UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-21410
The Weitz Funds
(Exact name of registrant as specified in charter)
1125 South 103 Street, Suite 200 Omaha, NE 68124-1071
(Address of principal executive offices) (Zip code)
Weitz Investment Management, Inc., 1125 South 103 Street, Suite 200, Suite. 200, Omaha, NE 68124-1071
(Name and address of agent for service)
Registrant’s telephone number, including area code: (402) 391-1980
Date of fiscal year end: March 31
Date of reporting period: September 30, 2022
Item 1. Reports to Stockholders.
2 2022 Semi-Annual Report
THE WEITZ PHILOSOPHY
Finding quality at a discount
There are no shortcuts in value investing. At Weitz, we dig for opportunities using a robust quality scoring process. We analyze hundreds of ideas to find strong, well-managed but undervalued companies that offer reasonable risk-adjusted returns. It’s simple – but it’s not easy. We do the due diligence, analyze, ask tough questions and push for answers. We wait for the right opportunities. Then, and only then, do we invest your money.
Fundamental Research-Driven Process
Our research-driven investment approach means deeply understanding our investable universe so we can capitalize on opportunities that arise out of market inefficiencies. Each of our analysts focuses on finding opportunities in specific industries, ensuring deep, ongoing research within their own areas of expertise. We also encourage a generalist mentality where all investment team members vet new ideas. All investment decisions are backed by thorough analysis, logical strategies, extensive debate and our team’s commitment to long-term growth.
Bottom-Up Focus
Our focus is on finding well-run companies with strong fundamentals and outstanding long-term prospects. Valuation is our North Star. When a security is selling at a significant discount to its intrinsic value, that’s when we buy. And when it’s not selling at a discount, we have the discipline and patience to wait for the price to come our way.
High-Conviction Investing
We believe there are a limited number of great investment ideas and that intrinsic value doesn’t change with the daily ebbs and flows of the market. Our high-conviction approach means we know what we own inside and out, allowing our funds to be highly concentrated.
Today we are responsible for approximately $3 billion in investments for our shareholders – individuals, corporations, pension plans, foundations and endowments. And our commitment remains the same: to put your goals first. Always. We do so through our expertise, our flexibility, and our drive to uncover investments that can help you preserve and grow wealth.
We’re right beside you
Weitz employees have a strong commitment of investing their own assets in our mutual funds. By aligning our goals with yours, you can have confidence that we’re treating your money as if it were our own.
2022 Semi-Annual Report 3
TABLE OF CONTENTS
Value Matters | 4 |
Fixed Income Insights | 6 |
Performance Summary | 10 |
Balanced Fund | 11 |
Core Plus Income Fund | 13 |
Hickory Fund | 16 |
Nebraska Tax-Free Income Fund | 18 |
Partners III Opportunity Fund | 21 |
Partners Value Fund | 23 |
Short Duration Income Fund | 25 |
Ultra Short Government Fund | 28 |
Value Fund | 30 |
Schedule of Investments | 32 |
Financial Statements | 56 |
Notes to Financial Statements | 64 |
Actual and Hypothetical Expenses for Comparison Purposes | 72 |
Other Information | 73 |
Index Descriptions | 81 |
Glossary of Terms | 82 |
Beginning 2021, paper copies of the Fund’s shareholder reports are no longer sent by mail unless specifically requested. Reports will be made available at weitzinvestments. com and you will be notified by mail each time a report is posted. You will continue to receive other Fund regulatory documents (such as prospectuses or supplements) in paper unless you have elected to receive all Fund documents electronically.
If you would like to receive the Fund’s future shareholder reports in paper free of charge, you may make that request (1) by contacting your financial intermediary; or (2) if you invest directly with the Fund, by calling 888-859-0698.
The management of Weitz Funds has chosen paper for the 88 page report from a paper manufacturer certified under the Sustainable Forestry Initiative ® standard.
Portfolio composition is subject to change at any time and references to specific securities, industries, and sectors referenced in this report are not recommendations to purchase or sell any particular security. Current and future portfolio holdings are subject to risk. See the Schedules of Investments included in this report for the percent of assets in each of the Funds invested in particular industries or sectors.
4 2022 Semi-Annual Report
VALUE MATTERS: Don’t Wait for the Robins
September 30, 2022
Dear Clients and Fellow Shareholders,
The Fed’s campaign against inflation continues. U.S. Treasury yields in the area of 4% are dramatically higher than any we have seen in recent years. Mid-single-digit interest costs are moderate by historical standards and should pose no major issues for individuals and companies over the next few years, but the “sticker shock” of 7% mortgage rates and the squeeze on borrowers who must refinance at higher rates is real.
The economy is slowing, with housing being the most visible example. Many companies’ earnings have held up fairly well so far, but with each earnings report, managements are issuing very cautious/negative “guidance” about business prospects for the next few quarters.
Investors tend to obsess over near-term prospects – the next data point, the trend and even the “rate of change” within the trend. The financial media fan their fears because, as with weather reports, raising anxiety levels is good for business. This leads to active trading and volatility in stock and bond markets.
So, fear is driving markets these days. The third quarter began with a strong rally off the June lows but resumed its slide in mid-August and ended the quarter at new lows for the year. The S&P 500 was down nearly 25% as of September 30, and gloom was very thick.
How serious is this for investors?
The Fed is getting what it wanted. Fed Chair Jay Powell seems to have channeled his inner Paul Volcker (the former Fed Chair who raised rates to a peak of 20% to combat rampant inflation in the early 1980s), so we would not expect Powell to relent any time soon. Interest rates are expected to rise further, and the money supply, which has already contracted considerably, is likely to shrink further. These credit tightening moves will continue to slow the economy. Even the very strong labor market is showing some signs of cooling. Whether the National Bureau of Economic Research eventually defines this period as a recession isn’t really important. The fact is, it feels like a recession, and companies and investors are acting accordingly.
Nothing is ever simple in global economics, but there is an extra wildcard this time – the war in Ukraine. The war has exposed Europe’s dependence on Russian energy. Western sanctions and Russian countermoves have caused disruptions of supplies and an energy crisis in Europe. Less visible, but perhaps more important, is a global food crisis that has been exacerbated by the war. The inflationary impact of these supply disruptions complicates the roles of central banks in fighting inflation.
A by-product of higher U.S. interest rates and spiking global energy prices has been a big move up in the value of the dollar relative to other major currencies. There are positive aspects of a strong currency, but it can be negative for domestic companies because our exports are more expensive/less attractive to foreign buyers and profits earned abroad in other currencies translate back to fewer dollars/lower reported earnings.
So, the headwinds for stock and bond prices are real, but the outlook for investments is always about the value of future cash flows relative to the current price. If bonds default or a company’s competitive position is permanently impaired, investors can incur permanent loss of capital. But a temporary slowdown in the economy and lower earnings per share for a few quarters do not impair the business value of a strong company. Bonds trade lower when new investors have higher-yielding alternatives, but sound bonds mature at par value – 100 cents on the dollar – and in the meantime, interest payments can be reinvested at higher rates (this “interest on interest” is a significant component of total return for bonds).
Back to the Future – A Return to “Normal” Capital Markets
Over the decades, the Fed and Congress have occasionally intervened to stimulate or cool down the economy. In our experience, those fiscal and monetary moves didn’t last long, and investors learned what to expect and how to respond.
Since the Great Financial Crisis (GFC) of 2008-09, though, it has seemed that the government has felt the need to protect investors from any financial pain. Near-zero interest rates for over ten years and very aggressive fiscal stimulus in response to Covid inflated stock and bond prices and taught a new generation of investors that valuation did not matter. We responded to this surreal environment by placing even more emphasis on business quality and by holding onto great businesses, even as they reached fairly full valuations.
Last year the Fed recognized that we had an inflation problem and made a 180-degree shift in policy. This is the Fed we remember, and if they stick to their plan and bring inflation under control, we think the return to “normal” will be positive for long-term investors. Weak, over-indebted companies will not be subsidized with “free” money. Bonds will provide competition for investment dollars, and savers will be rewarded again. Stocks can still be great long-term investment vehicles, but to paraphrase an old commercial for the brokerage company Smith Barney, they will have to win the old-fashioned way, they will have to earn it. (Can those of a certain age hear John Houseman snarling the punch line?)
In the Meantime – Business Values Are STILL Our North Star
At this stage of a bear market, most stocks are falling just because sellers are motivated and buyers are not. We can protest that our stocks are misunderstood and “cheap,” but the flow of investment funds is out for the moment, and that is what matters in the short run.
In the longer term, though, we believe that a stock’s price will eventually be determined by the value of the business. Covid disruptions and potential recession may temporarily impact the path of earnings, but it is the long-term future cash flows that matter.
We think there is also some confusion about the value of “long-duration” stocks. The criticism relates to rapidly growing companies with little or no earnings today but promises/hopes of lots of earnings in a (perhaps somewhat distant) tomorrow. It is fair to note that rising rates are especially hard on these companies’ valuations because of the math of discounted cash flow analysis. These stocks may have been very over-valued going into the higher-rate environment. However, many investors seem to have made the incorrect generalization that rapid growth itself is a negative in the new environment. We would contend
2022 Semi-Annual Report 5
that some great businesses (e.g., Google, Visa, Mastercard) have lots of earnings today and will have even more tomorrow. This makes for very valuable businesses, and we own a number of them.
While this bear market runs its course, we continue to monitor our current holdings and look for others that offer solid business value at attractive prices. This requires patience, and investors who have been through distressed times know that holding, or even adding to, positions can be the key to long-term compounded returns. We are grateful for the long-time shareholders who have stuck with us through times like this before.
The Gloom is Thick—But Bear Markets End When You Least Expect It
The bad news for corporate profits is likely to continue for a while, and the bear market may have further to run (drop). But after the selling has run its course – after desperate sellers stop accepting distress prices and buyers regain some courage – the bear market ends. There is no way to predict with any certainty when this will happen, but the turn will probably not come because the news has turned positive – it will come before the coast is clear. As Warren Buffett said in late 2008, “If you wait for the robins, Spring will be over.”
Our companies have been going about their businesses, generating cash and growing their future earning power. They are taking market share at the expense of weaker competitors and buying productive assets from others that need the money. It may seem counter-intuitive, but long-term growth in earning power and business value is very often enhanced by periods of adversity. Market drawdowns can be painful in the moment. But over the long history of the stock market, bears – even deep ones – have tended to disappear into the steady, upward-sloping pattern of long-term stock charts.
Sincerely,
Wally Weitz | Brad Hinton |
wally@weitzinvestments.com | brad@weitzinvestments.com |
As of 09/30/2022, the following portfolio company constituted a portion of the net assets of Balanced Fund, Hickory Fund, Partners III Opportunity Fund, Partners Value Fund, and Value Fund as follows:
• Alphabet, Inc.: 1.8%, 0.0%, 6.5%, 7.0%, and 7.2%.
• Visa, Inc.: 1.6%, 0.0%, 5.6%, 4.3%, and 4.2%.
• Mastercard, Inc.: 1.6%, 0.0%, 4.4%, 3.8%, and 4.2%.
Portfolio composition is subject to change at any time. Current and future portfolio holdings are subject to risk.
6 2022 Semi-Annual Report
FIXED INCOME INSIGHTS: High Uncertainty, Great Opportunity
September 30, 2022
The third quarter was a continuation of the “nowhere to hide” mantra that has dominated almost all global assets in 2022. Here in the U.S., the strong start for both credit and equities came to a crashing halt after Federal Reserve Chairman Jerome Powell delivered a simple, yet stark, message at the Jackson Hole Economic Symposium in late August: taming inflation will require more financial and economic pain. The higher-than-expected August inflation report threw more fuel on the fire, creating severe risk-off conditions (investors reducing their exposure to risk and focusing on protecting capital) and extreme cross asset volatility (volatility across multiple asset classes, including stocks, bonds, commodities, and currencies).
2022 YTD, Q3 and September total returns (in USD) for a selection of global assets
Zooming in on U.S. fixed income markets, the table below provides return data for select Bloomberg U.S. bond indexes for the third quarter and year-to-date. Large negative returns are the norm except for ultra-short securities (such as Treasury bills) and cash. Given this backdrop, while negative returns are never welcome, we are pleased with the relative results that our investment process and flexible approach have yielded. For details regarding individual fund performance and analysis, see our funds’ quarterly commentaries.
U.S. Treasury yields surged to multi-decade highs as the Fed’s resolve to keep monetary policy more restrictive for longer took markets by surprise. In other words, ANY hope for a Fed pivot was crushed. Contrary to such hope, the Fed delivered a third consecutive super-sized 0.75% interest rate hike in September and set the stage to increase interest rates by an additional 1.00-1.25% this year, resulting in expectations for a 4.00-4.25% target rate by year-end. In addition, the Fed’s quantitative tightening (QT) program is now in full effect with up to $90 billion of roll-off per month from the Fed’s balance sheet.
The Fed’s intent to keep raising interest rates and sustain them at an elevated level is explicitly seen in the upward shift of the entire yield curve during the third quarter. As illustrated below, the Fed’s expected path of interest rate hikes is largely priced into the market today, with 2-yr and 3-yr Treasuries yielding above 4.25%. Incredibly, the yield on 2-yr Treasuries has increased more than fifteen-fold over the past year. In addition, the 10-year Treasury briefly traded above 4% for the first time since 2010.
Federal Reserve – No (Easy) Way Out
After decades of accommodative monetary policy, the Federal Reserve is dusting off the restrictive policy playbook. And while they believe a softish landing is still the most likely outcome, whereby inflation recedes toward its 2% target and unemployment gently rises, the history books contain few reasons to be optimistic when it comes to high inflationary environments. Since World War II, only two of the prior thirteen Fed hiking cycles ended without a recession (1965-66 and 1994-1995). However, in neither case was inflation at or above 5%, let alone over 8%. The U.S. also has much higher leverage (i.e., debt-to-GDP) in the overall economy than we did in the 1960s or 1990s.
Monetary policy is a blunt policy tool and one that operates with a significant economic lag, leading to both intended and unintended consequences. As a result, no one knows what economic impact the Fed’s aggressive interest rate hikes will have on the economy over the next six to twelve months. In the here and now, the Fed remains focused on inflation and employment trends, and the data is not encouraging. The strong labor market is a key reason inflation remains stubbornly high. As illustrated in the chart below, there remains a large gap between wages and the unemployment rate. Even with the tick down in the year-over-year growth rate of average hourly earnings from
2022 Semi-Annual Report 7
5.2% in August to 5.0% in September, wage pressures remain elevated. In addition, the unemployment rate fell back to a 50+ year low of 3.5% in September, from 3.7% in August.
Even though employment is considered a coincident or lagging indicator, these labor market statistics are in stark opposition to the Fed’s goal of increasing unemployment. Again, history is not on the Fed’s side. According to Deutsche Bank, twelve months following the first interest hike in all previous thirteen Fed hiking cycles going back to the mid-1950s, the unemployment rate declined in twelve instances and was flat in the other. Moreover, per Bank of America, the average unemployment rate when the Fed hiked rates for the last time in the past sixteen rate-hiking cycles was 5.7%. This historical context, and the latest data, seem to suggest the Fed may have difficulty making significant progress on nudging the unemployment rate up and, therefore, has plenty of work to do per its policy objectives. Ultimately, no one knows what the longer-term economic impact will be, but we are preparing for a much weaker economy in 2023.
No Canary in the Credit Coal Mine
While investors have witnessed extreme interest rate and equity market volatility, such fear has yet to spill over to credit markets. The chart below shows how credit risk premiums have widened in both investment grade and high yield, but not to levels consistent with market stress or recession. As such, market participants banking on a Fed pivot due to “stress” in financial market conditions may be disappointed. While new debt issuance is becoming more costly for issuers, financial intermediation is alive and well. New financing transactions are getting done, albeit with better pricing and terms for investors. Secondary markets have gotten choppier, and liquidity is harder to come by, but we welcome these conditions and are taking advantage.
Finally, The Presence of Higher Income/Yields
Over the past few years, we repeatedly warned about low forward-looking returns across fixed income markets given historically low yields during and after the COVID pandemic. While uncertainty remains the dominant force, there is a bright spot for fixed income investors: forward return prospects continue to improve on the back of higher current income/yields. Interest rates are adjusting to higher inflation, and credit spreads reflect an uncertain economic environment. As a result, we are finding the best risk-adjusted return opportunities since the COVID pandemic. We are proceeding with caution, but with Treasury yields at or above 4% and higher-quality, investment-grade yields on offer at 5-7%, we believe that now may be a good time for investors to consider adding to their fixed income allocation.
To illustrate the attractive yields on offer today, CreditSights assembled the following investment-grade yield curve across various duration segments. The key takeaway is that current investment-grade yields (dark-blue line) are now mostly above the pre-Great Financial Crisis (GFC) median (dark-green line). In other words, the post-GFC environment of zero-interest-rate policy – reflected by the post-GFC median (light-green line) and, at its most extreme, year-end 2021 (light-blue line) – have been fully retraced by today’s fixed income environment.
8 2022 Semi-Annual Report
As we often say, we would never “call” a bottom in price or a
peak in yields. Our overarching investment approach is to remain
patient while utilizing our flexible mandate to achieve our long-
term investment goals. Namely (a) preserve capital, (b) maintain
a strong liquidity position, (c) understand evolving risks and
opportunities, (d) conduct consistent/thorough credit surveillance,
and (e) selectively take advantage of favorable risk/reward
opportunities.
Tom Carney | Nolan Anderson |
tom@weitzinvestments.com | nolan@weitzinvestments.com |
Portfolio composition is subject to change at any time. Current and future portfolio
holdings are subject to risk.
Definitions: Investment-Grade Bonds are those securities rated at least BBB- by
one or more credit ratings agencies. Yield to Worst (YTW) the lowest potential yield
(most conservative yield) that can be received on a bond without the issuer actually
defaulting. YTW is calculated by using worst-case scenario provisions, including
prepayments, calls and sinking funds. Furthermore, YTW is a forward-looking
estimate that ignores capital gains.
2022 Semi-Annual Report 9
DISCLOSURES
Data quoted is past performance and current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. All investments involve risks, including possible loss of principal. Please visit weitzinvestments.com for the most recent month-end performance.
Investment results reflect applicable fees and expenses and assume all distributions are reinvested but do not reflect the deduction of taxes an investor would pay on distributions or share redemptions. Certain Funds have entered into fee waiver and/or expense reimbursement arrangements with the Investment Advisor by which the Advisor has contractually agreed to waive a portion of the Advisor’s fee and reimburse certain expenses (excluding taxes, interest, brokerage costs, acquired fund fees and expenses and extraordinary expenses) to limit the total annual fund operating expenses of the Fund’s average daily net assets through Contractual Expiration Date of 07/31/2023. If this arrangement had not been in place, the performance results would have been lower.
The net expense ratio reflects the total annual fund operating expenses of the Fund after taking into account any such fee waiver and/or expense reimbursement. Net and gross expense ratios are as of the Fund’s most recent prospectus.
Performance quoted for the Balanced, Partners Value and Value Funds’ Institutional Class shares before their inception is derived from the historical performance of the Investor Class shares, which have not been adjusted for the expenses of the Institutional Class shares, had they, returns would have been different.
Performance quoted for the Partners III Opportunity and Short Duration Income Funds’ Investor Class shares before their inception is derived from the historical performance of the Institutional Class shares, which have not been adjusted for the expenses of the Investor Class shares, had they, returns would have been different.
Index performance is hypothetical and is shown for illustrative purposes only. You cannot invest directly in an index. See page 81 for a description of all indices. All indices Since Inception return are since the Fund’s inception. The inception date of the Bloomberg 1-3 Year U.S. Aggregate Index and the Bloomberg 5-Year Municipal Bond Index was 12/31/1992 and 1/29/1988, respectively.
On 12/29/2006, the Nebraska Tax-Free Income Fund succeeded to substantially all of the assets of Weitz Income Partners Limited Partnership. On 12/31/1993, Partners Value Fund succeeded to substantially all of the assets of Weitz Partners II Limited Partnership. On 12/30/2005, Partners III Opportunity Fund succeeded to substantially all of the assets of Weitz Partners III Limited Partnership. The investment objectives, policies and restrictions of the Funds are materially equivalent to those of the Partnerships, and the Partnerships were managed at all times with full investment authority by the Investment Adviser. The performance information includes performance for the Partnerships. The Partnerships were not registered under the Investment Company Act of 1940 and, therefore, were not subject to certain investment or other restrictions or requirements imposed by the 1940 Act or the Internal Revenue Code. If the Partnerships had been registered under the 1940 Act, the Partnerships’ performance might have been adversely affected.
Effective 12/16/2016, the Ultra Short Government Fund revised its principal investment strategies. Prior to that date, the Fund operated as a “government money market fund” and maintained a stable net asset value of $1.00 per share. Performance prior to 12/16/2016 reflects the Fund’s prior principal investment strategies and may not be indicative of future performance results.
Effective 12/16/2016, the Short Duration Income Fund revised its principal investment strategies. Since that time the Fund has generally maintained an average effective duration between one to three and a half years. Prior to that date, the Fund maintained a dollar–weighted average maturity of between two to five years. Performance prior to 12/16/2016 reflects the Fund’s prior principal investment strategies and may not be indicative of future performance results.
Effective 03/29/2019, the Hickory Fund invests the majority of its assets in the common stock of medium–sized companies, which the Fund considers to be companies with a market capitalization, less than or equal to the market capitalization of the largest company in the Russell Midcap Index. Prior to that date, the Fund invested the majority of its assets in the common stock of smaller– and medium–sized companies, which the Fund considered to be companies with a market capitalization, at the time of initial purchase, of less than $10 billion.
10 2022 Semi-Annual Report
PERFORMANCE SUMMARY
Returns (%) as of 9/30/2022
ANNUALIZED | ||||||||||
Since Fund | Inception | Net | Gross | |||||||
EQUITY | QTD | YTD | 1 YR | 5 YR | 10 YR | Inception* | Date | Expense | Expense | |
Hickory (WEHIX) | (9.07) | (31.34) | (26.85) | 0.23 | 4.35 | 8.18 | 4/1/1993* | 1.09 | 1.12 | |
Russell MidCap Index | (3.44) | (24.27) | (19.39) | 6.48 | 10.29 | 10.16 | ||||
Partners III Opportunity - Investor (WPOIX) | (10.22) | (26.64) | (26.07) | 1.81 | 5.09 | 10.96 | 8/1/2011 | 1.86 | 1.86 | |
Partners III Opportunity - Institutional (WPOPX) | (10.08) | (26.46) | (25.80) | 2.37 | 5.56 | 11.10 | 6/1/1983* | 1.43 | 1.43 | |
Russell 3000 Index | (4.46) | (24.62) | (17.63) | 8.61 | 11.38 | 10.50 | ||||
S&P 500 Index | (4.88) | (23.87) | (15.47) | 9.23 | 11.69 | 10.76 | ||||
Partners Value - Investor (WPVLX) | (6.39) | (27.32) | (22.87) | 3.01 | 5.93 | 10.69 | 6/1/1983* | 1.09 | 1.09 | |
Partners Value - Institutional (WPVIX) | (6.32) | (27.22) | (22.72) | 3.25 | 6.12 | 10.74 | 7/31/2014 | 0.89 | 0.91 | |
Russell 3000 Index | (4.46) | (24.62) | (17.63) | 8.61 | 11.38 | 10.50 | ||||
S&P 500 Index | (4.88) | (23.87) | (15.47) | 9.23 | 11.69 | 10.76 | ||||
Value - Investor (WVALX) | (7.17) | (28.30) | (24.29) | 7.19 | 8.46 | 9.78 | 5/9/1986* | 1.04 | 1.04 | |
Value - Institutional (WVAIX) | (7.10) | (28.20) | (24.16) | 7.41 | 8.64 | 9.83 | 7/31/2014 | 0.89 | 0.90 | |
Russell 1000 Index | (4.61) | (24.59) | (17.22) | 8.99 | 11.60 | 10.11 | ||||
S&P 500 Index | (4.88) | (23.87) | (15.47) | 9.23 | 11.69 | 10.13 | ||||
ANNUALIZED | ||||||||||
Since Fund | Inception | Net | Gross | |||||||
ALLOCATION | QTD | YTD | 1 YR | 5 YR | 10 YR | Inception* | Date | Expense | Expense | |
Balanced - Investor (WBALX) | (3.65) | (14.43) | (11.25) | 4.30 | 5.36 | 5.22 | 10/1/2003* | 0.85 | 1.01 | |
Balanced - Institutional (WBAIX) | (3.64) | (14.33) | (11.10) | 4.40 | 5.41 | 5.24 | 3/29/2019 | 0.70 | 0.82 | |
Morningstar Moderately Conservative Target Risk Index | (5.33) | (18.54) | (16.66) | 2.17 | 3.81 | 5.07 | ||||
ANNUALIZED | ||||||||||
Since Fund | Inception | Net | Gross | |||||||
FIXED INCOME | QTD | YTD | 1 YR | 5 YR | 10 YR | Inception* | Date | Expense | Expense | |
Core Plus Income - Investor (WCPNX) | (2.78) | (11.17) | (11.10) | 1.66 | N/A | 2.33 | 7/31/2014* | 0.50 | 0.89 | |
Core Plus Income - Institutional (WCPBX) | (2.86) | (11.11) | (11.10) | 1.79 | N/A | 2.49 | 7/31/2014* | 0.40 | 0.62 | |
Bloomberg U.S. Aggregate Bond Index | (4.75) | (14.61) | (14.60) | (0.27) | N/A | 0.87 | ||||
Nebraska Tax-Free Income (WNTFX) | (2.94) | (8.04) | (7.66) | 0.00 | 0.44 | 4.01 | 10/1/1985* | 0.45 | 1.02 | |
Bloomberg 5-Year Municipal Bond Index | (2.71) | (8.06) | (8.03) | 0.48 | 1.20 | N/A | ||||
Short Duration Income - Investor (WSHNX) | (0.73) | (3.86) | (4.11) | 1.04 | 1.26 | 4.54 | 8/1/2011 | 0.55 | 0.90 | |
Short Duration Income - Institutional (WEFIX) | (0.80) | (3.83) | (4.06) | 1.16 | 1.43 | 4.60 | 12/23/1988* | 0.48 | 0.62 | |
Bloomberg 1-3 Year U.S. Aggregate Index | (1.50) | (4.58) | (5.11) | 0.64 | 0.78 | N/A | ||||
Ultra Short Government - Institutional (SAFEX) | 0.33 | 0.43 | 0.37 | 1.17 | 0.65 | 2.19 | 8/1/1991* | 0.20 | 0.68 | |
ICE BofA U.S. 6-Month Treasury Bill Index | 0.39 | 0.38 | 0.39 | 1.25 | 0.82 | 2.71 |
* Denotes the Fund's inception date and the date from which Since Fund Inception performance is calculated.
2022 Semi-Annual Report 11
BALANCED FUND
Portfolio Managers: Brad Hinton, CFA & Nolan Anderson
Investment Style: Conservative Allocation
The Balanced Fund’s Institutional Class returned -3.64% for the third quarter compared to -5.33% for the Morningstar Moderately Conservative Target Risk Index. Year-to-date, the Fund’s Institutional Class has returned -14.33% compared to -18.54% for the index.
Over a 10-year period, the Fund’s Institutional Class has returned +5.41% annualized compared to +3.81% for the index. These results include the ravaging effects of the current bear market in stocks and the historically extreme drawdowns in bonds. With that longer-term lens, total returns well above inflation (10-year average rate of 2.4%) have helped our investors retain and build wealth.
The third quarter was another adventure for investors. Stocks staged a classic bear market rally for the better part of two months. Then in late August, Fed Chair Jerome Powell quickly changed the mood at the Jackson Hole Economic Symposium. He opened his speech by saying “Today, my remarks will be shorter, my focus narrower, and my message more direct.” Direct, it was. Job one would be taming inflation. To that end, the Fed would continue to raise interest rates via “forceful and rapid steps to moderate demand.” Chair Powell suggested clearly that the path ahead would “bring some pain to households and businesses.” Investors got the message and scrambled for cover, with the broad stock indexes declining to fresh 2022 lows at quarter-end. Bonds also posted negative returns as yields again rose across the maturity spectrum (as yields rise, bond prices fall).
Monetary policy works with a meaningful lag. While we cannot predict the full economic impact of the Fed’s actions, it seems clear that there will be both intended and unintended consequences along the way. Near-term earnings are the wildcard with a potential recession looming on the horizon. In our view, the case for owning durable, resilient, and adaptable businesses has never been stronger. We like our collection of companies, and we think their stocks are generally priced at sensible (or better) levels.
Vulcan Materials, Charles Schwab, Martin Marietta Materials, Idex, and Fortive were the Fund’s largest quarterly equity contributors. The positive returns were clustered primarily in construction materials and industrials (companies that produce stuff). As the dollar strengthened, Vulcan and Martin also benefited from their 100% domestic revenue profiles. The Fund has no year-to-date positive equity contributors, though companies like AutoZone, Charles Schwab, Aon, Markel, and Berkshire Hathaway notably held up better than the broader market indexes.
Liberty Broadband, Markel, Comcast, Alphabet, and LabCorp were the Fund’s largest quarterly equity detractors. The declines represented a mix of investor fears, ranging from higher competitive intensity at Liberty Broadband and Comcast to potential recession impacts at Alphabet (digital advertising) and LabCorp (drug development). Liberty Broadband, Alphabet, Microsoft, LabCorp, and Accenture are the Fund’s largest year-to-date equity detractors. While some of the price declines have been harrowing, our team’s estimates suggest that underlying business values have been much more resilient.
We take the Fund’s capital preservation objective seriously, so we never enjoy reporting negative returns. With few places to hide, losing less (at least for now) has been the more realistic, achievable short-term goal. By this measure, we feel reasonably good about the Fund’s showing this quarter and year-to-date. The real workhorse has been the Fund’s high-quality, short-maturity bond portfolio, which has provided a meaningful buffer this year.
As interest rates continued to grind higher, we methodically put more money to work in bonds. One clear goal was to capture the higher yields for slightly longer periods. We purchased Treasuries primarily in the 2-year to 4-year range and sprinkled in small individual positions in asset-backed debt, with a heavy focus on sponsor quality and structural protection. We were generally not active in corporate credit markets during the quarter, as we still saw better risk-return profiles elsewhere.
The Fund’s fixed income portfolio now yields nearly 5%, with a modestly longer duration of roughly two years. This profile represents a remarkable improvement from the beginning of the year and, for that matter, an improvement from most of the last decade. These yields are available with high average credit quality (more than 95% investment-grade), offering savers real and welcome alternatives. The Fund’s credit exposure remains modest, so we have the option to either stay defensive or flex into higher-yielding securities if economic conditions deteriorate.
The Fund’s portfolio continues to evolve with market conditions. We own common equity stakes in 29 companies totaling 40.6% of net assets. High-yielding, hybrid securities represent another 1.8% of the Fund. The fixed income portfolio includes investment-grade corporate bonds (1.2%), securitized debt (14.4%), Treasury securities (39.5%), and cash equivalents/other (2.5%). We have plenty of capacity to lean into new opportunities as our team uncovers them.
While things may seem cloudy now, we think the Fund is increasingly well-positioned to provide long-term capital appreciation. The current income outlook has materially improved with the increase in interest rates. And lower prices for both stocks and bonds provide a healthier cushion for achieving our capital preservation goal. As always, we encourage investors to evaluate the strategy on a total-return basis over longer time horizons.
Definitions: Investment Grade Bonds are those securities rated at least BBB- by one or more credit ratings agencies.
12 2022 Semi-Annual Report
Returns
Annualized | ||||||||||||||||||
Since | ||||||||||||||||||
Inception | Net | Gross | ||||||||||||||||
QTD | YTD | 1 YR | 3 YR | 5 YR | 10 YR | (10/1/03) | Expense | Expense | ||||||||||
WBALX - Investor Class | (3.65)% | (14.43)% | (11.25)% | 2.56% | 4.30% | 5.36% | 5.22% | 0.85% | 1.01% | |||||||||
WBAIX - Institutional Class | (3.64) | (14.33) | (11.10) | 2.72 | 4.40 | 5.41 | 5.24 | 0.70 | 0.82 | |||||||||
Morningstar Moderately Conservative Target Risk Index | (5.33) | (18.54) | (16.66) | 0.15 | 2.17 | 3.81 | 5.07 |
Top 10 Stock Holdings | ||
% of Net Assets | ||
Danaher Corp. | 2.3 | |
Microsoft Corp. | 2.2 | |
Berkshire Hathaway, Inc. | 2.1 | |
Aon plc | 2.0 | |
Vulcan Materials Co. | 2.0 | |
Analog Devices, Inc. | 2.0 | |
Thermo Fisher Scientific, Inc. | 1.9 | |
Alphabet, Inc. | 1.8 | |
Laboratory Corp. of America Holdings | 1.7 | |
Markel Corp. | 1.7 | |
19.7 |
Top Stock Performers | |||
Average | |||
Return | Weight | Contribution | |
Vulcan Materials | 11.3% | 1.8% | 0.17% |
Charles Schwab | 14.1 | 1.2 | 0.14 |
IDEX | 10.3 | 1.2 | 0.10 |
Martin Marietta Materials | 7.9 | 1.6 | 0.10 |
Fortive | 7.3 | 1.1 | 0.05 |
Bottom Stock Performers | |||
Average | |||
Return | Weight | Contribution | |
Liberty Broadband – Series C | (36.1)% | 1.2% | (0.45)% |
Markel | (16.2) | 1.8 | (0.30) |
Comcast – Class A | (24.8) | 1.0 | (0.26) |
Alphabet – Class C | (12.1) | 1.9 | (0.23) |
Laboratory Corporation of America | (12.4) | 1.9 | (0.22) |
30-Day SEC Yield | ||||
Share Class | Subsidized | Unsubsidized | ||
Investor | 1.76% | 1.66% | ||
Institutional | 1.91 | 1.90 |
Industry Breakdown | ||
% of Net Assets | ||
Information Technology | 12.6 | |
Financials | 9.7 | |
Health Care | 5.9 | |
Materials | 4.7 | |
Communication Services | 3.5 | |
Industrials | 3.3 | |
Consumer Staples | 0.9 | |
Total Common Stocks | 40.6 | |
U.S. Treasuries | 39.5 | |
Asset-Backed Securities | 9.1 | |
Commercial Mortgage-Backed Securities | 2.6 | |
Mortgage-Backed Securities | 2.6 | |
Corporate Bonds | 1.2 | |
Corporate Convertible Bonds | 1.0 | |
Non-Convertible Preferred Stocks | 0.9 | |
Cash Equivalents/Other | 2.5 | |
Total Bonds & Cash Equivalents | 59.4 | |
100.0 |
Fixed Income Attributes | |
Portfolio Summary | |
Average Maturity | 2.6 years |
Average Effective Maturity | 2.7 years |
Average Duration | 2.1 years |
Average Effective Duration | 1.9 years |
Average Coupon | 2.2% |
Credit Quality | ||
Underlying Securities | % of Bond Portfolio | |
U.S. Treasury | 66.0 | |
U.S. Government Agency Mortgage Related Securities | 1.7 | |
AAA | 17.1 | |
AA | 4.7 | |
A | 1.4 | |
BBB | 2.0 | |
B | 1.4 | |
Non-Rated | 1.7 | |
Cash Equivalents | 4.0 | |
100.0 |
All data as of 9/30/2022 unless otherwise indicated. Data quoted is past performance and current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. All investments involve risks, including possible loss of principal. Please visit weitzinvestments.com for the most recent month-end performance.
