MANAGEMENT DISCUSSION & ANALYSIS – BALANCED FUND

MARCH 31, 2009

Portfolio Manager:  Bradley P. Hinton

The Balanced Fund had a solid first quarter in a challenging market. The Fund declined modestly (-0.9%) compared to a steeper -6.6% drop in the Blended Index. A handful of smaller company stocks delivered substantial gains during the quarter. We think Coinstar (+68%), Cabela’s (+56%) and Eagle Materials (+32%) remain undervalued at today’s price levels. Redwood Trust was another large contributor during the quarter. We added substantially to our position when the company offered new shares at $11.25 in January. Redwood’s stock closed the quarter up 36% from that level. We also feel increasingly confident about the stocks that temporarily declined during the quarter. While their stock prices may be volatile, we believe the underlying businesses at Telephone & Data Systems (-15%), Berkshire Hathaway (-12%) and aggregates companies Vulcan Materials (-36%) and Martin Marietta Materials (-18%) are sturdy.

For the fiscal year ended March 31, 2009, the Balanced Fund declined -21.9% compared to a -22.1% decline in the Blended Index. We are not happy with these results, and it is small comfort that they were relatively in-line. Asset allocation was perhaps more important than security selection, and in retrospect the fewer stocks the better. The S&P 500 was down -38.1% for the twelve months, and no sector was immune. While the list of detractors was broad-based, several of our financial and consumer-related stocks were especially hard hit. Our value estimates declined significantly for some companies, such as American Express (-67%) and Liberty Media – Interactive (-82%). We think business values remain largely intact at several others, including Berkshire Hathaway (-37%) and Liberty Global (-56%). We sold a few of the most troubled financial stocks last summer, well before the crisis reached full bloom. Omnicare (+35%), Coinstar (+16%) and ITT Educational Services were among the few bright spots for the fiscal year. The Fund’s bond portfolio also held up quite well amidst the market turmoil.

The Fund’s asset allocation is 61% stocks and 39% bonds and short-term securities, little changed overall from the prior quarter. We continued to re-shape and upgrade the equity portfolio. In addition to the Redwood Trust purchase described above, we bought more Berkshire Hathaway, Mohawk Industries, United Parcel Service, XTO Energy, Microsoft and Diageo. We also added new positions in Avon Products, Procter & Gamble and Corporate Executive Board. While we never buy stocks for yield alone, most of these companies do pay healthy, sustainable cash dividends. To help fund these purchases, we sold a few stocks that we would gladly own again at lower prices (ITT Educational Services, ACI Worldwide and Bed Bath & Beyond). We also exited two lower-conviction names (Cardinal Health and Cemex) and cleaned up several other small positions.

We continue to believe that carefully selected corporate bonds, purchased at opportunistic prices, offer pockets of value. During the quarter we added bonds issued by WellPoint, Willis Group, Time Warner Cable and JP Morgan Chase. Corporate bonds now account for 12% of the Fund’s net assets. We sold two agency mortgage-backed securities (MBS) at gains, trimming our MBS exposure to less than 19% of net assets. We also halved our holdings of Treasury Inflation-Protected Securities as TIPS rallied strongly during the quarter. We remain on the lookout for less expensive forms of longer-term inflation protection. As a result of these changes, cash reserves now represent 6% of net assets.

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. This information represents past performance and past performance does not guarantee future results. The investment return and the principal value of an investment in the 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 higher or lower than the performance data quoted above. Performance data current to the most recent month-end may be obtained at www.weitzfunds.com/performance/monthly.asp.

* Fund inception date: October 1, 2003. All performance numbers assume reinvestment of dividends.

† The Blended Index reflects an unmanaged portfolio of 60% of the S&P 500, which is an unmanaged index of common stock prices, and 40% of the Lehman Brothers Intermediate U.S. Government/Credit Index, which is an unmanaged index consisting of government securities and publicly issued corporate debt with maturities from one to ten years.

# Index performance is hypothetical and is for illustrative purposes only.

Investors should consider carefully the investment objectives, risks, and charges and expenses of the Fund before investing. The Fund’s Prospectus contains this and other information about the Fund and should be read carefully before investing. Portfolio composition is subject to change at any time and references to specific securities, industries, and sectors referenced in this letter are not recommendations to purchase or sell any particular security. Current and future portfolio holdings are subject to risk. See the Schedule of Investments in Securities included in the Fund’s quarterly report for the percent of assets of the Fund invested in particular industries or sectors.

Weitz Securities, Inc. is the distributor of The Weitz Funds.