|
|
|
|
|
|
U.S. Treasury Bills, 0.03% to 0.09%,
|
|
|
|
|
|
|
|
1/09/14 to 5/22/14
(a)
|
|
|
42,500,000
|
|
|
42,496,275
|
|
Money Market Funds — 6.1%
|
|
|
|
|
|
|
|
Wells Fargo Advantage Government Money Market Fund -
|
|
|
|
|
|
|
|
Institutional Class 0.01%
(b)
|
|
|
8,044,376
|
|
|
8,044,376
|
|
Total Cash Equivalents
|
|
|
|
|
|
|
|
(Cost $50,538,924)
|
|
|
|
|
|
50,540,651
|
|
Total Investments in Securities
|
|
|
|
|
|
|
|
(Cost $114,303,467)
|
|
|
|
|
|
132,614,758
|
|
Other Liabilities in Excess of Other Assets — (0.1%)
|
|
|
|
|
|
(34,343
|
)
|
Net Assets — 100.0%
|
|
|
|
|
$
|
132,580,415
|
|
Net Asset Value Per Share
|
|
|
|
|
$
|
14.02
|
|
*
|
Non-income producing
|
(a)
|
Interest rates presented represent the yield to maturity at the date of purchase.
|
(b)
|
Rate presented represents the annualized 7-day yield at December 31, 2013.
|
(c)
|
Number of years indicated represents estimated average life.
|
(d)
|
Security is exempt from registration under Rule 144A of the Securities Act of 1933. This security may be resold in transactions that are exempt from registration, normally to qualified institutional buyers.
|
34 Weitz Funds
This page has been left blank intentionally.
weitzinvestments.com 35
SHORT-INTERMEDIATE INCOME FUND
PORTFOLIO MANAGER’S DISCUSSION & ANALYSIS
Portfolio Manager: Thomas D. Carney, CFA
The Short-Intermediate Income Fund’s Institutional Class returned +1.1% for the 12 months ended December 31, compared to a -0.9% return for the Barclays Intermediate U.S. Government/Credit Index (BIGC), our Fund’s primary benchmark. For the fourth calendar quarter, the Short-Intermediate Income Fund’s Institutional Class returned +0.2%, compared to a 0.0% return for the BIGC. Overall, we are pleased to report positive results in a year of rising longer-term interest rates.
The performance page following this discussion shows returns for our Fund’s Institutional Class (after deducting fees and expenses) over various holding periods and returns for three Barclays U.S. Government/Credit Indexes (Intermediate, 1-5 year and 1-3 year) for comparison purposes.
Commentary and Fund Review
U.S. Treasury bond yields rose (prices declined) in the fourth quarter as continued progress on the domestic economic front prompted the Fed to (modestly) begin scaling back its large scale asset purchase program. The 10-year Treasury bond yield, for example, rose approximately 40 basis points (a basis point represents one one-hundredth of a percentage point) in the quarter and ended the year slightly above 3%, its highest closing level in over two years. For the year, 10-year Treasury yields increased approximately 125 basis points, resulting in price declines for many long-term bond holders.
Despite headwinds from Treasury interest rates, corporate bonds and other credit sensitive securities performed reasonably well in the quarter and year-to-date as they continued to benefit from a “risk on” mentality among fixed-income investors. The best credit-related returns were once again experienced by lower quality (high yield) bonds, as they are more correlated to solid company-specific financial performance and stock market results than to changes in Treasury interest rates. A broad measure of corporate bond spreads (the incremental return investors demand above U.S. Treasury bonds for owning corporate debt) compiled by Bank of America Merrill Lynch declined to 127 basis points as of December 31, down 29 basis points in the quarter. For the full year, this same measure of broad corporate bond market spreads declined 26 basis points.
Our Fund continued to benefit from the strong market conditions for credit-related assets as a large majority (approximately 80%) of Fund investments contributed positive results in the quarter. Notable contributors from our corporate bond segment (38% of Fund net assets at 12/31/13) included Petrohawk 1-year, Vulcan Materials 4-year, Mohawk Industries 2-year, Expedia 5-year, Transdigm 5-year, Washington Post 5-year, and Range Resource 5-year bonds. Most of our corporate bond gains resulted from continued improvement in risk appetite among investors resulting in narrower credit spreads, notably high yield.
Principal detractors to results came from select portions of the Fund’s MBS (mortgage-backed securities) investments, principally as a result of slower prepayment speeds than our original assumptions.
Investment activity in the Fund declined from the solid pace of the third quarter of 2013, as we identified fewer qualifying investment opportunities. One area where we continue to find pockets of value is in the structured securities market. Last quarter we highlighted our growing investment in the senior layers of subprime auto securitizations. In the fourth quarter, we added to our commercial mortgage-backed segment (3.7% at 12/31). Once again, credit goes to Nolan Anderson for his comprehensive analysis of the credit and deal structures. For the detail oriented, Nolan’s comments at the end of this letter provide an in depth overview of our latest addition in this area for our Fund.
Overall portfolio metrics as measured by the average maturity and duration changed modestly during the quarter. The average maturity declined from 3.0 to 2.8 years and average duration declined from 2.2 to 2.0 years. These measures provide a guide to the Fund’s interest rate sensitivity. A shorter average maturity and duration reduces the Fund’s price sensitivity to changes in interest rates (either up or down).
36 Weitz Funds
Fund Strategy Revisited
Our investment approach consists primarily of investing in a portfolio of mostly high quality, short-to-intermediate-term bonds with an overall portfolio average maturity of 2 to 5 years where we believe we can capture most of the “coupon” returns of long-term bonds with materially less interest-rate risk. We do not and will not try to mimic any particular index as we construct our portfolio. We select assets for our portfolio one security at a time based on our view of opportunities in the marketplace. Our corporate bond research is supplemented by credit work we do on companies and industries in the course of our equity due diligence.
Over the years, our portfolio has often been constructed with a shorter average life (i.e. duration) than the BIGC. We chose this benchmark to highlight that we
could
periodically invest in
longer
term and/or
lower
quality bonds when conditions warrant. The effect over time of our portfolio construction (typically shorter average life) has been a penalty when interest rates fall but a boost to relative performance when rates rise.
For a small portion of our portfolio (currently about 10%), we may also invest in other fixed-income related investments that have favorable risk/reward characteristics (such as high-yield and convertible bonds, preferred and convertible preferred stock, or high dividend paying common stock). These types of investments have generally enhanced our Fund’s historical returns.
Overall, we strive to be adequately compensated for the risks assumed in order to maximize our investment (or reinvestment) yield and avoid making interest rate “bets,” particularly ones that depend on interest rates going down. We are willing to trade some upside potential in a rapidly falling interest-rate environment in exchange for enhanced capital preservation.
Outlook
We believe today’s low nominal interest rate and average, at best, credit spread environment provide little protection against any inflationary shocks or potential re-pricing (higher) of credit risk. The seemingly insatiable demand for yield has not only re-priced credit risk across all fixed-income assets, it has allowed companies to issue new debt with less covenant protection for bondholders. While the timing is always unknown, the ingredients for the next credit hiccup steadily accumulate. Consequently, we expect to continue to position the Fund defensively relative to interest rate exposure and be even more selective in our credit investments while we patiently seek out areas of opportunity. We will continue to invest one security at a time, relying on a fundamental research-based investment approach and are well positioned to take advantage of any market weakness.
Commercial Mortgage-Backed Securities (CMBS) – Commercial Liquidating Trusts
In the fourth calendar quarter we purchased two CMBS liquidating trusts, which consist of collateral pools backed by a mix of seasoned, performing and non-performing commercial mortgage loans. In contrast to a traditional CMBS transaction, where investors purchase an interest in a pool of newly originated mortgage loans, liquidating trusts are formed largely to wind down an existing pool of loans. We believe one primary reason commercial liquidating trusts are attractive is a result of significant capital flowing to traditional CMBS assets, which tend to have a relatively large percentage of their loans in major real estate markets, and which have in-place cash flows that meet CMBS-industry-standard underwriting criteria. It seems that traditional CMBS investors perceive major real estate markets as safe and stable, as opposed to non-major markets, which have been viewed with increased suspicion after the financial crisis. Accordingly, institutional investors who are more willing to look at non-major markets, and at un-stabilized loans, have been able to purchase loans at discounts to underlying collateral value.
In the case of our two new investments, Texas Pacific Group (“TPG”), an institutional investor with substantial real estate experience, purchased a pool of seasoned commercial mortgage loans from a regional bank at a significant discount to the estimated market value of the real estate collateral, which is located in a mix of major and non-major markets. TPG then split the loans into two commercial liquidating trusts: Pool A consists primarily of performing loans, and Pool B consists primarily of non-performing loans. We invested both in Notes issued by Pool A and in Notes issued by Pool B. To help explain these investments, Figure 1 below shows (as of the Pool B Notes’ “Issue Date”) certain details regarding Pool B.
weitzinvestments.com 37
SHORT-INTERMEDIATE INCOME FUND
PORTFOLIO MANAGER’S DISCUSSION & ANALYSIS • (CONTINUED)
Source: Bloomberg
41% UPB is the Notes’ issue price divided by the Unpaid Principal Balance of the mortgages.
57% LTV is the Notes’ issue price divided by Estimated Market Value of the loan collateral.
70% LTC is TPG’s purchase price divided by the Notes’ issue price.
On the Issue Date, and generally speaking, TPG (as the deal sponsor) received the Note holders’ $111.5 million purchase price, and the $48.2 million remainder (30%) of TPG’s purchase price (“TPG equity”) stays in the trust as credit support for the Notes. TPG has made projections regarding Pool B, such as the aggregate collateral that will pay as scheduled, that will experience discounted loan payoff or that will need to be foreclosed. If TPG’s projections are correct (including, that no TPG equity will be needed for credit support), then as the Notes pay down, this credit support will exceed 40% of the value of the Notes. We believe this cushion between TPG’s projections and the Notes provides reasonably strong downside protection in case valuations of the mortgage loans or the real estate prove too optimistic. In terms of bondholder protections, the transaction is structured such that TPG cannot extract any equity until the Note holders are fully repaid. In this way, TPG’s equity and potential upside (if the ultimate value of the collateral exceeds TPG’s cost basis) should provide strong incentive for TPG to act in the best interest of the Note holders.
In addition to credit analysis, we incorporated liquidity risk into our investment process because the Pool A & B Notes were not rated by rating agencies, and are considered small by CMBS standards. One of the biggest risks from a liquidity standpoint is the potential for bond extension. Although the estimated weighted average life’s of commercial liquidating trusts are approximately 1 to 1.5 years, there is always the risk a sponsor is unable to generate proceeds as quickly as expected, which could extend the life of the bond. In Figure 2 below, we analyzed the actual versus initially projected cash flows for our three commercial liquidating trust holdings that have at least nine months of seasoning. What this chart shows, and what we’ve also experienced with our less seasoned investments, is that our principal has been returned much faster than expected, which has shortened the life of the bonds and helped mitigate liquidity concerns.
We continue to view the incremental return (i.e. spread) for newly issued, shorter term (2-5 year) CMBS transactions as unattractive, despite strong credit support and minimal risk
38 Weitz Funds
Source: Bloomberg
of loss. In Figure 3 below, we provide a pricing comparison for Pools A & B and for a Wells Fargo/UBS (“WFRBS”) transaction that came to market simultaneously, but that we did not purchase. As illustrated, Pools A & B offer significant spread pickup with estimated weighted average life’s that are 1 to 3 years shorter than the WFRBS deal. Although the non-rated status of Pools A & B versus AAA ratings for the WFRBS transaction, along with liquidity concerns, are worth considerable spread concession, we believe investors in Pool A & B Notes are being compensated for these additional risk factors. With purchase yields of 3.50-4.50%, we believe the risk-adjusted return profiles for the Pool A & B Notes are attractive relative to the new issue CMBS market and other shorter-term, corporate bond alternatives.
|
Figure 3: CMBS Pricing Comparison
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pool A
|
|
Pool B
|
|
WFRBS 2013-UBS1
|
|
|
|
|
|
|
|
|
|
|
A1
|
|
A2
|
|
Bond Class
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tranche Size
|
|
|
88,459,000
|
$
|
111.5
|
MM
|
$
|
27.7
|
MM
|
$
|
158.8
|
MM
|
|
Yield
|
|
|
3.50%
|
|
4.50%
|
|
1.12%
|
|
2.93%
|
|
Estimated Spread
1
|
|
|
315 bps
|
|
415 bps
|
|
55 bps
|
|
83 bps
|
|
Estimated WAL
|
|
|
1.51
|
|
1.61
|
|
2.67
|
|
4.95
|
|
Credit Rating
|
|
|
non-rated
|
|
non-rated
|
|
AAA
|
|
AAA
|
|
Credit Enhancement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A Attachment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unpaid Principal Balance (UPB)
|
|
|
60.4%
|
|
41.4%
|
|
70.0%
|
|
|
|
|
Sponsor Acquisition Cost (LTC)
|
|
|
75.0%
|
|
70.0%
|
|
n/a
|
|
|
|
|
Estimated Value (LTV)
|
|
|
61.6%
|
|
56.6%
|
|
41.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
Incremental return over the estimated 1.5 year industry benchmark.
