PORTFOLIO MANAGER'S DISCUSSION & ANALYSIS – HICKORY FUND

DECEMBER 31, 2009

Portfolio Manager:  Wallace R. Weitz

The Hickory Fund returned +36.5% for the 2009 calendar year, compared to a return of +26.5% for the S&P 500. For the fourth calendar quarter, the Fund increased 1.7% compared to a 6.0% gain for the S&P 500. Liberty Media – Capital tacked another 14% onto its five-fold increase for the year, driven largely by the company’s timely investments in Sirius XM Radio securities. The Fund’s health care stocks rebounded as investors gained confidence that proposed legislation would not be materially negative for LabCorp (+14%) or Omnicare (+7%). ACI Worldwide also rallied 13% as technology stocks continued to lead the market higher.

Coinstar declined 16% during the quarter, paring some of the stock’s healthy gain for the year.  This small-cap stock is much more volatile than the company’s underlying business, which continues to make reasonable progress.  Investors remain concerned about the Redbox division’s difficult relationships with a few movie studios, and the potential impact on DVD kiosk profitability.  We have factored in lower margin assumptions and still think the stock is cheap. Our building materials stocks also declined modestly during the quarter, led by Eagle Materials (-8%) as the cement and wallboard markets remain cyclically challenged. Redwood Trust fell by 5% as investors fretted that the company was being too cautious in deploying its excess capital. We think management’s approach is sensible and will pay long-term dividends.

We purchased two new stocks that are squarely in Hickory’s wheelhouse during the quarter. The Buckle is a casual apparel retailer headquartered in Kearney, Nebraska. The company pursues a prudent, moderate store growth strategy funded with free cash flow. The Buckle’s stores generate robust sales metrics with high operating margins, resulting in strong returns on capital. The business is conservatively financed, and management consistently returns excess capital to shareholders via regular and special dividends. The Knot operates the leading web site catering to couples planning weddings. The business generates revenues from ad-supported and subscription-based content, registry services, merchandise and publishing. We think the company has an opportunity to further monetize its high-value, engaged audience and grow the business for years to come.

Liberty Media – Starz is the Fund’s largest new position at 4.4% of net assets. The Starz tracker made its debut as a separately traded stock in November. While the name is new, the core assets have been in the Liberty Media corporate family for years. The Starz cable television channels have attractive recurring revenue streams that generate plenty of free cash flow. The company also has significant net cash on the balance sheet that management can use to grow the business or shrink the equity. With this raw material in the hands of skilled capital allocators, we expect reasonable per share value growth over the next several years.

The Hickory Fund continues to tilt heavily toward our best smaller company ideas. Other new purchases included for-profit education company ITT Educational Services, insurance broker Brown & Brown and auto parts retailer AutoZone. We funded these purchases partly by selling large-cap companies Comcast, Tyco International, ConocoPhillips, WellPoint, UnitedHealth Group, Discovery Communications and EOG Resources. Nearly 90% of Hickory’s stock investments are in companies with market caps under $10 billion, with a median market cap of $2.4 billion. The Fund’s residual cash position declined to 20% of net assets at quarter end.

Click here to obtain December 31, 2009 performance information.

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.