JUNE 30, 2010

Portfolio Manager:  Thomas D. Carney

The Government Money Market Fund closed the second quarter with a 7-day effective yield of 0.06%. (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 yield, and hence return, remains mired in a near-zero range. Our Fund’s 7-day effective yield was unchanged in the second quarter. 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 second quarter. At both meetings the FOMC decided to keep the Fed Funds rate (the overnight lending rate between banks, which is controlled by the Federal Reserve) at “exceptionally low levels for an extended period.” The Fed has maintained this highly unusual target range for the Fed Funds rate at zero to 0.25% since December 2008 in response to low rates of resource utilization, subdued inflation trends, stable inflation expectations and as a means to promote economic recovery. The result has been a collapse in the income returns for short-term investors and savers of all types, from CDs to bank savings accounts to money market mutual funds like ours.

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 (down from 90 days beginning June 30). 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 June 30, 99.2% 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 June 30 was approximately 25 days.

Despite the shock waves resulting from the developments relating to European sovereign debt crisis (particularly Greece), there continue to be signs of economic stabilization in the U.S. (e.g. the pace of job losses has slowed). While it’s reasonable to believe the path of short-term interest rates is inevitably higher, the timing of this event keeps getting pushed further out in time like the apparition one often sees and never reaches while driving across the plains on a hot summer day. It now seems nearly certain that the Fed will keep short-term interest rates at near-zero for the rest of 2010 with some even calling for no change until 2012. When the Fed changes from its current course and begins to raise short-term rates is anyone’s guess, but our Fund’s yield will quickly benefit as we frequently reinvest maturing securities. In the meantime, we will continue to seek opportunities to add incremental return to our Fund’s yield while maintaining our focus on high credit quality.

Despite today’s low yield environment, our Fund remains a sensible option for those investors whose primary objective is the maintenance of liquidity and the preservation of capital.

The Securities and Exchange Commission (SEC) adopted on February 23, 2010 amendments to rules governing the regulation of money market mutual funds. These amendments are intended to accomplish a number of things, including: enhancement of portfolio information disclosure; improvement in fund operations; and strengthening of risk-limiting conditions governing money market mutual funds. The amendments will be implemented over the course of 2010. Aside from the amendment to shorten the maximum dollar-weighted average portfolio maturity of a money fund portfolio to 60 calendar days (from the current limit of 90 calendar days), the investment adviser anticipates minimal operational impact to Fund shareholders from implementation of the amendments given the current and historical high-quality nature of our investments.

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 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 sectors.

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