Investment results reflect applicable fees and expenses and assume all distributions are reinvested but do not reflect the deduction of taxes an investor would pay on distributions or share redemptions. The Fund has entered into fee waiver and/or expense reimbursement arrangements with the Investment Advisor by which the Advisor has contractually agreed to waive a portion of the Advisor’s fee and reimburse certain expenses (excluding taxes, interest, brokerage costs, acquired fund fees and expenses and extraordinary expenses) to limit the total annual fund operating expenses of the Fund’s average daily net assets through 07/31/2023. If this arrangement had not been in place, the performance results would have been lower. The net expense ratio reflects the total annual fund operating expenses of the Fund after taking into account any such fee waiver and/or expense reimbursement. Net and gross expense ratios are as of the Fund’s most recent prospectus.
See page 9 for additional performance disclosures. See page 81 for a description of all indices. See page 82 for a Glossary of Terms.
Credit ratings are assigned to underlying securities utilizing ratings from a Nationally Recognized Statistical Rating Organization (NRSRO) such as Moody’s and Fitch, or other rating agencies and applying the following hierarchy: security is determined to be Investment Grade if it has been rated at least BBB- by one credit rating agency; once determined to be Investment Grade (BBB- and above) or Non-Investment Grade (BB+ and below) where multiple ratings are available, then the lowest rating is assigned. Mortgage-related securities issued and guaranteed by government-sponsored agencies such as Fannie Mae and Freddie Mac are generally not rated by rating agencies. Securities that are not rated do not necessarily indicate low quality. Ratings are shown in the Fitch scale (e.g., AAA). Ratings and portfolio credit quality may change over time. The Fund itself has not been rated by a credit rating agency.
Contributions to performance are based on actual daily holdings. Returns shown are the actual quarterly returns of the security.
Source (Fixed Income Attributes, Credit Quality, and Maturity Distribution): Bloomberg Analytics
Source (Top Performers, Bottom Performers): Statpro
2022 Semi-Annual Report 13
CORE PLUS INCOME FUND
Portfolio Managers: Tom Carney, CFA & Nolan Anderson
Investment Style: Intermediate-Term Core Plus Bond
The Core Plus Income Fund’s Institutional Class returned -2.86% for the third quarter compared to a -4.75% return for the Bloomberg U.S. Aggregate Bond Index (Agg). Year to date, the Fund’s Institutional Class returned -11.11% compared to -14.61% for the index. Negative absolute results are never pleasant to report despite solid relative results. Longer-term results (3-, 5-, and 7-year) continue to far outpace the index.
As has been the theme throughout the year, inflationary pressures remain stiff and showed no signs of abating in the third quarter. These pressures precipitated a large upward move in interest rates as the Federal Reserve announced its third consecutive 0.75% interest rate hike. Investor sentiment shifted again, at least momentarily, from concerns about recession back to inflation. The chart below shows the unprecedented pace at which the Federal Open Markets Committee (FOMC) is raising rates to get current high inflation under control. No other rate hiking cycle has begun this steeply since the 1980s (when the Fed started targeting the federal funds rate as its primary tool for conducting monetary policy). And the Fed’s newfound fondness for hiking rates appears set to continue well into 2023 with some economists predicting the benchmark federal funds rate to hit as high as 5% sometime next year.
The repricing of interest rates and credit spreads, while unpleasant, sets the stage for more favorable forward returns. This can be seen in the Fund’s improved yield-to-worst (YTW) metric, as illustrated in the table below. As a reminder, YTW has historically been a reasonable predictor of forward returns. On a year-over-year basis, the Fund's YTW increased from 1.8% to 6.1% – far exceeding the Agg’s YTW of 4.8% as of September 30, 2022. This is the widest (positive) gap in YTW for the Fund versus the index since September 2020. The positive variance compared to the index is partially attributable to the Fund’s approximately 23% weight in floating-rate securities compared to no exposure in the Agg. The YTW for our floating-rate securities incorporates the market’s current expectations for higher short-term interest over the course of the next six to nine months.
YTW / Duration Analysis | Weitz Core Plus Income Fund vs. Bloomberg U.S. Agg | ||||
9/30/2021 | 9/30/2022 | |||
Weitz Core Plus: | Change | % | ||
Yield to Worst | 1.80% | 6.09% | 4.29% | 238% |
Overall Average Duration | 4.80 | 5.18 | 0.38 | 8 |
YTW / Duration Analysis | Weitz Core Plus Income Fund vs. Bloomberg U.S. Agg | ||||
9/30/2021 | 9/30/2022 | |||
U.S. Agg: | Change | % | ||
Yield to Worst | 1.56% | 4.75% | 3.19% | 205% |
Overall Average Duration | 6.60 | 6.12 | (0.48) | (7) |
In terms of overall portfolio metrics, the Fund’s average effective
maturity increased to 8.3 years as of September 30, 2022, from
8.0 years as of June 30, 2022, and the average effective duration
remained steady at 5.2 years over the same time period. These
measures provide a guide to the Fund’s interest rate sensitivity.
A higher average effective maturity and longer average effective
duration increase the Fund’s price sensitivity to changes in
interest rates (either up or down). As of September 30, 2022, the
average effective duration of the Agg was 6.1 years.
As of September 30, our high-yield exposure as a percent of
net assets was 11.1%, down from 12.1% on June 30, 2022. We had
commented favorably on high yield valuations in the second-
quarter Fund commentary – but a significant rally at the outset
of the third quarter reduced favorable investment opportunities.
Weakness in credit markets broadly near / at the end of the
third quarter has increased the relative attractiveness of certain
high yield credits. Given the Fund can invest up to 25% of net
assets in high yield, we are well positioned to take advantage
of any further valuation discrepancies / opportunities in the high
yield area. Our approach, however, will most likely be focused in
what might be termed “higher-quality high yield”. That is, those
companies that we believe have strong businesses and balance
sheets and can weather an economic disturbance caused by a
possible recession.
Portfolio Positioning
9/30/2022 | 6/30/2022 | Qtr Over | 9/30/2021 | Yr Over | |
Current | Previous | Qtr | Previous | Yr | |
Sector (% of Net Assets) | Quarter | Quarter | Change | Year | Change |
Corporate Bonds | 21.5 | 22.2 | -0.7 | 33.0 | -11.5 |
Corporate Convertible Bonds | 0.5 | 0.5 | 0.0 | 0.7 | -0.2 |
Asset-Backed Securities | |||||
(ABS) | 29.4 | 24.0 | 5.4 | 18.1 | 11.3 |
Corporate Collateralized | |||||
Loan Obligations (CLOs)* | 12.5 | 10.7 | 1.8 | 8.1 | 4.4 |
Commercial Mortgage- | |||||
Backed Securities (CMBS) | 10.3 | 10.6 | -0.3 | 9.2 | 1.1 |
Agency Mortgage-Backed | |||||
(MBS) | 1.1 | 1.1 | 0.0 | 1.8 | -0.7 |
Non-Agency Mortgage | |||||
Backed (RMBS) | 0.4 | 0.5 | -0.1 | 0.9 | -0.5 |
Non-Convertible Preferred | |||||
Stock | 0.4 | 0.5 | -0.1 | 0.7 | -0.3 |
Taxable Municipal Bonds | 0.3 | 0.6 | -0.3 | 0.9 | -0.6 |
U.S. Treasury | 34.5 | 37.5 | -3.0 | 30.8 | 3.7 |
Common Stock | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
Cash & Equivalents | 1.6 | 2.5 | -0.9 | 3.9 | -2.3 |
Total (does not include | |||||
CLO line) | 100.0 | 100.0 | 100.0 | ||
High Yield** | 11.1 | 12.1 | -1.0 | 11.3 | 0.2 |
Average Effective Duration | |||||
(years) | 5.2 | 5.2 | 0.0 | 4.8 | 0.4 |
Average Effective Maturity | |||||
(years) | 8.3 | 8.0 | 0.3 | 6.5 | 1.8 |
14 2022 Semi-Annual Report
*Corporate CLOs are included in the ABS segment in the Fund’s schedule of investments but are additionally called out separately for the purposes of the discussion.
**For the current period, high-yield exposure consists of investments in the Corporate, Corporate Convertible, ABS, and CMBS sectors.
Totals may be greater or less than 100 due to rounding.
In terms of sector allocation, we continued to increase our asset-backed securities (ABS) exposure. Credit spreads in ABS have widened materially, which we believe has greatly improved their relative value compared to investment-grade corporate bonds. We added a variety of automobile and unsecured consumer loan investments that we believe offer strong investor protections and attractive coupon income. We also added to our corporate CLO portfolio, including both static and reinvesting deals.
Top Quarterly Contributors
• | Collateralized Loan Obligations (CLOs): Our portfolio of floating rate commercial real estate and corporate CLOs provided very modest positive contribution to the Fund during the third quarter. The floating rates protected against interest rate sensitivity and coupon incomes more than offset spread widening. |
Top Quarterly Detractors
• | U.S. Treasury Bonds: Our U.S. Treasury holdings were the largest detractor to performance for the third quarter in a row. With an effective maturity of over 13 years, our Treasury portfolio was negatively impacted by rising interest rates across the curve. |
• | Corporate Bonds: Investments in a wide variety of corporate bonds, including high yield, were the second largest detractor to performance in the quarter. High yield and longer maturity segments of our corporate bond portfolio underperformed the most. |
• | Asset-Backed Securities (ABS): Our ABS detracted from performance due to rising interest rates and widening credit spreads. |
Outlook
While it is particularly unpleasant to report on this year’s Fund performance, we continue to be pleased with the underlying fundamentals (credit quality) of our investments. This solid year-to-date credit quality has been recognized by rating agencies with meaningfully more upgrades to our portfolio’s credit ratings than downgrades (more than 20-to-1). Additionally, prepayments have allowed for reinvestment at meaningfully higher returns, helping to enhance our YTW of 6.1% at quarter-end.
Yogi Berra – the famous baseball player well-known for his many Yogi-isms – is credited with saying “it's tough to make predictions, especially about the future.” Good advice, especially in credit and equity markets. Our role as money managers, per one of the founders of Gavekal Research, is to ‘adapt’ to market environments and not forecast. Widespread worry/concerns/ fears/confusion about the macro environment (further inflation, stagflation, possible recession, consumer spending slowdown, etc., etc.) often present opportunities for the fundamental investor. As a result, we are finding the best risk-adjusted return opportunities for the Weitz Core Plus Income Fund since the COVID pandemic, and we believe the Fund is well-positioned, as described above, to take advantage of today’s opportunities and any further valuation disparities that may develop. While there could still be some price declines ahead, as timing is always uncertain, we see greener pastures from today’s levels.
Definitions: Average effective duration provides a measure of a fund’s interest-rate sensitivity. The longer a fund’s duration, the more sensitive the fund is to shifts in interest rates. Average effective maturity is the weighted average of the maturities of a fund’s underlying bonds. CRE CLOs refer to commercial real estate collateralized loan obligations backed by a pool of commercial loads. Investment Grade Bonds are those securities rated at least BBB- by one or more credit rating agencies. Middle market CLOs refer to collateralized loan obligations backed by loans made to smaller companies, which companies generally have earnings before interest, taxes, and amortization of less than $75 million. Non-Investment Grade Bonds are those securities (commonly referred to as “high yield” or “junk” bonds) rated BB+ and below by one or more credit rating agencies. Yield to worst (YTW) is the lowest potential yield that can be received on a bond portfolio without the underlying issuers defaulting.
2022 Semi-Annual Report 15
Returns
Annualized | ||||||||||||||||
Since | ||||||||||||||||
Inception | Net | Gross | ||||||||||||||
QTD | YTD | 1 YR | 3 YR | 5 YR | (7/31/14) | Expense | Expense | |||||||||
WCPNX - Investor Class | (2.78)% | (11.17)% | (11.10)% | (0.17)% | 1.66% | 2.33% | 0.50% | 0.89% | ||||||||
WCPBX - Institutional Class | (2.86) | (11.11) | (11.10) | (0.07) | 1.79 | 2.49 | 0.40 | 0.62 | ||||||||
Bloomberg U.S. Aggregate Bond Index | (4.75) | (14.61) | (14.60) | (3.25) | (0.27) | 0.87 |
Fixed Income Attributes | |
Portfolio Summary | |
Average Maturity | 8.1 years |
Average Effective Maturity | 8.3 years |
Average Duration | 5.9 years |
Average Effective Duration | 5.2 years |
Average Coupon | 3.6% |
Maturity Distribution | ||
Maturity | % of Portfolio | |
Cash Equivalents | -0.5 | |
Less than 1 year | 8.3 | |
1 - 3 Years | 15.5 | |
3 - 5 Years | 16.9 | |
5 - 7 Years | 20.8 | |
7 - 10 Years | 11.5 | |
10 Years or more | 27.5 | |
Common Stocks | 0.0 | |
100.0 |
Credit Quality | ||
Underlying Securities | % of Portfolio | |
U.S. Treasury | 35.1 | |
U.S. Government Agency Mortgage | ||
Related Securities | 1.0 | |
AAA | 7.6 | |
AA | 16.1 | |
A | 11.4 | |
BBB | 18.0 | |
BB | 7.7 | |
B | 1.8 | |
CCC | 1.2 | |
Non-Rated | 0.6 | |
Cash Equivalents | (0.5) | |
100.0 |
30-Day SEC Yield | ||
Share Class | Subsidized | Unsubsidized |
Investor | 4.37% | 4.02% |
Institutional | 4.47 | 4.39 |
All data as of 9/30/2022 unless otherwise indicated. Data quoted is past performance and current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. All investments involve risks, including possible loss of principal. Please visit weitzinvestments.com for the most recent month-end performance.
Investment results reflect applicable fees and expenses and assume all distributions are reinvested but do not reflect the deduction of taxes an investor would pay on distributions or share redemptions. The Fund has entered into fee waiver and/or expense reimbursement arrangements with the Investment Advisor by which the Advisor has contractually agreed to waive a portion of the Advisor’s fee and reimburse certain expenses (excluding taxes, interest, brokerage costs, acquired fund fees and expenses and extraordinary expenses) to limit the total annual fund operating expenses of the Fund’s average daily net assets through 07/31/2023. If this arrangement had not been in place, the performance results would have been lower. The net expense ratio reflects the total annual fund operating expenses of the Fund after taking into account any such fee waiver and/or expense reimbursement. Net and gross expenses ratios are as of the Fund’s most recent Prospectus.
See page 9 for additional performance disclosures. See page 81 for a description of all indices. See page 82 for a Glossary of Terms.
Credit ratings are assigned to underlying securities utilizing ratings from a Nationally Recognized Statistical Rating Organization (NRSRO) such as Moody’s and Fitch, or other rating agencies and applying the following hierarchy: security is determined to be Investment Grade if it has been rated at least BBB- by one credit rating agency; once determined to be Investment Grade (BBB- and above) or Non-Investment Grade (BB+ and below) where multiple ratings are available, then the lowest rating is assigned. Mortgage-related securities issued and guaranteed by government-sponsored agencies such as Fannie Mae and Freddie Mac are generally not rated by rating agencies. Securities that are not rated do not necessarily indicate low quality. Ratings are shown in the Fitch scale (e.g., AAA). Ratings and portfolio credit quality may change over time. The Fund itself has not been rated by a credit rating agency.
Source (Fixed Income Attributes, Credit Quality, and Maturity Distribution): Bloomberg Analytics
16 2022 Semi-Annual Report
HICKORY FUND
Portfolio Managers: Wally Weitz, CFA & Drew Weitz
Investment Style: Mid-Cap Value
The Hickory Fund returned -9.07% in the third quarter compared to -3.44% for the Russell Midcap Index. Year-to-date, the Fund returned -31.34% compared to -24.27% for the Russell Midcap Index.
Returns in the third quarter were, again, disproportionately driven by investors’ perceptions of potential Federal Reserve policy actions. Economic data released early in the quarter raised hopes of a “Fed Pivot” – the idea that, although still too hot, inflation was cooling enough to warrant less aggressive tightening of monetary policy, and even a potential return of loosening restrictions in the coming year. Equity markets rallied, and by mid-August the Fund was up roughly 13% for the quarter. Then came Chairman Jerome Powell’s Jackson Hole speech. In it, Chairman Powell plainly stated that further aggressive action was needed to bring inflation to heel and noted that the historical record cautioned against loosening conditions prematurely. The speech squarely negated both pillars of the “pivot” thesis, and stocks gave up their gains and then some in the weeks that followed.
The preceding discussion is offered as context for the current investment landscape. At any given time, investors’ broad market perceptions have an outsized influence on the reaction to company-specific news. When investors are bearish, good news is frequently shrugged off, while disappointments are met with swift, and often overdone, punishment. We believe this to be the case for Liberty Broadband (owner of 26% of broadband provider Charter Communications). As the Fund’s largest position and its outsized impact as the top detractor for the quarter and year-to-date periods, a more detailed discussion of our continued optimism is warranted.
Investors have apparently extrapolated that Charter’s recent string of lackluster broadband customer growth portends zero (or negative) growth into perpetuity. Skeptics point to early customer wins for wireless broadband offerings and fiber-network operators’ plans to aggressively expand their footprints as evidence that Charter’s (and cable operators’, generally) ability to add subscribers is permanently impaired. We disagree. Wireless broadband will likely continue to win customers in areas where wired infrastructure is unavailable or by expanding the market to new customer segments (e.g., construction trailers, food trucks, etc.). That said, the carriers face an important trade-off, as fixed wireless is a lower-return usage of scarce network capacity. As fixed and mobile data usage inexorably grow, we believe carriers will prioritize their traditional mobility business at the expense of expanding their fixed wireless base. With respect to growing competition from fiber-to-the-home operators, Charter’s footprint is already roughly 40% overbuilt and has been competing successfully for over a decade. As fiber companies look to enact previously announced expansion plans, inflationary pressures for labor, equipment, and funding costs may reduce their ultimate appetites.
Of course, Charter isn’t simply sitting back playing defense. We believe the company can resuscitate customer growth through expanding its own network into underserved areas. High-speed networks with little (or no) competition tend to generate strong demand as they come online, bringing new subscribers to Charter’s rolls. Charter is also rapidly growing its own mobile phone business across its entire network with some of the lowest-priced plans in the industry, taking market share by delivering significant savings for customers while also growing their cash flow per-customer relationship at the same time. All that to say, at these levels we believe the stock is mispriced. We can’t predict when other investors may change their minds, but in the interim, the company continues to generate very healthy cash flow, and management’s continued share repurchases compound value on our behalf.
Carmax and Liberty Global were also detractors during both time periods. In Carmax’s case, after a period of sharply rising used car prices, affordability took another hit as would-be buyers now face higher borrowing costs for auto loans. The industry at large will need to digest this reset, but as the largest scaled player, and with a growing set of omnichannel tools, we believe Carmax is poised to not only weather the storm but to continue to grow market share. As for Liberty Global, the company owns a collection of European broadband providers that collectively trade at a discount to our “sum of the parts” value estimation.
In recent quarters, their portfolio has had relatively stable, if uninspiring, results. The surging U.S. dollar dampens reported earnings, but management’s focus remains on growing local currency cash flows and identifying strategic opportunities to recognize the unappreciated value of their assets. As we make our way through this bear market, good news has been harder to come by. CoStar Group was the portfolio standout in the third quarter. Shares rallied on the news that it would be added to the S&P 500 index, and investors looked to capitalize on the subsequent index fund buying. The portfolio also enjoyed positive contributions from Ingersoll Rand and HEICO. In the quarter’s early run-up, we trimmed several holdings on strength, most notably Ingersoll-Rand, and we added modestly to Carmax as shares sold off post-earnings. At quarter-end, our estimated portfolio price-to-value ratio was in the low 60s. This suggests to us that, despite a highly uncertain investment backdrop in the near term, we believe our businesses trade at prices that hopefully should generate stronger returns in the coming years.
2022 Semi-Annual Report 17
Returns
Annualized | ||||||||||||||||||||
Since | ||||||||||||||||||||
Inception | Net | Gross | ||||||||||||||||||
QTD | YTD | 1 YR | 3 YR | 5 YR | 10 YR | 20 YR | (4/1/93) | Expense | Expense | |||||||||||
WEHIX | (9.07)% | (31.34)% | (26.85)% | (2.31)% | 0.23% | 4.35% | 7.58% | 8.18% | 1.09% | 1.12% | ||||||||||
Russell MidCap Index | (3.44) | (24.27) | (19.39) | 5.18 | 6.48 | 10.29 | 10.73 | 10.16 |
Top 10 Stock Holdings | ||
% of Net Assets | ||
CoStar Group, Inc. | 7.3 | |
Liberty Media Corp-Liberty SiriusXM | 6.8 | |
Liberty Broadband Corp. | 6.6 | |
LICT Corp. | 6.4 | |
HEICO Corp. | 4.7 | |
LKQ Corp. | 4.7 | |
Laboratory Corp. of America Holdings | 4.4 | |
CarMax, Inc. | 4.3 | |
Axalta Coating Systems Ltd. | 3.7 | |
Martin Marietta Materials, Inc. | 3.7 | |
52.6 |
Top Stock Performers | |||
Average | |||
Return | Weight | Contribution | |
Costar Group | 15.3% | 6.5% | 0.77% |
Vulcan Materials | 11.25 | 2.9 | 0.22 |
Ingersoll Rand | 2.6 | 3.0 | 0.22 |
HEICO – Class A | 8.8 | 4.3 | 0.22 |
Gartner | 14.4 | 2.3 | 0.19 |
Industry Breakdown | ||
% of Net Assets | ||
Communication Services | 24.8 | |
Industrials | 19.4 | |
Information Technology | 14.3 | |
Materials | 13.4 | |
Financials | 9.8 | |
Consumer Discretionary | 9.4 | |
Health Care | 4.4 | |
Non-Convertible Preferred Stocks | 1.1 | |
Warrants | 0.0 | |
Cash Equivalents/Other | 3.4 | |
100.0 |
Bottom Stock Performers | |||
Average | |||
Return | Weight | Contribution | |
Liberty Broadband Corp. – Series C | (36.2)% | 8.3% | (3.16)% |
CarMax, Inc. | (27.2) | 4.7 | (1.25) |
Liberty Global – Class C | (25.3) | 3.6 | (0.83) |
Perimeter Solutions | (26.1) | 3.1 | (0.84) |
Markel. | (16.2) | 3.2 | (0.55) |
All data as of 9/30/2022 unless otherwise indicated. Data quoted is past performance and current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. All investments involve risks, including possible loss of principal. Please visit weitzinvestments.com for the most recent month-end performance.
Investment results reflect applicable fees and expenses and assume all distributions are reinvested but do not reflect the deduction of taxes an investor would pay on distributions or share redemptions. The Fund has entered into fee waiver and/or expense reimbursement arrangements with the Investment Advisor by which the Advisor has contractually agreed to waive a portion of the Advisor’s fee and reimburse certain expenses (excluding taxes, interest, brokerage costs, acquired fund fees and expenses and extraordinary expenses) to limit the total annual fund operating expenses of the Fund’s average daily net assets through 07/31/2023. If this arrangement had not been in place, the performance results would have been lower. The net expense ratio reflects the total annual fund operating expenses of the Fund after taking into account any such fee waiver and/or expense reimbursement. Net and gross expense ratios are as of the Fund’s most recent prospectus.
See page 9 for additional performance disclosures. See page 81 for a description of all indices. See page 82 for a Glossary of Terms.
Contributions to performance are based on actual daily holdings. Returns shown are the actual quarterly returns of the security.
Source (Top Performers, Bottom Performers): Statpro
Source (Capitalization): Bloomberg Analytics
18 2022 Semi-Annual Report
NEBRASKA TAX-FREE INCOME FUND
Portfolio Manager: Tom Carney, CFA
Investment Style: Municipal-State Bond
The Nebraska Tax-Free Income Fund returned -2.94% in the third quarter compared to a -2.71% return for the Bloomberg 5-Year Municipal Bond Index. Year-to-date, the Fund’s total return was -8.04% compared to a -8.06% return for the index.
Overview
The Federal Reserve continued raising short-term interest rates in the third quarter of 2022 as inflationary pressures in the U.S. economy provided little signs of easing. The Federal Open Market Committee’s (FOMC’s) monetary actions have lifted the benchmark federal funds rate from zero at the beginning of 2022 to a range of 3.00-to-3.25% as of the end of the third quarter – with historically outsized rate hikes of 0.75% at their June, July, and September meetings. The chart below shows the unprecedented pace at which the FOMC is raising rates to get current high inflation under control. No other rate hiking cycle has begun this steeply since the 1980s (when the Fed started targeting the federal funds rate as its primary tool for conducting monetary policy). And the Fed’s newfound fondness for hiking rates appears set to continue well into 2023 with some economists predicting the benchmark federal funds rate to hit as high as 5% sometime next year.
While the steepness of the 2022 curve has negatively impacted year-to-date returns for nearly all fixed-income investors, it has also set the stage for more favorable forward returns. This can be seen in the Fund’s improved yield-to-worst (YTW) metric. As a reminder, YTW has historically been a reasonable predictor of forward returns. The Fund's YTW increased from 2.6% on June 30, 2022, to 3.5% on September 30, 2022 – and up from 0.8% on December 31, 2021.
Municipal bonds modestly underperformed Treasuries in the third quarter as yield ratios of municipal bonds relative to comparable U.S. Treasuries moved higher. The ratio of the 5-year AAA-rated municipal bond to the 5-year Treasury, for example, increased from 75% on June 30, 2022, to 77% on September 30, 2022. This ratio, which registered a 20+ year monthly low at year-end 2021 and is now modestly below the 10-year average, remains a reasonably useful tool in measuring the relative attractiveness of tax-free municipal bonds compared to U.S. Treasury bonds.
Top Quarterly Contributors
• | No segment generated positive results in the quarter. |
Top Quarterly Detractors
• | School district general obligation bonds issued by Papillion-La Vista, Nebraska, School District; Sarpy County, Nebraska, School District (Bellevue), Wayne County, Nebraska, School District; and Cass County School District (Weeping Water) |
• | Tax-supported lease revenue bonds issued by Omaha, Nebraska, Public Facilities Corporation; Sarpy County, Nebraska, certificates of participation; and Papillion, Nebraska, Municipal Facilities Corporation |
• | Combined utility revenue bonds issued by Dawson, Grand Island, Columbus, and Municipal Energy Agency of Nebraska |
• | City general obligation bonds issued by Bellevue, Columbus, and Norfolk, Nebraska |
• | General revenue bonds issued by Boys Town Village |
• | Higher education revenue bonds issued by Nebraska State College Facilities Corporation, University of Nebraska, and Saline County (Doane University) |
• | Electricity and public power revenue bonds issued by Omaha Public Power District, Nebraska Public Power District, and Public Power Generation Agency of Nebraska (Whelan Energy Project) |
• | County general obligation bonds issued by Seward County, Nebraska; and Bexar County, Texas |
• | Water and sewer revenue bonds issued by Omaha Sanitary Sewer |
• | Hospital revenue bonds issued by Douglas County, Nebraska, Health Facilities (Nebraska Medicine) |
• | Airport revenue bonds issued by Austin, Texas; Lincoln, Nebraska; and San Diego County, California |
• | Single-family housing revenue bonds issued by Nebraska Investment Finance Authority |
Turning to portfolio metrics, the average effective duration of the Fund decreased in the quarter to 3.9 years on September 30, 2022, from 4.0 years on June 30, 2022. Average effective maturity increased to 4.8 years from 4.1 years over the same time period. Overall asset quality remains high, with approximately 93% rated A or better by one or more of the nationally recognized statistical rating organizations.
While it is particularly unpleasant to report on this year’s Fund performance, we are pleased to report that the underlying fundamentals (credit quality) of most of our investments continue to perform at or better than original expectations – and we believe potential forward returns have improved dramatically as highlighted by the Fund’s improved yield-to-worst.
Yogi Berra – the famous baseball player well-known for his many Yogi-isms – is credited with saying “it’s tough to make predictions, especially about the future.” Good advice, especially in credit and equity markets. Our role as money managers, per one of the founders of Gavekal Research, is to “adapt” to market environments and not forecast.
There is no mistaking that this has been an historically challenging year for municipal bond investors – the worst on record as highlighted by the chart below of Bloomberg investment-grade and high-yield municipal indexes.
2022 Semi-Annual Report 19
We believe the Fed’s tightening cycle is in the later innings,
possibly near the seventh-inning stretch in baseball parlance.
Timing is always uncertain, and there could still be some
price declines ahead. But despite of the uncertainty as well as
unsatisfactory year-to-date performance, we are increasingly
encouraged by the forward return prospects of the Fund’s new
and existing investments.
Following are additional details regarding the breakdown of our
holdings. Our investments are broad, and they are all backed by
a consistent philosophy: we strive to own only those investments
we believe compensate us for the incremental credit risk.
Our overall goal is to invest in a portfolio of bonds of varying
maturities that we believe offer attractive risk-adjusted returns,
taking into consideration the general level of interest rates and
the credit quality of each investment.
Definitions: Average effective duration provides a measure of a fund’s
interest-rate sensitivity. The longer a fund’s duration, the more sensitive
the fund is to shifts in interest rates. Average effective maturity is the
weighted average of the maturities of a fund’s underlying bonds. Yield to
worst (YTW) is the lowest potential yield that can be received on a bond
portfolio without the underlying issuers defaulting.
20 2022 Semi-Annual Report
Returns | |||||||||||||||||
Annualized | |||||||||||||||||
Since | |||||||||||||||||
Inception | Net | Gross | |||||||||||||||
QTD | YTD | 1 YR | 3 YR | 10 YR | 20 YR | (12/29/06) | Expense | Expense | |||||||||
WNTFX | (2.94)% | (8.04)% | (7.66)% | (1.35)% | 0.44% | 1.99% | 4.01% | 0.45% | 1.02% | ||||||||
Bloomberg 5-Year Municipal Bond Index | (2.71) | (8.06) | (8.03) | (0.94) | 1.20 | 2.77 | N/A |
30-Day SEC Yield | |||
Share Class | Subsidized | Unsubsidized | |
2.38% | 2.15% |
Fixed Income Attributes | |
Portfolio Summary | |
Average Maturity | 6.1 years |
Average Effective Maturity | 4.8 years |
Average Duration | 4.1 years |
Average Effective Duration | 3.9 years |
Average Coupon | 3.4% |
State Breakdown | ||
% of Net Assets | ||
Nebraska | 84.0 | |
Texas | 3.0 | |
New Mexico | 1.3 | |
Washington | 1.1 | |
California | 0.7 | |
Florida | 0.7 | |
Utah | 0.4 | |
Colorado | 0.3 | |
Arizona | 0.3 | |
Cash Equivalents/Other | 8.2 | |
100.0 |
Maturity Distribution | ||
Maturity Type | % of Portfolio | |
Cash Equivalents | 7.3 | |
Less than 1 Year | 11.0 | |
1 -3 Years | 13.0 | |
3 - 5 Years | 32.8 | |
5 - 7 Years | 11.9 | |
7 - 10 Years | 13.6 | |
10 Years or more | 10.4 | |
100.0 | ||
Credit Quality | ||
Underlying Securities | % of Portfolio | |
AAA | 6.2 | |
AA | 61.6 | |
A | 21.1 | |
BBB | 0.9 | |
Non-Rated | 2.9 | |
Cash Equivalents | 7.3 | |
100.0 |
Sector Breakdown | |
% of Net Assets | |
Power | 14.5 |
Hospital | 9.7 |
Lease | 9.3 |
General | 6.9 |
Water/Sewer | 6.3 |
Certificates of Participation | 5.2 |
Airport/Transportation | 3.2 |
Housing | 2.6 |
Higher Education | 2.0 |
Revenue | 59.7 |
School District | 13.1 |
County | 6.5 |
City/Subdivision | 5.2 |
State/Commonwealth | 0.7 |
General Obligation | 25.5 |
Escrow/Pre-Refunded | 6.6 |
Cash Equivalents/Other | 8.2 |
100.0 |
All data as of 9/30/2022 unless otherwise indicated. Data quoted is past performance and current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. All investments involve risks, including possible loss of principal. Please visit weitzinvestments.com for the most recent month-end performance.
