PORTFOLIO MANAGER'S DISCUSSION & ANALYSIS – PARTNERS III OPPORTUNITY FUND

JUNE 30, 2010

Portfolio Manager:  Wallace R. Weitz

The Partners III Opportunity Fund declined -6.1% in the second calendar quarter, compared to a -11.4% decline for the S&P 500. For the calendar year-to-date, the Fund returned +8.9% compared to a -6.6% decline for the S&P 500. After a strong run, Liberty Media – Interactive pulled back sharply during the quarter (-31%) on fears of a renewed slowdown in consumer spending. Technology companies Microsoft (-21%) and Dell (-20%), as well as long-term care pharmacy operator Omnicare (-16%), detracted from the Fund’s returns despite posting decent operating results. All of these companies continue to generate significant free cash flow and maintain strong competitive positions. Their stocks now trade at among the largest discounts to our business value estimates. Coinstar (+32%) was a notable bright spot for the Fund, as its Redbox division continued to expand profitably and take market share from brick and mortar DVD retailers. The Fund’s short positions also generated positive returns as the broader stock market fell.

SandRidge Energy was our largest new purchase this quarter. SandRidge is an Oklahoma City-based natural gas and oil company that focuses on traditional, conventional reservoirs with predictable production profiles and shallow decline rates. The pending acquisition of Arena Resources will increase the company’s exposure to oil, tighten its geographic focus, and strengthen its balance sheet. SandRidge trades at less than $6 per share, and we think the stock is worth at least $10, perhaps substantially more if natural gas prices surprise to the upside. We also continue to find value in larger, high quality companies. As examples, we established positions in Aon Corporation, Texas Instruments and Monsanto, while adding to the Fund’s holdings of Accenture plc and Microsoft. Hewitt Associates and Laboratory Corporation of America are smaller-sized businesses that share similar “quality” characteristics.

While we were net buyers during the quarter, we did pare the Fund’s holdings of Liberty Media – Capital and Coinstar after the stocks posted 76% and 55% year-to-date returns, respectively. We also trimmed shares of long-time favorite Berkshire Hathaway, which remains the Fund’s largest position at 6.4% of net assets. We sold former top ten holdings Comcast and WellPoint to focus on stocks with more upside, and we eliminated the Fund’s small positions in Corporate Executive Board, The Washington Post and EOG Resources.

The Fund is 82% “net long” at quarter end, up from 77% at March 31, 2010. Long positions equal 98% of net assets and short positions are 16% of net assets. The Fund’s short positions remain tilted to broad-based small and mid-cap stock ETF’s, though we covered some of that short exposure as markets declined during the quarter. In the table below we have included comparative returns for two established all-cap indices, the Russell 3000 and the Russell 3000 Value. As a reminder, we do not and will not manage our funds to any specific benchmark. Even so, investors may find the supplemental information useful in evaluating the Fund’s longer-term results.

These performance numbers reflect the deduction of the Fund’s annual operating expenses which as stated in its most recent Prospectus are 1.80% of the Fund’s net assets. The returns assume redemption at the end of each period and reinvestment of dividends. 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 lower or higher 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.

* All performance numbers assume reinvestment of dividends.

** Performance of the Partners III Opportunity Fund (the "Fund") is measured from June 1, 1983, the inception of Weitz Partners III Limited Partnership (the "Partnership"). As of December 30, 2005, the Fund succeeded to substantially all of the assets of the Partnership. The investment objectives, policies and restrictions of the Fund are materially equivalent to those of the Partnership and the Partnership was managed at all times with full investment authority by Wallace R. Weitz & Company. The performance information includes performance for the period before the Fund became an investment company registered with the Securities and Exchange Commission. During this period, the Partnership was not registered under the Investment Company Act of 1940 and, therefore, was not subject to certain investment restrictions imposed by the 1940 Act. If the Partnership had been registered under the 1940 Act during this period, the Partnership’s performance might have been adversely affected.

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

^(a) 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.

^(b) The Russell 3000 is an unmanaged index of the 3,000 largest U.S. companies based on market capitalization.

^(c) 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.

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.