|
Source: Bloomberg, Deal Documents
weitzinvestments.com 39
SHORT-INTERMEDIATE INCOME FUND
PERFORMANCE • (UNAUDITED)
|
|
|
Total Returns
|
|
Average Annual Total Returns
|
|
|
|
3 Mos.
|
|
1 Year
|
|
3 Year
|
|
5 Year
|
|
10 Year
|
|
15 Year
|
|
20 Year
|
|
25 Year
|
|
Short-Intermediate Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund – Institutional Class
|
|
0.23
|
%
|
|
1.11
|
%
|
|
2.41
|
%
|
|
4.52
|
%
|
|
3.92
|
%
|
|
4.56
|
%
|
|
5.04
|
%
|
|
5.73
|
%
|
|
Barclays Indexes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intermediate U.S.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government/Credit
|
|
-0.02
|
|
|
-0.86
|
|
|
2.91
|
|
|
3.96
|
|
|
4.09
|
|
|
4.94
|
|
|
5.35
|
|
|
6.35
|
|
|
1-5 Year U.S. Government/Credit
|
|
0.14
|
|
|
0.29
|
|
|
1.88
|
|
|
2.86
|
|
|
3.41
|
|
|
4.35
|
|
|
4.82
|
|
|
5.77
|
|
|
1-3 Year U.S. Government/Credit
|
|
0.18
|
|
|
0.65
|
|
|
1.17
|
|
|
2.02
|
|
|
2.91
|
|
|
3.86
|
|
|
4.39
|
|
|
5.27
|
|
Growth of $10,000
This chart depicts the change in the value of a $10,000 investment in the Short-Intermediate Income Fund – Institutional Class for the period December 31, 2003 through December 31, 2013, as compared with the growth of the Barclays Intermediate Index during the same period. Index performance is hypothetical and is shown for illustrative purposes only.
|
|
|
Short-
|
|
Barclays
|
|
Relative
|
|
|
|
Int.
|
|
Interm.
|
|
Results
|
|
Year
|
|
(1)
|
|
(2)
|
|
(1)-(2)
|
|
1988 (12/23/88)
|
|
0.08
|
%
|
|
|
%
|
|
N/A
|
%
|
|
1989
|
|
9.09
|
|
|
12.76
|
|
|
-3.67
|
|
|
1990
|
|
9.06
|
|
|
9.17
|
|
|
-0.11
|
|
|
1991
|
|
11.18
|
|
|
14.63
|
|
|
-3.45
|
|
|
1992
|
|
5.53
|
|
|
7.17
|
|
|
-1.64
|
|
|
1993
|
|
8.06
|
|
|
8.78
|
|
|
-0.72
|
|
|
1994
|
|
-2.38
|
|
|
-1.93
|
|
|
-0.45
|
|
|
1995
|
|
15.75
|
|
|
15.33
|
|
|
0.42
|
|
|
1996
|
|
4.43
|
|
|
4.05
|
|
|
0.38
|
|
|
1997
|
|
8.64
|
|
|
7.87
|
|
|
0.77
|
|
|
1998
|
|
6.76
|
|
|
8.44
|
|
|
-1.68
|
|
|
1999
|
|
0.92
|
|
|
0.39
|
|
|
0.53
|
|
|
2000
|
|
9.66
|
|
|
10.12
|
|
|
-0.46
|
|
|
2001
|
|
8.45
|
|
|
8.97
|
|
|
-0.52
|
|
|
2002
|
|
4.18
|
|
|
9.83
|
|
|
-5.65
|
|
|
2003
|
|
6.30
|
|
|
4.31
|
|
|
1.99
|
|
|
2004
|
|
2.64
|
|
|
3.04
|
|
|
-0.40
|
|
|
2005
|
|
1.60
|
|
|
1.58
|
|
|
0.02
|
|
|
2006
|
|
4.04
|
|
|
4.08
|
|
|
-0.04
|
|
|
2007
|
|
6.10
|
|
|
7.39
|
|
|
-1.29
|
|
|
2008
|
|
2.29
|
|
|
5.08
|
|
|
-2.79
|
|
|
2009
|
|
10.85
|
|
|
5.24
|
|
|
5.61
|
|
|
2010
|
|
4.74
|
|
|
5.89
|
|
|
-1.15
|
|
|
2011
|
|
2.11
|
|
|
5.80
|
|
|
-3.69
|
|
|
2012
|
|
4.04
|
|
|
3.89
|
|
|
0.15
|
|
|
2013
|
|
1.11
|
|
|
-0.86
|
|
|
1.97
|
|
|
Since Inception:
|
|
|
|
|
|
|
|
|
|
|
Cumulative
|
|
|
|
|
|
|
|
|
|
|
Return
|
|
303.27
|
|
|
366.53
|
|
|
-63.26
|
|
|
Avg. Annual
|
|
|
|
|
|
|
|
|
|
|
Return
|
|
5.73
|
|
|
6.35
|
|
|
-0.62
|
|
These performance numbers reflect the deduction of the Fund’s Institutional Class annual operating expenses which as stated in its most recent prospectus are 0.63% of the Fund’s net assets.The returns assume redemption at the end of each period and reinvestment of dividends. Total returns shown include fee waivers and expense reimbursements, if any; total returns would have been lower had there been no waiver of fees and/or reimbursement of expenses by the Adviser.
This information represents past performance and past performance does not guarantee future results.
The investment return and the principal value of an investment in this Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month-end may be obtained at www.weitzinvestments.com/funds_and_performance/fund_performance.fs.
See page 4 for additional performance disclosures. See page 54 for a description of all indices.
Performance information does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
40 Weitz Funds
SHORT-INTERMEDIATE INCOME FUND
PORTFOLIO PROFILE • (UNAUDITED)
Credit Quality
(a)
|
U.S. Treasury Notes
|
|
|
14.4
|
%
|
U.S. Government Agency Mortgage Related Securities
(b)
|
|
|
22.7
|
|
Aaa/AAA
|
|
|
3.8
|
|
Aa/AA
|
|
|
5.5
|
|
A/A
|
|
|
13.7
|
|
Baa/BBB
|
|
|
19.8
|
|
Ba/BB
|
|
|
3.5
|
|
B/B
|
|
|
0.4
|
|
Caa/CCC
|
|
|
0.6
|
|
Non-Rated
|
|
|
5.3
|
|
Common Stocks
|
|
|
1.4
|
|
Cash/Other
|
|
|
8.9
|
|
Net Assets
|
|
|
100.0
|
%
|
Sector Breakdown
|
Corporate Bonds
|
|
|
37.6
|
%
|
Mortgage-Backed Securities
|
|
|
25.5
|
|
U.S. Treasury Notes
|
|
|
14.4
|
|
Cash Equivalents/Other
|
|
|
8.9
|
|
Asset-Backed Securities
|
|
|
6.0
|
|
Commercial Mortgage-Backed Securities
|
|
|
3.7
|
|
Common Stocks
|
|
|
1.4
|
|
Taxable Municipal Bonds
|
|
|
1.3
|
|
Convertible Bonds
|
|
|
1.2
|
|
Net Assets
|
|
|
100.0
|
%
|
|
|
|
|
|
Financial Attributes
|
Average Maturity
|
|
|
2.8 years
|
Average Effective Maturity
|
|
|
2.4 years
|
Average Duration
|
|
|
2.0 years
|
Average Coupon
|
|
|
3.3
|
%
|
30-Day SEC Yield at 12-31-13 - Institutional Class
|
|
|
1.33
|
%
|
30-Day SEC Yield at 12-31-13 - Investor Class
|
|
|
1.14
|
%
|
|
|
|
|
|
Five Largest Corporate Issuers
(c)
|
Wells Fargo & Co.
|
|
|
4.7
|
%
|
JP Morgan Chase & Co.
|
|
|
2.9
|
|
General Electric Capital Corp.
|
|
|
1.9
|
|
Mohawk Industries, Inc.
|
|
|
1.9
|
|
Hewlett-Packard Co.
|
|
|
1.6
|
|
|
|
|
|
|
Maturity Distribution
|
Cash Equivalents/Other
|
|
|
8.9
|
%
|
Less than 1 Year
|
|
|
18.2
|
|
1 to 3 Years
|
|
|
36.0
|
|
3 to 5 Years
|
|
|
26.5
|
|
5 to 7 Years
|
|
|
6.4
|
|
7 to 10 Years
|
|
|
2.0
|
|
10 Years or more
|
|
|
0.6
|
|
Common Stocks
|
|
|
1.4
|
|
Net Assets
|
|
|
100.0
|
%
|
(a) The Fund receives credit quality ratings on underlying securities of the Fund when available from Moody‘s, S&P and Fitch. The Fund will use one rating for an underlying security if that is all that is provided. Ratings and portfolio credit quality may change over time. The Fund itself has not been rated by an independent rating agency.
(b) Mortgage related securities issued and guaranteed by government-sponsored entities such as Fannie Mae and Freddie Mac are generally not rated by Moody‘s, S&P and Fitch. Securities which are not rated do not necessarily indicate low quality. Fannie Mae‘s and Freddie Mac‘s senior long-term debt are currently rated Aaa, AA+ and AAA by Moody‘s, S&P and Fitch, respectively.
(c) Percent of net assets
weitzinvestments.com 41
SHORT-INTERMEDIATE INCOME FUND
SCHEDULE OF INVESTMENTS • DECEMBER 31, 2013 • (UNAUDITED)
|
|
|
Principal
|
|
|
|
|
CORPORATE BONDS — 37.6%
|
|
|
amount
|
|
|
Value
|
|
ACI Worldwide, Inc.
|
|
|
|
|
|
|
|
6.375% 8/15/20
(c)
|
|
$
|
250,000
|
|
$
|
261,875
|
|
ADT Corp.
|
|
|
|
|
|
|
|
2.25% 7/15/17
|
|
|
5,000,000
|
|
|
4,924,460
|
|
American Express Co.
|
|
|
|
|
|
|
|
FSB Bank 6.0% 9/13/17
|
|
|
2,500,000
|
|
|
2,878,328
|
|
8.125% 5/20/19
|
|
|
1,000,000
|
|
|
1,277,374
|
|
Anheuser-Busch InBev SA/NV
|
|
|
|
|
|
|
|
4.125% 1/15/15
|
|
|
6,000,000
|
|
|
6,227,130
|
|
Aon plc
|
|
|
|
|
|
|
|
3.5% 9/30/15
|
|
|
5,000,000
|
|
|
5,220,660
|
|
AutoZone, Inc.
|
|
|
|
|
|
|
|
5.75% 1/15/15
|
|
|
1,250,000
|
|
|
1,313,425
|
|
Bank of America Corp.
|
|
|
|
|
|
|
|
4.5% 4/01/15
|
|
|
10,000,000
|
|
|
10,464,950
|
|
Berkshire Hathaway Finance Corp.
|
|
|
|
|
|
|
|
1.5% 1/10/14
|
|
|
500,000
|
|
|
500,119
|
|
4.85% 1/15/15
|
|
|
1,500,000
|
|
|
1,570,478
|
|
0.95% 8/15/16
|
|
|
4,000,000
|
|
|
4,020,736
|
|
1.6% 5/15/17
|
|
|
1,000,000
|
|
|
1,010,470
|
|
5.4% 5/15/18
|
|
|
5,000,000
|
|
|
5,756,825
|
|
2.0% 8/15/18
|
|
|
2,500,000
|
|
|
2,504,247
|
|
2.9% 10/15/20
|
|
|
3,000,000
|
|
|
2,979,615
|
|
4.25% 1/15/21
|
|
|
1,000,000
|
|
|
1,064,306
|
|
Boston Properties LP
|
|
|
|
|
|
|
|
5.625% 4/15/15
|
|
|
10,635,000
|
|
|
11,287,468
|
|
5.875% 10/15/19
|
|
|
8,250,000
|
|
|
9,485,619
|
|
Comcast Corp.
|
|
|
|
|
|
|
|
6.5% 1/15/15
|
|
|
2,081,000
|
|
|
2,207,086
|
|
4.95% 6/15/16
|
|
|
8,590,000
|
|
|
9,385,142
|
|
5.15% 3/01/20
|
|
|
3,000,000
|
|
|
3,351,168
|
|
DCP Midstream Operating, LP
|
|
|
|
|
|
|
|
2.5% 12/01/17
|
|
|
2,000,000
|
|
|
1,993,240
|
|
Diageo Capital plc
|
|
|
|
|
|
|
|
4.85% 5/15/18
|
|
|
3,941,000
|
|
|
4,345,599
|
|
DIRECTV Holdings
|
|
|
|
|
|
|
|
4.75% 10/01/14
|
|
|
2,000,000
|
|
|
2,059,884
|
|
Expedia, Inc.
|
|
|
|
|
|
|
|
7.456% 8/15/18
|
|
|
13,000,000
|
|
|
15,149,342
|
|
FiServ, Inc.
|
|
|
|
|
|
|
|
3.125% 10/01/15
|
|
|
1,000,000
|
|
|
1,035,785
|
|
Flir Systems, Inc.
|
|
|
|
|
|
|
|
3.75% 9/01/16
|
|
|
10,000,000
|
|
|
10,435,370
|
|
Ford Motor Credit Co. LLC
|
|
|
|
|
|
|
|
4.207% 4/15/16
|
|
|
10,000,000
|
|
|
10,661,220
|
|
General Electric Capital Corp.