Investment results reflect applicable fees and expenses and assume all distributions are reinvested but do not reflect the deduction of taxes an investor would pay on distributions or share redemptions. The Fund has entered into fee waiver and/or expense reimbursement arrangements with the Investment Advisor by which the Advisor has contractually agreed to waive a portion of the Advisor’s fee and reimburse certain expenses (excluding taxes, interest, brokerage costs, acquired fund fees and expenses and extraordinary expenses) to limit the total annual fund operating expenses of the Fund’s average daily net assets through 07/31/2023. If this arrangement had not been in place, the performance results would have been lower. The net expense ratio reflects the total annual fund operating expenses of the Fund after taking into account any such fee waiver and/or expense reimbursement. Net and gross expense ratios are as of the Fund’s most recent prospectus.
See page 9 for additional performance disclosures. See page 81 for a description of all indices. See page 82 for a Glossary of Terms.
Credit ratings are assigned to underlying securities utilizing ratings from a Nationally Recognized Statistical Rating Organization (NRSRO) such as Moody’s and Fitch, or other rating agencies and applying the following hierarchy: security is determined to be Investment Grade if it has been rated at least BBB- by one credit rating agency; once determined to be Investment Grade (BBB- and above) or Non-Investment Grade (BB+ and below) where multiple ratings are available, then the lowest rating is assigned. Ratings are shown in the Fitch scale (e.g., AAA). Ratings and portfolio credit quality may change over time. The Fund itself has not been rated by a credit rating agency.
Income from municipal securities is generally free from federal taxes and state taxes for residents of the issuing state. While the interest income is tax-free, capital gains, if any, will be subject to taxes. Income for some investors may be subject to the federal Alternative Minimum Tax (AMT).
Source (Fixed Income Attributes, Credit Quality, and Maturity Distribution): Bloomberg Analytics
2022 Semi-Annual Report 21
PARTNERS III OPPORTUNITY FUND
Portfolio Managers: Wally Weitz, CFA & Drew Weitz
Investment Style: Multi-Cap Alternative
The Partners III Opportunity Fund’s Institutional Class returned -10.08% in the third quarter, compared to -4.46% for the Russell 3000. Year-to-date, the Fund’s Institutional Class returned -26.46% compared to -24.62% for the Russell 3000.
The third quarter was a tale of two halves. Stocks rallied in the early going as modestly softer economic readings led many to extrapolate that the Federal Reserve might at least slow down the pace of interest rate hikes and potentially even cut rates in 2023. By mid-August, our portfolio had gained nearly 12%. This so-called “Fed Pivot” was not to be, however. In late August, Fed Chairman Jerome Powell used his Jackson Hole speech to clearly state the inflation fight was far from over and that history suggested loosening restrictions (i.e., cutting interest rates) too soon was more dangerous than remaining restrictive longer. The conclusions were unambiguous and led stocks to make a pivot of their own. By quarter-end, the market made a new bear market low.
The drawdown was swift, and few of our holdings were spared. Liberty Broadband (26% owner of broadband provider Charter Communications) was the Fund’s largest detractor in the quarter and the second largest year-to-date detractor. Charter’s skeptics point to new wireless broadband services and expansion plans from fiber operators as reasons customer growth is permanently impaired. We believe this underestimates the speed and capacity challenges faced by wireless providers, and also ignores the fact that Charter already competes successfully with fiber in over 40% of its footprint today. Charter’s own network expansion and fast-growing mobile business give us confidence that customer growth can, and will, be resuscitated.
Carmax and Liberty Global also earned dishonorable mentions for the quarter and year-to-date. In Carmax’s case, it is a challenging environment for used car sales, to say the least. Vehicle prices remain stubbornly high, and higher interest rates equate to higher car payments for consumers. The entire industry faces these challenges, but thanks to its national scale and investments in its omnichannel retail model, we believe Carmax is best positioned to weather the storm and is poised for further market share gains. As for Liberty Global, the company owns a collection of European broadband providers that collectively trade at a discount to our “sum of the parts” value estimation. In recent quarters, their portfolio has had relatively stable, if uninspiring, results. The surging U.S. dollar dampens reported earnings, but management’s focus remains on growing local currency cash flows and identifying strategic opportunities to recognize the unappreciated value of their assets.
Facebook parent Meta Platforms was the portfolio’s top year-to-date detractor. Fears of a recession and a resultant pullback in ad spending have added insult to injury as Meta attempts to gain traction with its short-form video product called Reels. Meta’s progress in monetizing Reels and the heavyweight bout with video-sharing app TikTok for consumers’ attention are clearly the main event, but we are also encouraged that, behind the scenes, management is taking a more disciplined approach to investing and expense management. Investors looking for greater detail on Meta are encouraged to read equity analyst Jon Baker’s Analyst Corner feature from earlier this year.
Against this bear market backdrop, there were still some bright spots. Signs of reaccelerating growth at multifamily rental marketplace Apartments.com powered CoStar Group to the top of our quarterly contributors table. Investors also cheered the company’s inclusion into the S&P 500 index. As for other contributors, improving net interest margins and an earlier-than-anticipated return of share repurchases helped Charles Schwab produce an outsized gain. Liberty SiriusXM and Amazon.com’s more modest positive returns were amplified by their larger position sizes.
Portfolio activity was tilted toward sales during the quarter, most materially for Black Knight, CoStar Group and Dun & Bradstreet. Black Knight is awaiting regulatory approval for its sale to Intercontinental Exchange. Although the deal has put a “floor” under its stock price, we trimmed nearly half the position, hedging a potential risk that the deal is blocked. We also sold roughly half of our CoStar shares as the stock rallied strongly on its positive earnings announcement. Finally, progress at Dun & Bradstreet has been slower than we hoped. Given the steep repricing of other, higher-conviction holdings, we elected to close our position and reinvest the proceeds elsewhere. Our short position was unchanged in the quarter (3% of net assets), and the portfolio ended the quarter with an effective net long position of 91% of net assets.
As we wrote in this quarter’s Value Matters, fear is driving the market these days, and near-term disappointments are being projected into perpetuity. It is a difficult time to be sure, but not permanently so. We cannot predict when the selling will potentially end, but we feel good about the businesses we own and their long-term earnings potential. We estimate that our portfolio price-to-value ratio is in the low 60s as of quarter-end, a level that we believe can generate strong returns in the coming years.
Definitions: Effective net is the effective long (the sum of the portfolio’s long positions, such as common stocks, or derivatives where the price increases when an index or position rises) minus the effective short (the sum of the portfolio’s short positions, such as derivatives where the price increases when an index or position falls).
22 2022 Semi-Annual Report
Returns | ||||||||||||||||||||
Annualized | ||||||||||||||||||||
Since | ||||||||||||||||||||
Inception | Net | Gross | ||||||||||||||||||
QTD | YTD | 1 YR | 3 YR | 5 YR | 10 YR | 20 YR | (6/1/83) | Expense | Expense | |||||||||||
WPOIX - Investor Class | (10.22)% | (26.64)% | (26.07)% | (2.14)% | 1.81% | 5.09% | 8.18% | 10.96% | 1.86% | 1.86% | ||||||||||
WPOPX - Institutional Class | (10.08) | (26.46) | (25.80) | (1.62) | 2.37 | 5.56 | 8.44 | 11.10 | 1.43 | 1.43 | ||||||||||
Russell 3000 Index | (4.46) | (24.62) | (17.63) | 7.69 | 8.61 | 11.38 | 9.92 | 10.50 | ||||||||||||
S&P 500 Index | (4.88) | (23.87) | (15.47) | 8.15 | 9.23 | 11.69 | 9.83 | 10.76 |
Top 10 Stock Holdings | ||
% of Net Assets | ||
Berkshire Hathaway, Inc. | 10.6 | |
Alphabet, Inc. | 6.5 | |
Visa, Inc. | 5.6 | |
Fidelity National Information Services, Inc. | 5.4 | |
Amazon.com, Inc. | 5.4 | |
Liberty Media Corp-Liberty SiriusXM | 5.3 | |
Markel Corp. | 5.2 | |
Meta Platforms, Inc. | 4.9 | |
Liberty Broadband Corp. | 4.8 | |
Mastercard, Inc. | 4.4 | |
58.1 |
Top Stock Performers | |||
Average | |||
Return | Weight | Contribution | |
Costar Group | 14.9% | 3.6% | 0.55% |
Charles Schwab | 14.1 | 3.3 | 0.31 |
Liberty Media | 5.1 | 5.2 | 0.22 |
SPDR S&P 500 | (5.3) | (3.2) | 0.21 |
Amazon | 6.4 | 5.1 | 0.10 |
Industry Breakdown | ||
% of Net Assets | ||
Information Technology | 26.5 | |
Communication Services | 25.3 | |
Financials | 19.7 | |
Consumer Discretionary | 9.4 | |
Health Care | 4.9 | |
Industrials | 3.3 | |
Materials | 3.0 | |
Non-Convertible Preferred Stocks | 2.2 | |
Short-Term Securities Held as Collateral for Securities on Loan | 1.9 | |
Warrants | 0.0 | |
Securities Sold Short | (3.4) | |
Short Proceeds/Other | 7.2 | |
100.0 |
Bottom Stock Performers | |||
Average | |||
Return | Weight | Contribution | |
Liberty Broadband – Series C | (36.2)% | 5.8% | (2.15)% |
CarMax, Inc. | (27.1) | 4.2 | (1.20) |
Liberty Global – Class C | (25.3) | 4.2 | (1.08) |
Fidelity National Information | (17.1) | 5.7 | (0.97) |
Perimeter Solutions | (26.1) | 3.3 | (0.90) |
All data as of 9/30/2022 unless otherwise indicated. Data quoted is past performance and current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. All investments involve risks, including possible loss of principal. Please visit weitzinvestments.com for the most recent month-end performance.
Investment results reflect applicable fees and expenses and assume all distributions are reinvested but do not reflect the deduction of taxes an investor would pay on distributions or share redemptions. Net and gross expense ratios are as of the Fund’s most recent prospectus.
See page 9 for additional performance disclosures. See page 81 for a description of all indices. See page 82 for a Glossary of Terms.
Contributions to performance are based on actual daily holdings. Returns shown are the actual quarterly returns of the security.
Source (Top Performers, Bottom Performers): Statpro
Source (Capitalization): Bloomberg Analytics
2022 Semi-Annual Report 23
PARTNERS VALUE FUND
Portfolio Managers: Wally Weitz, CFA, Brad Hinton, CFA & Drew Weitz
Investment Style: Multi-Cap Value
The Partners Value Fund’s Institutional Class returned -6.32% for the third quarter compared to -4.46% for the Russell 3000 and -4.88% for the S&P 500. Year-to-date, the Fund’s Institutional Class has returned -27.22% compared to -24.62% for the Russell 3000 and -23.87% for the S&P 500.
The third quarter was another adventure for investors. Stocks staged a classic bear market rally for the better part of two months. Then in late August, Fed Chair Jerome Powell quickly changed the mood at the Jackson Hole Economic Symposium. He opened his speech by saying “Today, my remarks will be shorter, my focus narrower, and my message more direct.” Direct, it was. Job one would be taming inflation. To that end, the Fed would continue to raise interest rates via “forceful and rapid steps to moderate demand.” Chair Powell suggested clearly that the path ahead would “bring some pain to households and businesses.” Investors got the message and scrambled for cover, with the broad stock indexes declining to fresh 2022 lows at quarter-end.
Monetary policy works with a meaningful lag. While we cannot predict the full economic impact of the Fed’s actions, it seems clear that there will be both intended and unintended consequences along the way. Near-term earnings are the wildcard with a potential recession looming on the horizon. In our view, the case for owning durable, resilient, and adaptable businesses has never been stronger. We like our collection of companies, and we think their stocks are generally priced at sensible (or better) levels.
CoStar Group, Charles Schwab, Vulcan Materials, and Gartner were the Fund’s largest quarterly contributors, all posting double-digit returns. Liberty Broadband, CarMax, Liberty Global, and Alphabet were the Fund’s largest quarterly detractors, with declines ranging from 12% at Alphabet to 36% at Liberty Broadband. Perhaps fitting for a bear market, we think the “winners” and the “losers” on the list continue to trade at discounts to our value estimates. We still own them all.
Liberty Broadband, Alphabet, Meta Platforms, CarMax, and Liberty Global were the Fund’s largest year-to-date detractors. New “Class of 2022” position in Danaher was the Fund’s only positive year-to-date contributor. Gartner, CoStar Group, Charles Schwab, and AutoZone were also relative bright spots. These stocks held up far better than the market, helping to cushion the Fund’s year-to-date decline.
Cable broadband stocks have been pummeled as lackluster customer additions fell well short of expectations. Competitive intensity has increased as fixed wireless internet and fiber network alternatives gain subscribers. While more competition is never helpful, our broad take is that current trends overstate the long-term threat. Liberty Broadband’s primary asset is a 26% stake in Charter Communications. Charter is not sitting still; the company is adapting via footprint expansion into underserved areas, price-advantaged mobile line growth, and so on. Charter’s hefty free cash flows are valuable in the hands of proven, astute capital allocators. Time will tell, but to paraphrase country music artist Merle Haggard, we do not yet think cable’s good times are really over for good.
CarMax and Liberty Global detracted from results, and unfortunately both stocks may require some patience. Used car demand softened as vehicle prices remained high and borrowing costs rose, reducing affordability. CarMax’s unit volumes fell, while expenses continued to rise as the company invests for the omnichannel future. While the company continued to gain market share, near-term earnings will suffer. We think CarMax is well-positioned to weather the cyclical storm, but for now the stock is in the penalty box. Liberty Global owns a collection of European broadband providers that trade at a clear discount to our value estimate. In this bear market, investors have little tolerance for structural complexity, heavy U.K. exposure, stable but uninspiring operating results, and sum-of-the-parts math. The company is committed to taking advantage of relative valuation disparities, but bold strategic moves take time. We think it will be worth the wait.
CoStar Group posted strong quarterly results across its main business lines, and trends notably improved in their closely watched Apartments.com business. CoStar was also added to the S&P 500, providing another demand boost for the stock. We sold some shares into the price strength simply to keep a lid on position size. We trimmed Dun & Bradstreet and Liberty Latin America to concentrate in higher-conviction ideas, and we lightly pared the Fund’s Liberty Global holdings to match our risk appetite.
We believe that investing in businesses of all sizes, using our Quality at a Discount framework, is an enduring advantage of a multi-cap strategy. Valuation remains our North Star, and we think our stocks are priced at increasing discounts to business value. And while things may seem cloudy now, our current estimate is that the portfolio trades at a price-to-value in the mid 60s – a level that suggests ample long-term return potential from both our mid- and large-cap holdings.
24 2022 Semi-Annual Report
Returns | ||||||||||||||||||||
Annualized | ||||||||||||||||||||
Since | ||||||||||||||||||||
Inception | Net | Gross | ||||||||||||||||||
QTD | YTD | 1 YR | 3 YR | 5 YR | 10 YR | 20 YR | (6/1/83) | Expense | Expense | |||||||||||
WPVLX - Investor Class | (6.39)% | (27.32)% | (22.87)% | 1.13% | 3.01% | 5.93% | 6.87% | 10.69% | 1.09% | 1.09% | ||||||||||
WPVIX - Institutional Class | (6.32) | (27.22) | (22.72) | 1.34 | 3.25 | 6.12 | 6.97 | 10.74 | 0.89 | 0.91 | ||||||||||
Russell 3000 Index | (4.46) | (24.62) | (17.63) | 7.69 | 8.61 | 11.38 | 9.92 | 10.50 | ||||||||||||
S&P 500 Index | (4.88) | (23.87) | (15.47) | 8.15 | 9.23 | 11.69 | 9.83 | 10.76 |
Top 10 Stock Holdings | ||
% of Net Assets | ||
Berkshire Hathaway, Inc. | 7.1 | |
Alphabet, Inc. | 7.0 | |
CoStar Group, Inc. | 5.6 | |
Liberty Media Corp-Liberty SiriusXM | 5.6 | |
Visa, Inc. | 4.3 | |
Mastercard, Inc. | 3.8 | |
HEICO Corp. | 3.6 | |
Aon plc | 3.5 | |
LKQ Corp. | 3.5 | |
Vulcan Materials Co. | 3.5 | |
47.5 |
Industry Breakdown | ||
% of Net Assets | ||
Communication Services | 23.1 | |
Financials | 21.1 | |
Information Technology | 19.8 | |
Industrials | 12.5 | |
Materials | 9.5 | |
Consumer Discretionary | 6.3 | |
Health Care | 5.9 | |
Cash Equivalents/Other | 1.8 | |
100.0 |
Top Stock Performers | |||
Average | |||
Return | Weight | Contribution | |
Costar Group | 15.2% | 5.1% | 0.67% |
Charles Schwab | 14.1 | 2.8 | 0.28 |
Vulcan Materials | 11.3 | 3.2 | 0.26 |
Gartner | 14.2 | 2.3 | 0.21 |
HEICO – Class A | 8.8 | 3.4 | 0.18 |
Bottom Stock Performers | |||
Average | |||
Return | Weight | Contribution | |
Liberty Broadband – Series C | (36.2)% | 4.2% | (1.61)% |
CarMax, Inc. | (27.0) | 3.4 | (0.90) |
Liberty Global – Class C | (25.3) | 3.5 | (0.84) |
Alphabet – Class C | (12.1) | 7.2 | (0.82) |
Markel | (16.2) | 3.2 | (0.55) |
All data as of 9/30/2022 unless otherwise indicated. Data quoted is past performance and current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. All investments involve risks, including possible loss of principal. Please visit weitzinvestments.com for the most recent month-end performance.
Investment results reflect applicable fees and expenses and assume all distributions are reinvested but do not reflect the deduction of taxes an investor would pay on distributions or share redemptions. The Fund has entered into fee waiver and/or expense reimbursement arrangements with the Investment Advisor by which the Advisor has contractually agreed to waive a portion of the Advisor’s fee and reimburse certain expenses (excluding taxes, interest, brokerage costs, acquired fund fees and expenses and extraordinary expenses) to limit the total annual fund operating expenses of the Fund’s average daily net assets through 07/31/2023. If this arrangement had not been in place, the performance results would have been lower. The net expense ratio reflects the total annual fund operating expenses of the Fund after taking into account any such fee waiver and/or expense reimbursement. Net and gross expense ratios are as of the Fund’s most recent prospectus.
See page 9 for additional performance disclosures. See page 81 for a description of all indices. See page 82 for a Glossary of Terms.
Contributions to performance are based on actual daily holdings. Returns shown are the actual quarterly returns of the security.
Source (Top Performers, Bottom Performers): Statpro
Source (Capitalization): Bloomberg Analytics
2022 Semi-Annual Report 25
SHORT DURATION INCOME FUND
Portfolio Managers: Tom Carney, CFA & Nolan Anderson
Investment Style: Short-Term Bond
The Short Duration Income Fund’s Institutional Class returned -0.80% in the third quarter compared to a -1.50% return for the Bloomberg 1-3 Year U.S. Aggregate Index. Year-to-date, the Fund’s Institutional Class returned -3.83% compared to a -4.58% return for the index. Negative absolute results are never pleasant to report, especially rare back-to-back-to-back quarters of negative results – a historic first for the Fund. Longer-term results (3-, 5-, and 10-year) continue to outpace the index.
Overview
The Federal Reserve continued raising short-term interest rates in the third quarter as inflationary pressures in the U.S. economy provided little signs of easing. The Federal Open Market Committee’s (FOMC’s) monetary actions have lifted the benchmark federal funds rate from zero at the beginning of 2022 to a range of 3.00-to-3.25% as of the end of the third quarter – with historically outsized rate hikes of 0.75% at their June, July, and September meetings. The chart below shows the unprecedented pace at which the FOMC is raising rates to get high inflation under control. No other rate hiking cycle has begun this steeply since the 1980s (when the Fed started targeting the federal funds rate as its primary tool for conducting monetary policy). And the Fed’s newfound fondness for hiking rates appears set to continue well into 2023 with some economists predicting the benchmark federal funds rate to hit as high as 5% sometime next year.
While the steepness of the 2022 curve has negatively impacted year-to-date returns for nearly all fixed income investors, it has also set the stage for more favorable forward returns. This can be seen in the Fund’s improved yield-to-worst (YTW) metric. As a reminder, YTW has historically been a reasonable predictor of forward returns. The Fund's YTW increased from 4.3% on June 30, 2022, to 5.6% on September 30, 2022 – exceeding the index’s YTW of 4.6% on September 30. The positive variance is attributable to timely investments in the third quarter (detailed below) and to the Fund’s approximately 23% weight in floating-rate securities versus no exposure in the index. The YTW for our floating-rate securities incorporates the market’s current expectations for higher short-term interest rates of more than 4% by year-end. The improved year-over-year YTW is also worth highlighting (box below). The Fund’s YTW remains meaningfully higher than the Bloomberg 1-3 Year U.S. Aggregate index, while the Fund’s interest rate risk (duration) is much lower.
YTW / Duration Analysis | Weitz Short Duration Income Fund vs. Bloomberg 1-3 Yr U.S. Agg | ||||
9/30/2021 | 9/30/2022 | |||
Weitz Short: | Change | % | ||
Yield to Worst | 1.15% | 5.68% | 4.53% | 394% |
Overall Average Duration | 1.60 | 1.52 | (0.08) | (5) |
9/30/2021 | 9/30/2022 | |||
1-3 Yr U.S. Agg: | Change | % | ||
Yield to Worst | 0.40% | 4.57% | 4.17% | 1,043% |
Overall Average Duration | 1.85 | 1.82 | (0.03) | (2) |
Portfolio Positioning
The table below shows the change in allocation to various sectors, from the prior quarter and from the prior year. This summary provides a view over time of how we have allocated capital. Since our goal is to invest in sectors that we believe offer the best risk-adjusted returns, our allocations may change significantly over time.
9/30/2022 | 6/30/2022 | Qtr Over | 9/30/2021 | Yr Over | |
Current | Previous | Qtr | Previous | Yr | |
Sector (% Net Assets) | Quarter | Quarter | Change | Year | Change |
Corporate Bonds | 12.6 | 12.5 | 0.1 | 15.9 | -3.3 |
Corporate Convertible Bonds | 2.3 | 2.3 | 0.0 | 2.7 | -0.4 |
Asset-Backed Securities (ABS) | 36.1 | 34.4 | 1.7 | 29.0 | 7.1 |
Corporate Collateralized | |||||
Loan Obligations (CLO)* | 12.0 | 11.5 | 0.5 | 10.6 | 1.4 |
Commercial Mortgage- | |||||
Backed Securities (CMBS) | 11.0 | 11.2 | -0.2 | 11.8 | -0.8 |
Agency Mortgage-Backed | |||||
(MBS) | 4.0 | 4.7 | -0.7 | 7.4 | -3.4 |
Non-Agency Mortgage- | |||||
Backed (RMBS) | 5.9 | 6.7 | -0.8 | 8.0 | -2.1 |
Taxable Municipal Bonds | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
U.S. Treasury | 25.3 | 24.8 | 0.5 | 20.9 | 4.4 |
Common Stocks | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
Cash & Equivalents | 2.8 | 3.4 | -0.6 | 4.2 | -1.4 |
Total (does not include the | |||||
CLO line) | 100.0 | 100.0 | 99.9 | ||
High Yield** | 5.0 | 5.2 | -0.2 | 5.3 | -0.3 |
Average Effective Duration | |||||
(years) | 1.5 | 1.6 | -0.1 | 1.6 | -0.1 |
Average Effective Maturity | |||||
(years) | 3.1 | 3.2 | -0.1 | 2.6 | 0.5 |
*Corporate CLOs are included in the ABS segment in the Fund’s schedule of investments but are additionally called out separately for the purposes of the discussion.
**High-Yield exposure (as of 09/30/2022) consists of investments in the Corporate, Corporate Convertible, ABS and CMBS sectors.
Totals may be greater or less than 100 due to rounding.
Investment activity remained strong in the third quarter as we sourced a little more than $106 million of new investments for the Fund, exceeding the Fund’s monthly/quarterly paydowns and maturities of securities (approximately $60 million in the third quarter). By design, the Fund has a distinct feature of having about 25%-30% of its holdings paydown or mature in any given year. This allows for frequent reinvestment of investor capital into areas of the fixed-income market that we believe provide the best current relative value opportunities. While this continuous reinvestment has been an occasional headwind as rates fell to historic lows in recent years, it should provide (and has provided) return upside when interest rates, particularly short-term rates, move higher as has been the case so far in 2022.
Noteworthy additions included:
26 2022 Semi-Annual Report
• | Asset-backed securities (ABS) issued by Lending Point (LDPT), Foresight Capital (FCRT), Ladder (LAD), Pagaya (PAID), Pawnee (PWNE), Conn’s (CONN) and Marlette (MFT), which are backed by automobile receivables, equipment, and unsecured consumer loans. Like most of our other ABS investments, these third quarter investments are short average life (less than 2.0 years), senior securities from recent securitizations. We had refrained from investing in most auto ABS in 2021 as we believed both base rates and credit spreads were too low to participate. Those decisions proved out in 2022 as nominal returns improved materially from rising base rates and credit spreads – all helping to meaningfully improve the Fund’s forward return prospects via improved an improved YTW metric. |
• | Treasury securities, principally in the 2-to-3-year area, with late quarter additions in 5-year Treasuries. |
• | Commercial real estate collateralized loan obligations (CRE CLOs) and middle-market collateralized loan obligations (MM CLOs) issued by Capital Four (C4US), Loancore Capital (LNCR), and Owl Rock (OR). |
In terms of overall portfolio metrics, from June 30, 2022, to September 30, 2022, the Fund’s average effective maturity decreased from 3.2 years to 3.1 years, and its average effective duration declined from 1.6 years to 1.5 years. These measures provide a guide to the Fund’s interest rate sensitivity. A lower average effective maturity and shorter average effective duration reduce the Fund’s price sensitivity to changes in interest rates (either up or down). Another portfolio attribute to re-highlight is the Fund’s investments in floating-rate securities (mainly MM CLOs and CRE CLOs) – representing about 23% of Fund assets as of September 30, 2022. These investments have experienced increased coupon income due to the year-to-date tightening moves (increases in short-term interest rates) that the Fed has undertaken to combat inflation.
As of September 30, 2022, the Fund’s high-yield exposure as a percent of net assets was 5.0%, down from 5.2% on June 30, 2022. In last quarter’s Fund commentary, we commented favorably on high yield valuations – but a significant rally at the outset of the third quarter reduced favorable investment opportunities. Weakness in credit markets broadly as the third quarter came to a close has increased the relative attractiveness of certain high yield credits. Given the Fund can invest up to 15% of net assets in high yield, we are well-positioned to take advantage of any further valuation discrepancies and opportunities in the high yield area. Our approach, however, will most likely be focused on what might be termed “higher-quality high-yield.” That is, those companies whose business and balance sheet is strong and who can weather an economic disturbance caused by a possible recession.
Top Quarterly Contributors
• | CLOs (both CRE CLOs and MM CLOs) were the funds top quarterly contributors as meaningfully rising coupon income from adjustable-rate investments more than offset market value declines. ABS investments broadly and corporate bonds issued by Redwood Trust and Starwood Capital were also noteworthy contributors. |
Top Quarterly Detractors
• | U.S. Treasury, agency, and non-agency residential mortgage-backed securities (RMBS) were the primary detractors in the quarter as rates rose and mortgage-backed spreads widened. |
While it is particularly unpleasant to report on this year’s Fund performance, we are pleased to report that most of our investments continue to have underlying fundamentals (credit quality) that match, or exceed, original expectations. This solid year-to-date credit performance has been recognized by rating agencies with meaningfully more upgrades to credit ratings than downgrades (more than 20-to-1). Additionally, prepayments have allowed for reinvestment at meaningfully higher returns, helping to enhance our YTW of 5.6% at quarter-end.
Yogi Berra – the famous baseball player well-known for his many Yogi-isms – is credited with saying “it's tough to make predictions, especially about the future.” Good advice, especially in credit and equity markets. Our role as money managers, per one of the founders of Gavekal Research, is to “adapt” to market environments and not forecast.
Widespread worry/concerns/fears/confusion about the macro environment (further inflation, stagflation, possible recession, consumer spending slowdown, etc., etc.) often present opportunities for the fundamental investor. As a result, we are finding the best risk-adjusted return opportunities for the Weitz Short Duration Income Fund since the COVID pandemic. We are proceeding with caution, but with Treasury yields at or above 4% and higher-quality, investment-grade yields on offer at 5-7%, we believe that now may be a good time for investors to consider adding to their fixed income allocation.
We believe the Fed’s tightening cycle is in the later innings, possibly near the seventh-inning stretch in baseball parlance. Timing is always uncertain, and there could still be some price declines ahead. But despite the uncertainty as well as unsatisfactory year-to-date performance, we are increasingly encouraged by the forward return prospects of the Fund’s new and existing investments.
Definitions: Average effective duration provides a measure of a fund’s interest-rate sensitivity. The longer a fund’s duration, the more sensitive the fund is to shifts in interest rates. Average effective maturity is the weighted average of the maturities of a fund’s underlying bonds. Investment Grade Bonds are those securities rated at least BBB-. Non-Investment Grade Bonds are those securities (commonly referred to as “high yield” or “junk” bonds) rated BB+ and below. Middle market refers to smaller companies, generally with earnings before interest, taxes, and amortization of generally less than $75 million. Yield to worst (YTW) is the lowest potential yield that can be received on a bond portfolio without the underlying issuers defaulting.
2022 Semi-Annual Report 27
Returns | ||||||||||||||||||||
Annualized | ||||||||||||||||||||
Since | ||||||||||||||||||||
Inception | Net | Gross | ||||||||||||||||||
QTD | YTD | 1 YR | 3 YR | 5 YR | 10 YR | 20 YR | (8/1/11) | Expense | Expense | |||||||||||
WSHNX - Investor Class | (0.73)% | (3.86)% | (4.11)% | 0.25% | 1.04% | 1.26% | 2.90% | 4.54% | 0.55% | 0.90% | ||||||||||
WEFIX - Institutional Class | (0.80) | (3.83) | (4.06) | 0.31 | 1.16 | 1.43 | 3.00 | 4.60 | 0.48 | 0.62 | ||||||||||
Bloomberg 1-3 Year U.S. Aggregate | ||||||||||||||||||||
Index | (1.50) | (4.58) | (5.11) | (0.52) | 0.64 | 0.78 | 2.03 | N/A |
30-Day SEC Yield | ||||
Share Class | Subsidized | Unsubsidized | ||
Investor | 3.39% | 3.28% | ||
Institutional | 3.47 | 3.34 |
Fixed Income Attributes | |
Portfolio Summary | |
Average Maturity | 3.0 years |
Average Effective Maturity | 3.1 years |
Average Duration | 2.0 years |
Average Effective Duration | 1.5 years |
Average Coupon | 3.1% |
Maturity Distribution | ||
Maturity | % of Portfolio | |
Cash Equivalents | 2.5 | |
Less than 1 year | 26.5 | |
1 - 3 Years | 37.3 | |
3 - 5 Years | 18.2 | |
5 - 7 Years | 9.1 | |
7 - 10 Years | 0.5 | |
10 Years or more | 5.9 | |
100.0 |
Credit Quality | ||
Underlying Securities | % of Portfolio | |
U.S. Treasury | 25.4 | |
U.S. Government Agency Mortgage | ||
Related Securities | 4.0 | |
AAA | 38.0 | |
AA | 10.0 | |
A | 3.3 | |
BBB | 11.8 | |
BB | 2.2 | |
B | 0.2 | |
CCC | 0.3 | |
Non-Rated | 2.3 | |
Cash Equivalents | 2.5 | |
100.0 |
All data as of 09/30/2022 unless otherwise indicated. Data quoted is past performance and current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. All investments involve risks, including possible loss of principal. Please visit weitzinvestments.com for the most recent month-end performance.
Investment results reflect applicable fees and expenses and assume all distributions are reinvested but do not reflect the deduction of taxes an investor would pay on distributions or share redemptions. The Fund has entered into fee waiver and/or expense reimbursement arrangements with the Investment Advisor by which the Advisor has contractually agreed to waive a portion of the Advisor’s fee and reimburse certain expenses (excluding taxes, interest, brokerage costs, acquired fund fees and expenses and extraordinary expenses) to limit the total annual fund operating expenses of the Fund’s average daily net assets through 07/31/2023. If this arrangement had not been in place, the performance results would have been lower. The net expense ratio reflects the total annual fund operating expenses of the Fund after taking into account any such fee waiver and/or expense reimbursement. Net and gross expense ratios are as of the Fund’s most recent prospectus.
See page 9 for additional performance disclosures. See page 81 for a description of all indices. See page 82 for a Glossary of Terms.
Credit ratings are assigned to underlying securities utilizing ratings from a Nationally Recognized Statistical Rating Organization (NRSRO) such as Moody’s and Fitch, or other rating agencies and applying the following hierarchy: security is determined to be Investment Grade if it has been rated at least BBB- by one credit rating agency; once determined to be Investment Grade (BBB- and above) or Non-Investment Grade (BB+ and below) where multiple ratings are available, then the lowest rating is assigned. Mortgage-related securities issued and guaranteed by government-sponsored agencies such as Fannie Mae and Freddie Mac are generally not rated by rating agencies. Securities that are not rated do not necessarily indicate low quality. Ratings are shown in the Fitch scale (e.g., AAA). Ratings and portfolio credit quality may change over time. The Fund itself has not been rated by a credit rating agency.
