PORTFOLIO MANAGERS' DISCUSSION & ANALYSIS – VALUE FUND

JUNE 30, 2010

Co-Portfolio Managers:
Wallace R. Weitz & Bradley P. Hinton

The Value Fund declined -8.9% in the second calendar quarter, compared to a -11.4% decline for the S&P 500. For the calendar year-to-date, the Fund showed a modest gain (+0.4%) 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%) also detracted from the Fund’s returns despite posting decent operating results. For-profit education company Apollo Group declined -31% on mounting regulatory concerns, while seed company Monsanto fell -35% as earnings and management’s outlook disappointed investors. 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. Retailer AutoZone (+12%) was a bright spot for the Fund, as were a few stocks we sold at gains.

Portfolio activity was above average during the quarter due to stock market volatility. We continue to find value in larger, high quality companies. New purchases Aon Corporation, Lockheed Martin, Texas Instruments, Omnicom Group and Praxair operate in vastly different industries but all fit this bill. We also added significantly to our stakes in Accenture plc and ConocoPhillips, both now top ten holdings, as well as industry leaders Google, Wal-Mart Stores and Monsanto. Our heaviest buying took place in late May and June during the broader stock market decline.

Liberty Media – Capital has been a fantastic investment for the Fund, and we sold the stock at an outsized gain during the quarter. John Malone and his team have done a terrific job of building value at Capital. While we think the company has a bright outlook, we sold it in the Value Fund to focus on larger companies trading at similar estimated discounts. We also eliminated a few other media-related stocks (DIRECTV Group, News Corporation and The Washington Post), XTO Energy prior to its acquisition by Exxon Mobil, and The Progressive Corporation in what turned out to be a modest yet profitable trade. Finally, we trimmed our holdings in long-time favorite Berkshire Hathaway, which remains the Fund’s largest position at 5.6% of net assets.

The Value Fund tilts toward our best larger company ideas, with more than 80% of the Fund’s stock investments in companies with market caps greater than $5 billion. The Fund also remains relatively concentrated, with the ten largest holdings representing 43% of net assets. As a result of the activity described above, the Fund’s technology-related holdings increased from 12% to 18% of net assets, while consumer discretionary exposure declined from 25% to 18% of net assets. The Fund’s residual cash position fell to 14% of net assets at quarter end.

In the table below we have included comparative returns for two established large-cap indices, the Russell 1000 and the Russell 1000 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 1.25% 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.

^# 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 1000 is an unmanaged index of large capitalization common stocks. It consists of the 1,000 largest companies in the Russell 3000 index, which consists of the 3,000 largest U.S. companies based on market capitalization.

^(c) 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.