|
|
|
|
|
|
|
|
2.375% 6/30/15
|
|
|
10,000,000
|
|
|
10,266,390
|
|
1.0% 9/23/15 Floating Rate Security
|
|
|
11,992,000
|
|
|
12,057,440
|
|
2.25% 11/09/15
|
|
|
6,181,000
|
|
|
6,373,099
|
|
Goldman Sachs Group, Inc.
|
|
|
|
|
|
|
|
5.95% 1/18/18
|
|
|
4,000,000
|
|
|
4,551,892
|
|
Hewlett-Packard Co.
|
|
|
|
|
|
|
|
1.55% 5/30/14
|
|
|
8,009,000
|
|
|
8,039,018
|
|
4.75% 6/02/14
|
|
|
15,540,000
|
|
|
15,790,474
|
|
JP Morgan Chase & Co.
|
|
|
|
|
|
|
|
0.99285% 5/02/14 Floating Rate Security
|
|
|
5,000,000
|
|
|
5,012,005
|
|
2.6% 1/15/16
|
|
|
15,000,000
|
|
|
15,457,455
|
|
0.6291% 11/21/16 (Bear Stearns)
|
|
|
|
|
|
|
|
Floating Rate Security
|
|
|
15,000,000
|
|
|
14,920,860
|
|
6.3% 4/23/19
|
|
|
2,500,000
|
|
|
2,954,030
|
|
|
|
|
Principal
|
|
|
|
|
|
|
|
amount
|
|
|
Value
|
|
JP Morgan Chase Bank, N.A.
|
|
|
|
|
|
|
|
6.0% 7/05/17
|
|
$
|
5,000,000
|
|
$
|
5,641,050
|
|
Laboratory Corp. of America Holdings
|
|
|
|
|
|
|
|
3.125% 5/15/16
|
|
|
1,250,000
|
|
|
1,301,810
|
|
Marathon Petroleum Corp.
|
|
|
|
|
|
|
|
3.5% 3/01/16
|
|
|
1,000,000
|
|
|
1,044,766
|
|
Markel Corp.
|
|
|
|
|
|
|
|
7.125% 9/30/19
|
|
|
5,776,000
|
|
|
6,885,575
|
|
5.35% 6/01/21
|
|
|
10,000,000
|
|
|
10,870,950
|
|
4.9% 7/01/22
|
|
|
2,000,000
|
|
|
2,087,418
|
|
Mead Johnson Nutrition Co.
|
|
|
|
|
|
|
|
3.5% 11/01/14
|
|
|
2,000,000
|
|
|
2,044,284
|
|
MetLife, Inc.
|
|
|
|
|
|
|
|
2.375% 2/06/14
|
|
|
1,000,000
|
|
|
1,001,833
|
|
5.125% 8/15/14
|
|
|
|
|
|
|
|
(Travelers Life & Annuity)
(c)
|
|
|
8,000,000
|
|
|
8,226,536
|
|
2.0% 1/09/15
(c)
|
|
|
10,000,000
|
|
|
10,164,340
|
|
3.125% 1/11/16
(c)
|
|
|
2,000,000
|
|
|
2,085,710
|
|
1.875% 6/22/18
(c)
|
|
|
1,000,000
|
|
|
982,834
|
|
Mohawk Industries, Inc.
|
|
|
|
|
|
|
|
6.125% 1/15/16
|
|
|
25,905,000
|
|
|
28,463,119
|
|
Omnicom Group, Inc.
|
|
|
|
|
|
|
|
5.9% 4/15/16
|
|
|
7,000,000
|
|
|
7,742,119
|
|
6.25% 7/15/19
|
|
|
6,181,000
|
|
|
7,143,172
|
|
Outerwall, Inc.
|
|
|
|
|
|
|
|
6.0% 3/15/19
|
|
|
200,000
|
|
|
205,000
|
|
Penske Truck Leasing
|
|
|
|
|
|
|
|
2.5% 3/15/16
(c)
|
|
|
9,945,000
|
|
|
10,194,281
|
|
3.75% 5/11/17
(c)
|
|
|
5,000,000
|
|
|
5,264,010
|
|
Petrohawk Energy Corp.
|
|
|
|
|
|
|
|
7.875% 6/01/15
|
|
|
16,750,000
|
|
|
17,193,875
|
|
7.25% 8/15/18
|
|
|
5,675,000
|
|
|
6,131,838
|
|
QVC, Inc.
|
|
|
|
|
|
|
|
7.5% 10/01/19
(c)
|
|
|
4,000,000
|
|
|
4,312,180
|
|
Range Resources Corp.
|
|
|
|
|
|
|
|
8.0% 5/15/19
|
|
|
12,300,000
|
|
|
13,176,375
|
|
Republic Services, Inc. (Allied Waste)
|
|
|
|
|
|
|
|
3.8% 5/15/18
|
|
|
5,000,000
|
|
|
5,301,005
|
|
Safeway, Inc.
|
|
|
|
|
|
|
|
3.4% 12/01/16
|
|
|
5,000,000
|
|
|
5,205,665
|
|
SemGroup Holdings, LP
|
|
|
|
|
|
|
|
7.5% 6/15/21
(c)
|
|
|
1,000,000
|
|
|
1,062,500
|
|
Shale-Inland Holdings, LLC
|
|
|
|
|
|
|
|
8.75% 11/15/19
(c)
|
|
|
2,000,000
|
|
|
2,080,000
|
|
Solvay SA (Rhodia)
|
|
|
|
|
|
|
|
6.875% 9/15/20
(c)
|
|
|
5,680,000
|
|
|
6,290,077
|
|
Texas Industries, Inc.
|
|
|
|
|
|
|
|
9.25% 8/15/20
|
|
|
300,000
|
|
|
335,625
|
|
Time Warner Cable, Inc.
|
|
|
|
|
|
|
|
7.5% 4/01/14
|
|
|
1,700,000
|
|
|
1,728,331
|
|
Time Warner, Inc.
|
|
|
|
|
|
|
|
3.15% 7/15/15
|
|
|
500,000
|
|
|
518,191
|
|
TransDigm, Inc.
|
|
|
|
|
|
|
|
7.75% 12/15/18
|
|
|
8,000,000
|
|
|
8,620,000
|
|
UnitedHealth Group, Inc.
|
|
|
|
|
|
|
|
4.75% 2/10/14
|
|
|
178,000
|
|
|
178,796
|
|
U.S. Bancorp
|
|
|
|
|
|
|
|
2.2% 11/15/16
|
|
|
4,250,000
|
|
|
4,391,937
|
|
U.S. Bank, N.A.
|
|
|
|
|
|
|
|
4.95% 10/30/14
|
|
|
4,500,000
|
|
|
4,672,152
|
|
3.778% 4/29/20
|
|
|
8,184,000
|
|
|
8,472,044
|
|
42 Weitz Funds
|
|
|
Principal
|
|
|
|
|
|
|
|
amount
|
|
|
Value
|
|
Valeant Pharmaceuticals International, Inc.
|
|
|
|
|
|
|
|
6.5% 7/15/16
(c)
|
|
$
|
2,537,000
|
|
$
|
2,619,452
|
|
Verizon Communications, Inc.
|
|
|
|
|
|
|
|
2.5% 9/15/16
|
|
|
750,000
|
|
|
776,034
|
|
3.65% 9/14/18
|
|
|
2,000,000
|
|
|
2,119,416
|
|
Vornado Realty Trust
|
|
|
|
|
|
|
|
4.25% 4/01/15
|
|
|
14,315,000
|
|
|
14,765,708
|
|
Vulcan Materials Co.
|
|
|
|
|
|
|
|
6.5% 12/01/16
|
|
|
5,500,000
|
|
|
6,187,500
|
|
6.4% 11/30/17
|
|
|
8,000,000
|
|
|
9,040,000
|
|
Washington Post Co.
|
|
|
|
|
|
|
|
7.25% 2/01/19
|
|
|
8,500,000
|
|
|
10,109,585
|
|
Wells Fargo & Co.
|
|
|
|
|
|
|
|
4.8% 11/01/14 (Wachovia Bank)
|
|
|
10,000,000
|
|
|
10,373,460
|
|
1.25% 2/13/15
|
|
|
27,339,000
|
|
|
27,572,311
|
|
0.51285% 6/15/17 (Wachovia Bank)
|
|
|
|
|
|
|
|
Floating Rate Security
|
|
|
5,000,000
|
|
|
4,965,445
|
|
Wells Fargo Bank, N.A.
|
|
|
|
|
|
|
|
0.622% 11/03/14 (Wachovia Bank)
|
|
|
|
|
|
|
|
Floating Rate Security
|
|
|
21,585,000
|
|
|
21,625,968
|
|
4.875% 2/01/15 (Wachovia Bank)
|
|
|
6,070,000
|
|
|
6,349,080
|
|
Willis North America, Inc.
|
|
|
|
|
|
|
|
6.2% 3/28/17
|
|
|
14,477,000
|
|
|
15,726,365
|
|
WM Wrigley Jr. Co.
|
|
|
|
|
|
|
|
3.7% 6/30/14
(c)
|
|
|
9,626,000
|
|
|
9,775,213
|
|
1.4% 10/21/16
(c)
|
|
|
500,000
|
|
|
501,100
|
|
Yum! Brands, Inc.
|
|
|
|
|
|
|
|
4.25% 9/15/15
|
|
|
1,000,000
|
|
|
1,056,225
|
|
Total Corporate Bonds
|
|
|
|
|
|
|
|
(Cost $551,594,922)
|
|
|
|
|
|
573,376,844
|
|
|
|
|
|
|
|
|
|
CONVERTIBLE BONDS — 1.2%
|
|
|
|
|
|
|
|
Redwood Trust, Inc.