Source (Fixed Income Attributes, Credit Quality, and Maturity Distribution): Bloomberg Analytics
28 2022 Semi-Annual Report
ULTRA SHORT GOVERNMENT FUND
Portfolio Managers: Tom Carney, CFA & Nolan Anderson
Investment Style: Ultra-Short-Term Bond
The Ultra Short Government Fund returned +0.33% in the second quarter compared to a +0.39% return for the ICE BofAML US 6-Month Treasury Bill Index (6-Month Treasury). Year-to-date, the Fund returned +0.43% compared to a +0.38% return for the index. In a year where positive investment returns have been more and more scarce, even for ultra-short-term investors, we’re pleased to report even modest ‘green’ (positive) results for the quarter and year-to-date.
Overview
The Federal Reserve continued raising short-term interest rates in the third quarter of 2022 as inflationary pressures in the U.S. economy provided little signs of easing. The Federal Open Market Committee’s (FOMC’s) monetary actions have lifted the benchmark federal funds rate from zero at the beginning of 2022 to a range of 3.00-to-3.25% as of the end of the third quarter –with historically outsized rate hikes of 0.75% at their June, July, and September meetings. The chart below shows the unprecedented pace at which the FOMC is raising rates to get high inflation under control. No other rate hiking cycle has begun this steeply since the 1980s (when the Fed started targeting the federal funds rate as its primary tool for conducting monetary policy). And the Fed’s newfound fondness for hiking rates appears set to continue well into 2023 with some economists predicting the benchmark federal funds rate to hit as high as 5% sometime next year.
The Federal Reserve’s monetary policy decisions (e.g., changes in short-term interest rates) will continue to affect all investments within our opportunity set. As a result, our yield and returns will invariably follow the path dictated by the Federal Reserve’s monetary policy, as we frequently reinvest maturities with holdings that mature in a short period of time. As of September 30, 81.9% of our portfolio was invested in U.S. Treasury notes, 5.2% in investment-grade asset-backed securities, and 12.9% in a high-quality money market fund. The average effective duration was unchanged in the quarter at 0.1 years. The Fund’s 30-day yield increased approximately 192 basis points in the quarter to 2.48% as of September 30. A more forward-looking data point is the Fund’s yield-to-worst (YTW), which stood at 2.7% as of September 30. As a reminder, YTW has historically been a reasonable predictor of forward returns.
Given the Fed’s intentions to continue raising short-term interest rates (highly likely at the two remaining meetings in 2022), the Fund’s 30-day yield will likely increase in the months and quarters to follow as we re-invest maturing investments at likely more favorable levels. The Fund’s historically low duration level will continue to be an aid in actively taking advantage of improved forward return opportunities.
Under normal market conditions, the Fund will invest at least 80% of its net assets in obligations issued or guaranteed by the U.S. government and its government-related entities. The balance of Fund assets may be invested in U.S. investment-grade debt securities. Additionally, the Fund will maintain an average effective duration of one year or less. Duration is a measure of how sensitive the portfolio may be to changes in interest rates. All else equal, a lower-duration bond portfolio is less sensitive to changes in interest rates (either up or down) than a bond portfolio with a higher duration. Over time, this shorter-term focus (duration of less than one year) is intended to generate higher total returns than cash or money market funds, while also taking less interest rate risk than a bond portfolio with a higher duration.
The Fund’s principal investment strategies and objectives of providing current income, protecting principal, and providing liquidity remain our primary goals.
Definitions: 30-Day SEC Yield represents net investment income earned by a fund over a 30-day period, expressed as an annual percentage rate based on the Fund’s share price at the end of the 30-day period. Subsidized yield reflects fee waivers and/or expense reimbursements during the period. Without such fee waivers and/or expense reimbursements, if any; yields would have been lower. Unsubsidized yield does not adjust for any fee waivers and/or expense reimbursement in effect. Average effective duration provides a measure of a fund’s interest-rate sensitivity. The longer a fund’s duration, the more sensitive the fund is to shifts in interest rates. Investment Grade Bonds are those securities rated at least BBB- by one or more credit ratings agencies. Non-Investment Grade Bonds are those securities (commonly referred to as “high yield” or “junk” bonds) rated BB+ and below by one or more credit ratings agencies.
2022 Semi-Annual Report 29
Returns | ||||||||||||||||||||
Annualized | ||||||||||||||||||||
Since | ||||||||||||||||||||
Inception | Net | Gross | ||||||||||||||||||
QTD | YTD | 1 YR | 3 YR | 5 YR | 10 YR | 20 YR | (8/1/91) | Expense | Expense | |||||||||||
SAFEX | 0.33% | 0.43% | 0.37% | 0.62% | 1.17% | 0.65% | 1.10% | 2.19% | 0.20% | 0.68% | ||||||||||
ICE BofA U.S. 6-Month Treasury Bill Index | 0.39 | 0.38 | 0.39 | 0.68 | 1.25 | 0.82 | 1.47 | 2.71 |
30-Day SEC Yield | |||
Share Class | Subsidized | Unsubsidized | |
2.48% | 2.19% |
Fixed Income Attributes | |
Portfolio Summary | |
Average Maturity | 0.1 years |
Average Effective Maturity | 0.1 years |
Average Duration | 0.1 years |
Average Effective Duration | 0.1 years |
Average Coupon | 1.6% |
Maturity Distribution | ||
Maturity | % of Portfolio | |
Cash Equivalents | 12.9 | |
Less than 1 year | 86.2 | |
1 - 3 Years | 0.9 | |
100.0 |
Credit Quality | ||
Underlying Securities | % of Portfolio | |
U.S. Treasury | 81.9 | |
AAA | 2.8 | |
AA | 0.4 | |
A | 1.9 | |
BBB | 0.1 | |
Cash Equivalents | 12.9 | |
100.0 |
All data as of 9/30/2022 unless otherwise indicated. Data quoted is past performance and current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. All investments involve risks, including possible loss of principal. Please visit weitzinvestments.com for the most recent month-end performance.
Investment results reflect applicable fees and expenses and assume all distributions are reinvested but do not reflect the deduction of taxes an investor would pay on distributions or share redemptions. The Fund has entered into fee waiver and/or expense reimbursement arrangements with the Investment Advisor by which the Advisor has contractually agreed to waive a portion of the Advisor’s fee and reimburse certain expenses (excluding taxes, interest, brokerage costs, acquired fund fees and expenses and extraordinary expenses) to limit the total annual fund operating expenses of the Fund’s average daily net assets through 07/31/2023. If this arrangement had not been in place, the performance result would have been lower. The net expense ratio reflects the total annual fund operating expenses of the Fund after taking into account any such fee waiver and/or expense reimbursement. Net and gross expense ratios are as of the Fund’s most recent prospectus.
See page 9 for additional performance disclosures. See page 81 for a description of all indices. See page 82 for a Glossary of Terms.
Credit ratings are assigned to underlying securities utilizing ratings from a Nationally Recognized Statistical Rating Organization (NRSRO) such as Moody’s and Fitch, or other rating agencies and applying the following hierarchy: security is determined to be Investment Grade if it has been rated at least BBB- by one credit rating agency; once determined to be Investment Grade (BBB- and above) or Non-Investment Grade (BB+ and below) where multiple ratings are available, then the lowest rating is assigned. Ratings are shown in the Fitch scale (e.g., AAA). Ratings and portfolio credit quality may change over time. The Fund itself has not been rated by a credit rating agency.
Source (Fixed Income Attributes, Credit Quality, and Maturity Distribution): Bloomberg Analytics
30 2022 Semi-Annual Report
VALUE FUND
Portfolio Manager: Brad Hinton, CFA
Investment Style: Large-Cap Value
The Value Fund’s Institutional Class returned -7.10% for the third quarter compared to -4.61% for the Russell 1000. Year-to-date, the Fund’s Institutional Class has returned -28.20% compared to -24.59% for the Russell 1000.
The third quarter was another adventure for investors. Stocks staged a classic bear market rally for the better part of two months. Then in late August, Fed Chair Jerome Powell quickly changed the mood at the Jackson Hole Economic Symposium. He opened his speech by saying “Today, my remarks will be shorter, my focus narrower, and my message more direct.” Direct, it was. Job one would be taming inflation. To that end, the Fed would continue to raise interest rates via “forceful and rapid steps to moderate demand.” Chair Powell suggested clearly that the path ahead would “bring some pain to households and businesses.” Investors got the message and scrambled for cover, with the broad stock indexes declining to fresh 2022 lows at quarter-end.
Monetary policy works with a meaningful lag. While we cannot predict the full economic impact of the Fed’s actions, it seems clear that there will be both intended and unintended consequences along the way. Near-term earnings are the wildcard with a potential recession looming on the horizon. In our view, the case for owning durable, resilient, and adaptable businesses has never been stronger. We like our collection of companies, and we think their stocks are generally priced at sensible (or better) levels.
CoStar Group, Vulcan Materials, Charles Schwab, and Gartner were the Fund’s largest quarterly contributors, all posting double-digit returns. Liberty Broadband, Alphabet, CarMax, and Adobe were the Fund’s largest quarterly detractors, with declines ranging from 12% at Alphabet to 36% at Liberty Broadband. Perhaps fitting for a bear market, we think the “winners” and the “losers” on the list continue to trade at discounts to our value estimates. We still own them all.
Meta Platforms, Liberty Broadband, Alphabet, CarMax, and Salesforce were the Fund’s largest year-to-date detractors. JPMorgan Chase was the Fund’s only positive contributor year-to-date, due to a timely sale back in January. AutoZone, Charles Schwab, Aon, and CoStar Group were also relative bright spots. These stocks held up far better than the market, helping to cushion the Fund’s year-to-date decline.
Many of the Fund’s highly profitable, lower multiple, and ostensibly more defensive holdings have fully participated in the year’s drawdown. Examples of these “baseload” positions include LabCorp, Oracle, and Fidelity National Information Services. We can explain why these stocks are down, but the amount they have declined seems excessive. We have rechecked our assumptions and stayed the course.
Cable broadband stocks have been pummeled as lackluster customer additions fell well short of expectations. Competitive intensity has increased as fixed wireless internet and fiber network alternatives gain subscribers. While more competition is never helpful, our broad take is that current trends overstate the long-term threat. We reshaped the Fund’s exposure by adding to Liberty Broadband and exiting Comcast. The idea is to create more concentrated upside potential via the pure-play Liberty Broadband, with less overall exposure to the industry. Liberty Broadband’s primary asset is a 26% stake in Charter Communications. Charter is not sitting still; the company is adapting via footprint expansion into underserved areas, price-advantaged mobile line growth, and so on. Charter’s hefty free cash flows are valuable in the hands of proven, astute capital allocators. Time will tell, but to paraphrase country music artist Merle Haggard, we do not yet think cable’s good times are really over for good.
Software stocks continued to slide, but Adobe created its own drama when the company agreed to acquire privately held Figma for an eye-popping $20 billion. Figma’s strategic fit with Adobe’s creative business is quite sound, perhaps exceptional, but the price tag was undeniably high. The deal raised questions about our quality score assessment, particularly around capital allocation, management, and competitive position. We reset growth expectations and lowered our business value estimate, but not nearly as much as the stock price declined. While our diligence is ongoing, we answered enough to add modestly to the position. Our equity research analyst will have an opportunity to keep drilling deeper at the upcoming Adobe MAX user conference and financial investor meeting. If our views change as we learn more, so will our positioning.
The portfolio is focused and well-aligned with our vision for successful large-cap investing. We have concentrated ownership stakes in 26 companies, with the top ten representing 48% of the portfolio. Each position is significant enough to matter, yet none can individually make or break our results. Our current estimate is that the portfolio trades at a price-to-value in the mid 60s, though these estimates are more fluid than usual. We believe that most holdings have a chance for healthy gains over a multi-year period. Others are priced for adequate return potential primarily from expected growth in per-share business value.
2022 Semi-Annual Report 31
Returns | ||||||||||||||||||||
Annualized | ||||||||||||||||||||
Since | ||||||||||||||||||||
Inception | Net | Gross | ||||||||||||||||||
QTD | YTD | 1 YR | 3 YR | 5 YR | 10 YR | 20 YR | (5/9/86) | Expense | Expense | |||||||||||
WVALX - Investor Class | (7.17)% | (28.30)% | (24.29)% | 4.73% | 7.19% | 8.46% | 7.59% | 9.78% | 1.04% | 1.04% | ||||||||||
WVAIX - Institutional Class | (7.10) | (28.20) | (24.16) | 4.93 | 7.41 | 8.64 | 7.69 | 9.83 | 0.89 | 0.90 | ||||||||||
S&P 500 Index | (4.88) | (23.87) | (15.47) | 8.15 | 9.23 | 11.69 | 9.83 | 10.31 | ||||||||||||
Russell 1000 Index | (4.61) | (24.59) | (17.22) | 7.94 | 8.99 | 11.60 | 9.96 | 10.11 |
Top 10 Stock Holdings | ||
% of Net Assets | ||
Alphabet, Inc. | 7.2 | |
CoStar Group, Inc. | 5.6 | |
Danaher Corp. | 5.3 | |
Thermo Fisher Scientific, Inc. | 4.6 | |
Vulcan Materials Co. | 4.4 | |
Analog Devices, Inc. | 4.4 | |
Berkshire Hathaway, Inc. | 4.3 | |
Visa, Inc. | 4.2 | |
Mastercard, Inc. | 4.2 | |
Meta Platforms, Inc. | 3.8 | |
48.0 |
Industry Breakdown | ||
% of Net Assets | ||
Information Technology | 34.3 | |
Communication Services | 18.1 | |
Financials | 13.4 | |
Health Care | 13.0 | |
Materials | 6.9 | |
Consumer Discretionary | 5.8 | |
Industrials | 5.6 | |
Cash Equivalents/Other | 2.9 | |
100.0 |
Top Stock Performers | |||
Average | |||
Return | Weight | Contribution | |
Costar Group | 15.3% | 5.2% | 0.67% |
Vulcan Materials | 11.3 | 4.0 | 0.32 |
Charles Schwab | 14.1 | 2.8 | 0.27 |
Gartner, Inc. | 14.4 | 3.1 | 0.26 |
Amazon | 6.4 | 3.1 | 0.09 |
Bottom Stock Performers | |||
Average | |||
Return | Weight | Contribution | |
Liberty Broadband – Series C | (36.3)% | 4.2% | (1.69)% |
Alphabet – Class C | (12.09) | 7.4 | (0.85) |
CarMax, Inc. | (27.02) | 3.3 | (0.81) |
Adobe | (24.96) | 2.8 | (0.65) |
Fidelity National Information | (17.09) | 3.9 | (0.64) |
All data as of 9/30/2022 unless otherwise indicated. Data quoted is past performance and current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. All investments involve risks, including possible loss of principal. Please visit weitzinvestments.com for the most recent month-end performance.
Investment results reflect applicable fees and expenses and assume all distributions are reinvested but do not reflect the deduction of taxes an investor would pay on distributions or share redemptions. The Fund has entered into fee waiver and/or expense reimbursement arrangements with the Investment Advisor by which the Advisor has contractually agreed to waive a portion of the Advisor’s fee and reimburse certain expenses (excluding taxes, interest, brokerage costs, acquired fund fees and expenses and extraordinary expenses) to limit the total annual fund operating expenses of the Fund’s average daily net assets through 07/31/2023. If this arrangement had not been in place, the performance results would have been lower. The net expense ratio reflects the total annual fund operating expenses of the Fund after taking into account any such fee waiver and/or expense reimbursement. Net and gross expense ratios are as of the Fund’s most recent prospectus.
See page 9 for additional performance disclosures. See page 81 for a description of all indices. See page 82 for a Glossary of Terms.
Contributions to performance are based on actual daily holdings. Returns shown are the actual quarterly returns of the security.
Source (Top Performers, Bottom Performers): Statpro
Source (Capitalization): Bloomberg Analytics
32 2022 Semi-Annual Report
BALANCED FUND
Schedule of Investments
September 30, 2022 (Unaudited)
Common Stocks - 40.6%a | |||
% of Net | |||
Information Technology | Assets | Shares | $ Value |
Data Processing & Outsourced Services | 4.3 | ||
Visa, Inc. - Class A | 17,000 | 3,020,050 | |
Mastercard, Inc. - Class A | 10,500 | 2,985,570 | |
Fidelity National Information Services, Inc. | 26,000 | 1,964,820 | |
Systems Software | 3.1 | ||
Microsoft Corp. | 17,500 | 4,075,750 | |
Oracle Corp. | 30,000 | 1,832,100 | |
Semiconductors | 2.9 | ||
Analog Devices, Inc. | 26,000 | 3,622,840 | |
Texas Instruments, Inc. | 11,301 | 1,749,169 | |
Application Software | 1.2 | ||
Roper Technologies, Inc. | 6,200 | 2,229,768 | |
IT Consulting & Other Services | 1.1 | ||
Accenture plc - Class A(a) | 8,000 | 2,058,400 | |
12.6 | 23,538,467 | ||
Financials | |||
Multi-Sector Holdings | 2.1 | ||
Berkshire Hathaway, Inc. - Class B(b) | 15,000 | 4,005,300 | |
Insurance Brokers | 2.0 | ||
Aon plc - Class A(a) | 14,000 | 3,750,180 | |
Property & Casualty Insurance | 1.7 | ||
Markel Corp.(b) | 2,850 | 3,090,027 | |
Investment Banking & Brokerage | 1.4 | ||
The Charles Schwab Corp. | 35,000 | 2,515,450 | |
Financial Exchanges & Data | 1.2 | ||
S&P Global, Inc. | 7,500 | 2,290,125 | |
Diversified Banks | 1.0 | ||
JPMorgan Chase & Co. | 17,000 | 1,776,500 | |
Mortgage REITs | 0.3 | ||
Redwood Trust, Inc. | 108,485 | 622,704 | |
9.7 | 18,050,286 | ||
Health Care | |||
Health Care Equipment | 2.3 | ||
Danaher Corp. | 16,500 | 4,261,785 | |
Life Sciences Tools & Services | 1.9 | ||
Thermo Fisher Scientific, Inc. | 6,850 | 3,474,251 | |
Health Care Services | 1.7 | ||
Laboratory Corp. of America Holdings | 16,000 | 3,276,960 | |
5.9 | 11,012,996 | ||
Materials | |||
Construction Materials | 3.6 | ||
Vulcan Materials Co. | 23,000 | 3,627,330 | |
Martin Marietta Materials, Inc. | 9,500 | 3,059,855 |
% of Net | |||
Materials | Assets | Shares | $ Value |
Industrial Gases | 1.1 | ||
Linde plc(a) | 8,136 | 2,193,384 | |
4.7 | 8,880,569 | ||
Communication Services | |||
Interactive Media & Services | 1.8 | ||
Alphabet, Inc. - Class C(b) | 34,360 | 3,303,714 | |
Cable & Satellite | 1.7 | ||
Liberty Broadband Corp. - Class C(b) | 22,000 | 1,623,600 | |
Comcast Corp. - Class A | 55,000 | 1,613,150 | |
3.5 | 6,540,464 | ||
Industrials | |||
Industrial Machinery | 2.4 | ||
IDEX Corp. | 12,000 | 2,398,200 | |
Fortive Corp. | 35,000 | 2,040,500 | |
Industrial Conglomerates | 0.9 | ||
Honeywell International, Inc. | 9,944 | 1,660,350 | |
3.3 | 6,099,050 | ||
Consumer Staples | |||
Distillers & Vintners | 0.9 | ||
Diageo plc - ADR(a) | 10,000 | 1,698,100 | |
Total Common Stocks (Cost $50,935,811) | 75,819,932 | ||
Non-Convertible Preferred Stocks - 0.9% | |||
Qurate Retail, Inc. 3/15/31 (Cost $3,461,303) | 35,000 | 1,593,900 | |
Corporate Bonds - 1.2% | |||
$ Principal | |||
Amount | $ Value | ||
AutoZone, Inc. | |||
3.63% 4/15/25 | 500,000 | 481,620 | |
JPMorgan Chase & Co. | |||
3.38% 5/1/23 | 500,000 | 497,005 | |
JPMorgan Chase Co. | |||
3.84% 6/14/25 Floating Rate (SOFR + 98) | 200,000 | 194,670 | |
Markel Corp. | |||
3.63% 3/30/23 | 500,000 | 497,790 | |
U.S. Bancorp | |||
2.4% 7/30/24 | 500,000 | 480,043 | |
Total Corporate Bonds (Cost $2,203,213) | 2,151,128 |
The accompanying notes form an integral part of these financial statements.
2022 Semi-Annual Report 33
Corporate Convertible Bonds - 1.0% | ||
$ Principal | ||
Amount | $ Value | |
Redwood Trust, Inc. | ||
5.63% 7/15/24 (Cost $1,916,058) | 2,000,000 | 1,814,931 |
Asset-Backed Securities - 9.1% | ||
Automobile | ||
AmeriCredit Automobile Receivables Trust (AMCAR) | ||
Series 2020-2 Class D - 2.13% 3/18/26 | 400,000 | 375,548 |
ARI Fleet Lease Trust (ARIFL) | ||
Series 2020-A Class A - 1.77% 8/15/28(c) | 6,285 | 6,283 |
Series 2022-A Class A2 - 3.12% 1/15/31(c) | 100,000 | 98,210 |
Carmax Auto Owner Trust (CARMX) | ||
Series 2012-2 Class C - 3.16% 2/18/25 | 500,000 | 494,789 |
CFMT LLC (CFMT) | ||
Series 2021-AL1 Class B - 1.39% 9/22/31(c) | 446,981 | 422,669 |
Chesapeake Funding II LLC (CFII) | ||
Series 2021-1A Class A1 - 0.47% 4/15/33(c) | 289,359 | 283,473 |
Enterprise Fleet Financing LLC (EFF) | ||
Series 2019-2 Class A - 2.29% 2/20/25(c) | 29,310 | 29,269 |
Series 2020-1 Class A - 1.78% 12/22/25(c) | 110,452 | 109,663 |
Flagship Credit Auto Trust (FCAT) | ||
Series 2020-4 Class C - 1.28% 2/16/27(c) | 300,000 | 286,266 |
Foursight Capital Automobile Receivables Trust (FCRT) | ||
Series 2022-2 Class A2 - 4.49% 3/16/26(c) | 500,000 | 495,979 |
GLS Auto Receivables Issuer Trust (GCAR) | ||
Series 2021-1A Class C - 1.2% 1/15/27(c) | 475,000 | 463,515 |
Series 2021-4A Class A - 0.84% 7/15/25(c) | 234,922 | 231,208 |
JPMorgan Chase Auto Credit Linked Note (CACLN) | ||
Series 2020-1 Class A5 - 0.99% 1/25/28(c) | 158,865 | 156,014 |
Series 2020-2 Class A2 - 0.84% 2/25/28(c) | 30,412 | 29,627 |
Series 2021-1 Class A2 - 0.88% 9/25/28(c) | 328,557 | 317,463 |
Series 2021-2 Class A4 - 0.89% 12/26/28(c) | 259,207 | 249,459 |
LAD Auto Receivables Trust (LADAR) | ||
Series 2021-1A Class A - 1.3% 8/17/26(c) | 502,516 | 484,532 |
Series 2022-1A Class A - 5.21% 6/15/27(c) | 632,908 | 621,320 |
Onemain Direct Auto Receivables Trust (OMDAR) | ||
Series 2021-1A Class A - 0.87% 7/14/28(c) | 500,000 | 462,754 |
OneMain Direct Auto Receivables Trust (ODART) | ||
Series 2022-1A Class C - 1.42% 7/14/28(c) | 200,000 | 174,021 |
Santander Drive Auto Receivables Trust (SDART) | ||
Series 2020-2 Class D - 2.22% 9/15/26 | 375,000 | 366,276 |
Series 2020-3 Class C - 1.12% 1/15/26 | 142,690 | 141,664 |
Series 2020-4 Class C - 1.01% 1/15/26 | 180,878 | 178,802 |
Series 2022-6 Class A2 - 4.37% 5/15/25 | 150,000 | 149,498 |
Securitized Term Auto Loan Receivables Trust (SSTRT) | ||
Series 2019-CRTA Class B - 2.45% 3/25/26(a) (c) | 43,869 | 43,554 |
Westlake Automobile Receivables Trust (WLAKE) | ||
Series 2021-2A Class B - 0.62% 7/15/26(c) | 256,000 | 247,297 |
Series 2022-1A Class A2A - 1.97% 12/16/24(c) | 224,005 | 221,971 |
Wheels SPV 2 LLC (WHLS) | ||
Series 2020-1A Class A2 - 0.51% 8/20/29(c) | 476,556 | 470,365 |
7,611,489 | ||
Collateralized Loan Obligations | ||
ABPCI Direct Lending Fund CLO LP (ABPCI) | ||
Series 2020-10A Class A - 4.66% 1/20/32 Floating Rate | ||
(Qtrly LIBOR + 195)(a) (c) (d) | 500,000 | 491,915 |
Audax Senior Debt CLO LLC (AUDAX) | |||
Series 2021-6A Class A1 - 4.21% 10/20/33 Floating Rate | |||
(Qtrly LIBOR + 150)(c) (d) | 500,000 | 487,962 | |
Blackrock Rainier CLO VI Ltd. (BLKMM) | |||
Series 2021-6A Class A - 4.41% 4/20/33 Floating Rate | |||
(Qtrly LIBOR + 170)(a) (c) (d) | 500,000 | 475,881 | |
Capital Four US CLO II Ltd. (C4US) | |||
Series 2022-1A Class A1 - 5.81% 10/20/30 Floating Rate | |||
(TSFR3M + 214)(a) (c) (d) | 500,000 | 491,366 | |
Cerberus Loan Funding LP (CERB) | |||
Series 2020-1A Class A - 4.36% 10/15/31 Floating Rate | |||
(Qtrly LIBOR + 185)(a) (c) (d) | 500,000 | 495,157 | |
Series 2021-6A Class A - 3.91% 11/22/33 Floating Rate | |||
(Qtrly LIBOR + 140)(a) (c) (d) | 171,145 | 170,485 | |
Churchill Middle Market CLO Ltd. (CHMML) | |||
Series 2021-1A Class A1 - 4.28% 10/24/33 Floating Rate | |||
(Qtrly LIBOR + 150)(a) (c) (d) | 250,000 | 230,625 | |
Fortress Credit Opportunities CLO Ltd. (FCO) | |||
Series 2021-15A Class A2 - 4.33% 4/25/33 Floating | |||
Rate (Qtrly LIBOR + 155)(a) (c) (d) | 500,000 | 476,580 | |
Golub Capital Partners CLO Ltd. (GOCAP) | |||
Series 2021-54A Class A2 - 4.36% 8/5/33 Floating Rate | |||
(Qtrly LIBOR + 153)(a) (c) (d) | 500,000 | 486,859 | |
Monroe Capital MML CLO XII Ltd. (MCMML) | |||
Series 2021-2A Class A1 - 4.77% 9/14/33 Floating Rate | |||
(Qtrly LIBOR + 150)(a) (c) (d) | 500,000 | 482,119 | |
Palmer Square Loan Funding Ltd. (PSTAT) | |||
Series 2021-1A Class A2 - 3.96% 4/20/29 Floating Rate | |||
(Qtrly LIBOR + 125)(a) (c) (d) | 500,000 | 483,056 | |
4,772,005 | |||
Consumer & Specialty Finance | |||
Affirm Asset Securitization Trust (AFFRM) | |||
Series 2021-A Class A4 - 0.88% 8/15/25(c) | 70,790 | 70,353 | |
Foundation Finance Trust (FFIN) | |||
Series 2021-2A Class A - 2.19% 1/15/42(c) | 186,761 | 170,839 | |
Lendingpoint Asset Securitization Trust (LDPT) | |||
Series 2022-C Class A - 6.56% 2/15/30(c) | 500,000 | 500,254 | |
Marlette Funding Trust (MFT) | |||
Series 2022-1A Class A - 1.36% 4/15/32(c) | 132,736 | 129,784 | |
Octane Receivables Trust (OCTL) | |||
Series 2020-1A Class A2 - 1.71% 2/20/25(c) | 97,800 | 96,635 | |
Series 2021-1A Class A5 - 0.93% 3/22/27(c) | 64,302 | 62,142 | |
Series 2021-2A Class A - 1.21% 9/20/28(c) | 156,568 | 149,812 | |
Series 2022-1A Class A2 - 4.18% 3/20/28(c) | 279,519 | 278,366 | |
Series 2022-2A Class A - 5.11% 2/22/28(c) | 238,372 | 236,770 | |
Upstart Securitization Trust (UPST) | |||
Series 2021-3 Class A - 0.83% 7/20/31(c) | 97,869 | 94,757 | |
Series 2021-5 Class A - 1.31% 11/20/31(c) | 143,875 | 139,124 | |
1,928,836 | |||
Equipment | |||
Amur Equipment Finance Receivables LLC (AXIS) | |||
Series 2021-1A Class A2 - 0.75% 11/20/26(c) | 430,754 | 414,192 | |
Amur Equipment Finance Receivables XI LLC (AXIS) | |||
Series 2022-2A Class A2 - 5.3% 6/21/28(c) | 150,000 | 148,990 | |
CCG Receivables Trust (CCG) | |||
Series 2019-2 Class A - 2.11% 3/15/27(c) | 33,475 | 33,389 | |
Dell Equipment Finance Trust (DEFT) | |||
Series 2021-2 Class A2 - 0.53% 12/22/26(c) | 625,000 | 595,469 | |
Series 2022-1 Class A2 - 2.11% 8/22/27(c) | 250,000 | 245,963 |
The accompanying notes form an integral part of these financial statements.
34 2022 Semi-Annual Report
BALANCED FUND (CONTINUED)
Schedule of Investments
September 30, 2022 (Unaudited)
$ Principal | |||
Amount | $ Value | ||
DLLST LLC (DLLST) | |||
Series 2022-1A Class A2 - 2.79% 1/22/24(c) | 500,000 | 494,444 | |
Greatamerica Leasing Receivables Funding LLC (GALC) | |||
Series 2021-1 Class B - 0.72% 12/15/26(c) | 500,000 | 449,278 | |
MMAF Equipment Finance LLC (MMAF) | |||
Series 2022-A Class A2 - 2.77% 2/13/25(c) | 375,000 | 367,794 | |
2,749,519 | |||
Total Asset-Backed Securities (Cost $17,455,800) | 17,061,849 | ||
Commercial Mortgage-Backed Securities - 2.6% | |||
AREIT Trust (AREIT) | |||
Series 2021-CRE5 Class A - 4.07% 7/17/26 Floating Rate | |||
(Mthly LIBOR + 108)(c) | 433,615 | 420,914 | |
BFLD Trust (BFLD) | |||
Series 2020-OBRK Class A - 4.87% 11/15/22 Floating | |||
Rate (Mthly LIBOR + 205)(c) | 125,000 | 123,639 | |
FS Rialto Issuer Ltd. (FSRI) | |||
Series 2022-FL5 Class A - 5.32% 6/19/27 Floating Rate | |||
(TSFR1M + 230)(a) (c) | 500,000 | 494,042 | |
GPMT Ltd. (GPMT) | |||
Series 2021-FL3 Class A - 4.24% 7/16/35 Floating Rate | |||
(Mthly LIBOR + 125)(a) (c) | 350,662 | 346,041 | |
HGI CRE CLO Ltd. (HGI) | |||
Series 2021-FL1 Class A4 - 3.99% 6/16/36 Floating Rate | |||
(Mthly LIBOR + 105)(a) (c) | 250,000 | 240,967 | |
Series 2021-FL2 Class A4 - 3.94% 9/19/26 Floating | |||
Rate (Mthly LIBOR + 100)(a) (c) | 250,000 | 240,056 | |
KREF Ltd. (KREF) | |||
Series 2021-FL2 Class A4 - 4.01% 2/15/39 Floating Rate | |||
(Mthly LIBOR + 107)(a) (c) | 500,000 | 483,125 | |
Series 2022-FL3 Class A - 4.47% 2/15/39 Floating Rate | |||
(Mthly SOFR + 145)(a) (c) | 500,000 | 481,250 | |
LoanCore Issuer Ltd. (LNCR) | |||
Series 2018-CRE1 Class D - 5.77% 5/15/28 Floating Rate | |||
(US0001M + 295)(a) (c) | 400,000 | 391,235 | |
Series 2021-CRE5 Class A - 4.12% 7/15/36 Floating Rate | |||
(Mthly LIBOR + 130)(a) (c) | 500,000 | 485,625 | |
Series 2022-CRE7 Class A - 3.83% 1/17/37 Floating Rate | |||
(SOFR 30 Day Avg + 155)(a) (c) | 250,000 | 242,053 | |
PFP Ltd. (PFP) | |||
Series 2022-9 Class A - 5.32% 8/19/35 Floating Rate | |||
(TSFR1M + 218)(a) (c) | 250,000 | 249,531 | |
STWD Ltd. (STWD) | |||
Series 2022-FL3 Class A - 3.64% 11/15/38 Floating Rate | |||
(SOFR 30 Day Avg + 135)(a) (c) | 500,000 | 484,406 | |
VMC Finance LLC (VMC) | |||
Series 2021-FL4 Class A - 4.09% 6/16/36 Floating Rate | |||
(Mthly LIBOR + 110)(c) | 249,793 | 243,938 | |
Total Commercial Mortgage-Backed Securities (Cost $5,045,065) | 4,926,822 | ||
Mortgage-Backed Securities - 2.6% | |||
Federal Home Loan Mortgage Corporation | |||
Collateralized Mortgage Obligations | |||
Series 3649 Class A - 4% 3/15/25 | 8,667 | 8,630 |
$ Principal | |||
Amount | $ Value | ||
Pass-Through Securities | |||
Pool# J14649 – 3.5% 4/1/26 | 18,435 | 17,556 | |
Pool# E02948 – 3.5% 7/1/26 | 40,490 | 38,569 | |
Pool# J16663 – 3.5% 9/1/26 | 21,889 | 20,811 | |
Pool# ZS8692 – 2.5% 4/1/33 | 147,378 | 134,802 | |
220,368 | |||
Federal National Mortgage Association | |||
Pass-Through Securities | |||
Pool# AR8198 – 2.5% 3/1/23 | 4,784 | 4,764 | |
Pool# MA1502 – 2.5% 7/1/23 | 5,302 | 5,271 | |
Pool# 995755 – 4.5% 5/1/24 | 1,618 | 1,594 | |
Pool# AB1769 – 3% 11/1/25 | 15,753 | 15,440 | |
Pool# AB3902 – 3% 11/1/26 | 39,593 | 38,571 | |
Pool# AK3264 – 3% 2/1/27 | 31,238 | 30,377 | |
Pool# AB6291 – 3% 9/1/27 | 174,876 | 169,341 | |
Pool# MA3189 – 2.5% 11/1/27 | 147,608 | 141,571 | |
Pool# MA3791 – 2.5% 9/1/29 | 319,303 | 296,072 | |
Pool# BM5708 – 3% 12/1/29 | 166,452 | 161,041 | |
Pool# AS7701 – 2.5% 8/1/31 | 787,369 | 731,402 | |
Pool# MA3540 – 3.5% 12/1/33 | 86,297 | 81,896 | |
1,677,340 | |||
Government National Mortgage Association | |||
Pass-Through Securities | |||
Pool# 5255 – 3% 12/20/26 | 38,262 | 37,292 | |
Non-Government Agency | |||
Collateralized Mortgage Obligations | |||
Flagstar Mortgage Trust (FSMT) | |||
Series 2021-7 Class B - 2.5% 8/25/51(c) (d) | 424,886 | 367,065 | |
GS Mortgage-Backed Securities Trust (GSMBS) | |||
Series 2022-PJ1 Class AB - 2.5% 5/28/52(c) (d) | 466,953 | 402,710 | |
JPMorgan Mortgage Trust (JPMMT) | |||
Series 2014-5 Class B - 2.82% 10/25/29(c) (d) | 57,019 | 53,826 | |
Series 2016-3 Class A - 2.98% 10/25/46(c) (d) | 165,302 | 149,812 | |
Series 2017-3 Class A - 2.5% 8/25/47(c) (d) | 201,276 | 178,362 | |
Series 2020-7 Class A - 3% 1/25/51(c) (d) | 43,467 | 42,458 | |
Series 2020-8 Class A - 3% 3/25/51(c) (d) | 89,623 | 86,147 | |
Series 2021-6 Class B - 2.5% 10/25/51(c) (d) | 550,171 | 474,479 | |
Series 2021-8 Class B - 2.5% 12/25/51(c) (d) | 408,449 | 353,655 | |
Series 2022-2 Class A4A - 2.5% 8/25/52(c) (d) | 329,064 | 283,464 | |
JPMorgan Wealth Management (JPMWM) | |||
Series 2020-ATR1 Class A - 3% 2/25/50(c) (d) | 51,776 | 50,746 | |
RCKT Mortgage Trust (RCKT) | |||
Series 2021-3 Class A5 - 2.5% 7/25/51(c) (d) | 391,701 | 339,860 | |
Sequoia Mortgage Trust (SEMT) | |||
Series 2019-CH2 Class A - 4.5% 8/25/49(c) (d) | 41,704 | 41,048 | |
Series 2020-3 Class A - 3% 4/25/50(c) (d) | 43,178 | 41,721 | |
2,865,353 | |||
Total Mortgage-Backed Securities (Cost $5,364,899) | 4,800,353 |
The accompanying notes form an integral part of these financial statements.
2022 Semi-Annual Report 35
U.S. Treasuries - 39.5% | |||
$ Principal | |||
Amount | $ Value | ||
U.S. Treasury Notes | |||
2% 11/30/22 | 3,000,000 | 2,994,287 | |
2% 2/15/23 | 1,000,000 | 993,729 | |
2.5% 3/31/23 | 2,000,000 | 1,987,157 | |
1.63% 5/31/23 | 2,000,000 | 1,967,969 | |
2.5% 8/15/23 | 2,000,000 | 1,969,927 | |
2.88% 10/31/23 | 1,000,000 | 985,078 | |
1.63% 10/31/23 | 2,000,000 | 1,944,062 | |
2.13% 11/30/23 | 2,000,000 | 1,951,914 | |
2.75% 2/15/24 | 2,000,000 | 1,957,656 | |
2.13% 2/29/24 | 2,000,000 | 1,940,469 | |
2% 4/30/24 | 2,000,000 | 1,929,453 | |
2.5% 5/31/24 | 1,000,000 | 971,191 | |
3% 6/30/24 | 2,000,000 | 1,956,680 | |
1.25% 8/31/24 | 3,000,000 | 2,836,055 | |
0.38% 9/15/24 | 2,000,000 | 1,855,547 | |
2.25% 10/31/24 | 1,500,000 | 1,440,644 | |
0.75% 11/15/24 | 2,000,000 | 1,858,594 | |
1.13% 1/15/25 | 2,000,000 | 1,863,672 | |
1.38% 1/31/25 | 2,000,000 | 1,873,672 | |
2% 2/15/25 | 2,000,000 | 1,898,437 | |
2.63% 3/31/25 | 2,000,000 | 1,923,437 | |
0.38% 4/30/25 | 2,000,000 | 1,811,992 | |
2.75% 5/15/25 | 3,000,000 | 2,887,383 | |
0.25% 6/30/25 | 2,000,000 | 1,795,430 | |
0.25% 7/31/25 | 2,000,000 | 1,788,008 | |
3.13% 8/15/25 | 2,000,000 | 1,938,828 | |
2.75% 8/31/25 | 2,000,000 | 1,918,203 | |
3% 10/31/25 | 2,000,000 | 1,929,219 | |
0.38% 11/30/25 | 2,000,000 | 1,773,555 | |
0.38% 1/31/26 | 1,000,000 | 881,016 | |
0.5% 2/28/26 | 4,000,000 | 3,530,469 | |
2.38% 4/30/26 | 1,500,000 | 1,410,234 | |
0.75% 5/31/26 | 2,000,000 | 1,766,719 | |
1.5% 8/15/26 | 2,000,000 | 1,809,375 | |
1.63% 10/31/26 | 4,000,000 | 3,624,219 | |
2% 11/15/26 | 500,000 | 459,258 | |
1.88% 2/28/27 | 2,000,000 | 1,821,875 | |
0.5% 8/31/27 | 2,000,000 | 1,685,078 | |
2.25% 11/15/27 | 2,000,000 | 1,830,625 | |
Total U.S. Treasuries (Cost $77,839,640) | 73,761,116 | ||
Cash Equivalents - 2.4% | |||
JPMorgan U.S. Government Money Market | |||
Fund - Institutional Class 2.7%(e) | 1,483,975 | 1,483,975 | |
U.S. Treasury Bill 2.11% 10/18/22 (f) | 3,000,000 | 2,996,842 | |
Total Cash Equivalents (Cost $4,480,472) | 4,480,817 | ||
Total Investments in Securities (Cost $168,702,261) | 186,410,848 | ||
Cash due to Custodian - 0.0% | (1,245) | ||
Other Assets Less Other Liabilities - 0.1% | 117,968 | ||
Net Assets - 100% | 186,527,571 | ||
Net Asset Value Per Share - Investor Class | 14.79 | ||
Net Asset Value Per Share - Institutional Class | 14.81 |
(a) | Foreign domiciled entity. |
(b) | Non-income producing. |
(c) | Security is exempt from registration under Rule 144A of the Securities Act of 1933. This security may be resold in transactions that are exempt from registration, normally to qualified institutional buyers. |
(d) | The interest rate resets periodically based on the weighted average coupons of the underlying mortgage-related or asset-backed obligations. |
(e) | Rate presented represents the 30 day average yield at September 30, 2022. |
(f) | Interest rates presented represent the effective yield at September 30, 2022. |
The accompanying notes form an integral part of these financial statements.
36 2022 Semi-Annual Report
CORE PLUS INCOME FUND
Schedule of Investments
September 30, 2022 (Unaudited)
Corporate Bonds - 21.5% | |||
$ Principal | |||
Amount | $ Value | ||
Abercrombie & Fitch Management Co. | |||
8.75% 7/15/25(a) | 1,428,000 | 1,394,206 | |
Alexandria Real Estate Equities, Inc. | |||
3.95% 1/15/28 | 366,000 | 338,561 | |
American Airlines Group, Inc. | |||
3.75% 3/1/25^ (a) | 1,000,000 | 818,980 | |
American Airlines, Inc./AAdvantage Loyalty IP Ltd. | |||
5.5% 4/20/26(a) | 3,300,000 | 3,104,755 | |
5.75% 4/20/29(a) | 1,000,000 | 874,275 | |
Ares Capital Corp. | |||
2.88% 6/15/28 | 1,000,000 | 788,612 | |
Ashtead Capital, Inc. | |||
4.38% 8/15/27(a) | 1,000,000 | 919,475 | |
4% 5/1/28(a) | 670,000 | 588,967 | |
2.45% 8/12/31(a) | 500,000 | 368,229 | |
AT&T, Inc. | |||
6.8% 5/15/36 | 713,000 | 732,193 | |
Axalta Coating Systems LLC | |||
3.38% 2/15/29(a) | 624,000 | 490,139 | |
Bath & Body Works, Inc. | |||
6.95% 3/1/33 | 3,675,000 | 2,961,526 | |
6.88% 11/1/35 | 301,000 | 252,176 | |
6.75% 7/1/36 | 2,756,000 | 2,275,422 | |
Berkshire Hathaway Finance Corp. | |||
4.25% 1/15/49 | 500,000 | 417,278 | |
Broadcom, Inc. | |||
3.42% 4/15/33(a) | 350,000 | 267,783 | |
3.14% 11/15/35(a) | 1,014,000 | 712,639 | |
Cantor Fitzgerald LP | |||
4.5% 4/14/27(a) | 1,500,000 | 1,392,631 | |
Carlisle Cos., Inc. | |||
3.5% 12/1/24 | 532,000 | 512,454 | |
3.75% 12/1/27 | 500,000 | 455,393 | |
CDW LLC / CDW Finance Corp. | |||
3.28% 12/1/28 | 1,000,000 | 836,395 | |
Charter Communications Operating LLC/Charter | |||
Communications Operating Capital | |||
4.2% 3/15/28 | 650,000 | 584,640 | |
Choice Hotels International, Inc. | |||
3.7% 1/15/31 | 250,000 | 208,153 | |
Cinemark USA, Inc. | |||
5.88% 3/15/26(a) | 500,000 | 418,641 | |
5.25% 7/15/28(a) | 3,000,000 | 2,312,385 | |
Compass Group Diversified Holdings LLC | |||
5.25% 4/15/29(a) | 2,081,000 | 1,635,905 | |
Cox Communications, Inc. | |||
3.5% 8/15/27(a) | 842,000 | 772,142 | |
Delta Air Lines, Inc./SkyMiles IP Ltd. | |||
4.5% 10/20/25(a) | 560,000 | 543,903 | |
4.75% 10/20/28(a) | 1,100,000 | 1,025,996 | |
Devon Energy Corp. | |||
5.25% 10/15/27 | 325,000 | 325,969 | |
4.5% 1/15/30 | 920,000 | 838,610 | |
Diamondback Energy, Inc. | |||
3.25% 12/1/26 | 75,000 | 69,269 | |
3.5% 12/1/29 | 100,000 | 86,448 | |
Dick's Sporting Goods, Inc. | |||
3.15% 1/15/32 | 500,000 | 381,543 | |
Dow Chemical Co. (The) | |||
4.25% 10/1/34 | 1,052,000 | 892,945 |
$ Principal | ||||
Amount | $ Value | |||
Drax Finco PLC | ||||
6.63% 11/1/25(a) (b) | 1,000,000 | 964,895 | ||
Duke Energy Carolinas LLC | ||||
6% 12/1/28 | 445,000 | 458,702 | ||
Element Fleet Management Corp. | ||||
3.85% 6/15/25(a) (b) | 1,000,000 | 947,573 | ||
Energy Transfer LP | ||||
2.9% 5/15/25 | 500,000 | 466,611 | ||
4.75% 1/15/26 | 200,000 | 192,922 | ||
Enterprise Products Operating LLC | ||||
4.45% 2/15/43 | 990,000 | 798,221 | ||
EPR Properties | ||||
4.75% 12/15/26 | 1,250,000 | 1,111,227 | ||
4.5% 6/1/27 | 1,330,000 | 1,149,956 | ||
4.95% 4/15/28 | 830,000 | 715,695 | ||
Essential Properties LP | ||||
2.95% 7/15/31 | 2,750,000 | 2,013,091 | ||
Expedia Group, Inc. | ||||
3.8% 2/15/28 | 484,000 | 430,523 | ||
3.25% 2/15/30 | 90,000 | 73,110 | ||
Gap, Inc. (The) | ||||
3.88% 10/1/31(a) | 106,000 | 67,624 | ||
Georgia-Pacific LLC | ||||
7.25% 6/1/28 | 1,000,000 | 1,100,681 | ||
Hercules Capital, Inc. | ||||
2.63% 9/16/26 | 1,000,000 | 819,411 | ||
Highwoods Realty LP | ||||
2.6% 2/1/31 | 500,000 | 375,519 | ||
Host Hotels & Resorts LP | ||||
Series H 3.38% 12/15/29 | 612,000 | 496,584 | ||
Indiana Bell Telephone Co., Inc. | ||||
7.3% 8/15/26 | 535,000 | 560,489 | ||
iStar, Inc. | ||||
4.25% 8/1/25 | 825,000 | 801,353 | ||
JPMorgan Chase & Co. | ||||
0.65% 9/16/24 Floating Rate (Qtrly SOFR + 60) | 1,000,000 | 954,103 | ||
Lennar Corp. | ||||
4.75% 5/30/25 | 622,000 | 613,198 | ||
Lexington Realty Trust | ||||
2.7% 9/15/30 | 500,000 | 385,399 | ||
Markel Corp. | ||||
3.63% 3/30/23 | 200,000 | 199,116 | ||
3.5% 11/1/27 | 550,000 | 500,265 | ||
Marriott International, Inc. | ||||
Series HH 2.85% 4/15/31 | 500,000 | 393,358 | ||
Masonite International Corp. | ||||
5.38% 2/1/28(a) | 646,000 | 572,366 | ||
3.5% 2/15/30(a) | 200,000 | 153,399 | ||
MasTec, Inc. | ||||
4.5% 8/15/28(a) | 500,000 | 437,276 | ||
Micron Technology, Inc. | ||||
4.19% 2/15/27 | 500,000 | 467,488 | ||
Mileage Plus Holdings LLC/Mileage Plus Intellectual | ||||
Property Assets Ltd. | ||||
6.5% 6/20/27(a) | 1,805,000 | 1,770,055 | ||
MPLX LP | ||||
4.88% 12/1/24 | 750,000 | 741,592 | ||
4.88% 6/1/25 | 190,000 | 186,416 | ||
4% 3/15/28 | 85,000 | 77,575 | ||
4.8% 2/15/29 | 250,000 | 232,939 | ||
4.7% 4/15/48 | 551,000 | 421,324 |
The accompanying notes form an integral part of these financial statements.
2022 Semi-Annual Report 37
$ Principal | |||
Amount | $ Value | ||
6.88% 12/31/99 Floating Rate (US0003M + 465) | 765,000 | 755,438 | |
OneMain Finance Corp. | |||
3.88% 9/15/28 | 1,994,000 | 1,471,831 | |
5.38% 11/15/29 | 2,003,000 | 1,555,580 | |
Oracle Corp. | |||
4.13% 5/15/45 | 1,000,000 | 689,468 | |
PDC Energy, Inc. | |||
6.13% 9/15/24 | 407,000 | 402,522 | |
5.75% 5/15/26 | 2,827,000 | 2,619,145 | |
Physicians Realty LP | |||
4.3% 3/15/27 | 1,271,000 | 1,190,876 | |
Plains All American Pipeline LP/PAA Finance Corp. | |||
3.55% 12/15/29 | 798,000 | 665,831 | |
4.3% 1/31/43 | 75,000 | 50,584 | |
Realty Income Corp. | |||
3.95% 8/15/27 | 575,000 | 540,472 | |
RELX Capital, Inc. | |||
4% 3/18/29 | 500,000 | 459,859 | |
4.75% 5/20/32 | 250,000 | 235,640 | |
Rocket Mortgage LLC / Rocket Mortgage Co-Issuer, Inc. | |||
3.88% 3/1/31(a) | 200,000 | 145,285 | |
4% 10/15/33(a) | 950,000 | 654,615 | |
STORE Capital Corp. | |||
4.5% 3/15/28 | 503,000 | 479,773 | |
4.63% 3/15/29 | 500,000 | 478,637 | |
2.7% 12/1/31 | 1,250,000 | 1,084,574 | |
Symetra Financial Corp. | |||
4.25% 7/15/24 | 640,000 | 625,976 | |
Take Two Interactive Software, Inc. | |||
3.7% 4/14/27 | 1,000,000 | 929,830 | |
Tempur Sealy International, Inc. | |||
4% 4/15/29(a) | 400,000 | 315,906 | |
3.88% 10/15/31(a) | 1,500,000 | 1,102,215 | |
T-Mobile USA, Inc. | |||
2.63% 4/15/26 | 250,000 | 226,847 | |
3.38% 4/15/29 | 4,000,000 | 3,462,000 | |
Twilio, Inc. | |||
3.88% 3/15/31 | 300,000 | 236,122 | |
United Airlines Holdings, Inc. | |||
4.88% 1/15/25^ | 200,000 | 186,728 | |
United Wholesale Mortgage LLC | |||
5.75% 6/15/27(a) | 200,000 | 158,877 | |
VICI Properties LP | |||
4.95% 2/15/30 | 500,000 | 452,917 | |
VICI Properties LP/VICI Note Co., Inc. | |||
4.13% 8/15/30(a) | 1,120,000 | 937,703 | |
Vistajet Malta Finance PLC/XO Management Holding, Inc. | |||
7.88% 5/1/27(a) (b) | 600,000 | 540,774 | |
VistaJet Malta Finance PLC/XO Management Holding, Inc. | |||
6.38% 2/1/30(a) (b) | 100,000 | 81,997 | |
Vontier Corp. | |||
2.95% 4/1/31 | 100,000 | 72,118 | |
Total Corporate Bonds (Cost $85,407,684) | 75,058,834 |
Corporate Convertible Bonds - 0.5% | |||
$ Principal | |||
Amount | $ Value | ||
Redwood Trust, Inc. | |||
4.75% 8/15/23 | 850,000 | 839,374 | |
5.63% 7/15/24 | 700,000 | 635,226 | |
5.75% 10/1/25 | 500,000 | 429,750 | |
Total Corporate Convertible Bonds (Cost $1,957,560) | 1,904,350 | ||
Asset-Backed Securities - 29.4%a | |||
Automobile | |||
ACC Auto Trust (AUTOC) | |||
Series 2021-A Class A - 1.08% 4/15/27(a) | 225,150 | 221,512 | |
American Credit Acceptance Receivables Trust (ACAR) | |||
Series 2020-4 Class D - 1.77% 12/14/26(a) | 2,600,000 | 2,461,025 | |
AmeriCredit Automobile Receivables Trust (AMCAR) | |||
Series 2020-3 Class D - 1.49% 9/18/26 | 1,250,000 | 1,163,240 | |
Arivo Acceptance Auto Loan Receivables Trust (ARIVO) | |||
Series 2019-1 Class A - 2.99% 7/15/24(a) | 10,869 | 10,862 | |
Series 2021-1A Class A - 1.19% 1/15/27(a) | 60,563 | 58,393 | |
CFMT LLC (CFMT) | |||
Series 2021-AL1 Class B - 1.39% 9/22/31(a) | 1,042,955 | 986,229 | |
Drive Auto Receivables Trust (DART) | |||
Series 2021-1 Class D - 1.45% 1/16/29 | 610,000 | 567,623 | |
DT Auto Owner Trust (DTAOT) | |||
Series 2019-3A Class D - 2.96% 4/15/25(a) | 942,865 | 929,917 | |
Enterprise Fleet Financing LLC (EFF) | |||
Series 2019-2 Class A - 2.29% 2/20/25(a) | 36,637 | 36,586 | |
Exeter Automobile Receivables Trust (EART) | |||
Series 2021-4A Class C - 1.46% 10/15/27 | 635,000 | 597,329 | |
First Investors Auto Owner Trust (FIAOT) | |||
Series 2022-1A Class A - 2.03% 1/15/27(a) | 346,041 | 338,195 | |
Flagship Credit Auto Trust (FCAT) | |||
Series 2021-2 Class C - 1.27% 6/15/27(a) | 2,100,000 | 1,930,932 | |
Series 2021-3 Class C - 1.46% 9/15/27(a) | 255,000 | 233,495 | |
Series 2021-4 Class D - 2.26% 12/15/27(a) | 350,000 | 309,979 | |
Foursight Capital Automobile Receivables Trust (FCRT) | |||
Series 2022-2 Class A2 - 4.49% 3/16/26(a) | 500,000 | 495,979 | |
GLS Auto Receivables Issuer Trust (GCAR) | |||
Series 2020-2A Class B - 3.16% 6/16/25(a) | 593,320 | 590,872 | |
Series 2021-1A Class C - 1.2% 1/15/27(a) | 500,000 | 487,911 | |
Series 2021-2A Class D - 1.42% 4/15/27(a) | 405,000 | 369,219 | |
Series 2021-3A Class C - 1.11% 9/15/26(a) | 800,000 | 745,571 | |
Series 2021-4A Class D - 2.48% 10/15/27(a) | 455,000 | 411,440 | |
JPMorgan Chase Bank NA (CACLN) | |||
Series 2020-1 Class D - 1.89% 1/25/28(a) | 158,865 | 156,195 | |
Series 2020-1 Class F - 6.68% 1/25/28(a) | 1,000,000 | 991,276 | |
Series 2021-2 Class E - 2.28% 12/26/28(a) | 518,414 | 499,262 | |
LAD Auto Receivables Trust (LADAR) | |||
Series 2021-1A Class A - 1.3% 8/17/26(a) | 879,403 | 847,930 | |
Series 2021-1A Class D - 3.99% 11/15/29(a) | 3,740,000 | 3,372,173 | |
Series 2022-1A Class B - 5.87% 9/15/27(a) | 1,720,000 | 1,671,774 | |
Series 2022-1A Class C - 6.85% 4/15/30(a) | 2,000,000 | 1,947,706 | |
OneMain Direct Auto Receivables Trust (ODART) | |||
Series 2022-1A Class C - 1.42% 7/14/28(a) | 2,500,000 | 2,175,264 | |
Santander Bank NA (SBCLN) | |||
Series 2021-1A Class C - 3.27% 12/15/31(a) | 356,550 | 344,328 | |
Securitized Term Auto Loan Receivables Trust (SSTRT) | |||
Series 2019-CRTA Class C - 2.85% 3/25/26(a) (b) | 163,499 | 162,455 |
The accompanying notes form an integral part of these financial statements.
38 2022 Semi-Annual Report
CORE PLUS INCOME FUND (CONTINUED)
Schedule of Investments
September 30, 2022 (Unaudited)
$ Principal | |||
Amount | $ Value | ||
Westlake Automobile Receivables Trust (WLAKE) | |||
Series 2021-1A Class C - 0.95% 3/16/26(a) | 540,000 | 517,726 | |
25,632,398 | |||
Collateralized Loan Obligations | |||
ABPCI Direct Lending Fund CLO X LP (ABPCI) | |||
Series 2020-10A Class B1 - 5.06% 1/20/32 Floating | |||
Rate (Qtrly LIBOR + 235)(a) (b) (c) | 1,000,000 | 963,610 | |
ABPCI Direct Lending Fund CLO XI LP (ABPCI) | �� | ||
Series 2022-11A Class B1 - 7.66% 10/27/34 Floating | |||
Rate (TSFR3M + 360)(a) (b) (c) | 1,500,000 | 1,468,778 | |
Audax Senior Debt CLO LLC (AUDAX) | |||
Series 2021-6A Class B - 4.66% 10/20/33 Floating Rate | |||
(Qtrly LIBOR + 195)(a) (c) | 3,000,000 | 2,831,804 | |
Ballyrock CLO Ltd. (BALLY) | |||
Series 2016-1A Class BR2 - 3.86% 10/15/28 Floating | |||
Rate (Qtrly LIBOR + 135)(a) (b) (c) | 1,000,000 | 982,772 | |
BCRED MML CLO LLC (BXCMM) | |||
Series 2022-1A Class A1 - 2.24% 4/20/35 Floating Rate | |||
(Qtrly SOFR + 165)(a) (b) (c) | 1,000,000 | 943,326 | |
BlackRock Elbert CLO V LLC (ELB) | |||
Series 5A Class AR - 5.06% 6/15/34 Floating Rate | |||
(TSFR3M + 185)(a) (b) (c) | 1,040,000 | 996,592 | |
Blackrock Rainier CLO VI Ltd. (BLKMM) | |||
Series 2021-6A Class B - 4.76% 4/20/33 Floating Rate | |||
(Qtrly LIBOR + 205)(a) (b) (c) | 1,800,000 | 1,634,569 | |
Brightwood Capital MM CLO Ltd. (BWCAP) | |||
Series 2020-1A Class A - 5.19% 12/15/28 Floating Rate | |||
(Qtrly LIBOR + 190)(a) (b) (c) | 398,050 | 397,671 | |
Capital Four US CLO II Ltd. (C4US) | |||
Series 2022-1A Class B - 6.77% 10/20/30 Floating Rate | |||
(TSFR3M + 310)(a) (b) (c) | 1,000,000 | 974,966 | |
Cerberus Loan Funding LP (CERB) | |||
Series 2020-1A Class B - 5.06% 10/15/31 Floating Rate | |||
(Qtrly LIBOR + 255)(a) (b) (c) | 500,000 | 481,584 | |
Series 2020-1A Class C - 6.21% 10/15/31 Floating Rate | |||
(Qtrly LIBOR + 370)(a) (b) (c) | 500,000 | 474,025 | |
Series 2020-2A Class A - 4.41% 10/15/32 Floating Rate | |||
(Qtrly LIBOR + 190)(a) (b) (c) | 495,000 | 484,529 | |
Series 2020-2A Class B - 5.11% 10/15/32 Floating Rate | |||
(Qtrly LIBOR + 260)(a) (b) (c) | 500,000 | 474,734 | |
Series 2021-2A Class B - 4.41% 4/22/33 Floating Rate | |||
(Qtrly LIBOR + 190)(a) (b) (c) | 1,500,000 | 1,373,312 | |
Series 2021-6A Class B - 4.26% 11/22/33 Floating Rate | |||
(Qtrly LIBOR + 175)(a) (b) (c) | 1,650,000 | 1,634,304 | |
Series 2022-1A Class A2 - 4.02% 4/15/34(a) | 1,750,000 | 1,554,546 | |
Churchill Middle Market CLO Ltd. (CHMML) | |||
Series 2021-1A Class A1 - 4.28% 10/24/33 Floating Rate | |||
(Qtrly LIBOR + 150)(a) (b) (c) | 1,000,000 | 922,500 | |
Deerpath Capital CLO Ltd. (DPATH) | |||
Series 2021-2A Class A1 - 4.11% 1/15/34 Floating Rate | |||
(Qtrly LIBOR + 160)(a) (b) (c) | 1,000,000 | 951,519 | |
Series 2021-2A Class C - 5.41% 1/15/34 Floating Rate | |||
(Qtrly LIBOR + 290)(a) (b) (c) | 2,300,000 | 2,028,922 | |
Series 2022-1A Class A1 - 2.99% 7/15/33 Floating Rate | |||
(TSFR3M + 195)(a) (b) (c) | 750,000 | 733,992 | |
Fortress Credit Opportunities CLO Ltd. (FCO) | |||
Series 2017-9A Class A1TR - 4.06% 10/15/33 Floating | |||
Rate (Qtrly LIBOR + 155)(a) (b) (c) | 1,500,000 | 1,417,723 | |
Series 2021-15A Class B - 4.63% 4/25/33 Floating Rate | |||
(Qtrly LIBOR + 185)(a) (b) (c) | 1,500,000 | 1,360,129 |
$ Principal | |||
Amount | $ Value | ||
Golub Capital Partners CLO Ltd. (GOCAP) | |||
Series 2016-31A Class CR - 5.73% 8/5/30 Floating Rate | |||
(Qtrly LIBOR + 290)(a) (b) (c) | 1,000,000 | 931,600 | |
Series 2021-54A Class B - 4.68% 8/5/33 Floating Rate | |||
(Qtrly LIBOR + 185)(a) (b) (c) | 500,000 | 479,187 | |
Series 2021-54A Class C - 5.48% 8/5/33 Floating Rate | |||
(Qtrly LIBOR + 265)(a) (b) (c) | 1,000,000 | 939,450 | |
Golub Capital Partners Short Duration (GSHOR) | |||
Series 2022-1A Class B1 10/25/31 Floating Rate | |||
(TSFR3M + 350)(a) (c) | 1,000,000 | 1,000,000 | |
Guggenheim MM CLO Ltd. (GUGG) | |||
Series 2021-4A Class B - 4.76% 1/15/34 Floating Rate | |||
(Qtrly LIBOR + 225)(a) (b) (c) | 2,500,000 | 2,382,042 | |
Ivy Hill Middle Market Credit Fund IX Ltd. (IVYH) | |||
Series 9A Class A1TR - 4.16% 4/15/34 Floating Rate | |||
(Qtrly SOFR + 162)(a) (b) (c) | 1,500,000 | 1,415,613 | |
KKR Lending Partners III Clo LLC (KKRLP) | |||
Series 2021-1A Class B - 4.61% 10/20/30 Floating Rate | |||
(Qtrly LIBOR + 190)(a) (c) | 3,000,000 | 2,908,169 | |
KKR Static CLO I Ltd. (KKRS) | |||
Series 2022-1A Class B - 5.08% 7/20/31 Floating Rate | |||
(TSFR3M + 260)(a) (b) (c) | 1,250,000 | 1,222,831 | |
Maranon Loan Funding Ltd. (MRNON) | |||
Series 2021-2RA Class BR - 4.56% 7/15/33 Floating | |||
Rate (Qtrly LIBOR + 205)(a) (b) (c) | 2,500,000 | 2,424,825 | |
Monroe Capital MML CLO XII Ltd. (MCMML) | |||
Series 2021-2A Class C - 5.92% 9/14/33 Floating Rate | |||
(Qtrly LIBOR + 265)(a) (b) (c) | 2,000,000 | 1,868,269 | |
Owl Rock CLO VIII LLC (OR) | |||
Series 2022-8A Class AT 11/20/34 Floating Rate | |||
(TSFR3M + 250)(a) (c) | 1,000,000 | 989,193 | |
Palmer Square Loan Funding Ltd. (PSTAT) | |||
Series 2021-1A Class A2 - 3.96% 4/20/29 Floating Rate | |||
(Qtrly LIBOR + 125)(a) (b) (c) | 250,000 | 241,528 | |
Series 2021-1A Class B - 4.51% 4/20/29 Floating Rate | |||
(Qtrly LIBOR + 180)(a) (b) (c) | 1,000,000 | 946,835 | |
42,835,449 | |||
Consumer & Specialty Finance | |||
Affirm Asset Securitization Trust (AFFRM) | |||
Series 2021-A Class D - 3.49% 8/15/25(a) | 750,000 | 725,005 | |
Series 2021-B Class A - 1.03% 8/15/26(a) | 1,250,000 | 1,179,583 | |
Series 2022-Z1 Class A - 4.55% 6/15/27(a) | 1,400,501 | 1,373,840 | |
Bankers Healthcare Group Securitization Trust (BHG) | |||
Series 2020-A Class A - 2.56% 9/17/31(a) | 244,600 | 239,004 | |
Series 2021-A Class A - 1.42% 11/17/33(a) | 296,825 | 276,196 | |
Series 2022-B Class B - 4.84% 6/18/35(a) | 1,498,342 | 1,432,880 | |
Conn's Receivables Funding LLC (CONN) | |||
Series 2021-A Class A - 1.05% 5/15/26(a) | 302,528 | 301,185 | |
Series 2021-A Class B - 2.87% 5/15/26(a) | 2,350,000 | 2,292,724 | |
Series 2022-A Class A - 5.87% 12/15/26(a) | 791,252 | 791,219 | |
Driven Brands Funding LLC (HONK) | |||
Series 2019-2A Class A2 - 3.98% 10/20/49(a) | 486,250 | 432,033 | |
Foundation Finance Trust (FFIN) | |||
Series 2019-1A Class A - 3.86% 11/15/34(a) | 136,243 | 133,604 | |
Series 2021-1A Class B - 1.87% 5/15/41(a) | 921,000 | 794,416 | |
FREED ABS Trust (FREED) | |||
Series 2022-1FP Class C - 2.51% 3/19/29(a) | 2,530,000 | 2,350,515 | |
Series 2022-3FP Class B - 5.79% 8/20/29(a) | 1,500,000 | 1,484,366 | |
Jersey Mike's Funding (JMIKE) | |||
Series 2019-1A Class A2 - 4.43% 2/15/50(a) | 992,500 | 903,090 |
The accompanying notes form an integral part of these financial statements.