|
|
|
|
|
|
|
|
4.625% 4/15/18
|
|
|
|
|
|
|
|
(Cost $17,000,000)
|
|
|
17,000,000
|
|
|
17,733,125
|
|
|
|
|
|
|
|
|
|
MORTGAGE-BACKED SECURITIES — 25.5%
(b)
|
|
|
|
|
|
|
|
Federal Home Loan Mortgage Corporation — 11.4%
|
|
|
|
|
|
|
|
Collateralized Mortgage Obligations — 3.8%
|
|
|
|
|
|
|
|
3229 CL HB — 5.0% 2025 (0.4 years)
|
|
|
212,012
|
|
|
216,027
|
|
2778 CL JD — 5.0% 2032 (0.5 years)
|
|
|
609,081
|
|
|
620,828
|
|
2937 CL JG — 5.0% 2033 (0.6 years)
|
|
|
1,607,020
|
|
|
1,630,403
|
|
2934 CL KE — 5.0% 2033 (0.6 years)
|
|
|
1,211,482
|
|
|
1,229,774
|
|
3556 CL MA — 5.0% 2037 (0.6 years)
|
|
|
432,509
|
|
|
440,054
|
|
2864 CL PE — 5.0% 2033 (0.6 years)
|
|
|
4,840,346
|
|
|
4,929,488
|
|
2937 CL HJ — 5.0% 2019 (0.7 years)
|
|
|
489,056
|
|
|
502,553
|
|
2760 CL PD — 5.0% 2032 (0.7 years)
|
|
|
1,673,686
|
|
|
1,715,460
|
|
3840 CL KA — 5.0% 2029 (0.8 years)
|
|
|
2,089,748
|
|
|
2,136,210
|
|
2780 CL TE — 5.0% 2033 (0.8 years)
|
|
|
2,482,586
|
|
|
2,549,948
|
|
3562 CL KA — 4.0% 2022 (0.8 years)
|
|
|
1,292,493
|
|
|
1,322,672
|
|
2574 CL JM — 5.0% 2022 (0.9 years)
|
|
|
195,534
|
|
|
202,146
|
|
3170 CL EA — 4.5% 2020 (1.0 years)
|
|
|
642,531
|
|
|
665,353
|
|
3544 CL KA — 4.5% 2023 (1.0 years)
|
|
|
852,120
|
|
|
880,030
|
|
3815 CL AD — 4.0% 2025 (2.0 years)
|
|
|
1,362,938
|
|
|
1,422,640
|
|
3844 CL AG — 4.0% 2025 (2.2 years)
|
|
|
4,264,077
|
|
|
4,494,197
|
|
3003 CL LD — 5.0% 2034 (3.1 years)
|
|
|
5,372,988
|
|
|
5,827,543
|
|
2952 CL PA — 5.0% 2035 (3.2 years)
|
|
|
1,917,089
|
|
|
2,075,197
|
|
3649 CL BW — 4.0% 2025 (3.4 years)
|
|
|
6,597,538
|
|
|
6,958,449
|
|
3620 CL PA — 4.5% 2039 (3.5 years)
|
|
|
4,654,803
|
|
|
4,959,578
|
|
3842 CL PH — 4.0% 2041 (3.8 years)
|
|
|
3,952,472
|
|
|
4,153,228
|
|
|
|
|
Principal
|
|
|
|
|
|
|
|
amount
|
|
|
Value
|
|
4107 CL LA — 2.5% 2031 (11.2 years)
|
|
$
|
6,957,751
|
|
$
|
6,343,336
|
|
4107 CL LW — 1.75% 2027 (12.1 years)
|
|
|
3,920,628
|
|
|
3,221,300
|
|
|
|
|
|
|
|
58,496,414
|
|
Pass-Through Securities — 7.1%
|
|
|
|
|
|
|
|
EO1386 — 5.0% 2018 (1.6 years)
|
|
|
64,651
|
|
|
68,573
|
|
G18190 — 5.5% 2022 (2.7 years)
|
|
|
83,325
|
|
|
90,585
|
|
G13300 — 4.5% 2023 (2.9 years)
|
|
|
518,104
|
|
|
556,369
|
|
G18296 — 4.5% 2024 (3.1 years)
|
|
|
1,231,608
|
|
|
1,323,556
|
|
G18306 — 4.5% 2024 (3.1 years)
|
|
|
2,573,975
|
|
|
2,765,270
|
|
G13517 — 4.0% 2024 (3.2 years)
|
|
|
1,809,407
|
|
|
1,913,975
|
|
G18308 — 4.0% 2024 (3.2 years)
|
|
|
2,531,417
|
|
|
2,677,744
|
|
J13949 — 3.5% 2025 (3.8 years)
|
|
|
9,675,816
|
|
|
10,140,185
|
|
E02804 — 3.0% 2025 (3.9 years)
|
|
|
6,442,276
|
|
|
6,579,348
|
|
J14649 — 3.5% 2026 (3.9 years)
|
|
|
8,681,284
|
|
|
9,071,471
|
|
E02948 — 3.5% 2026 (3.9 years)
|
|
|
19,487,471
|
|
|
20,357,990
|
|
J16663 — 3.5% 2026 (3.9 years)
|
|
|
18,197,439
|
|
|
19,018,147
|
|
G01818 — 5.0% 2035 (3.9 years)
|
|
|
5,320,307
|
|
|
5,762,519
|
|
E03033 — 3.0% 2027 (4.3 years)
|
|
|
9,195,826
|
|
|
9,391,485
|
|
E03048 — 3.0% 2027 (4.4 years)
|
|
|
17,456,442
|
|
|
17,827,861
|
|
|
|
|
|
|
|
107,545,078
|
|
Structured Agency Credit Risk Debt Notes — 0.4%
|
|
|
|
|
|
|
|
2013-DN1 CL M1 — 3.5646% 2023
|
|
|
|
|
|
|
|
Floating Rate Security (2.0 years)
|
|
|
5,357,068
|
|
|
5,517,904
|
|
Interest Only Securities — 0.1%
|
|
|
|
|
|
|
|
3974 CL AI — 3.0% 2021 (2.4 years)
|
|
|
14,777,673
|
|
|
977,233
|
|
|
|
|
|
|
|
172,536,629
|
|
Federal National Mortgage Association — 10.0%
|
|
|
|
|
|
|
|
Collateralized Mortgage Obligations — 0.9%
|
|
|
|
|
|
|
|
2004-40 CL BA — 4.5% 2018 (0.0 years)
|
|
|
4,886
|
|
|
4,885
|
|
2010-9 CL CA — 5.0% 2037 (0.2 years)
|
|
|
306,468
|
|
|
307,318
|
|
2003-39 CL LC — 5.0% 2022 (0.2 years)
|
|
|
23,779
|
|
|
23,875
|
|
2003-43 CL EX — 4.5% 2017 (0.3 years)
|
|
|
29,701
|
|
|
29,854
|
|
2009-52 CL DC — 4.5% 2023 (0.3 years)
|
|
|
63,898
|
|
|
64,104
|
|
2007-42 CL YA — 5.5% 2036 (0.5 years)
|
|
|
198,205
|
|
|
201,100
|
|
2004-78 CL AB — 5.0% 2032 (0.6 years)
|
|
|
1,602,850
|
|
|
1,634,269
|
|
2003-86 CL KT — 4.5% 2018 (1.1 years)
|
|
|
365,191
|
|
|
380,909
|
|
2009-44 CL A — 4.5% 2023 (1.1 years)
|
|
|
407,538
|
|
|
421,896
|
|
2003-9 CL DB — 5.0% 2018 (1.5 years)
|
|
|
352,446
|
|
|
374,798
|
|
2011-19 CL KA — 4.0% 2025 (2.0 years)
|
|
|
4,205,716
|
|
|
4,416,134
|
|
2010-145 CL PA — 4.0% 2024 (2.8 years)
|
|
|
2,526,241
|
|
|
2,676,665
|
|
2010-54 CL WA — 3.75% 2025 (2.8 years)
|
|
|
3,516,959
|
|
|
3,740,817
|
|
|
|
|
|
|
|
14,276,624
|
|
Pass-Through Securities — 9.1%
|
|
|
|
|
|
|
|
255291 — 4.5% 2014 (0.2 years)
|
|
|
13,068
|
|
|
13,897
|
|
256982 — 6.0% 2017 (1.5 years)
|
|
|
191,879
|
|
|
204,928
|
|
251787 — 6.5% 2018 (1.7 years)
|
|
|
8,006
|
|
|
8,900
|
|
254907 — 5.0% 2018 (1.7 years)
|
|
|
238,500
|
|
|
254,510
|
|
357414 — 4.0% 2018 (1.8 years)
|
|
|
745,584
|
|
|
791,183
|
|
357985 — 4.5% 2020 (2.2 years)
|
|
|
232,850
|
|
|
248,556
|
|
MA0464 — 3.5% 2020 (2.3 years)
|
|
|
6,349,268
|
|
|
6,674,805
|
|
888595 — 5.0% 2022 (2.3 years)
|
|
|
488,254
|
|
|
526,851
|
|
AD0629 — 5.0% 2024 (2.5 years)
|
|
|
1,703,153
|
|
|
1,840,306
|
|
995960 — 5.0% 2023 (2.5 years)
|
|
|
1,472,079
|
|
|
1,590,430
|
|
888439 — 5.5% 2022 (2.6 years)
|
|
|
446,602
|
|
|
488,609
|
|
AL0471 — 5.5% 2025 (2.6 years)
|
|
|
9,200,666
|
|
|
10,061,375
|
|
AE0031 — 5.0% 2025 (2.7 years)
|
|
|
2,403,006
|
|
|
2,597,462
|
|
995693 — 4.5% 2024 (2.8 years)
|
|
|
2,496,525
|
|
|
2,664,660
|
|
995692 — 4.5% 2024 (2.9 years)
|
|
|
2,146,561
|
|
|
2,290,743
|
|
930667 — 4.5% 2024 (3.2 years)
|
|
|
1,961,918
|
|
|
2,092,058
|
|
weitzinvestments.com 43
SHORT-INTERMEDIATE INCOME FUND
SCHEDULE OF INVESTMENTS • (CONTINUED)
|
|
|
Principal
|
|
|
|
|
|
|
|
amount
|
|
|
Value
|
|
Pass-Through Securities (continued)
|
|
|
|
|
|
|
|
995755 — 4.5% 2024 (3.2 years)
|
|
$
|
3,199,860
|
|
$
|
3,412,834
|
|
MA0043 — 4.0% 2024 (3.2 years)
|
|
|
1,455,821
|
|
|
1,546,075
|
|
890112 — 4.0% 2024 (3.2 years)
|
|
|
1,703,113
|
|
|
1,809,845
|
|
AA5510 — 4.0% 2024 (3.3 years)
|
|
|
771,642
|
|
|
819,959
|
|
AA4315 — 4.0% 2024 (3.3 years)
|
|
|
3,341,764
|
|
|
3,549,626
|
|
931739 — 4.0% 2024 (3.4 years)
|
|
|
825,026
|
|
|
876,162
|
|
555531 — 5.5% 2033 (3.4 years)
|
|
|
8,977,267
|
|
|
9,963,456
|
|
AD7073 — 4.0% 2025 (3.5 years)
|
|
|
2,631,575
|
|
|
2,794,288
|
|
995112 — 5.5% 2036 (3.5 years)
|
|
|
3,960,263
|
|
|
4,363,726
|
|
AR8198 — 2.5% 2023 (3.6 years)
|
|
|
13,368,096
|
|
|
13,652,909
|
|
725232 — 5.0% 2034 (3.8 years)
|
|
|
755,266
|
|
|
822,923
|
|
MA1502 — 2.5% 2023 (3.8 years)
|
|
|
10,879,735
|
|
|
11,110,691
|
|
AB1769 — 3.0% 2025 (4.0 years)
|
|
|
5,936,305
|
|
|
6,066,578
|
|
AB2251 — 3.0% 2026 (4.0 years)
|
|
|
6,531,792
|
|
|
6,676,053
|
|
AB3902 — 3.0% 2026 (4.4 years)
|
|
|
4,503,816
|
|
|
4,608,233
|
|
MA0587 — 4.0% 2030 (4.5 years)
|
|
|
11,707,108
|
|
|
12,230,818
|
|
AK3264 — 3.0% 2027 (4.5 years)
|
|
|
11,106,294
|
|
|
11,367,168
|
|
AB4482 — 3.0% 2027 (4.5 years)
|
|
|
10,077,797
|
|
|
10,314,522
|
|
|
|
|
|
|
|
138,335,139
|
|
|
|
|
|
|
|
152,611,763
|
|
Government National Mortgage Association — 1.7%
|
|
|
|
|
|
|
|
Interest Only Securities — 0.2%
|
|
|
|
|
|
|
|
2012-61 CL BI — 4.5% 2038 (1.3 years)
|
|
|
3,716,510
|
|
|
230,527
|
|
2009-31 CL PI — 4.5% 2037 (1.9 years)
|
|
|
5,260,162
|
|
|
395,658
|
|
2010-66 CL IO — 1.2141% 2052
|
|
|
|
|
|
|
|
Floating Rate Security (5.3 years)
|
|
|
54,965,143
|
|
|
2,902,654
|
|
|
|
|
|
|
|
3,528,839
|
|
Pass-Through Securities — 1.5%
|
|
|
|
|
|
|
|
G2 5255 — 3.0% 2026 (4.5 years)
|
|
|
22,088,133
|
|
|
22,713,253
|
|
|
|
|
|
|
|
26,242,092
|
|
Non-Government Agency — 2.4%
|
|
|
|
|
|
|
|
Collateralized Mortgage Obligations — 2.4%
|
|
|
|
|
|
|
|
Washington Mutual, Inc. (WAMU) 2003-S7
|
|
|
|
|
|
|
|
CL A1 — 4.5% 2018 (0.1 years)
|
|
|
104,532
|
|
|
106,092
|
|
Sequoia Mortgage Trust (SEMT) 2011-1
|
|
|
|
|
|
|
|
CL A1 — 4.125% 2041 (0.1 years)
|
|
|
1,219,993
|
|
|
1,222,519
|
|
Sequoia Mortgage Trust (SEMT) 2010-H1
|
|
|
|
|
|
|
|
CL A1 — 3.75% 2040 (1.1 years)
|
|
|
1,461,667
|
|
|
1,440,264
|
|
Sequoia Mortgage Trust (SEMT) 2012-2
|
|
|
|
|
|
|
|
CL A2 — 3.5% 2042 (1.8 years)
|
|
|
4,741,680
|
|
|
4,775,498
|
|
Chase Mortgage Finance Corp. (CHASE)
|
|
|
|
|
|
|
|
2004-S1 CL A6 — 4.5% 2019 (2.1 years)
|
|
|
62,425
|
|
|
61,893
|
|
Sequoia Mortgage Trust (SEMT) 2012-1
|
|
|
|
|
|
|
|
CL 1A1 — 2.865% 2042 (2.3 years)
|
|
|
6,606,643
|
|
|
6,585,555
|
|
Sequoia Mortgage Trust (SEMT) 2012-4
|
|
|
|
|
|
|
|
CL A1 — 3.5% 2042 (4.4 years)
|
|
|
9,151,741
|
|
|
9,056,997
|
|
Sequoia Mortgage Trust (SEMT) 2013-4
|
|
|
|
|
|
|
|
CL A3 — 1.55% 2043 (8.1 years)
|
|
|
14,319,465
|
|
|
13,842,748
|
|
|
|
|
|
|
|
37,091,566
|
|
Total Mortgage-Backed Securities
|
|
|
|
|
|
|
|
(Cost $384,057,543)
|
|
|
|
|
|
388,482,050
|
|
COMMERCIAL MORTGAGE-
|
|
|
Principal
|
|
|
|
|
BACKED SECURITIES — 3.7%
(b)
|
|
|
amount
|
|
|
Value
|
|
Rialto Capital Management, LLC (RIAL)
|
|
|
|
|
|
|
|
2013-LT2 CL A 2.8331% 2028
|
|
|
|
|
|
|
|
(0.0 years)
(c)
|
|
$
|
3,916,451
|
|
$
|
3,926,042
|
|
Oaktree Real Estate Investments/Sabal
|
|
|
|
|
|
|
|
(ORES) 2013-LV2 CL A
|
|
|
|
|
|
|
|
3.081% 2025 (0.4 years)
(c)
|
|
|
6,552,379
|
|
|
6,555,046
|
|
SMA Portfolio (SMAP) 2012-LV1 CL A
|
|
|
|
|
|
|
|
3.5% 2025 (0.4 years)
(c)
|
|
|
662,177
|
|
|
663,845
|
|
VFC LLC (VFCP) 2013-1 CL A
|
|
|
|
|
|
|
|
3.13% 2026 (0.5 years)
(c)
|
|
|
2,984,938
|
|
|
3,005,610
|
|
Banc of America Commercial Mortgage Trust
|
|
|
|
|
|
|
|
(BACM) 2003-2 CL D 5.34536%
|
|
|
|
|
|
|
|
2041 Floating Rate Security (0.6 years)
|
|
|
10,144,153
|
|
|
10,360,746
|
|
TPG Opportunities Partners, L.P.