2022 Semi-Annual Report 39
$ Principal | ||||
Amount | $ Value | |||
Lendingpoint Asset Securitization Trust (LDPT) | ||||
Series 2022-C Class A - 6.56% 2/15/30(a) | 2,500,000 | 2,501,270 | ||
Marlette Funding Trust (MFT) | ||||
Series 2021-2A Class B - 1.06% 9/15/31(a) | 500,000 | 483,189 | ||
Series 2022-1A Class A - 1.36% 4/15/32(a) | 530,943 | 519,135 | ||
Octane Receivables Trust (OCTL) | ||||
Series 2020-1A Class B - 1.98% 6/20/25(a) | 940,000 | 908,290 | ||
Series 2021-1A Class B - 1.53% 4/20/27(a) | 700,000 | 631,458 | ||
Series 2022-1A Class A2 - 4.18% 3/20/28(a) | 652,210 | 649,520 | ||
Pagaya AI Debt Selection Trust (PAID) | ||||
Series 2020-3 Class B - 3.22% 5/17/27(a) | 696,255 | 692,928 | ||
Series 2021 Class B - 0.99% 1/16/29(a) | 614,001 | 577,002 | ||
Series 2021-1 Class A - 1.18% 11/15/27(a) | 475,633 | 464,914 | ||
Series 2022-2 Class A - 4.97% 1/15/30(a) | 1,387,255 | 1,370,040 | ||
PAGAYA AI Debt Trust (PAID) | ||||
Series 2022-3 Class A - 6.06% 3/15/30(a) | 2,500,000 | 2,490,971 | ||
Theorem Funding Trust (THRM) | ||||
Series 2021-1A Class A - 1.28% 12/15/27(a) | 670,096 | 653,446 | ||
Series 2021-1A Class B - 2.21% 12/15/27(a) | 1,000,000 | 912,533 | ||
Series 2022-2A Class B - 9.27% 12/15/28(a) | 1,000,000 | 1,030,646 | ||
Upstart Securitization Trust (UPST) | ||||
Series 2021-1 Class B - 1.89% 3/20/31(a) | 250,000 | 242,819 | ||
Series 2021-1 Class C - 4.06% 3/20/31(a) | 250,000 | 233,465 | ||
Series 2021-2 Class A - 0.91% 6/20/31(a) | 72,079 | 70,366 | ||
Zaxby's Funding LLC (ZAXBY) | ||||
Series 2021-1A Class A2 - 3.24% 7/30/51(a) | 1,237,500 | 1,016,582 | ||
30,158,234 | ||||
Equipment | ||||
Amur Equipment Finance Receivables IX LLC (AXIS) | ||||
Series 2021-1A Class B - 1.38% 2/22/27(a) | 1,035,000 | 955,825 | ||
Series 2021-1A Class D - 2.3% 11/22/27(a) | 500,000 | 447,766 | ||
CCG Receivables Trust (CCG) | ||||
Series 2019-1 Class B - 3.22% 9/14/26(a) | 467,155 | 467,078 | ||
Series 2019-2 Class B - 2.55% 3/15/27(a) | 300,000 | 296,116 | ||
Dext ABS LLC (DEXT) | ||||
Series 2020-1 Class B - 1.92% 11/15/27(a) | 800,000 | 764,041 | ||
Pawnee Equipment Receivables Series LLC (PWNE) | ||||
Series 2019-1 Class A2 - 2.29% 10/15/24(a) | 12,083 | 12,072 | ||
Series 2019-1 Class D - 2.86% 10/15/24(a) | 500,000 | 484,639 | ||
SCF Equipment Leasing LLC (SCFET) | ||||
Series 2019-2A Class A2 - 2.47% 4/20/26(a) | 109,378 | 107,791 | ||
3,535,328 | ||||
Other | ||||
Hilton Grand Vacations Trust (HGVT) | ||||
Series 2020-AA Class B - 4.22% 2/25/39(a) | 244,581 | 236,015 | ||
Sierra Timeshare Receivables Funding LLC (SRFC) | ||||
Series 2019-2A Class B - 2.82% 5/20/36(a) | 162,118 | 155,926 | ||
391,941 | ||||
Total Asset-Backed Securities (Cost $107,042,699) | 102,553,350 |
Commercial Mortgage-Backed Securities - 10.3% | |||
$ Principal | |||
Amount | $ Value | ||
Arbor Realty Commercial Real Estate Notes Ltd. (ARCLO) | |||
Series 2019-FL2 Class B - 4.71% 9/15/34 Floating Rate | |||
(TSFR1M + 186)(a) (b) | 540,000 | 524,446 | |
Series 2021-FL4 Class C - 5.12% 11/15/36 Floating Rate | |||
(Mthly LIBOR + 230)(a) (b) | 3,000,000 | 2,845,327 | |
AREIT Trust (AREIT) | |||
Series 2021-CRE5 Class A - 4.07% 7/17/26 Floating Rate | |||
(Mthly LIBOR + 108)(a) | 867,231 | 841,827 | |
BDS Ltd. (BDS) | |||
Series 2021-FL10 Class C - 5.29% 12/18/36 Floating | |||
Rate (Mthly LIBOR + 230)(a) (b) | 1,250,000 | 1,184,280 | |
BFLD Trust (BFLD) | |||
Series 2020-OBRK Class A - 4.87% 11/15/22 Floating | |||
Rate (Mthly LIBOR + 205)(a) | 940,000 | 929,765 | |
BPCRE Ltd. (BPCRE) | |||
Series 2021-FL1 Class D - 5.54% 2/15/37 Floating Rate | |||
(Mthly LIBOR + 260)(a) (b) | 1,193,000 | 1,167,683 | |
Series 2021-FL1 Class E - 6.04% 2/15/37 Floating Rate | |||
(US0001M + 310)(a) (b) | 766,000 | 762,330 | |
Series 2022-FL2 Class C - 7.52% 1/18/37 Floating Rate | |||
(TSFR1M + 450)(a) (b) | 2,500,000 | 2,476,983 | |
GPMT Ltd. (GPMT) | |||
Series 2021-FL3 Class A - 4.24% 7/16/35 Floating Rate | |||
(Mthly LIBOR + 125)(a) (b) | 1,402,648 | 1,384,165 | |
Hera Commercial Mortgage, Ltd. (HCM) | |||
Series 2021-FL1 Class C - 4.94% 2/18/38 Floating Rate | |||
(US0001M + 195)(a) (b) | 650,000 | 621,207 | |
HGI CRE CLO Ltd. (HGI) | |||
Series 2021-FL1 Class AS - 4.34% 6/16/36 Floating Rate | |||
(Mthly LIBOR + 140)(a) (b) | 1,500,000 | 1,451,771 | |
Series 2021-FL1 Class B - 4.54% 6/16/36 Floating Rate | |||
(Mthly LIBOR + 160)(a) (b) | 3,081,000 | 2,966,898 | |
Series 2021-FL1 Class C - 4.64% 6/16/36 Floating Rate | |||
(US0001M + 170)(a) (b) | 450,000 | 427,824 | |
Series 2021-FL2 Class D - 5.09% 10/19/26 Floating Rate | |||
(Mthly LIBOR + 215)(a) (b) | 1,000,000 | 940,105 | |
Hilton USA Trust (HILT) | |||
Series 2016-SFP Class E - 5.52% 11/5/35(a) | 840,000 | 792,747 | |
ILPT Commercial Mortgage Trust (ILPT) | |||
Series 2022-LPF2 Class B - 4.99% 10/15/39 Floating | |||
Rate (TSFR1M + 274)(a) | 1,000,000 | 999,627 | |
KREF Ltd. (KREF) | |||
Series 2021-FL2 Class B - 4.59% 2/15/39 Floating Rate | |||
(Mthly LIBOR + 165)(a) (b) | 2,500,000 | 2,362,457 | |
Series 2022-FL3 Class B - 5.12% 2/15/39 Floating Rate | |||
(Mthly SOFR + 210)(a) (b) | 2,500,000 | 2,382,900 | |
LoanCore Issuer Ltd. (LNCR) | |||
Series 2018-CRE1 Class C - 5.37% 5/15/28 Floating Rate | |||
(Mthly LIBOR + 255)(a) (b) | 1,000,000 | 999,162 | |
Series 2018-CRE1 Class D - 5.77% 5/15/28 Floating Rate | |||
(US0001M + 295)(a) (b) | 1,000,000 | 978,087 | |
Series 2022-CRE7 Class B - 4.53% 1/17/37 Floating Rate | |||
(SOFR 30 Day Avg. + 225)(a) (b) | 2,500,000 | 2,393,235 | |
PFP Ltd. (PFP) | |||
Series 2022-9 Class A - 5.32% 8/19/35 Floating Rate | |||
(TSFR1M + 218)(a) (b) | 750,000 | 748,594 | |
ReadyCap Commercial Mortgage Trust (RCMT) | |||
Series 2021-FL6 Class B - 4.68% 7/25/36 Floating Rate | |||
(Mthly LIBOR + 160)(a) | 1,500,000 | 1,428,152 | |
Series 2021-FL7 Class A - 4.28% 11/25/36 Floating Rate | |||
(Mthly LIBOR + 120)(a) | 997,716 | 960,302 | |
STWD Ltd. (STWD) | |||
Series 2022-FL3 Class B - 4.24% 11/15/38 Floating Rate | |||
(SOFR 30 Day Avg. + 195)(a) (b) | 2,500,000 | 2,359,913 |
The accompanying notes form an integral part of these financial statements.
40 2022 Semi-Annual Report
CORE PLUS INCOME FUND (CONTINUED)
Schedule of Investments
September 30, 2022 (Unaudited)
$ Principal | |||
Amount | $ Value | ||
VMC Finance LLC (VMC) | |||
Series 2021-FL4 Class A - 4.09% 6/16/36 Floating Rate | |||
(Mthly LIBOR + 110)(a) | 999,171 | 975,752 | |
Total Commercial Mortgage-Backed Securities (Cost $37,031,585) | 35,905,539 | ||
Mortgage-Backed Securities - 1.5% | |||
Federal Home Loan Mortgage Corporation | |||
Collateralized Mortgage Obligations | |||
Series 5026 Class DH - 1.75% 9/25/43 | 484,201 | 441,967 | |
Series 4949 Class BC - 2.25% 3/25/49 | 273,002 | 243,684 | |
Pass-Through Securities | |||
Pool# C91945 – 3% 8/1/37 | 270,290 | 246,929 | |
932,580 | |||
Federal National Mortgage Association | |||
Collateralized Mortgage Obligations | |||
Series 2013-130 Class CA - 2.5% 6/25/43 | 121,065 | 111,806 | |
Series 2013-130 Class CD - 3% 6/25/43 | 220,118 | 208,591 | |
Pass-Through Securities | |||
Pool# 932836 – 3% 12/1/25 | 13,860 | 13,585 | |
Pool# 468516 – 5.17% 6/1/28 | 205,128 | 204,106 | |
Pool# MA3443 – 4% 8/1/48 | 109,868 | 103,635 | |
Pool# FM5733 – 2% 1/1/51 | 1,294,480 | 1,058,553 | |
1,700,276 | |||
Government National Mortgage Association | |||
Collateralized Mortgage Obligations | |||
Series 2021-29 Class CY - 3% 9/20/50 | 1,000,000 | 811,264 | |
Series 2018-52 Class AE - 2.75% 5/16/51 | 84,422 | 79,357 | |
890,621 | |||
Non-Government Agency | |||
Collateralized Mortgage Obligations | |||
Flagstar Mortgage Trust (FSMT) | |||
Series 2017-1 Class 2A2 - 3% 3/25/47(a) (c) | 60,084 | 54,561 | |
JPMorgan Mortgage Trust (JPMMT) | |||
Series 2016-3 Class A - 2.98% 10/25/46(a) (c) | 66,121 | 59,925 | |
Series 2017-3 Class A - 2.5% 8/25/47(a) (c) | 70,447 | 62,427 | |
Series 2018-6 Class 2A2 - 3% 12/25/48(a) (c) | 27,486 | 25,878 | |
RCKT Mortgage Trust (RCKT) | |||
Series 2021-3 Class A5 - 2.5% 7/25/51(a) (c) | 1,566,803 | 1,359,438 | |
Sequoia Mortgage Trust (SEMT) | |||
Series 2019-CH2 Class A - 4.5% 8/25/49(a) (c) | 17,873 | 17,592 | |
Pass-Through Securities | |||
Greenpoint Mortgage Pass-Through Certificates (GMSI) | |||
Series 2003-1 Class A1 - 3.4% 10/25/33(c) | 38,448 | 36,997 | |
1,616,818 | |||
Total Mortgage-Backed Securities (Cost $6,034,947) | 5,140,295 |
Municipal Bonds - 0.3% | |||
$ Principal | |||
Amount | $ Value | ||
Detroit, MI City School District General Obligation SBLF, | |||
6.65% 5/1/29 | 460,000 | 494,531 | |
Village of Rosemont IL General Obligation BAM, 5.38% | |||
12/1/23 | 470,000 | 475,192 | |
Total Municipal Bonds (Cost $1,056,620) | 969,723 | ||
U.S. Treasuries - 34.5% | |||
U.S. Treasury Bonds | |||
3.5% 2/15/39 | 2,100,000 | 2,001,563 | |
1.88% 2/15/41 | 11,500,000 | 8,151,748 | |
1.75% 8/15/41 | 4,000,000 | 2,737,422 | |
2% 11/15/41 | 7,500,000 | 5,372,607 | |
2.38% 2/15/42 | 12,000,000 | 9,200,625 | |
3.25% 5/15/42 | 10,000,000 | 8,878,125 | |
3.13% 2/15/43 | 2,000,000 | 1,720,859 | |
3% 11/15/44 | 4,000,000 | 3,345,000 | |
2.5% 2/15/45 | 8,000,000 | 6,106,250 | |
2.5% 5/15/46 | 8,400,000 | 6,374,813 | |
2.25% 8/15/46 | 2,500,000 | 1,802,441 | |
3% 2/15/47 | 1,000,000 | 836,953 | |
2.25% 8/15/49 | 3,500,000 | 2,561,563 | |
U.S. Treasury Notes | |||
1.5% 8/15/26 | 1,850,000 | 1,673,672 | |
2% 11/15/26 | 2,000,000 | 1,837,031 | |
1.63% 11/30/26 | 3,000,000 | 2,714,531 | |
2.25% 2/15/27 | 3,500,000 | 3,236,133 | |
2.38% 5/15/27 | 3,000,000 | 2,781,328 | |
2.25% 8/15/27 | 3,000,000 | 2,758,535 | |
1.13% 2/29/28 | 6,500,000 | 5,580,098 | |
1.25% 5/31/28 | 8,000,000 | 6,871,250 | |
1.25% 9/30/28 | 7,000,000 | 5,960,117 | |
1.5% 11/30/28 | 3,000,000 | 2,586,445 | |
1.88% 2/28/29 | 3,500,000 | 3,081,367 | |
1.75% 11/15/29 | 3,000,000 | 2,606,953 | |
1.5% 2/15/30 | 5,250,000 | 4,457,168 | |
0.88% 11/15/30 | 8,000,000 | 6,375,625 | |
1.13% 2/15/31 | 4,500,000 | 3,645,176 | |
1.38% 11/15/31 | 5,500,000 | 4,470,147 | |
1.88% 2/15/32 | 1,000,000 | 847,578 | |
Total U.S. Treasuries (Cost $143,381,107) | 120,573,123 |
Non-Convertible Preferred Stocks - 0.4% | ||
Shares | $ Value | |
Qurate Retail, Inc. 3/15/31 (Cost $2,672,824) | 27,800 | 1,266,012 |
Cash Equivalents - 0.1% | ||
$ Principal | ||
Amount | $ Value | |
JPMorgan U.S. Government Money Market | ||
Fund - Institutional Class 2.7% (Cost | ||
$456,311) (d) | 456,311 | 456,311 |
The accompanying notes form an integral part of these financial statements.
2022 Semi-Annual Report 41
Short-Term Securities Held as Collateral for Securities on Loan - 0.1% | |||
Shares | $ Value | ||
Citibank N.A. DDCA | |||
3.07% | 51,100 | 51,100 | |
Goldman Sachs Financial Square Government Fund | |||
Institutional Class - 2.91% | 459,898 | 459,898 | |
Total Short-Term Securities Held as Collateral for Securities on Loan | |||
(Cost $510,998) | 510,998 | ||
Total Investments in Securities (Cost $385,552,335) | 344,338,535 | ||
Cash - 0.0% | 10 | ||
Other Assets Less Other Liabilities - 1.4% | 4,667,708 | ||
Net Assets - 100% | 349,006,253 | ||
Net Asset Value Per Share - Investor Class | 9.54 | ||
Net Asset Value Per Share - Institutional Class | 9.54 |
^ | This security or a partial position of this security was on loan as of September 30, 2022. The total value of securities on loan as of September 30, 2022 was $499,364. |
(a) | Security is exempt from registration under Rule 144A of the Securities Act of 1933. This security may be resold in transactions that are exempt from registration, normally to qualified institutional buyers. |
(b) | Foreign domiciled entity. |
(c) | The interest rate resets periodically based on the weighted average coupons of the underlying mortgage-related or asset-backed obligations. |
(d) | Rate presented represents the 30 day average yield at September 30, 2022. |
The accompanying notes form an integral part of these financial statements.
42 2022 Semi-Annual Report
HICKORY FUND
Schedule of Investments
September 30, 2022 (Unaudited)
Common Stocks - 95.5% | |||
% of Net | |||
Communication Services | Assets | Shares | $ Value |
Cable & Satellite | 15.4 | ||
Liberty Media Corp-Liberty SiriusXM(a) | |||
Class C | 190,000 | 7,164,900 | |
Class A | 70,000 | 2,664,900 | |
Liberty Broadband Corp.(a) | |||
Class C | 100,000 | 7,380,000 | |
Class A | 30,000 | 2,238,000 | |
Liberty Latin America Ltd. - Class C(a) (b) | 475,000 | 2,921,250 | |
Integrated Telecommunication Services | 6.4 | ||
LICT Corp.(a) | 446 | 9,232,200 | |
Alternative Carriers | 3.0 | ||
Liberty Global PLC - Class C(a) (b) | 265,000 | 4,372,500 | |
24.8 | 35,973,750 | ||
Industrials | |||
Research & Consulting Services | 10.0 | ||
CoStar Group, Inc.(a) | 152,100 | 10,593,765 | |
Dun & Bradstreet Holdings, Inc. | 320,000 | 3,964,800 | |
Aerospace & Defense | 4.7 | ||
HEICO Corp. - Class A | 60,000 | 6,877,200 | |
Industrial Machinery | 4.7 | ||
Ingersoll Rand, Inc. | 80,000 | 3,460,800 | |
IDEX Corp. | 16,500 | 3,297,525 | |
19.4 | 28,194,090 | ||
Information Technology | |||
Application Software | 5.1 | ||
Guidewire Software, Inc.(a) | 70,000 | 4,310,600 | |
ACI Worldwide, Inc.(a) | 150,000 | 3,135,000 | |
Electronic Components | 3.6 | ||
Dolby Laboratories, Inc. - Class A | 79,500 | 5,179,425 | |
Data Processing & Outsourced Services | 3.0 | ||
Black Knight, Inc.(a) | 67,500 | 4,369,275 | |
IT Consulting & Other Services | 2.6 | ||
Gartner, Inc.(a) | 13,600 | 3,762,984 | |
14.3 | 20,757,284 | ||
Materials | |||
Construction Materials | 6.9 | ||
Martin Marietta Materials, Inc. | 16,500 | 5,314,485 | |
Vulcan Materials Co. | 30,000 | 4,731,300 | |
Specialty Chemicals | 6.5 | ||
Axalta Coating Systems Ltd.(a) (b) | 255,000 | 5,370,300 | |
Perimeter Solutions SA(a) (b) | 500,000 | 4,005,000 | |
13.4 | 19,421,085 |
% of Net | |||
Financials | Assets | Shares | $ Value |
Financial Exchanges & Data | 3.5 | ||
MarketAxess Holdings, Inc. | 23,000 | 5,117,270 | |
Property & Casualty Insurance | 3.3 | ||
Markel Corp.(a) | 4,400 | 4,770,568 | |
Regional Banks | 3.0 | ||
First Republic Bank | 33,000 | 4,308,150 | |
9.8 | 14,195,988 | ||
Consumer Discretionary | |||
Distributors | 4.7 | ||
LKQ Corp. | 145,000 | 6,836,750 | |
Automotive Retail | 4.3 | ||
CarMax, Inc.(a) | 95,000 | 6,271,900 | |
Internet & Direct Marketing Retail | 0.4 | ||
Qurate Retail, Inc. - Class A | 300,000 | 603,000 | |
9.4 | 13,711,650 | ||
Health Care | |||
Health Care Services | 4.4 | ||
Laboratory Corp. of America Holdings | 31,000 | 6,349,110 | |
Total Common Stocks (Cost $108,462,762) | 138,602,957 | ||
Non-Convertible Preferred Stocks - 1.1%a | |||
Qurate Retail, Inc. 3/15/31 (Cost $2,581,983) | 35,000 | 1,593,900 | |
Warrants - 0.0%a | |||
Perimeter Solutions SA Expires 11/08/24 (Cost $5,000) (b) (c) | 500,000 | 0 | |
Cash Equivalents - 4.1%a | |||
$ Principal | |||
Amount | $ Value | ||
JPMorgan U.S. Government Money Market | |||
Fund - Institutional Class 2.7%(d) | 2,961,628 | 2,961,628 | |
U.S. Treasury Bills, 1.78% to 2.23%, 10/11/22 | |||
to 10/25/22(e) | 3,000,000 | 2,997,367 | |
Total Cash Equivalents (Cost $5,958,583) | 5,958,995 | ||
Total Investments in Securities (Cost $117,008,328) | 146,155,852 | ||
Other Liabilities in Excess of Other Assets - (0.7%) | (969,979) | ||
Net Assets - 100% | 145,185,873 | ||
Net Asset Value Per Share - Investor Class | 39.48 |
(a) | Non-income producing. |
(b) | Foreign domiciled entity. |
(c) | This security is classified as Level 3 within the fair value hierarchy. |
(d) | Rate presented represents the 30 day average yield at September 30, 2022. |
(e) | Interest rates presented represent the effective yield at September 30, 2022. |
The accompanying notes form an integral part of these financial statements.
2022 Semi-Annual Report 43
NEBRASKA TAX-FREE INCOME FUND
Schedule of Investments
September 30, 2022 (Unaudited)
Municipal Bonds - 91.8%a | ||||
% of Net | $ Principal | |||
Assets | Amount | $ Value | ||
Arizona | 0.3 | |||
Arizona Industrial Development Authority Revenue | ||||
5% 2/1/23 | 100,000 | 100,544 | ||
California | 0.7 | |||
San Diego County Regional Airport Authority Revenue | ||||
Series B 5% 7/1/25 | 200,000 | 205,766 | ||
Colorado | 0.3 | |||
Colorado Bridge Enterprise Revenue 4% 12/31/23 | 100,000 | 100,790 | ||
Florida | 0.7 | |||
State of Florida General Obligation 4% 6/1/36 | 200,000 | 200,243 | ||
Nebraska | 84.0 | |||
Ashland-Greenwood Public Schools General Obligation | ||||
3% 12/15/42 | 100,000 | 72,745 | ||
Cass County School District No. 22 General Obligation | ||||
2.05% 12/15/25 | 375,000 | 355,445 | ||
2.2% 12/15/26 | 250,000 | 235,271 | ||
City of Bellevue NE General Obligation Series A 3% | ||||
9/15/32 | 500,000 | 448,695 | ||
City of Blair NE Water System Revenue | ||||
AMT, | ||||
2.65% 12/15/24 | 100,000 | 96,370 | ||
2.85% 12/15/25 | 100,000 | 95,285 | ||
3% 12/15/26 | 100,000 | 93,938 | ||
3.1% 12/15/27 | 100,000 | 92,488 | ||
3.2% 12/15/28 | 100,000 | 91,670 | ||
City of Columbus NE Combined Utilities System Revenue | ||||
4% 6/15/33 | 200,000 | 202,259 | ||
AGM, | ||||
4% 12/15/26 | 100,000 | 102,743 | ||
4% 12/15/27 | 100,000 | 102,947 | ||
City of Columbus NE General Obligation | ||||
3% 12/15/29 | 150,000 | 140,951 | ||
3% 12/15/30 | 150,000 | 138,214 | ||
City of Grand Island NE Combined Utility System Revenue | ||||
Series A AGM, | ||||
4% 8/15/35 | 205,000 | 201,993 | ||
4% 8/15/36 | 125,000 | 121,228 | ||
City of Grand Island NE General Obligation | ||||
3% 11/15/27 | 150,000 | 144,798 | ||
3% 11/15/30 | 150,000 | 139,247 | ||
City of Gretna NE Certificates of Participation 4% | ||||
12/15/25 | 500,000 | 506,023 | ||
City of Lincoln NE General Obligation 5% 5/15/23 | 135,000 | 136,607 | ||
City of Norfolk NE General Obligation 0.65% 5/15/24 | 375,000 | 351,000 | ||
City of Omaha NE General Obligation | ||||
Series A | ||||
4% 4/15/23 | 185,000 | 185,959 | ||
4% 1/15/33 | 260,000 | 264,563 | ||
3% 4/15/35 | 100,000 | 84,286 | ||
Series A Class A - | ||||
3% 4/15/34 | 100,000 | 85,509 | ||
Series B | ||||
3% 11/15/24 | 400,000 | 399,972 |
% of Net | $ Principal | |||
Assets | Amount | $ Value | ||
City of Omaha NE Sewer Revenue | ||||
5% 11/15/22 | 200,000 | 200,457 | ||
5% 4/1/26 | 250,000 | 264,396 | ||
4% 4/1/31 | 350,000 | 357,042 | ||
Series A | ||||
4% 4/1/34 | 100,000 | 100,831 | ||
County of Kearney NE General Obligation 4% 6/1/23 | 200,000 | 200,880 | ||
County of Saline NE Revenue 3% 2/15/31 | 200,000 | 174,892 | ||
County of Sarpy NE Certificates of Participation 1.75% | ||||
6/15/26 | 500,000 | 458,974 | ||
County of Seward NE General Obligation 3% 12/15/30 | 605,000 | 576,097 | ||
Cozad City School District General Obligation 4% 6/15/26 | 250,000 | 255,091 | ||
Dawson County Public Power District Revenue | ||||
Series A | ||||
2% 6/15/26 | 170,000 | 159,405 | ||
2.1% 6/15/27 | 105,000 | 97,487 | ||
Series B | ||||
2.5% 6/15/28 | 135,000 | 126,972 | ||
3% 6/15/29 | 245,000 | 237,338 | ||
3% 6/15/30 | 355,000 | 340,146 | ||
Dodge County School District No. 595 General Obligation | ||||
1.9% 6/15/32 | 200,000 | 157,700 | ||
Douglas County Hospital Authority No. 2 Revenue | ||||
5% 5/15/26 | 500,000 | 507,448 | ||
5% 5/15/30 | 140,000 | 146,735 | ||
4% 5/15/32 | 700,000 | 677,132 | ||
Douglas County Hospital Authority No. 3 Revenue 5% | ||||
11/1/22 | 250,000 | 250,281 | ||
Douglas County School District No. 59 NE General | ||||
Obligation 3% 12/15/32 | 100,000 | 88,301 | ||
Kearney School District General Obligation 3% 12/15/24 | 250,000 | 246,412 | ||
Lancaster County School District 001 General Obligation | ||||
4% 1/15/33 | 250,000 | 254,415 | ||
Lincoln Airport Authority Revenue AMT, 5% 7/1/27 | 150,000 | 159,667 | ||
Lincoln-Lancaster County Public Building Commission | ||||
Revenue 3% 12/1/25 | 500,000 | 491,666 | ||
Madison County Hospital Authority No. 1 Revenue 5% | ||||
7/1/23 | 250,000 | 252,344 | ||
Metropolitan Utilities District of Omaha Gas System | ||||
Revenue 4% 12/1/27 | 450,000 | 456,499 | ||
Municipal Energy Agency of Nebraska Revenue 5% | ||||
4/1/27 | 350,000 | 369,519 | ||
Nebraska Cooperative Republican Platte Enhancement | ||||
Project Revenue Series A 2% 12/15/29 | 250,000 | 214,649 | ||
Nebraska Educational Health Cultural & Social Services | ||||
Finance Authority Revenue 4% 1/1/34 | 110,000 | 104,569 | ||
Nebraska Investment Finance Authority Revenue | ||||
Series A | ||||
2.05% 9/1/24 | 120,000 | 116,677 | ||
Series B | ||||
1.35% 9/1/26 | 200,000 | 181,000 | ||
Series C | ||||
1.85% 3/1/23 | 100,000 | 99,378 | ||
2% 9/1/35 | 325,000 | 239,174 | ||
Nebraska Public Power District Revenue | ||||
Series C | ||||
5% 1/1/32 | 65,000 | 67,358 | ||
5% 1/1/35 | 480,000 | 495,197 | ||
Nebraska State College Facilities Corp. Pre-refunded/ | ||||
Escrowed AGM, 4% 7/15/28 | 750,000 | 766,432 | ||
Omaha Public Facilities Corp. Revenue | ||||
4% 6/1/28 | 585,000 | 598,946 |
The accompanying notes form an integral part of these financial statements.
44 2022 Semi-Annual Report
NEBRASKA TAX-FREE INCOME FUND (CONTINUED)
Schedule of Investments
September 30, 2022 (Unaudited)
% of Net | $ Principal | |||
Assets | Amount | $ Value | ||
Series A | ||||
4% 6/1/31 | 155,000 | 158,851 | ||
Series C | ||||
4% 4/1/33 | 340,000 | 345,497 | ||
4% 4/1/39 | 500,000 | 461,791 | ||
Omaha Public Power District Revenue | ||||
Series A | ||||
2.85% 2/1/27 | 500,000 | 481,404 | ||
Series C | ||||
5% 2/1/39 | 150,000 | 154,427 | ||
Omaha School District General Obligation | ||||
5% 12/15/29 | 350,000 | 369,556 | ||
5% 12/15/31 | 135,000 | 141,683 | ||
Omaha-Douglas Public Building Commission General | ||||
Obligation Series B 5% 5/1/32 | 550,000 | 598,360 | ||
Papillion Municipal Facilities Corp. Revenue | ||||
2% 12/15/32 | 100,000 | 81,741 | ||
2% 12/15/34 | 200,000 | 155,846 | ||
Papillion-La Vista School District No. 27 General | ||||
Obligation | ||||
Series A | ||||
2.05% 12/1/24 | 150,000 | 144,630 | ||
2.2% 12/1/25 | 150,000 | 143,248 | ||
2.3% 12/1/26 | 275,000 | 260,466 | ||
Series B | ||||
4% 12/1/35 | 400,000 | 395,964 | ||
Public Power Generation Agency Revenue | ||||
5% 1/1/28 | 500,000 | 515,568 | ||
5% 1/1/32 | 140,000 | 145,966 | ||
Sarpy County School District No. 1 Pre-refunded/Escrowed | ||||
5% 12/15/29 | 550,000 | 595,208 | ||
Southeast Community College Certificates of Participation | ||||
3% 12/15/22 | 400,000 | 400,026 | ||
State of Nebraska Certificates of Participation Series A | ||||
2% 4/1/26 | 150,000 | 139,787 | ||
University of Nebraska Facilities Corp. Revenue 5% | ||||
7/15/29 | 380,000 | 399,487 | ||
University of Nebraska Revenue | ||||
Pre-refunded/Escrowed | ||||
3% 7/1/25 | 100,000 | 99,556 | ||
2.5% 7/1/26 | 210,000 | 204,512 | ||
3% 7/1/27 | 100,000 | 99,074 | ||
5% 5/15/30 | 100,000 | 108,349 | ||
Upper Republican Natural Resource District Revenue | ||||
AGM, | ||||
4% 12/15/25 | 245,000 | 245,359 | ||
4% 12/15/27 | 395,000 | 395,582 | ||
Village of Boys Town NE Revenue | ||||
3% 9/1/28 | 700,000 | 669,469 | ||
3% 7/1/35 | 325,000 | 278,503 | ||
Westside Community Schools General Obligation 2.5% | ||||
12/1/22 | 250,000 | 249,724 | ||
Winside Public Schools General Obligation 2% 6/15/31 | 350,000 | 290,650 | ||
24,111,997 | ||||
New Mexico | 1.3 | |||
New Mexico Finance Authority Revenue Series C 4% | ||||
6/1/34 | 365,000 | 367,241 |
% of Net | $ Principal | ||
Assets | Amount | $ Value | |
Texas | 3.0 | ||
City of Austin Tx Airport System Revenue Series B AMT, | |||
5% 11/15/26 | 250,000 | 258,592 | |
City of Austin Tx Electric Utility Revenue Series A | |||
5% 11/15/35 | 100,000 | 107,317 | |
County of Bexar TX General Obligation 4% 6/15/36 | 500,000 | 491,139 | |
857,048 | |||
Utah | 0.4 | ||
City of Salt Lake City UT Public Utilities Revenue 5% | |||
2/1/35 | 100,000 | 107,293 | |
Washington | 1.1 | ||
Pierce County School District No. 10 Tacoma General | |||
Obligation Series B AMBAC: AMER MUNI BOND | |||
ASSURANCE CORP, 4% 12/1/35 | 100,000 | 99,812 | |
Port of Seattle WA Revenue Series C 5% 5/1/26 | 200,000 | 208,328 | |
308,140 | |||
Total Municipal Bonds (Cost $28,453,393) | 26,359,062 | ||
Cash Equivalents - 7.4% | |||
JPMorgan U.S. Government Money Market | |||
Fund - Institutional Class 2.7% (Cost | |||
$2,117,343) (a) | 2,117,343 | 2,117,343 | |
Total Investments in Securities (Cost $30,570,736) | 28,476,405 | ||
Cash - 0.0% | 3 | ||
Other Assets Less Other Liabilities - 0.8% | 242,860 | ||
Net Assets - 100% | 28,719,268 | ||
Net Asset Value Per Share - Investor Class | 9.24 |
(a) Rate presented represents the 30 day average yield at September 30, 2022.