|
|
|
|
|
|
|
|
(TOPRE) 2013-LTR1 CL A 3.47%
|
|
|
|
|
|
|
|
2028 (1.5 years)
(c)
|
|
|
8,917,719
|
|
|
8,924,488
|
|
TPG Opportunities Partners, L.P.
|
|
|
|
|
|
|
|
(TOPRE) 2013-LTR1 CL B 4.25%
|
|
|
|
|
|
|
|
2028 (1.6 years)
(c)
|
|
|
9,749,326
|
|
|
9,766,060
|
|
Redwood Commercial Mortgage Corp.
|
|
|
|
|
|
|
|
(RCMC) 2012-CRE1 CL A 5.62346%
|
|
|
|
|
|
|
|
2044 (1.9 years)
(c)
|
|
|
12,837,986
|
|
|
12,888,869
|
|
Total Commercial Mortgage-Backed Securities
|
|
|
|
|
|
|
|
(Cost $55,985,611)
|
|
|
|
|
|
56,090,706
|
|
|
|
|
|
|
|
|
|
ASSET-BACKED SECURITIES — 6.0%
(b)
|
|
|
|
|
|
|
|
United Auto Credit Securitization Trust
|
|
|
|
|
|
|
|
(UACST) 2012-1 CL A2 1.1% 2015
|
|
|
|
|
|
|
|
(0.2 years)
(c)
|
|
|
767,276
|
|
|
767,240
|
|
Westlake Automobile Receivables Trust
|
|
|
|
|
|
|
|
(WLAKE) 2012-1A CL A2 1.03% 2016
|
|
|
|
|
|
|
|
(0.3 years)
(c)
|
|
|
2,092,914
|
|
|
2,094,335
|
|
Stanwich Mortgage Loan Co. (STWH)
|
|
|
|
|
|
|
|
2012-NPL5 CL A 2.9814% 2042
|
|
|
|
|
|
|
|
(0.3 years)
(c)
|
|
|
6,213,583
|
|
|
6,210,476
|
|
Bayview Opportunity Master Fund IIa Trust
|
|
|
|
|
|
|
|
(BOMFT) 2013-2RPL CL A 3.721% 2018
|
|
|
|
|
|
|
|
(0.3 years)
(c)
|
|
|
1,828,210
|
|
|
1,826,601
|
|
Santander Drive Auto Receivables Trust
|
|
|
|
|
|
|
|
(SDART) 2010-3 CL C 3.06% 2017
|
|
|
|
|
|
|
|
(0.7 years)
|
|
|
7,482,870
|
|
|
7,623,436
|
|
Stanwich Mortgage Loan Co. (STWH)
|
|
|
|
|
|
|
|
2012-NPL4 CL A 2.9814% 2042
|
|
|
|
|
|
|
|
(0.7 years)
(c)
|
|
|
1,782,793
|
|
|
1,776,589
|
|
Credit Acceptance Auto Loan Trust
|
|
|
|
|
|
|
|
(CAALT) 2011-1 CL B 3.96% 2019
|
|
|
|
|
|
|
|
(0.7 years)
(c)
|
|
|
7,500,000
|
|
|
7,667,216
|
|
Americredit Automobile Receivables
|
|
|
|
|
|
|
|
Trust (AMCAR) 2013-5 CL A2A
|
|
|
|
|
|
|
|
0.65% 2017 (0.8 years)
|
|
|
4,000,000
|
|
|
4,002,322
|
|
Prestige Auto Receivables Trust (PART)
|
|
|
|
|
|
|
|
2013-1A CL A2 1.09% 2018
|
|
|
|
|
|
|
|
(0.9 years)
(c)
|
|
|
3,834,192
|
|
|
3,845,027
|
|
Vericrest Opportunity Loan Trust (VOLT)
|
|
|
|
|
|
|
|
2013-3 CL A 3.22162% 2053
|
|
|
|
|
|
|
|
(1.1 years)
(c)
|
|
|
4,399,672
|
|
|
4,383,174
|
|
Vericrest Opportunity Loan Trust (VOLT)
|
|
|
|
|
|
|
|
2013-NPL1 CL A 4.25% 2058
|
|
|
|
|
|
|
|
(1.1 years)
(c)
|
|
|
9,706,602
|
|
|
9,837,039
|
|
44 Weitz Funds
|
|
|
Principal
|
|
|
|
|
|
|
|
amount
|
|
|
Value
|
|
Flagship Credit Auto Trust (FCAT)
|
|
|
|
|
|
|
|
2013-2 CL A 1.94% 2019
|
|
|
|
|
|
|
|
(1.3 years)
(c)
|
|
$
|
4,742,704
|
|
$
|
4,743,985
|
|
Stanwich Mortgage Loan Co. (STWH)
|
|
|
|
|
|
|
|
2013-NPL1 CL A 2.9814% 2043
|
|
|
|
|
|
|
|
(1.3 years)
(c)
|
|
|
7,067,855
|
|
|
7,034,282
|
|
Santander Drive Auto Receivables Trust
|
|
|
|
|
|
|
|
(SDART) 2012-4 CL C 2.94% 2017
|
|
|
|
|
|
|
|
(1.6 years)
|
|
|
8,000,000
|
|
|
8,236,852
|
|
CPS Auto Receivables Trust (CPS)
|
|
|
|
|
|
|
|
2013-A CL A 1.31% 2020
|
|
|
|
|
|
|
|
(2.0 years)
(c)
|
|
|
3,604,518
|
|
|
3,548,839
|
|
Cabela’s Master Credit Card Trust (CABMT)
|
|
|
|
|
|
|
|
2011-2A CL A2 0.7666% 2019 Floating
|
|
|
|
|
|
|
|
Rate Security (2.4 years)
(c)
|
|
|
4,500,000
|
|
|
4,530,834
|
|
Stanwich Mortgage Loan Co. (STWH)
|
|
|
|
|
|
|
|
2013-NPL2 CL A 3.2282% 2059
|
|
|
|
|
|
|
|
(2.6 years)
(c)
|
|
|
7,323,059
|
|
|
7,212,554
|
|
Cabela’s Master Credit Card Trust (CABMT)
|
|
|
|
|
|
|
|
2012-2A CL A2 0.6466% 2020 Floating
|
|
|
|
|
|
|
|
Rate Security (3.4 years)
(c)
|
|
|
6,000,000
|
|
|
6,012,363
|
|
Total Asset-Backed Securities
|
|
|
|
|
|
|
|
(Cost $91,196,781)
|
|
|
|
|
|
91,353,164
|
|
TAXABLE MUNICIPAL BONDS — 1.3%
|
|
|
|
|
|
|
|
Nebraska Public Power District
|
|
|
|
|
|
|
|
5.14% 1/01/14
|
|
|
10,000,000
|
|
|
10,000,000
|
|
Los Angeles, California Cmty Dev
|
|
|
|
|
|
|
|
6.0% 9/01/14
|
|
|
2,275,000
|
|
|
2,341,589
|
|
6.0% 9/01/15
|
|
|
1,220,000
|
|
|
1,304,485
|
|
Menomonee Falls, Wisconsin
|
|
|
|
|
|
|
|
4.25% 11/01/14
|
|
|
2,000,000
|
|
|
2,006,040
|
|
Omaha, Nebraska Public Facilities Corp.,
|
|
|
|
|
|
|
|
Lease Revenue, Series B, Refunding
|
|
|
|
|
|
|
|
4.588% 6/01/17
|
|
|
815,000
|
|
|
890,404
|
|
4.788% 6/01/18
|
|
|
1,000,000
|
|
|
1,096,290
|
|
Iowa State University Revenue
|
|
|
|
|
|
|
|
5.8% 7/01/22
|
|
|
1,335,000
|
|
|
1,402,698
|
|
Total Taxable Municipal Bonds
|
|
|
|
|
|
|
|
(Cost $18,664,396)
|
|
|
|
|
|
19,041,506
|
|
U.S. TREASURY NOTES — 14.4%
|
|
|
|
|
|
|
|
U.S. Treasury Note
|
|
|
|
|
|
|
|
1.25% 2/15/14
|
|
|
30,000,000
|
|
|
30,042,780
|
|
1.25% 3/15/14
|
|
|
30,000,000
|
|
|
30,072,060
|
|
1.75% 3/31/14
|
|
|
30,000,000
|
|
|
30,122,460
|
|
0.375% 1/15/16
|
|
|
40,000,000
|
|
|
39,987,520
|
|
0.375% 2/15/16
|
|
|
55,000,000
|
|
|
54,957,045
|
|
0.875% 11/30/16
|
|
|
20,000,000
|
|
|
20,066,400
|
|
2.125% 8/31/20
|
|
|
15,000,000
|
|
|
14,810,160
|
|
Total U.S. Treasury Notes
|
|
|
|
|
|
|
|
(Cost $220,137,062)
|
|
|
|
|
|
220,058,425
|
|
COMMON STOCKS — 1.4%
|
|
|
Shares
|
|
|
Value
|
|
Redwood Trust, Inc.
|
|
|
|
|
|
|
|
(Cost $12,708,270)
|
|
|
1,127,409
|
|
$
|
21,837,912
|
|
CASH EQUIVALENTS — 8.3%
|
|
|
|
|
|
|
|
Wells Fargo Advantage Government Money Market Fund -
|
|
|
|
|
|
|
|
Institutional Class 0.01%
(a)
|
|
|
|
|
|
|
|
(Cost $126,645,343)
|
|
|
126,645,343
|
|
|
126,645,343
|
|
Total Investments in Securities
|
|
|
|
|
|
|
|
(Cost $1,477,989,928)
|
|
|
|
|
|
1,514,619,075
|
|
Other Assets Less Other Liabilities — 0.6%
|
|
|
|
|
|
8,804,747
|
|
Net Assets — 100.0%
|
|
|
|
|
$
|
1,523,423,822
|
|
Net Asset Value Per Share — Institutional Class
|
|
|
|
|
$
|
12.50
|
|
Net Asset Value Per Share — Investor Class
|
|
|
|
|
$
|
12.48
|
|
(a)
|
Rate presented represents the annualized 7-day yield at December 31, 2013.
|
(b)
|
Number of years indicated represents estimated average life.
|
(c)
|
Security is exempt from registration under Rule 144A of the Securities Act of 1933. This security may be resold in transactions that are exempt from registration, normally to qualified institutional buyers.
|
weitzinvestments.com 45
NEBRASKA TAX-FREE INCOME FUND
PORTFOLIO MANAGER’S DISCUSSION & ANALYSIS
Portfolio Manager: Thomas D. Carney, CFA
The Nebraska Tax-Free Income Fund returned -0.3% for the 12 months ended December 31, compared to a +0.8% return for the Barclays 5-Year Municipal Bond Index, our Fund’s primary benchmark. For the fourth calendar quarter, the Nebraska Tax-Free Income Fund returned +0.4% compared to a +0.8% return for the Barclays 5-Year Municipal Bond Index. The principal reason our Fund results lagged our Fund’s primary benchmark was due to the wider maturity distribution of our Fund’s investments relative to the benchmark. Our Fund’s “barbell” portfolio attributes (both short- and longer-term bonds) differ from the benchmark's narrowly defined “laddered” structure (only 4- to 6-year bonds). The general rise in interest rates, particularly longer-term rates, negatively impacted our Fund results more than our benchmark. And while we are never pleased to report negative year-over-year results, our modest decline was meaningfully better than the average decline of 2.8% posted by a broad category of intermediate-term, single-state municipal bond funds in 2013.
Overview
U.S. Treasury bond yields rose (prices declined) in the fourth quarter as continued progress on the domestic economic front prompted the Fed to (modestly) begin scaling back its large scale asset purchase program. The 10-year Treasury bond yield, for example, rose approximately 40 basis points (a basis point represents one one-hundredth of a percentage point) in the quarter and ended the year slightly above 3%, its highest closing level in over two years. For the year, 10-year Treasury yields increased approximately 125 basis points, resulting in price declines for many long-term bond holders.
Despite headwinds from Treasury interest rates, municipal bonds generated positive results in the fourth quarter as investors digested the headline risk related to the Detroit bankruptcy and Puerto Rico’s budget difficulties. The credit profile of the municipal market is broadly improving as economic growth has picked up. The headwinds on state and local government budgets from reduced federal transfer payments, weak housing markets and high unemployment rates are turning into slight tailwinds with greater GDP growth. As U.S. GDP growth approaches 3%, state and local governments are beginning to overcome the budgetary pressures of the slow or no growth period of recent years.
Fund Review
All of the Fund’s holdings added to results during the quarter, principally from income returns on our investments. We did not purchase any new bonds in the quarter, allowing cash reserves to increase modestly. Municipal bond yields remain broadly higher than comparable U.S. Treasury bonds, a sign of municipal bonds
relative
value given their tax advantages. However, with overall interest rates still historically low,
absolute
value remains scarce.
The average duration of our Fund decreased to 2.9 from 3.1 years in the previous quarter and the average maturity decreased to 6.1 from 6.3 years.
While the vast majority of our Fund investments are Nebraska based, we select investments from a universe of thousands of issuers in the nearly $3 trillion municipal bond market. Our holdings are varied and diverse and include, for example, airport revenue bonds from Miami and Orlando; higher education bonds from the University of Nebraska to Hastings College to Wesleyan and Creighton University; electric utility bonds from Omaha and Nebraska Public Power Districts; and general obligation bonds from Omaha, Nebraska to Memphis, Tennessee to San Antonio, Texas to Chesterfield County, Virginia. As a reminder, while our non-Nebraska investments are taxable at the
state
level for Nebraska residents, they provide diversification benefits and we believe that most provide incremental return that compensate for any added state tax an investor would be required to pay.