The accompanying notes form an integral part of these financial statements.
2022 Semi-Annual Report 45
PARTNERS III OPPORTUNITY FUND
Schedule of Investments
September 30, 2022 (Unaudited)
Common Stocks - 92.1% | |||
% of Net | |||
Information Technology | Assets | Shares | $ Value |
Data Processing & Outsourced Services | 17.6 | ||
Visa, Inc. - Class A | 130,000 | 23,094,500 | |
Fidelity National Information Services, Inc. | 300,000 | 22,671,000 | |
Mastercard, Inc. - Class A | 65,000 | 18,482,100 | |
Black Knight, Inc.(a) | 140,000 | 9,062,200 | |
Application Software | 5.9 | ||
CoreCard Corp.^ † (a) | 630,000 | 13,715,100 | |
Roper Technologies, Inc. | 30,000 | 10,789,200 | |
Semiconductors | 3.0 | ||
Texas Instruments, Inc. | 80,000 | 12,382,400 | |
26.5 | 110,196,500 | ||
Communication Services | |||
Interactive Media & Services | 11.4 | ||
Alphabet, Inc. - Class C(a) | 280,000 | 26,922,000 | |
Meta Platforms, Inc. - Class A(a) | 150,000 | 20,352,000 | |
Cable & Satellite | 10.1 | ||
Liberty Media Corp-Liberty SiriusXM(a) | |||
Class C | 400,000 | 15,084,000 | |
Class A | 185,000 | 7,042,950 | |
Liberty Broadband Corp.(a) | |||
Class C | 180,000 | 13,284,000 | |
Class A | 90,000 | 6,714,000 | |
Alternative Carriers | 3.8 | ||
Liberty Global PLC - Class C(a) (b) | 960,000 | 15,840,000 | |
25.3 | 105,238,950 | ||
Financials | |||
Multi-Sector Holdings | 10.6 | ||
Berkshire Hathaway, Inc. - Class B(a) | 165,000 | 44,058,300 | |
Property & Casualty Insurance | 5.2 | ||
Markel Corp.(a) | 20,000 | 21,684,400 | |
Investment Banking & Brokerage | 3.9 | ||
The Charles Schwab Corp. | 230,000 | 16,530,100 | |
19.7 | 82,272,800 | ||
Consumer Discretionary | |||
Internet & Direct Marketing Retail | 5.4 | ||
Amazon.com, Inc.(a) | 200,000 | 22,600,000 | |
Automotive Retail | 4.0 | ||
CarMax, Inc.(a) | 250,000 | 16,505,000 | |
9.4 | 39,105,000 | ||
Health Care | |||
Health Care Equipment | 2.5 | ||
Danaher Corp. | 40,000 | 10,331,600 |
% of Net | |||
Health Care | Assets | Shares | $ Value |
Health Care Services | 2.4 | ||
Laboratory Corp. of America Holdings | 50,000 | 10,240,500 | |
4.9 | 20,572,100 | ||
Industrials | |||
Research & Consulting Services | 3.3 | ||
CoStar Group, Inc.(a) | 200,000 | 13,930,000 | |
Materials | |||
Specialty Chemicals | 3.0 | ||
Perimeter Solutions SA(a) (b) | 1,550,000 | 12,415,500 | |
Total Common Stocks (Cost $255,906,321) | 383,730,850 | ||
Non-Convertible Preferred Stocks - 2.2%a | |||
Qurate Retail, Inc. 3/15/31 (Cost $17,921,852) | 200,000 | 9,108,000 | |
Warrants - 0.0% | |||
Perimeter Solutions SA Expires 11/08/24 (Cost $15,000)(b) (c) | 1,500,000 | 0 | |
Cash Equivalents - 5.9% | |||
$ Principal | |||
Amount | $ Value | ||
JPMorgan U.S. Government Money Market | |||
Fund - Institutional Class 2.7%(d) | 14,753,089 | 14,753,089 | |
U.S. Treasury Bills 2.23% 10/25/22 (e) | 10,000,000 | 9,984,539 | |
Total Cash Equivalents (Cost $24,736,006) | 24,737,628 |
Short-Term Securities Held as Collateral for Securities on Loan - 1.9% | |||
Citibank N.A. DDCA | |||
3.07% | 776,902 | 776,902 | |
Goldman Sachs Financial Square Government Fund | |||
Institutional Class - 2.91% | 6,992,118 | 6,992,118 | |
Total Short-Term Securities Held as Collateral for Securities on Loan | |||
(Cost $7,769,020) | 7,769,020 | ||
Total Investments in Securities (Cost $306,348,199) | 425,345,498 | ||
Due from Broker - 3.6% | 14,976,645 | ||
Securities Sold Short - (3.4)% | (14,287,200) | ||
Cash due to Custodian - 0.0% | (2) | ||
Other Assets Less Other Liabilities - (2.3%) | (9,365,854) | ||
Net Assets - 100% | 416,669,087 | ||
Net Asset Value Per Share - Investor Class | 10.63 | ||
Net Asset Value Per Share - Institutional Class | 11.42 |
The accompanying notes form an integral part of these financial statements.
46 2022 Semi-Annual Report
PARTNERS III OPPORTUNITY FUND (CONTINUED)
Schedule of Investments
September 30, 2022 (Unaudited)
Securities Sold Short - (3.4)% | Shares | $ Value |
SPDR S&P 500 ETF Trust | 40,000 | (14,287,200) |
Total Securities Sold Short (proceeds $8,412,580) | (14,287,200) |
† | Non-controlled affiliate. |
^ | This security or a partial position of this security was on loan as of September 30, 2022. The total value of securities on loan as of September 30, 2022 was $7,579,026. |
(a) | Non-income producing. |
(b) | Foreign domiciled entity. |
(c) | This security is classified as Level 3 within the fair value hierarchy. |
(d) | Rate presented represents the 30 day average yield at September 30, 2022. |
(e) | Interest rates presented represent the effective yield at September 30, 2022. |
The accompanying notes form an integral part of these financial statements.
2022 Semi-Annual Report 47
PARTNERS VALUE FUND
Schedule of Investments
September 30, 2022 (Unaudited)
Common Stocks - 98.2% | |||
% of Net | |||
Communication Services | Assets | Shares | $ Value |
Cable & Satellite | 10.7 | ||
Liberty Media Corp-Liberty SiriusXM(a) | |||
Class C | 435,000 | 16,403,850 | |
Class A | 120,000 | 4,568,400 | |
Liberty Broadband Corp.(a) | |||
Class C | 100,000 | 7,380,000 | |
Class A | 70,000 | 5,222,000 | |
Liberty Latin America Ltd. - Class C(a) (b) | 1,120,000 | 6,888,000 | |
Interactive Media & Services | 9.5 | ||
Alphabet, Inc. - Class C(a) | 276,000 | 26,537,400 | |
Meta Platforms, Inc. - Class A(a) | 70,000 | 9,497,600 | |
Alternative Carriers | 2.9 | ||
Liberty Global PLC - Class C(a) (b) | 675,000 | 11,137,500 | |
23.1 | 87,634,750 | ||
Financials | |||
Multi-Sector Holdings | 7.1 | ||
Berkshire Hathaway, Inc. - Class B(a) | 100,000 | 26,702,000 | |
Insurance Brokers | 3.5 | ||
Aon plc - Class A(b) | 50,000 | 13,393,500 | |
Investment Banking & Brokerage | 3.2 | ||
The Charles Schwab Corp. | 170,000 | 12,217,900 | |
Property & Casualty Insurance | 3.2 | ||
Markel Corp.(a) | 11,250 | 12,197,475 | |
Regional Banks | 2.2 | ||
First Republic Bank | 64,000 | 8,355,200 | |
Financial Exchanges & Data | 1.9 | ||
MarketAxess Holdings, Inc. | 32,000 | 7,119,680 | |
21.1 | 79,985,755 | ||
Information Technology | |||
Data Processing & Outsourced Services | 10.8 | ||
Visa, Inc. - Class A | 92,500 | 16,432,625 | |
Mastercard, Inc. - Class A | 50,000 | 14,217,000 | |
Black Knight, Inc.(a) | 160,000 | 10,356,800 | |
Semiconductors | 3.5 | ||
Texas Instruments, Inc. | 85,000 | 13,156,300 | |
Application Software | 2.9 | ||
Guidewire Software, Inc.(a) | 120,000 | 7,389,600 | |
ACI Worldwide, Inc.(a) | 180,000 | 3,762,000 | |
IT Consulting & Other Services | 2.6 | ||
Gartner, Inc.(a) | 35,200 | 9,739,488 | |
19.8 | 75,053,813 | ||
Industrials | |||
Research & Consulting Services | 6.8 | ||
CoStar Group, Inc.(a) | 302,500 | 21,069,125 | |
Dun & Bradstreet Holdings, Inc. | 381,149 | 4,722,436 |
% of Net | |||
Industrials | Assets | Shares | $ Value |
Aerospace & Defense | 3.6 | ||
HEICO Corp. - Class A | 120,000 | 13,754,400 | |
Industrial Machinery | 2.1 | ||
IDEX Corp. | 40,000 | 7,994,000 | |
12.5 | 47,539,961 | ||
Materials | |||
Construction Materials | 6.9 | ||
Vulcan Materials Co. | 83,500 | 13,168,785 | |
Martin Marietta Materials, Inc. | 40,000 | 12,883,600 | |
Specialty Chemicals | 2.6 | ||
Axalta Coating Systems Ltd.(a) (b) | 465,000 | 9,792,900 | |
9.5 | 35,845,285 | ||
Consumer Discretionary | |||
Distributors | 3.5 | ||
LKQ Corp. | 280,000 | 13,202,000 | |
Automotive Retail | 2.8 | ||
CarMax, Inc.(a) | 160,000 | 10,563,200 | |
6.3 | 23,765,200 | ||
Health Care | |||
Health Care Services | 3.1 | ||
Laboratory Corp. of America Holdings | 57,000 | 11,674,170 | |
Health Care Equipment | 2.8 | ||
Danaher Corp. | 42,023 | 10,854,121 | |
5.9 | 22,528,291 | ||
Total Common Stocks (Cost $241,970,478) | 372,353,055 | ||
Cash Equivalents - 1.9% | |||
$ Principal | |||
Amount | $ Value | ||
JPMorgan U.S. Government Money Market | |||
Fund - Institutional Class 2.7%(c) | 4,297,299 | 4,297,299 | |
U.S. Treasury Bill 1.78% 10/11/22 (d) | 3,000,000 | 2,998,370 | |
Total Cash Equivalents (Cost $7,295,294) | 7,295,669 | ||
Total Investments in Securities (Cost $249,265,772) | 379,648,724 | ||
Cash - 0.0% | 0 | ||
Other Liabilities in Excess of Other Assets - (0.1%) | (382,097) | ||
Net Assets - 100% | 379,266,627 | ||
Net Asset Value Per Share - Investor Class | 25.62 | ||
Net Asset Value Per Share - Institutional Class | 26.25 |
(a) Non-income producing.
(b) Foreign domiciled entity.
The accompanying notes form an integral part of these financial statements.
48 2022 Semi-Annual Report
PARTNERS VALUE FUND (CONTINUED)
Schedule of Investments
September 30, 2022 (Unaudited)
(c) Rate presented represents the 30 day average yield at September 30, 2022.
(d) Interest rates presented represent the effective yield at September 30, 2022.
The accompanying notes form an integral part of these financial statements.
2022 Semi-Annual Report 49
SHORT DURATION INCOME FUND
Schedule of Investments
September 30, 2022 (Unaudited)
Corporate Bonds - 12.6% | |||
$ Principal | |||
Amount | $ Value | ||
Abercrombie & Fitch Management Co. | |||
8.75% 7/15/25(a) | 5,525,000 | 5,394,251 | |
American Airlines Group, Inc. | |||
3.75% 3/1/25^ (a) | 750,000 | 614,235 | |
American Airlines, Inc./AAdvantage Loyalty IP Ltd. | |||
5.5% 4/20/26(a) | 750,000 | 705,626 | |
Ares Capital Corp. (ARES) | |||
4.2% 6/10/24 | 3,000,000 | 2,906,688 | |
Ashtead Capital, Inc. | |||
1.5% 8/12/26(a) | 1,000,000 | 839,610 | |
4.38% 8/15/27(a) | 3,000,000 | 2,758,425 | |
Bath Body Works, Inc. | |||
9.38% 7/1/25(a) | 1,000,000 | 1,036,500 | |
Boardwalk Pipelines LP | |||
4.95% 12/15/24 | 2,580,000 | 2,555,500 | |
Boeing Co. (The) | |||
4.51% 5/1/23 | 1,000,000 | 996,786 | |
Boston Properties LP | |||
3.13% 9/1/23 | 9,560,000 | 9,392,299 | |
Brunswick Corp. | |||
0.85% 8/18/24 | 500,000 | 460,833 | |
Cantor Fitzgerald LP | |||
4.5% 4/14/27(a) | 1,500,000 | 1,392,631 | |
Carlisle Cos., Inc. | |||
0.55% 9/1/23 | 2,000,000 | 1,920,483 | |
3.5% 12/1/24 | 500,000 | 481,630 | |
Cinemark USA, Inc. | |||
5.88% 3/15/26(a) | 2,199,000 | 1,841,182 | |
Delta Air Lines, Inc./SkyMiles IP Ltd. | |||
4.5% 10/20/25(a) | 3,000,000 | 2,913,767 | |
Devon Energy Corp. | |||
5.25% 10/15/27 | 390,000 | 391,162 | |
Discovery Communications LLC | |||
2.95% 3/20/23 | 2,277,000 | 2,257,615 | |
Drax Finco PLC | |||
6.63% 11/1/25(a) (b) | 3,500,000 | 3,377,133 | |
Energy Transfer LP | |||
3.9% 5/15/24 | 1,852,000 | 1,806,973 | |
EPR Properties | |||
4.75% 12/15/26 | 3,769,000 | 3,350,573 | |
Expedia Group, Inc. (EXPE) | |||
6.25% 5/1/25(a) | 1,172,000 | 1,180,890 | |
Fidelity National Information Services, Inc. (FIS) | |||
4.5% 7/15/25 | 2,000,000 | 1,958,592 | |
FS KKR Capital Corp. | |||
1.65% 10/12/24 | 6,000,000 | 5,485,132 | |
Hercules Capital, Inc. | |||
2.63% 9/16/26 | 1,500,000 | 1,229,116 | |
Highwoods Realty LP | |||
3.63% 1/15/23 | 1,275,000 | 1,274,354 | |
iStar, Inc. | |||
4.25% 8/1/25 | 1,552,000 | 1,507,516 | |
JPMorgan Chase & Co. | |||
3.38% 5/1/23 | 3,956,000 | 3,932,304 | |
0.77% 8/9/25 Floating Rate (SOFR + 49) | 1,000,000 | 917,384 | |
JPMorgan Chase Co. | |||
3.84% 6/14/25 Floating Rate (SOFR + 98) | 800,000 | 778,678 | |
Kite Realty Group Trust (KRG) | |||
4% 3/15/25 | 2,083,000 | 1,971,480 | |
L Brands, Inc. | |||
6.69% 1/15/27 | 945,000 | 885,550 |
$ Principal | |||
Amount | $ Value | ||
Lennar Corp. | |||
4.88% 12/15/23 | 1,951,000 | 1,944,626 | |
LXP Industrial Trust (LXP) | |||
4.4% 6/15/24 | 1,000,000 | 977,664 | |
Masonite International Corp. | |||
5.38% 2/1/28(a) | 400,000 | 354,406 | |
Mileage Plus Holdings LLC/Mileage Plus Intellectual | |||
Property Assets Ltd. | |||
6.5% 6/20/27(a) | 2,172,650 | 2,130,588 | |
MPLX LP | |||
4.88% 6/1/25 | 1,961,000 | 1,924,014 | |
Onemain Finance Corp. | |||
6.13% 3/15/24 | 2,298,000 | 2,217,042 | |
PDC Energy, Inc. | |||
6.13% 9/15/24 | 1,463,000 | 1,446,903 | |
5.75% 5/15/26 | 3,000,000 | 2,779,425 | |
RELX Capital, Inc. | |||
3.5% 3/16/23 | 1,800,000 | 1,788,915 | |
Starwood Property Trust, Inc. | |||
5.5% 11/1/23(a) | 730,000 | 718,805 | |
4.75% 3/15/25 | 1,765,000 | 1,606,680 | |
Synchrony Bank (SYF) | |||
5.4% 8/22/25 | 1,000,000 | 975,882 | |
Take Two Interactive Software, Inc. | |||
3.3% 3/28/24 | 1,000,000 | 975,205 | |
U.S. Bancorp | |||
2.4% 7/30/24 | 500,000 | 480,043 | |
VICI Properties LP/VICI Note Co., Inc. | |||
3.5% 2/15/25(a) | 4,783,000 | 4,427,121 | |
Walgreens Boots Alliance, Inc. | |||
0.95% 11/17/23 | 5,000,000 | 4,789,510 | |
Xerox Corp. | |||
4.38% 3/15/23 | 1,370,000 | 1,347,049 | |
Total Corporate Bonds (Cost $104,524,269) | 99,398,776 | ||
Corporate Convertible Bonds - 2.3% | |||
Redwood Trust, Inc. | |||
4.75% 8/15/23 | 10,000,000 | 9,874,986 | |
5.63% 7/15/24 | 6,300,000 | 5,717,031 | |
5.75% 10/1/25 | 3,000,000 | 2,578,500 | |
Total Corporate Convertible Bonds (Cost $18,881,447) | 18,170,517 | ||
Asset-Backed Securities - 36.1% | |||
Automobile | |||
ACC Auto Trust (AUTOC) | |||
Series 2021-A Class A - 1.08% 4/15/27(a) | 1,350,901 | 1,329,071 | |
American Credit Acceptance Receivables Trust (ACAR) | |||
Series 2020-4 Class D - 1.77% 12/14/26(a) | 1,000,000 | 946,548 | |
AmeriCredit Automobile Receivables Trust (AMCAR) | |||
Series 2020-2 Class D - 2.13% 3/18/26 | 320,000 | 300,439 | |
Series 2020-3 Class D - 1.49% 9/18/26 | 3,000,000 | 2,791,777 | |
ARI Fleet Lease Trust (ARIFL) | |||
Series 2019-A Class A - 2.41% 11/15/27(a) | 24,473 | 24,450 | |
Series 2020-A Class A - 1.77% 8/15/28(a) | 43,998 | 43,978 | |
Series 2022-A Class A1 - 1.49% 4/17/23(a) | 206,536 | 205,856 |
The accompanying notes form an integral part of these financial statements.
50 2022 Semi-Annual Report
SHORT DURATION INCOME FUND (CONTINUED)
Schedule of Investments
September 30, 2022 (Unaudited)
$ Principal | |||
Amount | $ Value | ||
Series 2022-A Class A2 - 3.12% 1/15/31(a) | 1,300,000 | 1,276,732 | |
Arivo Acceptance Auto Loan Receivables Trust (ARIVO) | |||
Series 2021-1A Class A - 1.19% 1/15/27(a) | 302,816 | 291,963 | |
Series 2022-1A Class A - 4.01% 5/15/28(a) | 3,198,508 | 3,125,571 | |
CFMT LLC (CFMT) | |||
Series 2021-AL1 Class B - 1.39% 9/22/31(a) | 4,171,819 | 3,944,915 | |
Chesapeake Funding II LLC (CFII) | |||
Series 2021-1A Class A1 - 0.47% 4/15/33(a) | 1,446,793 | 1,417,366 | |
Enterprise Fleet Financing LLC (EFF) | |||
Series 2019-2 Class A - 2.29% 2/20/25(a) | 190,513 | 190,248 | |
Series 2020-1 Class A - 1.78% 12/22/25(a) | 773,164 | 767,643 | |
Exeter Automobile Receivables Trust (EART) | |||
Series 2020-1A Class D - 2.73% 12/15/25(a) | 2,400,000 | 2,363,201 | |
Series 2020-3A Class D - 2.63% 7/15/26 | 1,440,000 | 1,392,444 | |
Series 2021-1A Class D - 1.08% 11/16/26 | 1,350,000 | 1,268,387 | |
First Help Financial LLC (FHF) | |||
Series 2022-1A Class A - 4.43% 1/18/28(a) | 4,296,385 | 4,202,962 | |
First Investors Auto Owner Trust (FIAOT) | |||
Series 2022-1A Class A - 2.03% 1/15/27(a) | 2,459,570 | 2,403,803 | |
Foursight Capital Automobile Receivables Trust (FCRT) | |||
Series 2022-1 Class A2 - 1.15% 9/15/25(a) | 1,411,010 | 1,381,095 | |
Series 2022-2 Class A2 - 4.49% 3/16/26(a) | 6,000,000 | 5,951,747 | |
GLS Auto Receivables Issuer Trust (GCAR) | |||
Series 2020-2A Class B - 3.16% 6/16/25(a) | 197,773 | 196,957 | |
Series 2021-4A Class A - 0.84% 7/15/25(a) | 3,288,903 | 3,236,907 | |
Series 2022-2A Class A2 - 3.55% 1/15/26(a) | 3,500,000 | 3,465,312 | |
JPMorgan Chase Auto Credit Linked Note (CACLN) | |||
Series 2020-1 Class A5 - 0.99% 1/25/28(a) | 476,596 | 468,043 | |
Series 2020-2 Class A2 - 0.84% 2/25/28(a) | 577,822 | 562,912 | |
Series 2021-1 Class A2 - 0.88% 9/25/28(a) | 2,737,973 | 2,645,524 | |
Series 2021-2 Class A4 - 0.89% 12/26/28(a) | 2,332,861 | 2,245,125 | |
LAD Auto Receivables Trust (LADAR) | |||
Series 2021-1A Class A - 1.3% 8/17/26(a) | 5,025,161 | 4,845,316 | |
Series 2022-1A Class A - 5.21% 6/15/27(a) | 6,000,000 | 5,890,145 | |
Onemain Direct Auto Receivables Trust (OMDAR) | |||
Series 2021-1A Class A - 0.87% 7/14/28(a) | 2,500,000 | 2,313,770 | |
OneMain Direct Auto Receivables Trust (ODART) | |||
Series 2022-1A Class C - 1.42% 7/14/28(a) | 3,000,000 | 2,610,317 | |
Santander Bank NA (SBCLN) | |||
Series 2021-1A Class B - 1.83% 12/15/31(a) | 2,015,282 | 1,943,468 | |
Santander Drive Auto Receivables Trust (SDART) | |||
Series 2020-2 Class D - 2.22% 9/15/26 | 5,745,000 | 5,611,348 | |
Series 2020-3 Class C - 1.12% 1/15/26 | 642,103 | 637,488 | |
Series 2020-4 Class C - 1.01% 1/15/26 | 927,581 | 916,934 | |
Series 2022-6 Class A2 - 4.37% 5/15/25 | 2,350,000 | 2,342,131 | |
Securitized Term Auto Loan Receivables Trust (SSTRT) | |||
Series 2019-CRTA Class B - 2.45% 3/25/26(a) (b) | 326,997 | 324,649 | |
Series 2019-CRTA Class C - 2.85% 3/25/26(a) (b) | 245,248 | 243,683 | |
Westlake Automobile Receivables Trust (WLAKE) | |||
Series 2020-3A Class D - 1.65% 2/17/26(a) | 1,650,000 | 1,570,762 | |
Series 2021-1A Class C - 0.95% 3/16/26(a) | 3,885,000 | 3,724,754 | |
Series 2022-1A Class A2A - 1.97% 12/16/24(a) | 5,824,140 | 5,771,249 | |
87,186,990 | |||
Collateralized Loan Obligations | |||
ABPCI Direct Lending Fund CLO LP (ABPCI) | |||
Series 2016-1A Class A1A2 - 4.41% 7/20/33 Floating | |||
Rate (Qtrly LIBOR + 170)(a) (b) (c) | 2,000,000 | 1,913,036 | |
Series 2020-10A Class A - 4.66% 1/20/32 Floating Rate | |||
(Qtrly LIBOR + 195)(a) (b) (c) | 6,500,000 | 6,394,892 |
$ Principal | |||
Amount | $ Value | ||
Audax Senior Debt CLO LLC (AUDAX) | |||
Series 2021-6A Class A1 - 4.21% 10/20/33 Floating Rate | |||
(Qtrly LIBOR + 150)(a) (c) | 6,000,000 | 5,855,539 | |
Ballyrock CLO Ltd. (BALLY) | |||
Series 2016-1A Class BR2 - 3.86% 10/15/28 Floating | |||
Rate (Qtrly LIBOR + 135)(a) (b) (c) | 4,000,000 | 3,931,088 | |
BCRED MML CLO LLC (BXCMM) | |||
Series 2022-1A Class A1 - 2.24% 4/20/35 Floating Rate | |||
(Qtrly SOFR + 165)(a) (b) (c) | 3,000,000 | 2,829,978 | |
BlackRock Elbert CLO V LLC (ELB) | |||
Series 5A Class AR - 5.06% 6/15/34 Floating Rate | |||
(TSFR3M + 185)(a) (b) (c) | 2,000,000 | 1,916,524 | |
Blackrock Rainier CLO VI Ltd. (BLKMM) | |||
Series 2021-6A Class A - 4.41% 4/20/33 Floating Rate | |||
(Qtrly LIBOR + 170)(a) (b) (c) | 5,500,000 | 5,234,686 | |
Brightwood Capital MM CLO Ltd. (BWCAP) | |||
Series 2020-1A Class A - 5.19% 12/15/28 Floating Rate | |||
(Qtrly LIBOR + 190)(a) (b) (c) | 1,653,438 | 1,651,864 | |
Capital Four US CLO II Ltd. (C4US) | |||
Series 2022-1A Class A1 - 5.81% 10/20/30 Floating Rate | |||
(TSFR3M + 214)(a) (b) (c) | 6,500,000 | 6,387,758 | |
Cerberus Loan Funding LP (CERB) | |||
Series 2020-1A Class A - 4.36% 10/15/31 Floating Rate | |||
(Qtrly LIBOR + 185)(a) (b) (c) | 5,500,000 | 5,446,727 | |
Series 2020-2A Class A - 4.41% 10/15/32 Floating Rate | |||
(Qtrly LIBOR + 190)(a) (b) (c) | 4,500,000 | 4,404,812 | |
Series 2021-2A Class A - 4.13% 4/22/33 Floating Rate | |||
(Qtrly LIBOR + 162)(a) (b) (c) | 3,000,000 | 2,880,816 | |
Series 2021-6A Class A - 3.91% 11/22/33 Floating Rate | |||
(Qtrly LIBOR + 140)(a) (b) (c) | 1,540,302 | 1,534,363 | |
Churchill Middle Market CLO Ltd. (CHMML) | |||
Series 2021-1A Class A1 - 4.28% 10/24/33 Floating Rate | |||
(Qtrly LIBOR + 150)(a) (b) (c) | 2,750,000 | 2,536,875 | |
Deerpath Capital CLO Ltd. (DPATH) | |||
Series 2021-2A Class A1 - 4.11% 1/15/34 Floating Rate | |||
(Qtrly LIBOR + 160)(a) (b) (c) | 4,000,000 | 3,806,076 | |
Fortress Credit Opportunities CLO Ltd. (FCO) | |||
Series 2017-9A Class A1TR - 4.06% 10/15/33 Floating | |||
Rate (Qtrly LIBOR + 155)(a) (b) (c) | 1,500,000 | 1,417,723 | |
Series 2021-15A Class A2 - 4.33% 4/25/33 Floating | |||
Rate (Qtrly LIBOR + 155)(a) (b) (c) | 3,500,000 | 3,336,063 | |
Golub Capital Partners CLO Ltd. (GOCAP) | |||
Series 2016-31A Class CR - 5.73% 8/5/30 Floating Rate | |||
(Qtrly LIBOR + 290)(a) (b) (c) | 1,000,000 | 931,600 | |
Series 2021-54A Class A2 - 4.36% 8/5/33 Floating Rate | |||
(Qtrly LIBOR + 153)(a) (b) (c) | 4,500,000 | 4,381,728 | |
Series 2021-54A Class B - 4.68% 8/5/33 Floating Rate | |||
(Qtrly LIBOR + 185)(a) (b) (c) | 2,500,000 | 2,395,937 | |
Golub Capital Partners Short Duration (GSHOR) | |||
Series 2022-1A Class B1 10/25/31 Floating Rate | |||
(TSFR3M + 350)(a) (c) | 1,000,000 | 1,000,000 | |
Ivy Hill Middle Market Credit Fund IX Ltd. (IVYH) | |||
Series 9A Class A1TR - 4.16% 4/15/34 Floating Rate | |||
(Qtrly SOFR + 162)(a) (b) (c) | 3,500,000 | 3,303,097 | |
KKR Lending Partners III Clo LLC (KKRLP) | |||
Series 2021-1A Class B - 4.61% 10/20/30 Floating Rate | |||
(Qtrly LIBOR + 190)(a) (c) | 2,000,000 | 1,938,779 | |
KKR Static CLO I Ltd. (KKRS) | |||
Series 2022-1A Class B - 5.08% 7/20/31 Floating Rate | |||
(TSFR3M + 260)(a) (b) (c) | 1,250,000 | 1,222,831 | |
Maranon Loan Funding Ltd. (MRNON) | |||
Series 2021-2RA Class A1R - 4.2% 7/15/33 Floating Rate | |||
(Qtrly LIBOR + 169)(a) (b) (c) | 5,000,000 | 4,906,201 |
The accompanying notes form an integral part of these financial statements.