The “Portfolio Profile” page accompanying this report provides additional detail regarding the breakdown of our investment holdings by state, sector and rating. Our investments may be wide-ranging, but our analysis is the same. We strive to only own those investments we believe compensate us for the incremental credit risk we assume. Our overall goal is to invest in a portfolio of bonds of varying maturities that we believe represent attractive risk-adjusted returns, taking into consideration the general level of interest rates and the credit quality of each investment.
Outlook
We have been beating the drum about the challenging investment landscape in fixed income for some time now, but it bears repeating. Nominal interest rates on U.S. Treasuries, both short- and long-term, are being manipulated by monetary policy and remain artificially low. Low Treasury rates have a gravitational affect on all other fixed-income assets, municipal bonds included. Inflation, the bond investor’s boogeyman, has declined in 2013 but still leaves little room for
real
(after inflation) returns. The Federal Reserve’s willingness to allow inflation to (even temporarily) exceed its longer run goals of 2 percent add to our concern about
future
fixed-income returns. Therefore, we expect to continue to position the Fund defensively relative to interest rate exposure while we patiently seek out areas of opportunity. We will continue to invest one security at a time, relying on a fundamental research-based investment approach and are well positioned to take advantage of any market weakness.
46 Weitz Funds
NEBRASKA TAX-FREE INCOME FUND
PERFORMANCE • (UNAUDITED)
|
|
|
|
Total Returns
|
|
Average Annual Total Returns
|
|
|
|
|
3 Mos.
|
|
1 Year
|
|
3 Year
|
|
5 Year
|
|
10 Year
|
|
15 Year
|
|
20 Year
|
|
25 Year
|
|
Nebraska Tax-Free Income Fund
|
|
|
0.37
|
%
|
|
-0.25
|
%
|
|
2.55
|
%
|
|
3.42
|
%
|
|
3.07
|
%
|
|
3.67
|
%
|
|
4.13
|
%
|
|
4.77
|
%
|
|
Barclays 5-Year Municipal
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bond Index
|
|
|
0.84
|
|
|
0.81
|
|
|
3.54
|
|
|
4.27
|
|
|
3.92
|
|
|
4.47
|
|
|
4.67
|
|
|
5.50
|
|
Growth of $10,000
This chart depicts the change in the value of a $10,000 investment in the NE Tax-Free Fund for the period December 31, 2003 through December 31, 2013, as compared with the growth of the Barclays 5-Yr Index during the same period. Index performance is hypothetical and is shown for illustrative purposes only.
|
|
|
NE
|
|
Barclays
|
|
Relative
|
|
|
|
Tax-Free
|
|
5-Yr*
|
|
Results
|
|
Year
|
|
(1)
|
|
(2)
|
|
(1)-(2)
|
|
1985 (10/1/85)
|
|
3.55
|
%
|
|
N/A
|
%
|
|
N/A
|
%
|
|
1986
|
|
11.21
|
|
|
N/A
|
|
|
N/A
|
|
|
1987
|
|
4.00
|
|
|
N/A
|
|
|
N/A
|
|
|
1988
|
|
6.31
|
|
|
N/A
|
|
|
N/A
|
|
|
1989
|
|
6.89
|
|
|
9.07
|
|
|
-2.18
|
|
|
1990
|
|
6.31
|
|
|
7.70
|
|
|
-1.39
|
|
|
1991
|
|
8.41
|
|
|
11.41
|
|
|
-3.00
|
|
|
1992
|
|
7.37
|
|
|
7.62
|
|
|
-0.25
|
|
|
1993
|
|
7.87
|
|
|
8.73
|
|
|
-0.86
|
|
|
1994
|
|
-1.41
|
|
|
-1.28
|
|
|
-0.13
|
|
|
1995
|
|
10.49
|
|
|
11.65
|
|
|
-1.16
|
|
|
1996
|
|
5.46
|
|
|
4.22
|
|
|
1.24
|
|
|
1997
|
|
7.32
|
|
|
6.38
|
|
|
0.94
|
|
|
1998
|
|
6.10
|
|
|
5.84
|
|
|
0.26
|
|
|
1999
|
|
-1.21
|
|
|
0.73
|
|
|
-1.94
|
|
|
2000
|
|
9.87
|
|
|
7.71
|
|
|
2.16
|
|
|
2001
|
|
3.86
|
|
|
6.21
|
|
|
-2.35
|
|
|
2002
|
|
7.99
|
|
|
9.28
|
|
|
-1.29
|
|
|
2003
|
|
4.29
|
|
|
4.13
|
|
|
0.16
|
|
|
2004
|
|
3.38
|
|
|
2.72
|
|
|
0.66
|
|
|
2005
|
|
2.16
|
|
|
0.95
|
|
|
1.21
|
|
|
2006
|
|
3.26
|
|
|
3.34
|
|
|
-0.08
|
|
|
2007
|
|
3.56
|
|
|
5.15
|
|
|
-1.59
|
|
|
2008
|
|
1.23
|
|
|
5.78
|
|
|
-4.55
|
|
|
2009
|
|
7.24
|
|
|
7.40
|
|
|
-0.16
|
|
|
2010
|
|
2.27
|
|
|
3.40
|
|
|
-1.13
|
|
|
2011
|
|
5.94
|
|
|
6.93
|
|
|
-0.99
|
|
|
2012
|
|
2.07
|
|
|
2.97
|
|
|
-0.90
|
|
|
2013
|
|
-0.25
|
|
|
0.81
|
|
|
-1.06
|
|
|
Since Inception:
|
|
|
|
|
|
|
|
|
|
|
Cumulative
|
|
|
|
|
|
|
|
|
|
|
Return
|
|
308.09
|
|
|
N/A
|
|
|
N/A
|
|
|
Avg. Annual
|
|
|
|
|
|
|
|
|
|
|
Return
|
|
5.10
|
|
|
N/A
|
|
|
N/A
|
|
* The inception date of the Barclays 5-Yr was 1/29/88.
These performance numbers reflect the deduction of the Fund’s annual operating expenses which as stated in its most recent prospectus are 0.71% of the Fund’s net assets. The returns assume redemption at the end of each period and reinvestment of dividends. Total returns shown include fee waivers and expense reimbursements, if any; total returns would have been lower had there been no waiver of fees and/or reimbursement of expenses by the Adviser.
This information represents past performance and past performance does not guarantee future results.
The investment return and the principal value of an investment in this Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month-end may be obtained at www.weitzinvestments.com/funds_and_performance/fund_performance.fs.
See page 4 for additional performance disclosures. See page 54 for a description of all indices.
Performance information does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
weitzinvestments.com 47
NEBRASKA TAX-FREE INCOME FUND
PORTFOLIO PROFILE • (UNAUDITED)
State Breakdown
|
Nebraska
|
|
|
80.9
|
%
|
Florida
|
|
|
5.2
|
|
Texas
|
|
|
1.9
|
|
Arizona
|
|
|
1.5
|
|
Virginia
|
|
|
1.5
|
|
Puerto Rico
|
|
|
1.4
|
|
North Dakota
|
|
|
1.2
|
|
Tennessee
|
|
|
1.1
|
|
Iowa
|
|
|
0.9
|
|
Illinois
|
|
|
0.4
|
|
Cash Equivalents/Other
|
|
|
4.0
|
|
Net Assets
|
|
|
100.0
|
%
|
|
|
|
|
|
Sector Breakdown
|
Power
|
|
|
32.5
|
%
|
Higher Education
|
|
|
19.7
|
|
Hospital
|
|
|
10.2
|
|
Lease
|
|
|
3.7
|
|
General
|
|
|
3.5
|
|
Airport/Transportation
|
|
|
3.2
|
|
Water/Sewer
|
|
|
2.1
|
|
Housing
|
|
|
0.7
|
|
Total Revenue
|
|
|
75.6
|
|
City/Subdivision
|
|
|
7.0
|
|
School District
|
|
|
5.5
|
|
County
|
|
|
3.2
|
|
Natural Resource District
|
|
|
2.6
|
|
Total General Obligation
|
|
|
18.3
|
|
Escrow/Pre-Refunded
|
|
|
2.1
|
|
Cash Equivalents/Other
|
|
|
4.0
|
|
Net Assets
|
|
|
100.0
|
%
|
|
|
|
|
|
Financial Attributes
|
Average Maturity
|
|
|
6.1 years
|
Average Effective Maturity
|
|
|
3.3 years
|
Average Duration
|
|
|
2.9 years
|
Average Coupon
|
|
|
4.2
|
%
|
30-Day SEC Yield at 12-31-13
|
|
|
1.44
|
%
|
Municipals exempt from federal and
|
|
|
|
|
Nebraska income taxes
|
|
|
Approx. 82
|
%
|
Municipals subject to alternative
|
|
|
|
|
minimum tax
|
|
|
Approx. 2
|
%
|
|
|
|
|
|
Five Largest Issuers
(b)
|
Nebraska Public Power District
|
|
|
10.6
|
%
|
University of Nebraska
|
|
|
9.3
|
|
Omaha Public Power District
|
|
|
6.3
|
|
Public Power Generation Agency
|
|
|
4.3
|
|
Children’s Hospital Obligated Group
|
|
|
4.1
|
|
|
|
|
|
|
Credit Quality
(a)
|
Aaa/AAA
|
|
|
6.5
|
%
|
Aa/AA
|
|
|
44.5
|
|
A/A
|
|
|
37.6
|
|
Baa/BBB
|
|
|
4.4
|
|
Non-Rated
|
|
|
3.0
|
|
Cash Equivalents/Other
|
|
|
4.0
|
|
Net Assets
|
|
|
100.0
|
%
|
(a)
The Fund receives credit quality ratings on underlying securities of the Fund when available from Moody’s and S&P. The Fund will use one rating for an underlying security if that is all that is provided. Ratings and portfolio credit quality may change over time. The Fund itself has not been rated by an independent rating agency.
|
(b)
Percent of net assets
|
48 Weitz Funds
NEBRASKA TAX-FREE INCOME FUND
SCHEDULE OF INVESTMENTS • DECEMBER 31, 2013 • (UNAUDITED)
|
|
|
Principal
|
|
|
|
|
MUNICIPAL BONDS — 96.0%
|
|
|
amount
|
|
|
Value
|
|
Arizona — 1.5%
|
|
|
|
|
|
|
|
Maricopa County, General Obligation,
|
|
|
|
|
|
|
|
Peoria Unified School District No. 11, Series 2006
|
|
|
|
|
|
|
|
5.0% 7/01/24
|
|
$
|
950,000
|
|
$
|
1,044,183
|
|
Florida — 5.2%
|
|
|
|
|
|
|
|
Greater Orlando, Aviation Authority, Revenue, Series 2009A, AMT
|
|
|
|
|
|
|
|
6.0%, 10/01/16
|
|
|
1,000,000
|
|
|
1,140,550
|
|
JEA, Electric System Revenue, Series Three 2009B
|
|
|
|
|
|
|
|
5.0%, 10/01/28
|
|
|
300,000
|
|
|
306,867
|
|
Miami, Dade County, Aviation Revenue, Series 2010A
|
|
|
|
|
|
|
|
4.25%, 10/01/18
|
|
|
1,000,000
|
|
|
1,110,540
|
|
Orlando Utilities Commission, Utility System Revenue, Refunding,
|
|
|
|
|
|
|
|
Series 2006, 5.0%, 10/01/17
|
|
|
1,000,000
|
|
|
1,112,110
|
|
|
|
|
|
|
|
3,670,067
|
|
Illinois — 0.4%
|
|
|
|
|
|
|
|
Illinois Finance Authority, Revenue, Series 2009A,
|
|
|
|
|
|
|
|
Northwestern Memorial Hospital
|
|
|
|
|
|
|
|
5.0%, 8/15/17
|
|
|
245,000
|
|
|
278,420
|
|
Iowa — 0.9%
|
|
|
|
|
|
|
|
Cedar Rapids Community School District, Infrastructure Sales,
|
|
|
|
|
|
|
|
Services and Use Tax Revenue, Series 2011
|
|
|
|
|
|
|
|
4.0%, 7/01/20
|
|
|
600,000
|
|
|
634,224
|
|
Nebraska — 80.9%
|
|
|
|
|
|
|
|
Adams County, Hospital Authority #1, Revenue, Mary Lanning
|
|
|
|
|
|
|
|
Memorial Hospital Project, Radian Insured
|
|
|
|
|
|
|
|
4.25%, 12/15/16
|
|
|
250,000
|
|
|
269,490
|
|
4.4%, 12/15/17
|
|
|
250,000
|
|
|
273,657
|
|
Bellevue, Development Revenue, Bellevue University Project,
|
|
|
|
|
|
|
|
Series 2010A, 2.75%, 12/01/15
|
|
|
1,000,000
|
|
|
1,020,580
|
|
Cornhusker Public Power District, Electric Revenue, Refunding,
|
|
|
|
|
|
|
|
Series 2010, 2.4%, 7/01/17
|
|
|
400,000
|
|
|
408,496
|
|
Dawson Public Power District, Electric Revenue, Series 2010B
|
|
|
|
|
|
|
|
2.25%, 12/15/17
|
|
|
125,000
|
|
|
128,240
|
|
2.75%, 12/15/19
|
|
|
100,000
|
|
|
101,937
|
|
Douglas County, Educational Facility Revenue,
|
|
|
|
|
|
|
|
Creighton University Project, Refunding, Series 2010A
|
|
|
|
|
|
|
|
5.0%, 7/01/16
|
|
|
430,000
|
|
|
466,021
|
|
5.6%, 7/01/25
|
|
|
400,000
|
|
|
441,252
|
|
Douglas County, Elkhorn Public School District #10, Series 2010B
|
|
|
|
|
|
|
|
3.0%, 6/15/16
|
|
|
525,000
|
|
|
538,398
|
|
Douglas County, General Obligation, Refunding, Series 2011B
|
|
|
|
|
|
|
|
3.0%, 12/15/19
|
|
|
1,155,000
|
|
|
1,194,189
|
|
Douglas County, Hospital Authority #1, Revenue, Refunding,
|
|
|
|
|
|
|
|
Alegent Health - Immanuel, AMBAC Insured
|
|
|
|
|
|
|
|
5.125%, 9/01/17
|
|
|
205,000
|
|
|
205,100
|
|
Quality Living Inc. Project
|
|
|
|
|
|
|
|
4.7%, 10/01/17
|
|
|
255,000
|
|
|
249,398
|
|
Douglas County, Hospital Authority #2, Revenue,
|
|
|
|
|
|
|
|
Boys Town Project, Series 2008
|
|
|
|
|
|
|
|
4.75%, 9/01/28
|
|
|
500,000
|
|
|
512,580
|
|
Nebraska Medical Center Project, Series 2003
|
|
|
|
|
|
|
|
5.0%, 11/15/14
|
|
|
380,000
|
|
|
394,615
|
|
5.0%, 11/15/15
|
|
|
295,000
|
|
|
318,438
|
|
Refunding, Children’s Hospital Obligated Group, Series 2008B
|
|
|
|
|
|
|
|
4.5%, 8/15/15
|
|
|
230,000
|
|
|
241,985
|
|
5.25%, 8/15/20
|
|
|
1,000,000
|
|
|
1,071,600
|
|
5.5%, 8/15/21
|
|
|
1,430,000
|
|
|
1,526,024
|
|
|
|
|
Principal
|
|
|
|
|
|
|
|
amount
|
|
|
Value
|
|
Douglas County, Hospital Authority #3, Revenue, Refunding,
|
|
|
|
|
|
|
|
Nebraska Methodist Health System
|
|
|
|
|
|
|
|
5.5%, 11/01/18
|
|
$
|
385,000
|
|
$
|
412,289
|
|
Douglas County, Millard Public School District #17,
|
|
|
|
|
|
|
|
Refunding, Series 2009, 4.0%, 6/15/17
|
|
|
750,000
|
|
|
757,103
|
|
Douglas County, Zoo Facility Revenue, Refunding,
|
|
|
|
|
|
|
|
Omaha’s Henry Doorly Zoo Project
|
|
|
|
|
|
|
|
4.2%, 9/01/16
|
|
|
600,000
|
|
|
622,032
|
|
4.75%, 9/01/17
|
|
|
200,000
|
|
|
207,514
|
|
Hastings, Combined Utility Revenue, Refunding, Series 2012
|
|
|
|
|
|
|
|
2.0%, 10/15/16
|
|
|
320,000
|
|
|
330,752
|
|
2.0%, 10/15/17
|
|
|
430,000
|
|
|
443,545
|
|
La Vista, General Obligation, Refunding, Series 2009
|
|
|
|
|
|
|
|
2.5%, 11/15/15
|
|
|
415,000
|
|
|
420,910
|
|
3.0%, 11/15/17
|
|
|
640,000
|
|
|
648,102
|
|
Lancaster County, Hospital Authority #1, Revenue, Refunding,
|
|
|
|
|
|
|
|
Bryan LGH Medical Center
|
|
|
|
|
|
|
|
Series 2006, 4.0%, 6/01/19
|
|
|
300,000
|
|
|
311,832
|
|
Series 2008A, 5.0%, 6/01/16
|
|
|
500,000
|
|
|
542,140
|
|
Series 2008A, 5.0%, 6/01/17
|
|
|
500,000
|
|
|
552,080
|
|
Lincoln, Certificates of Participation,
|
|
|
|
|
|
|
|
Series 2010A, 2.4%, 3/15/17
|
|
|
395,000
|
|
|
405,124
|
|
Lincoln, Educational Facilities, Revenue, Refunding,
|
|
|
|
|
|
|
|
Nebraska Wesleyan University Project, Series 2012
|
|
|
|
|
|
|
|
2.25%, 4/01/19
|
|
|
645,000
|
|
|
651,392
|
|
2.5%, 4/01/21
|
|
|
925,000
|
|
|
897,731
|
|
Lincoln, Electric System Revenue, Refunding,
|
|
|
|
|
|
|
|
Series 2007B, 5.0%, 9/01/18
|
|
|
1,000,000
|
|
|
1,112,220
|
|
Series 2012, 5.0%, 9/01/21
|
|
|
1,000,000
|
|
|
1,171,860
|
|
Lincoln, General Obligation, Highway Allocation Fund
|
|
|
|
|
|
|
|
4.0%, 5/15/23
|
|
|
1,000,000
|
|
|
1,033,870
|
|
Lincoln, Parking Revenue, Refunding, Series 2011
|
|
|
|
|
|
|
|
3.25%, 8/15/18
|
|
|
440,000
|
|
|
474,527
|
|
Lincoln, Sanitary Sewer Revenue, Refunding, Series 2012
|
|
|
|
|
|
|
|
1.5%, 6/15/17
|
|
|
440,000
|
|
|
449,275
|
|
Municipal Energy Agency of Nebraska, Power Supply
|
|
|
|
|
|
|
|
System Revenue, Refunding,
|
|
|
|
|
|
|
|
2009 Series A, BHAC Insured
|
|
|
|
|
|
|
|
5.0%, 4/01/20
|
|
|
500,000
|
|
|
569,175
|
|
2012 Series A, 5.0%, 4/01/18
|
|
|
100,000
|
|
|
114,737
|
|
2013 Series A, 4.0%, 4/01/17
|
|
|
250,000
|
|
|
274,558
|
|
Nebraska Educational Financial Authority, Revenue, Refunding,
|
|
|
|
|
|
|
|
Hastings College Project
|
|
|
|
|
|
|
|
5.05%, 12/01/23
|
|
|
500,000
|
|
|
485,555
|
|
Nebraska Investment Financial Authority, Revenue, Drinking Water
|
|
|
|
|
|
|
|
State Revolving Fund, Series 2010A
|
|
|
|
|
|
|
|
4.0%, 7/01/25
|
|
|
750,000
|
|
|
764,490
|
|
Nebraska Investment Financial Authority, Homeownership Revenue,
|
|
|
|
|
|
|
|
2011 Series A, 2.4%, 9/01/17
|
|
|
445,000
|
|
|
460,468
|
|
Nebraska Public Power District, Revenue,
|
|
|
|
|
|
|
|
2005 Series A, 5.0%, 1/01/18
|
|
|
200,000
|
|
|
213,870
|
|
2005 Series B-2, 5.0%, 1/01/16
|
|
|
1,000,000
|
|
|
1,045,450
|
|
2007 Series B, 5.0%, 1/01/20
|
|
|
395,000
|
|
|
445,596
|
|
2007 Series B, 5.0%, 1/01/21
|
|
|
1,750,000
|
|
|
1,975,032
|
|
2008 Series B, 5.0%, 1/01/19
|
|
|
250,000
|
|
|
282,600
|
|
2010 Series C, 4.25%, 1/01/17
|
|
|
500,000
|
|
|
551,505
|
|
2011 Series A, 4.0%, 1/01/15
|
|
|
250,000
|
|
|
259,435
|
|
2012 Series A, 4.0%, 1/01/21
|
|
|
500,000
|
|
|
544,200
|
|
2012 Series A, 5.0%, 1/01/21
|
|
|
500,000
|
|
|
576,000
|
|
2012 Series B, 3.0%, 1/01/24
|
|
|
1,000,000
|
|
|
959,750
|
|
2012 Series C, 5.0%, 1/01/19
|
|
|
500,000
|
|
|
565,200
|
|
weitzinvestments.com 49
NEBRASKA TAX-FREE INCOME FUND
SCHEDULE OF INVESTMENTS • (CONTINUED)
|
|
|
Principal
|
|
|
|
|
|
|
|
amount
|
|
|
Value
|
|
Nebraska State Colleges Facility Corp., Deferred Maintenance Revenue,
|
|
|
|
|
|
|
|
MBIA Insured
|
|
|
|
|
|
|
|
4.25%, 7/15/15
|
|
$
|
405,000
|
|
$
|
427,939
|
|
5.0%, 7/15/16
|
|
|
200,000
|
|
|
220,922
|
|
4.0%, 7/15/17
|
|
|
200,000
|
|
|
214,130
|
|
Omaha Convention Hotel Corp., Revenue, Convention Center Hotel,
|
|
|
|
|
|
|
|
First Tier, Refunding, Series 2007, AMBAC Insured
|
|
|
|
|
|
|
|
5.0%, 2/01/20
|
|
|
600,000
|
|
|
656,028
|
|
Omaha, General Obligation, Refunding,
|
|
|
|
|
|
|
|
Series 2008
|
|
|
|
|
|
|
|
5.0%, 6/01/20
|
|
|
350,000
|
|
|
401,562
|
|
5.25%, 10/15/19
|
|
|
250,000
|
|
|
292,577
|
|
Omaha, Public Facilities Corp., Lease Revenue,
|
|
|
|
|
|
|
|
Omaha Baseball Stadium Project,
|
|
|
|
|
|
|
|
Series 2009, 5.0%, 6/01/23
|
|
|
770,000
|
|
|
858,612
|
|
Series 2010, 4.125%, 6/01/29
|
|
|
650,000
|
|
|
654,537
|
|
Rosenblatt Stadium Project, Series C
|
|
|
|
|
|
|
|
3.9%, 10/15/17
|
|
|
235,000
|
|
|
256,683
|
|
3.95%, 10/15/18
|
|
|
240,000
|
|
|
262,478
|
|
Omaha Public Power District,
|
|
|
|
|
|
|
|
Electric System Revenue,
|
|
|
|
|
|
|
|
1993 Series C, 5.5%, 2/01/14
|
|
|
40,000
|
|
|
40,179
|
|
2007 Series A, 4.1%, 2/01/19
|
|
|
1,000,000
|
|
|
1,078,180
|
|
2012 Series A, 5.0%, 2/01/24
|
|
|
2,000,000
|
|
|
2,271,580
|
|
Electric System Subordinated Revenue,
|
|
|
|
|
|
|
|
2006 Series B, FGIC Insured
|
|
|
|
|
|
|
|
4.75%, 2/01/36
|
|
|
1,000,000
|
|
|
1,000,350
|
|
Omaha, Sanitary Sewer Revenue, MBIA Insured
|
|
|
|
|
|
|
|
4.0%, 11/15/14
|
|
|
250,000
|
|
|
258,073
|
|
Papillion-La Vista, Sarpy County School District #27,
|
|
|
|
|
|
|
|
General Obligation,
|
|
|
|
|
|
|
|
Refunding, Series 2009A
|
|
|
|
|
|
|
|
3.15%, 12/01/17
|
|
|
930,000
|
|
|
976,472
|
|
Series 2009, 5.0%, 12/01/28
|
|
|
500,000
|
|
|
529,165
|
|
Papio-Missouri River Natural Resources District, General Obligation,
|
|
|
|
|
|
|
|
Flood Protection and Water Quality Enhancement,
|
|
|
|
|
|
|
|
Series 2013
|
|
|
|
|
|
|
|
3.0%, 12/15/16
|
|
|
400,000
|
|
|
426,696
|
|
3.0%, 12/15/17
|
|
|
385,000
|
|
|
414,318
|
|
3.0%, 12/15/18
|
|
|
500,000
|
|
|
532,035
|
|
Series 2013B, 5.0%, 12/15/19
|
|
|
400,000
|
|
|
454,472
|
|
Public Power Generation Agency, Revenue, Whelan Energy
|
|
|
|
|
|
|
|
Center Unit 2, Series A,
|
|
|
|
|
|
|
|
AGC-ICC AMBAC Insured,
|
|
|
|
|
|
|
|
5.0%, 1/01/19
|
|
|
1,260,000
|
|
|
1,368,763
|
|
AMBAC Insured, 5.0%, 1/01/18
|
|
|
750,000
|
|
|
818,865
|
|
AMBAC Insured, 5.0%, 1/01/26
|
|
|
800,000
|
|
|
844,384
|
|
Sarpy County, Recovery Zone Facility Certificates of Participation,
|
|
|
|
|
|
|
|
Series 2010
|
|
|
|
|
|
|
|
2.35%, 12/15/18
|
|
|
155,000
|
|
|
161,211
|
|
2.6%, 12/15/19
|
|
|
135,000
|
|
|
139,633
|
|
Southern Nebraska Public Power District, Electric System Revenue,
|
|
|
|
|
|
|
|
AMBAC Insured
|
|
|
|
|
|
|
|
4.625%, 9/15/21
|
|
|
1,000,000
|
|
|
1,076,790
|
|
University of Nebraska, Facilities Corp.,
|
|
|
|
|
|
|
|
Deferred Maintenance Revenue,
|
|
|
|
|
|
|
|
Series 2006, 5.0%, 7/15/18
|
|
|
830,000
|
|
|
917,839
|
|
Financing Agreement Revenue, UNMC Eye Institute, Series 2011
|
|
|
|
|
|
|
|
2.0%, 3/01/15
|
|
|
525,000
|
|
|
535,616
|
|
|
|
|
Principal
|
|
|
|
|
|
|
|
amount
|
|
|
Value
|
|
Lease Rental Revenue,
|
|
|
|
|
|
|
|
NCTA Education Center/Student Housing Project,
|
|
|
|
|
|
|
|
Series 2011, 3.75%, 6/15/19
|
|
$
|
285,000
|
|
$
|
312,728
|
|
University of Nebraska, University Revenue,
|
|
|
|
|
|
|
|
Kearney Student Fees and Facilities, Series 2006
|
|
|
|
|
|
|
|
4.75%, 7/01/25
|
|
|
330,000
|
|
|
355,126
|
|
Lincoln Memorial Stadium Project, Refunding, Series 2004A
|
|
|
|
|
|
|
|
5.0%, 11/01/19
|
|
|
2,160,000
|
|
|
2,192,940
|
|
Lincoln Parking Project, Refunding,
|
|
|
|
|
|
|
|
Series 2005
|
|
|
|
|
|
|
|
4.0%, 6/01/17
|
|
|
1,070,000
|
|
|
1,117,979
|
|
4.5%, 6/01/20
|
|
|
500,000
|
|
|
523,375
|
|
Series 2013, 2.0%, 6/01/16
|
|
|
310,000
|
|
|
318,860
|
|
Omaha Health & Recreation Project
|
|
|
|
|
|
|
|
4.05%, 5/15/19
|
|
|
390,000
|
|
|
428,957
|
|
5.0%, 5/15/33
|
|
|
700,000
|
|
|
718,382
|
|
Omaha Student Facilities Project
|
|
|
|
|
|
|
|
5.0%, 5/15/27
|
|
|
800,000
|
|
|
865,704
|
|
Wheat Belt Public Power District, Electric System Revenue,
|
|
|
|
|
|
|
|
Series 2009B
|
|
|
|
|
|
|
|
3.2%, 9/01/16
|
|
|
330,000
|
|
|
334,901
|
|
3.4%, 9/01/17
|
|
|
415,000
|
|
|
420,727
|
|
|
|
|
|
|
|
56,573,687
|
|
North Dakota — 1.2%
|
|
|
|
|
|
|
|
Grand Forks, Sales Tax Revenue, Refunding, Series 2005A
|
|
|
|
|
|
|
|
5.0%, 12/15/21
|
|
|
795,000
|
|
|
852,995
|
|
Puerto Rico — 1.4%
|
|
|
|
|
|
|
|
Electric Power Authority Revenue, Series RR, FSA Insured
|
|
|
|
|
|
|
|
5.0%, 7/01/20
|
|
|
1,000,000
|
|
|
975,650
|
|
Tennessee — 1.1%
|
|
|
|
|
|
|
|
Memphis, General Obligation, General Improvement, Series 2006A
|
|
|
|
|
|
|
|
5.0%, 11/01/19
|
|
|
720,000
|
|
|
777,600
|
|
Texas — 1.9%
|
|
|
|
|
|
|
|
San Antonio, General Obligation, Refunding, Series 2010
|
|
|
|
|
|
|
|
5.0%, 2/01/19
|
|
|
1,195,000
|
|
|
1,303,088
|
|
Virginia — 1.5%
|
|
|
|
|
|
|
|
Chesterfield County, General Obligation, Refunding, Series 2005B
|
|
|
|
|
|
|
|
5.0%, 1/01/17
|
|
|
975,000
|
|
|
1,021,732
|
|
Total Municipal Bonds
|
|
|
|
|
|
|
|
(Cost $65,358,304)
|
|
|
|
|
|
67,131,646
|
|
|
|
|
|
|
|
|
|
CASH EQUIVALENTS — 3.1%
|
|
|
Shares
|
|
|
Value
|
|
Wells Fargo National Advantage Tax-Free Money Market Fund -
|
|
|
|
|
|
|
|
Institutional Class 0.01%
(a)
|
|
|
|
|
|
|
|
(Cost $2,146,941)
|
|
|
2,146,941
|
|
|
2,146,941
|
|
Total Investments in Securities
|
|
|
|
|
|
|
|
(Cost $67,505,245)
|
|
|
|
|
|
69,278,587
|
|
Other Assets Less Other Liabilities — 0.9%
|
|
|
|
|
|
657,844
|
|
Net Assets — 100.0%
|
|
|
|
|
$
|
69,936,431
|
|
Net Asset Value Per Share
|
|
|
|
|
$
|
10.14
|
|
(a)
|
Rate presented represents the annualized 7-day yield at December 31, 2013.
|
50 Weitz Funds
This page has been left blank intentionally.
weitzinvestments.com 51
GOVERNMENT MONEY MARKET FUND
PORTFOLIO MANAGER’S DISCUSSION & ANALYSIS
Portfolio Manager: Thomas D. Carney, CFA
The Government Money Market Fund ended the fourth calendar quarter with a 7-day effective and current yield of
0.01%.
(An investment in the Fund is neither insured nor guaranteed by the U.S. Government. There can be no assurance that the Fund will be able to maintain a stable net asset value. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.)
Our Fund’s 7-day effective yield remains stuck near zero. This marks the
twenty-first
consecutive quarter (5+ years) of reporting paltry returns. There are a number of entertaining movies about reliving the same day or event over and over (e.g. Groundhog Day or Source Code). This real life version for savers and investors has been anything
but
entertaining and is getting quite old.
The Federal Open Market Committee (FOMC) of the Federal Reserve, and principal rate-setter for the investment universe for our Fund, met twice in the fourth quarter. At both meetings the FOMC reaffirmed its expectation to keep the Fed Funds rate (the overnight lending rate between banks, which is controlled by the Federal Reserve) at “exceptionally low levels” of
zero
to 0.25%. Additionally, the Fed now anticipates today’s low
Fed Funds rate will remain “well past” the time that the employment rate falls below 6.5%, especially if projected inflation is below the Fed’s 2% longer-run goal.
As we have mentioned in previous letters, the Fed Funds rate affects all investments within the opportunity set of our Fund. We invest in ultra-high quality, short-term investments (e.g. U.S. Treasury bills and government agency discount notes) that have a weighted average maturity of less than 60 days. As a result, our yield has invariably followed the path dictated by the Federal Reserve’s monetary policy as we frequently reinvest maturing bills and notes in these short-term instruments. As of December 31, 92.0% of our portfolio was invested in U.S. Treasury bills, with the balance in high quality Wells Fargo money market funds. The average life of our portfolio at December 31 was approximately 51 days.
When the Fed changes from its current course and begins to raise short-term rates, our Fund’s yield will quickly benefit as we frequently reinvest maturing securities. Infinitesimal income returns for short-term investors and savers of all types, from CDs to bank savings accounts to money market mutual funds like ours, are likely to persist for at least another year. In the meantime, we will maintain our focus on high credit quality, preservation of capital and maintaining liquidity for our investors.
52 Weitz Funds
GOVERNMENT MONEY MARKET FUND
SCHEDULE OF INVESTMENTS • DECEMBER 31, 2013 • (UNAUDITED)
|
|
|
Principal
|
|
|
|
|
U.S. TREASURY — 92.0%
†
|
|
|
amount
|
|
|
Value
|
|
U.S. Treasury Bill
|
|
|
|
|
|
|
|
0.03% 1/16/14
|
|
$
|
30,000,000
|
|
$
|
29,999,625
|
|
0.06% 2/06/14
|
|
|
25,000,000
|
|
|
24,998,625
|
|
0.04% 3/06/14
|
|
|
30,000,000
|
|
|
29,997,867
|
|
0.05% 4/24/14
|
|
|
22,000,000
|
|
|
21,996,547
|
|
Total U.S. Treasury
|
|
|
|
|
|
106,992,664
|
|
MONEY MARKET FUNDS — 8.0%
|
|
|
Shares
|
|
|
Value
|
|
Wells Fargo Advantage Government Money Market Fund -
|
|
|
|
|
|
|
|
Institutional Class 0.01%
(a)
|
|
|
9,320,698
|
|
$
|
9,320,698
|
|
Wells Fargo Advantage 100% Treasury Money Market Fund -
|
|
|
|
|
|
|
|
Service Class 0.00%
(a)
|
|
|
52,556
|
|
|
52,556
|
|
Total Money Market Funds
|
|
|
|
|
|
9,373,254
|
|
Total Investments in Securities
|
|
|
|
|
|
|
|
(Cost $116,365,918)
|
|
|
|
|
|
116,365,918
|
|
Other Liabilities in Excess of Other Assets — 0.0%
|
|
|
|
|
|
(45,891
|
)
|
Net Assets — 100.0%
|
|
|
|
|
$
|
116,320,027
|
|
Net Asset Value Per Share
|
|
|
|
|
$
|
1.00
|
|
†
|
Interest rates presented represent the yield to maturity at the date of purchase.
|
(a)
|
Rate presented represents the annualized 7-day yield at December 31, 2013.
|
weitzinvestments.com 53
INDEX DESCRIPTIONS
Russell 1000
|
|
The Russell 1000 is an unmanaged index of large capitalization common stocks. It consists of the 1,000 largest companies in the Russell 3000 Index.
|
|
|
|
Russell 1000 Value
|
|
The Russell 1000 Value is an unmanaged index of large capitalization common stocks. It consists of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values.
|
|
|
|
Russell 3000
|
|
The Russell 3000 is an unmanaged index of the 3,000 largest U.S. companies based on market capitalization.
|
|
|
|
Russell 3000 Value
|
|
The Russell 3000 Value is an unmanaged index of the largest capitalization common stocks. It consists of those Russell 3000 companies with lower price-to-book ratios and lower forecasted growth values.
|
|
|
|
Russell 2500
|
|
The Russell 2500 is an unmanaged index of small to mid-capitalization common stocks. It consists of the 2,500 smallest companies in the Russell 3000 Index.
|
|
|
|
Russell 2500 Value
|
|
The Russell 2500 Value is an unmanaged index of small to mid-capitalization common stocks. It consists of those Russell 2500 companies with lower price-to-book ratios and lower forecasted growth values.
|
|
|
|
S&P 500
|
|
The S&P 500 is an unmanaged index consisting of 500 companies generally representative of the market for the stocks of large-size U.S. companies.
|
|
|
|
Blended
|
|
The Blended Index blends the S&P 500 with the Barclays Intermediate U.S. Government/Credit Index by weighting their total returns at 60% and 40%, respectively. The portfolio is rebalanced monthly.
|
|
|
|
Barclays Intermediate U.S. Government/Credit
|
|
The Barclays Intermediate U.S. Government/Credit Index (BIGC) is a total return performance benchmark consisting of government securities and publicly issued corporate debt with maturities from one to ten years and rated at least BBB by Standard & Poor’s or Baa by Moody’s Investor Service.
|
|
|
|
Barclays 5-Year
Municipal Bond
|
|
The Barclays 5-Year Municipal Bond Index is an unmanaged index of long-term, fixed-rate, investment-grade, tax-exempt bonds representative of the municipal bond market.
|
54 Weitz Funds
Board of Trustees
Lorraine Chang
John W. Hancock
Thomas R. Pansing, Jr.
Roland J. Santoni
Barbara W. Schaefer
Delmer L. Toebben
Wallace R. Weitz
Justin B. Wender
Investment Adviser
Weitz Investment Management, Inc.
1125 South 103rd Street, Suite 200
Omaha, NE 68124-1071
(800) 304-9745
Custodian
Wells Fargo Bank, N.A.
|
Officers
Wallace R. Weitz, President
John R. Detisch, Vice President, Secretary &
Chief Compliance Officer
Kenneth R. Stoll, Vice President & Chief
Financial Officer
Bradley P. Hinton, Vice President
Distributor
Weitz Securities, Inc.
Transfer Agent and Dividend Paying Agent
Weitz Investment Management, Inc.
Sub-Transfer Agent
Boston Financial Data Services, Inc.
NASDAQ symbols:
Value Fund - WVALX
Partners Value Fund - WPVLX
Partners III Opportunity Fund
Institutional Class - WPOPX
Investor Class - WPOIX
Research Fund - WRESX
Hickory Fund - WEHIX
Balanced Fund - WBALX
Short-Intermediate Income Fund
Institutional Class - WEFIX
Investor Class - WSHNX
Nebraska Tax-Free Income Fund - WNTFX
Government Money Market Fund - WGMXX
|
Help us conserve resources by receiving your report electronically. Visit us online at weitzinvestments.com.
Simply log in to your account and select “Electronic Delivery.”
|
|
|
An investor should consider carefully the investment objectives, risks, and charges and expenses of the Funds before investing. The Funds’ Prospectus contains this and other information about the Funds. The Prospectus should be read carefully before investing.
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weitzinvestments.com 55
Surrey Bancorp (PK) (USOTC:SRYB)
Historical Stock Chart
From Jun 2024 to Jul 2024
Surrey Bancorp (PK) (USOTC:SRYB)
Historical Stock Chart
From Jul 2023 to Jul 2024