2022 Semi-Annual Report 51
$ Principal | |||
Amount | $ Value | ||
Monroe Capital MML CLO XII Ltd. (MCMML) | |||
Series 2021-2A Class A1 - 4.77% 9/14/33 Floating Rate | |||
(Qtrly LIBOR + 150)(a) (b) (c) | 7,500,000 | 7,231,782 | |
Owl Rock CLO VIII LLC (OR) | |||
Series 2022-8A Class AT 11/20/34 Floating Rate | |||
(TSFR3M + 250)(a) (c) | 2,000,000 | 1,978,386 | |
Palmer Square Loan Funding Ltd. (PSTAT) | |||
Series 2021-1A Class A2 - 3.96% 4/20/29 Floating Rate | |||
(Qtrly LIBOR + 125)(a) (b) (c) | 3,000,000 | 2,898,339 | |
Twin Brook CLO (TWBRK) | |||
Series 2021-1A Class A - 4.24% 1/20/34 Floating Rate | |||
(US0003M + 153)(a) (c) | 1,200,000 | 1,095,253 | |
94,762,753 | |||
Consumer & Specialty Finance | |||
Affirm Asset Securitization Trust (AFFRM) | |||
Series 2021-A Class A4 - 0.88% 8/15/25(a) | 1,521,982 | 1,512,599 | |
Series 2021-B Class A - 1.03% 8/15/26(a) | 2,000,000 | 1,887,332 | |
Series 2022-Z1 Class A - 4.55% 6/15/27(a) | 3,501,254 | 3,434,600 | |
Bankers Healthcare Group Securitization Trust (BHG) | |||
Series 2020-A Class A - 2.56% 9/17/31(a) | 2,119,870 | 2,071,367 | |
Series 2021-A Class A - 1.42% 11/17/33(a) | 593,651 | 552,392 | |
Series 2022-B Class A - 3.75% 6/18/35(a) | 1,293,950 | 1,274,654 | |
Series 2022-B Class B - 4.84% 6/18/35(a) | 1,498,342 | 1,432,880 | |
Series 2022-C Class A - 5.28% 10/17/35(a) | 2,000,000 | 1,995,196 | |
Conn's Receivables Funding LLC (CONN) | |||
Series 2021-A Class A - 1.05% 5/15/26(a) | 1,739,537 | 1,731,813 | |
Series 2022-A Class A - 5.87% 12/15/26(a) | 2,769,382 | 2,769,266 | |
Foundation Finance Trust (FFIN) | |||
Series 2019-1A Class A - 3.86% 11/15/34(a) | 836,921 | 820,709 | |
Series 2021-2A Class A - 2.19% 1/15/42(a) | 2,054,367 | 1,879,229 | |
FREED ABS Trust (FREED) | |||
Series 2022-1FP Class A - 0.94% 3/19/29(a) | 393,038 | 389,189 | |
Series 2022-1FP Class B - 1.91% 3/19/29(a) | 4,000,000 | 3,843,483 | |
Series 2022-3FP Class B - 5.79% 8/20/29(a) | 3,500,000 | 3,463,520 | |
Lendingpoint Asset Securitization Trust (LPST) | |||
Series 2022-B Class A - 4.77% 10/15/29(a) | 871,801 | 859,109 | |
Series 2022-C Class A - 6.56% 2/15/30(a) | 7,000,000 | 7,003,555 | |
Marlette Funding Trust (MFT) | |||
Series 2021-2A Class A - 0.51% 9/15/31(a) | 507,354 | 504,703 | |
Series 2021-2A Class B - 1.06% 9/15/31(a) | 2,000,000 | 1,932,754 | |
Series 2021-3A Class A - 0.65% 12/15/31(a) | 699,807 | 688,827 | |
Series 2022-1A Class A - 1.36% 4/15/32(a) | 3,318,397 | 3,244,596 | |
Series 2022-3A Class A - 5.18% 11/15/32(a) | 3,500,000 | 3,486,544 | |
Octane Receivables Trust (OCTL) | |||
Series 2020-1A Class A2 - 1.71% 2/20/25(a) | 1,466,995 | 1,449,522 | |
Series 2021-1A Class A5 - 0.93% 3/22/27(a) | 889,510 | 859,628 | |
Series 2021-2A Class A - 1.21% 9/20/28(a) | 1,722,250 | 1,647,937 | |
Series 2022-1A Class A2 - 4.18% 3/20/28(a) | 4,658,643 | 4,639,428 | |
Series 2022-2A Class A - 5.11% 2/22/28(a) | 2,145,344 | 2,130,935 | |
Pagaya AI Debt Selection Trust (PAID) | |||
Series 2021-1 Class A - 1.18% 11/15/27(a) | 2,061,074 | 2,014,626 | |
Series 2021-3 Class A - 1.15% 5/15/29(a) | 763,929 | 740,468 | |
Series 2021-HG1 Class A - 0.93% 1/16/29(a) | 3,069,320 | 2,894,089 | |
Series 2022-2 Class A - 4.97% 1/15/30(a) | 1,387,255 | 1,370,040 | |
PAGAYA AI Debt Trust (PAID) | |||
Series 2022-3 Class A - 6.06% 3/15/30(a) | 4,500,000 | 4,483,748 | |
Theorem Funding Trust (THRM) | |||
Series 2021-1A Class A - 1.28% 12/15/27(a) | 1,876,268 | 1,829,649 | |
Upstart Securitization Trust (UPST) | |||
Series 2020-3 Class A - 1.7% 11/20/30(a) | 135,328 | 135,140 |
$ Principal | |||
Amount | $ Value | ||
Series 2021-1 Class A - 0.87% 3/20/31(a) | 244,792 | 243,012 | |
Series 2021-2 Class A - 0.91% 6/20/31(a) | 504,552 | 492,562 | |
Series 2021-3 Class A - 0.83% 7/20/31(a) | 782,948 | 758,054 | |
Series 2021-5 Class A - 1.31% 11/20/31(a) | 1,582,621 | 1,530,365 | |
73,997,520 | |||
Equipment | |||
Amur Equipment Finance Receivables IX LLC (AXIS) | |||
Series 2021-1A Class B - 1.38% 2/22/27(a) | 1,000,000 | 923,503 | |
Amur Equipment Finance Receivables LLC (AXIS) | |||
Series 2020-1A Class A2 - 1.68% 8/20/25(a) | 195,759 | 194,755 | |
Series 2021-1A Class A2 - 0.75% 11/20/26(a) | 2,440,939 | 2,347,087 | |
Amur Equipment Finance Receivables XI LLC (AXIS) | |||
Series 2022-2A Class A2 - 5.3% 6/21/28(a) | 2,100,000 | 2,085,865 | |
CCG Receivables Trust (CCG) | |||
Series 2019-1 Class B - 3.22% 9/14/26(a) | 155,718 | 155,692 | |
Series 2019-2 Class A - 2.11% 3/15/27(a) | 167,373 | 166,947 | |
Dell Equipment Finance Trust (DEFT) | |||
Series 2021-2 Class A2 - 0.53% 12/22/26(a) | 625,000 | 595,469 | |
Series 2022-1 Class A2 - 2.11% 8/22/27(a) | 2,750,000 | 2,705,594 | |
Dext ABS LLC (DEXT) | |||
Series 2020-1 Class A - 1.46% 2/16/27(a) | 917,800 | 903,013 | |
Series 2021-1 Class A - 1.12% 2/15/28(a) | 2,691,823 | 2,576,918 | |
DLLST LLC (DLLST) | |||
Series 2022-1A Class A2 - 2.79% 1/22/24(a) | 4,500,000 | 4,449,999 | |
MMAF Equipment Finance LLC (MMAF) | |||
Series 2022-A Class A2 - 2.77% 2/13/25(a) | 3,125,000 | 3,064,951 | |
Pawnee Equipment Receivables Series LLC (PWNE) | |||
Series 2019-1 Class A2 - 2.29% 10/15/24(a) | 229,575 | 229,367 | |
Series 2020-1 Class A - 1.37% 11/17/25(a) | 698,990 | 688,708 | |
Series 2021-1 Class A2 - 1.1% 7/15/27(a) | 3,831,604 | 3,670,071 | |
Series 2022-1 Class A2 - 5.05% 2/15/28(a) | 4,000,000 | 3,981,761 | |
28,739,700 | |||
Other | |||
Hilton Grand Vacations Trust (HGVT) | |||
Series 2020-AA Class A - 2.74% 2/25/39(a) | 244,581 | 229,906 | |
Sierra Timeshare Receivables Funding LLC (SRFC) | |||
Series 2019-2A Class A - 2.59% 5/20/36(a) | 432,314 | 417,913 | |
Series 2019-2A Class B - 2.82% 5/20/36(a) | 54,039 | 51,975 | |
Series 2020-2A Class A - 1.33% 7/20/37(a) | 699,732 | 652,516 | |
1,352,310 | |||
Total Asset-Backed Securities (Cost $293,104,749) | 286,039,273 | ||
Commercial Mortgage-Backed Securities - 11.0% | |||
Arbor Realty Commercial Real Estate Notes Ltd. (ARCLO) | |||
Series 2021-FL4 Class A - 4.17% 11/15/36 Floating Rate | |||
(Mthly LIBOR + 135)(a) (b) | 5,000,000 | 4,906,090 | |
AREIT Trust (AREIT) | |||
Series 2021-CRE5 Class A - 4.07% 7/17/26 Floating Rate | |||
(Mthly LIBOR + 108)(a) | 5,203,384 | 5,050,963 | |
BDS Ltd. (BDS) | |||
Series 2021-FL10 Class A - 4.34% 12/18/36 Floating | |||
Rate (Mthly LIBOR + 135)(a) (b) | 4,000,000 | 3,900,000 | |
BFLD Trust (BFLD) | |||
Series 2020-OBRK Class A - 4.87% 11/15/22 Floating | |||
Rate (Mthly LIBOR + 205)(a) | 2,625,000 | 2,596,419 |
The accompanying notes form an integral part of these financial statements.
52 2022 Semi-Annual Report
SHORT DURATION INCOME FUND (CONTINUED)
Schedule of Investments
September 30, 2022 (Unaudited)
$ Principal | |||
Amount | $ Value | ||
BPCRE Ltd. (BPCRE) | |||
Series 2021-FL1 Class E - 6.04% 2/15/37 Floating Rate | |||
(US0001M + 310)(a) (b) | 2,000,000 | 1,990,418 | |
BPR Trust (BPR) | |||
Series 2021-KEN Class A - 4.07% 2/15/29 Floating Rate | |||
(Mthly LIBOR + 125)(a) | 3,000,000 | 2,914,467 | |
FS Rialto Issuer Ltd. (FSRI) | |||
Series 2022-FL5 Class A - 5.32% 6/19/27 Floating Rate | |||
(TSFR1M + 230)(a) (b) | 4,500,000 | 4,446,378 | |
GPMT Ltd. (GPMT) | |||
Series 2021-FL3 Class A - 4.24% 7/16/35 Floating Rate | |||
(Mthly LIBOR + 125)(a) (b) | 3,506,619 | 3,460,413 | |
HGI CRE CLO Ltd. (HGI) | |||
Series 2021-FL1 Class A4 - 3.99% 6/16/36 Floating Rate | |||
(Mthly LIBOR + 105)(a) (b) | 4,750,000 | 4,578,373 | |
Series 2021-FL2 Class A4 - 3.94% 9/19/26 Floating | |||
Rate (Mthly LIBOR + 100)(a) (b) | 2,750,000 | 2,640,619 | |
Hilton USA Trust (HILT) | |||
Series 2016-SFP Class E - 5.52% 11/5/35(a) | 4,300,000 | 4,058,111 | |
ILPT Commercial Mortgage Trust (ILPT) | |||
Series 2022-LPF2 Class A - 4.5% 10/15/39 Floating | |||
Rate (TSFR1M + 225)(a) | 1,000,000 | 999,406 | |
KREF Ltd. (KREF) | |||
Series 2021-FL2 Class A4 - 4.01% 2/15/39 Floating Rate | |||
(Mthly LIBOR + 107)(a) (b) | 4,500,000 | 4,348,125 | |
Series 2022-FL3 Class A - 4.47% 2/15/39 Floating Rate | |||
(Mthly SOFR + 145)(a) (b) | 4,500,000 | 4,331,250 | |
LoanCore Issuer Ltd. (LNCR) | |||
Series 2018-CRE1 Class D - 5.77% 5/15/28 Floating Rate | |||
(US0001M + 295)(a) (b) | 3,350,000 | 3,276,590 | |
Series 2021-CRE5 Class A - 4.12% 7/15/36 Floating Rate | |||
(Mthly LIBOR + 130)(a) (b) | 5,000,000 | 4,856,250 | |
Series 2022-CRE7 Class A - 3.83% 1/17/37 Floating Rate | |||
(SOFR 30 Day Avg + 155)(a) (b) | 4,750,000 | 4,599,016 | |
MF1 Ltd. (MF1) | |||
Series 21-FL7 Class A - 4.07% 10/18/36 Floating Rate | |||
(Mthly LIBOR + 108)(a) (b) | 2,000,000 | 1,920,000 | |
PFP Ltd. (PFP) | |||
Series 2021-7 Class AS - 3.97% 4/14/38 Floating Rate | |||
(Mthly LIBOR + 115)(a) (b) | 4,499,775 | 4,323,281 | |
Series 2022-9 Class A - 5.32% 8/19/35 Floating Rate | |||
(TSFR1M + 218)(a) (b) | 3,000,000 | 2,994,375 | |
Ready Capital Mortgage Financing LLC (RCMT) | |||
Series 2020-FL4 Class A - 5.23% 2/25/35 Floating Rate | |||
(Mthly LIBOR + 215)(a) | 2,418,388 | 2,423,889 | |
ReadyCap Commercial Mortgage Trust (RCMT) | |||
Series 2021-FL7 Class A - 4.28% 11/25/36 Floating Rate | |||
(Mthly LIBOR + 120)(a) | 3,990,865 | 3,841,207 | |
STWD Ltd. (STWD) | |||
Series 2022-FL3 Class A - 3.64% 11/15/38 Floating Rate | |||
(SOFR 30 Day Avg + 135)(a) (b) | 6,500,000 | 6,297,271 | |
VMC Finance LLC (VMC) | |||
Series 2021-FL4 Class A - 4.09% 6/16/36 Floating Rate | |||
(Mthly LIBOR + 110)(a) | 2,497,926 | 2,439,380 | |
Total Commercial Mortgage-Backed Securities (Cost $89,517,306) | 87,192,291 |
Mortgage-Backed Securities - 9.9% | |||
$ Principal | |||
Amount | $ Value | ||
Federal Home Loan Mortgage Corporation | |||
Collateralized Mortgage Obligations | |||
Series 3649 Class A - 4% 3/15/25 | 222,745 | 221,787 | |
Series 4107 Class LW - 1.75% 8/15/27 | 3,920,459 | 3,607,730 | |
Series 4281 Class AG - 2.5% 12/15/28 | 147,708 | 145,562 | |
Series 3003 Class LD - 5% 12/15/34 | 442,378 | 442,806 | |
Series 2952 Class PA - 5% 2/15/35 | 171,906 | 171,513 | |
Series 3620 Class PA - 4.5% 12/15/39 | 345,660 | 340,389 | |
Series 3842 Class PH - 4% 4/15/41 | 455,326 | 440,725 | |
Pass-Through Securities | |||
Pool# G13300 – 4.5% 5/1/23 | 3,577 | 3,534 | |
Pool# G18296 – 4.5% 2/1/24 | 26,885 | 26,512 | |
Pool# G18306 – 4.5% 4/1/24 | 57,310 | 56,509 | |
Pool# G18308 – 4% 5/1/24 | 105,991 | 102,806 | |
Pool# J13949 – 3.5% 12/1/25 | 692,126 | 658,238 | |
Pool# E02804 – 3% 12/1/25 | 480,630 | 471,035 | |
Pool# J14649 – 3.5% 4/1/26 | 508,264 | 484,034 | |
Pool# E02948 – 3.5% 7/1/26 | 1,579,092 | 1,504,201 | |
Pool# J16663 – 3.5% 9/1/26 | 1,314,370 | 1,249,641 | |
Pool# E03033 – 3% 2/1/27 | 847,040 | 825,141 | |
Pool# ZS8692 – 2.5% 4/1/33 | 736,888 | 674,012 | |
Pool# G01818 – 5% 5/1/35 | 535,004 | 539,893 | |
11,966,068 | |||
Federal National Mortgage Association | |||
Collateralized Mortgage Obligations | |||
Series 2010-54 Class WA - 3.75% 6/25/25 | 34,106 | 33,944 | |
Pass-Through Securities | |||
Pool# AR8198 – 2.5% 3/1/23 | 140,139 | 139,563 | |
Pool# MA1502 – 2.5% 7/1/23 | 153,766 | 152,856 | |
Pool# 995960 – 5% 12/1/23 | 1,200 | 1,205 | |
Pool# AD0629 – 5% 2/1/24 | 940 | 944 | |
Pool# 930667 – 4.5% 3/1/24 | 47,668 | 46,955 | |
Pool# 995693 – 4.5% 4/1/24 | 23,016 | 22,685 | |
Pool# MA0043 – 4% 4/1/24 | 151,115 | 146,467 | |
Pool# 995692 – 4.5% 5/1/24 | 116,620 | 114,893 | |
Pool# 931739 – 4% 8/1/24 | 28,939 | 28,033 | |
Pool# AE0031 – 5% 6/1/25 | 33,216 | 33,356 | |
Pool# AD7073 – 4% 6/1/25 | 109,277 | 105,787 | |
Pool# AL0471 – 5.5% 7/1/25 | 76,628 | 76,757 | |
Pool# 310139 – 3.5% 11/1/25 | 842,884 | 801,262 | |
Pool# AB1769 – 3% 11/1/25 | 362,325 | 355,116 | |
Pool# AH3429 – 3.5% 1/1/26 | 2,026,198 | 1,922,888 | |
Pool# AB2251 – 3% 2/1/26 | 524,616 | 513,562 | |
Pool# AB3902 – 3% 11/1/26 | 404,452 | 394,012 | |
Pool# AB4482 – 3% 2/1/27 | 2,043,946 | 1,987,035 | |
Pool# AL1366 – 2.5% 2/1/27 | 751,611 | 698,795 | |
Pool# AB6291 – 3% 9/1/27 | 412,797 | 399,732 | |
Pool# MA3189 – 2.5% 11/1/27 | 695,867 | 667,408 | |
Pool# MA3791 – 2.5% 9/1/29 | 1,576,161 | 1,461,489 | |
Pool# BM5708 – 3% 12/1/29 | 1,165,165 | 1,127,285 | |
Pool# MA0587 – 4% 12/1/30 | 1,451,635 | 1,386,419 | |
Pool# BA4767 – 2.5% 1/1/31 | 804,677 | 747,532 | |
Pool# AS7701 – 2.5% 8/1/31 | 2,513,221 | 2,334,630 | |
Pool# 555531 – 5.5% 6/1/33 | 1,121,043 | 1,152,101 | |
Pool# MA3540 – 3.5% 12/1/33 | 776,675 | 737,062 | |
Pool# 725232 – 5% 3/1/34 | 103,153 | 103,793 |
The accompanying notes form an integral part of these financial statements.
2022 Semi-Annual Report 53
$ Principal | |||
Amount | $ Value | ||
Pool# 995112 – 5.5% 7/1/36 | 503,890 | 520,232 | |
18,213,798 | |||
Government National Mortgage Association | |||
Pass-Through Securities | |||
Pool# 5255 – 3% 12/20/26 | 1,732,718 | 1,688,774 | |
Non-Government Agency | |||
Collateralized Mortgage Obligations | |||
Bunker Hill Loan Depositary Trust (BHLD) | |||
Series 2019-3A Class A1 - 2.72% 11/25/59(a) (c) | 832,335 | 805,645 | |
Citigroup Mortgage Loan Trust, Inc. (CMLTI) | |||
Series 2014-A Class A - 4% 1/25/35(a) (c) | 396,363 | 374,452 | |
Flagstar Mortgage Trust (FSMT) | |||
Series 2017-1 Class 2A2 - 3% 3/25/47(a) (c) | 626,589 | 568,992 | |
Series 2021-7 Class B - 2.5% 8/25/51(a) (c) | 5,523,512 | 4,771,848 | |
Series 2021-10IN Class A6 - 2.5% 10/25/51(a) (c) | 5,215,312 | 4,514,655 | |
GS Mortgage-Backed Securities Trust (GSMBS) | |||
Series 2021-PJ9 Class A8 - 2.5% 2/26/52(a) (c) | 3,473,695 | 3,013,616 | |
Series 2022-PJ1 Class AB - 2.5% 5/28/52(a) (c) | 4,202,576 | 3,624,392 | |
Series 2022-PJ2 Class A24 - 3% 6/25/52(a) (c) | 2,754,177 | 2,472,761 | |
Series 2020-NQM1 Class A1 - 1.38% 9/27/60(a) (c) | 502,208 | 460,362 | |
JPMorgan Mortgage Trust (JPMMT) | |||
Series 2014-2 Class 2A2 - 3.5% 6/25/29(a) (c) | 781,392 | 740,319 | |
Series 2014-5 Class B - 2.82% 10/25/29(a) (c) | 1,653,560 | 1,560,951 | |
Series 2016-3 Class A - 2.98% 10/25/46(a) (c) | 1,296,959 | 1,175,424 | |
Series 2017-3 Class A - 2.5% 8/25/47(a) (c) | 2,747,413 | 2,434,640 | |
Series 2018-6 Class 2A2 - 3% 12/25/48(a) (c) | 430,607 | 405,423 | |
Series 2020-7 Class A - 3% 1/25/51(a) (c) | 130,401 | 127,376 | |
Series 2020-8 Class A - 3% 3/25/51(a) (c) | 268,868 | 258,441 | |
Series 2021-4 Class A4 - 2.5% 8/25/51(a) (c) | 2,240,835 | 1,935,892 | |
Series 2021-6 Class B - 2.5% 10/25/51(a) (c) | 4,951,535 | 4,270,310 | |
Series 2021-8 Class B - 2.5% 12/25/51(a) (c) | 1,633,796 | 1,414,619 | |
Series 2022-2 Class A4A - 2.5% 8/25/52(a) (c) | 2,021,395 | 1,741,281 | |
JPMorgan Wealth Management (JPMWM) | |||
Series 2020-ATR1 Class A - 3% 2/25/50(a) (c) | 638,569 | 625,862 | |
Rate Mortgage Trust (RATE) | |||
Series 2021-J3 Class A7 - 2.5% 10/25/51(a) (c) | 4,483,849 | 3,866,968 | |
RCKT Mortgage Trust (RCKT) | |||
Series 2021-3 Class A5 - 2.5% 7/25/51(a) (c) | 5,875,511 | 5,097,894 | |
Sequoia Mortgage Trust (SEMT) | |||
Series 2019-CH2 Class A - 4.5% 8/25/49(a) (c) | 256,179 | 252,151 | |
Series 2020-3 Class A - 3% 4/25/50(a) (c) | 388,598 | 375,493 | |
46,889,767 | |||
Total Mortgage-Backed Securities (Cost $87,195,741) | 78,758,407 | ||
U.S. Treasuries - 25.3% | |||
U.S. Treasury Notes | |||
2% 2/15/23 | 5,000,000 | 4,968,645 | |
1.5% 2/28/23 | 25,000,000 | 24,767,101 | |
1.38% 9/30/23 | 3,000,000 | 2,915,275 | |
2% 5/31/24 | 18,000,000 | 17,338,359 | |
3% 6/30/24 | 2,000,000 | 1,956,680 | |
3.25% 8/31/24 | 13,000,000 | 12,766,406 | |
2.13% 11/30/24 | 2,500,000 | 2,390,234 | |
1.5% 11/30/24 | 17,000,000 | 16,040,430 |
$ Principal | |||
Amount | $ Value | ||
2.75% 2/28/25 | 2,000,000 | 1,931,016 | |
1.13% 2/28/25 | 9,000,000 | 8,359,453 | |
0.38% 4/30/25 | 5,000,000 | 4,529,980 | |
2.88% 6/15/25 | 9,000,000 | 8,681,133 | |
3.13% 8/15/25 | 8,000,000 | 7,755,312 | |
0.25% 8/31/25 | 20,000,000 | 17,819,531 | |
3.5% 9/15/25 | 7,000,000 | 6,857,812 | |
1.88% 7/31/26 | 15,000,000 | 13,791,211 | |
1.63% 10/31/26 | 17,000,000 | 15,402,930 | |
2.25% 2/15/27 | 2,000,000 | 1,849,219 | |
1.13% 2/28/27 | 10,000,000 | 8,807,422 | |
3.13% 8/31/27 | 2,000,000 | 1,918,750 | |
1.13% 2/29/28 | 16,000,000 | 13,735,625 | |
1.25% 3/31/28 | 7,000,000 | 6,037,227 | |
Total U.S. Treasuries (Cost $214,319,794) | 200,619,751 | ||
Cash Equivalents - 3.2% | |||
JPMorgan U.S. Government Money Market | |||
Fund - Institutional Class 2.7% (Cost | |||
$25,078,411) (d) | 25,078,411 | 25,078,411 | |
Short-Term Securities Held as Collateral for Securities on Loan - 0.0% | |||
Citibank N.A. DDCA | |||
3.07% | 31,219 | 31,219 | |
Goldman Sachs Financial Square Government Fund | |||
Institutional Class - 2.91% | 280,969 | 280,969 | |
Total Short-Term Securities Held as Collateral for Securities on Loan | |||
(Cost $312,188) | 312,188 | ||
Total Investments in Securities (Cost $832,933,905) | 795,569,614 | ||
Cash due to Custodian - 0.0% | (272) | ||
Other Liabilities in Excess of Other Assets - (0.4%) | (2,848,830) | ||
Net Assets - 100% | 792,720,512 | ||
Net Asset Value Per Share - Investor Class | 11.61 | ||
Net Asset Value Per Share - Institutional Class | 11.63 |
^ | This security or a partial position of this security was on loan as of September 30, 2022. The total value of securities on loan as of September 30, 2022 was $305,781. |
(a) | Security is exempt from registration under Rule 144A of the Securities Act of 1933. This security may be resold in transactions that are exempt from registration, normally to qualified institutional buyers. |
(b) | Foreign domiciled entity. |
(c) | The interest rate resets periodically based on the weighted average coupons of the underlying mortgage-related or asset-backed obligations. |
(d) | Rate presented represents the 30 day average yield at September 30, 2022. |
The accompanying notes form an integral part of these financial statements.
54 2022 Semi-Annual Report
ULTRA SHORT GOVERNMENT FUND
Schedule of Investments
September 30, 2022 (Unaudited)
Asset-Backed Securities - 5.2% | |||
$ Principal | |||
Amount | $ Value | ||
Automobile | |||
ACC Auto Trust (AUTOC) | |||
Series 2021-A Class A - 1.08% 4/15/27(a) | 75,050 | 73,837 | |
AmeriCredit Automobile Receivables Trust (AMCAR) | |||
Series 2018-1 Class D - 3.82% 3/18/24 | 915,949 | 915,641 | |
ARI Fleet Lease Trust (ARIFL) | |||
Series 2019-A Class A - 2.41% 11/15/27(a) | 18,763 | 18,746 | |
Series 2020-A Class A - 1.77% 8/15/28(a) | 27,027 | 27,015 | |
Series 2022-A Class A1 - 1.49% 4/17/23(a) | 137,691 | 137,237 | |
CFMT LLC (CFMT) | |||
Series 2021-AL1 Class B - 1.39% 9/22/31(a) | 297,987 | 281,780 | |
GLS Auto Receivables Issuer Trust (GCAR) | |||
Series 2021-4A Class A - 0.84% 7/15/25(a) | 234,922 | 231,208 | |
LAD Auto Receivables Trust (LADAR) | |||
Series 2022-1A Class A - 5.21% 6/15/27(a) | 300,000 | 294,507 | |
Westlake Automobile Receivables Trust (WLAKE) | |||
Series 2022-1A Class A2A - 1.97% 12/16/24(a) | 224,005 | 221,971 | |
Wheels SPV 2 LLC (WHLS) | |||
Series 2020-1A Class A2 - 0.51% 8/20/29(a) | 154,559 | 152,551 | |
2,354,493 | |||
Consumer & Specialty Finance | |||
Conn's Receivables Funding LLC (CONN) | |||
Series 2021-A Class A - 1.05% 5/15/26(a) | 75,632 | 75,296 | |
FREED ABS Trust (FREED) | |||
Series 2022-1FP Class A - 0.94% 3/19/29(a) | 131,013 | 129,730 | |
Marlette Funding Trust (MFT) | |||
Series 2021-2A Class A - 0.51% 9/15/31(a) | 31,710 | 31,544 | |
Theorem Funding Trust (THRM) | |||
Series 2021-1A Class A - 1.28% 12/15/27(a) | 134,019 | 130,689 | |
Upstart Securitization Trust (UPST) | |||
Series 2021-3 Class A - 0.83% 7/20/31(a) | 97,869 | 94,757 | |
462,016 | |||
Equipment | |||
MMAF Equipment Finance LLC (MMAF) | |||
Series 2022-A Class A1 - 1.48% 5/3/23(a) | 454,462 | 452,838 | |
Total Asset-Backed Securities (Cost $3,311,089) | 3,269,347 | ||
U.S. Treasuries - 81.9% | |||
U.S. Treasury Notes | |||
2% 10/31/22 | 13,000,000 | 12,992,168 | |
1.88% 10/31/22 | 5,500,000 | 5,496,171 | |
1.63% 11/15/22 | 11,000,000 | 10,980,464 | |
2% 11/30/22 | 20,000,000 | 19,961,913 | |
0.25% 4/15/23 | 2,000,000 | 1,961,223 | |
Total U.S. Treasuries (Cost $51,438,505) | 51,391,939 |
Cash Equivalents - 13.1% | |||
$ Principal | |||
Amount | $ Value | ||
JPMorgan U.S. Government Money Market | |||
Fund - Institutional Class 2.7% (Cost | |||
$8,201,757) (b) | 8,201,757 | 8,201,757 | |
Total Investments in Securities (Cost $62,951,351) | 62,863,043 | ||
Cash due to Custodian - 0.0% | (1,140) | ||
Other Liabilities in Excess of Other Assets - (0.2%) | (103,966) | ||
Net Assets - 100% | 62,757,937 | ||
Net Asset Value Per Share - Institutional Class | 9.98 |
(a) | Security is exempt from registration under Rule 144A of the Securities Act of 1933. This security may be resold in transactions that are exempt from registration, normally to qualified institutional buyers. |
(b) | Rate presented represents the 30 day average yield at September 30, 2022. |
The accompanying notes form an integral part of these financial statements.
2022 Semi-Annual Report 55
VALUE FUND
Schedule of Investments
September 30, 2022 (Unaudited)
Common Stocks - 97.1% | |||
% of Net | |||
Information Technology | Assets | Shares | $ Value |
Data Processing & Outsourced Services | 12.1 | ||
Visa, Inc. - Class A | 170,000 | 30,200,500 | |
Mastercard, Inc. - Class A | 105,000 | 29,855,700 | |
Fidelity National Information Services, Inc. | 345,000 | 26,071,650 | |
Application Software | 8.6 | ||
Roper Technologies, Inc. | 70,000 | 25,174,800 | |
Salesforce, Inc.(a) | 125,000 | 17,980,000 | |
Adobe, Inc.(a) | 65,000 | 17,888,000 | |
IT Consulting & Other Services | 6.4 | ||
Gartner, Inc.(a) | 90,000 | 24,902,100 | |
Accenture plc - Class A(b) | 80,000 | 20,584,000 | |
Semiconductors | 4.4 | ||
Analog Devices, Inc. | 225,000 | 31,351,500 | |
Systems Software | 2.8 | ||
Oracle Corp. | 325,000 | 19,847,750 | |
34.3 | 243,856,000 | ||
Communication Services | |||
Interactive Media & Services | 11.0 | ||
Alphabet, Inc. - Class C(a) | 535,000 | 51,440,250 | |
Meta Platforms, Inc. - Class A(a) | 200,000 | 27,136,000 | |
Cable & Satellite | 7.1 | ||
Liberty Broadband Corp. - Class C(a) | 360,000 | 26,568,000 | |
Liberty Media Corp-Liberty SiriusXM - Class C(a) | 625,000 | 23,568,750 | |
18.1 | 128,713,000 | ||
Financials | |||
Multi-Sector Holdings | 4.3 | ||
Berkshire Hathaway, Inc. - Class B(a) | 115,000 | 30,707,300 | |
Investment Banking & Brokerage | 3.3 | ||
The Charles Schwab Corp. | 325,000 | 23,357,750 | |
Insurance Brokers | 3.0 | ||
Aon plc - Class A(b) | 80,000 | 21,429,600 | |
Financial Exchanges & Data | 2.8 | ||
S&P Global, Inc. | 65,000 | 19,847,750 | |
13.4 | 95,342,400 | ||
Health Care | |||
Health Care Equipment | 5.3 | ||
Danaher Corp. | 145,000 | 37,452,050 | |
Life Sciences Tools & Services | 4.6 | ||
Thermo Fisher Scientific, Inc. | 65,000 | 32,967,350 | |
Health Care Services | 3.1 | ||
Laboratory Corp. of America Holdings | 107,500 | 22,017,075 | |
13.0 | 92,436,475 |
% of Net | |||
Materials | Assets | Shares | $ Value |
Construction Materials | 4.4 | ||
Vulcan Materials Co. | 200,000 | 31,542,000 | |
Industrial Gases | 2.5 | ||
Linde plc(b) | 65,000 | 17,523,350 | |
6.9 | 49,065,350 | ||
Consumer Discretionary | |||
Internet & Direct Marketing Retail | 3.2 | ||
Amazon.com, Inc.(a) | 200,000 | 22,600,000 | |
Automotive Retail | 2.6 | ||
CarMax, Inc.(a) | 280,000 | 18,485,600 | |
5.8 | 41,085,600 | ||
Industrials | |||
Research & Consulting Services | 5.6 | ||
CoStar Group, Inc.(a) | 575,000 | 40,048,750 | |
Total Common Stocks (Cost $458,462,128) | 690,547,575 | ||
Cash Equivalents - 3.2%a | |||
$ Principal | |||
Amount | $ Value | ||
JPMorgan U.S. Government Money Market | |||
Fund - Institutional Class 2.7%(c) | 11,158,729 | 11,158,729 | |
U.S. Treasury Bills, 1.78% to 2.23%, 10/11/22 | |||
to 10/25/22(d) | 12,000,000 | 11,983,452 | |
Total Cash Equivalents (Cost $23,140,309) | 23,142,181 | ||
Total Investments in Securities (Cost $481,602,437) | 713,689,756 | ||
Cash - 0.0% | 1 | ||
Other Liabilities in Excess of Other Assets - (0.3%) | (2,310,382) | ||
Net Assets - 100% | 711,379,375 | ||
Net Asset Value Per Share - Investor Class | 44.29 | ||
Net Asset Value Per Share - Institutional Class | 45.26 |
(a) Non-income producing.
(b) Foreign domiciled entity.
(c) Rate presented represents the 30 day average yield at September 30, 2022.
(d) Interest rates presented represent the effective yield at September 30, 2022.
The accompanying notes form an integral part of these financial statements.
56 2022 Semi-Annual Report
STATEMENTS OF ASSETS AND LIABILITIES
September 30, 2022 (Unaudited)
Nebraska | Short | |||||||||||||||||
Core Plus | Tax-Free | Partners III | Partners | Duration | Ultra Short | |||||||||||||
(In U.S. dollars, except share data) | Balanced | Income | Hickory | Income | Opportunity | Value | Income | Government | Value | |||||||||
Assets: | ||||||||||||||||||
Investments in securities at | ||||||||||||||||||
value*#: | ||||||||||||||||||
Unaffiliated issuers | 186,410,848 | 344,338,535 | 146,155,852 | 28,476,405 | 411,630,398 | 379,648,724 | 795,569,614 | 62,863,043 | 713,689,756 | |||||||||
Non-controlled affiliates | — | — | — | — | 13,715,100 | — | — | — | — | |||||||||
186,410,848 | 344,338,535 | 146,155,852 | 28,476,405 | 425,345,498 | 379,648,724 | 795,569,614 | 62,863,043 | 713,689,756 | ||||||||||
Accrued interest and dividends | ||||||||||||||||||
receivable | 470,206 | 2,316,789 | 32,875 | 302,363 | 57,977 | 42,739 | 3,184,387 | 373,803 | 78,112 | |||||||||
Due from broker | — | — | — | — | 14,976,645 | — | — | — | — | |||||||||
Receivable for fund shares sold | 76,515 | 5,743,229 | 199 | — | 14,003 | 2,470 | 560,310 | — | 16,011 | |||||||||
Reclaims receivable | 15,415 | — | — | — | — | — | — | — | — | |||||||||
Receivable from adviser | — | — | — | — | — | — | — | 518 | — | |||||||||
Prepaid expenses | 16,602 | 18,943 | 10,808 | 1,945 | 30,730 | 25,722 | 65,680 | 21,011 | 47,722 | |||||||||
Cash | — | 10 | — | 3 | — | — | — | — | 1 | |||||||||
Total assets | 186,989,586 | 352,417,506 | 146,199,734 | 28,780,716 | 440,424,853 | 379,719,655 | 799,379,991 | 63,258,375 | 713,831,602 | |||||||||
Liabilities: | ||||||||||||||||||
Bank Overdraft | 1,245 | — | — | — | 2 | — | 272 | 1,140 | — | |||||||||
Dividends payable on securities | ||||||||||||||||||
sold short | — | — | — | — | 63,856 | — | — | — | — | |||||||||
Due to adviser | 94,758 | 94,614 | 174,649 | 6,446 | 393,495 | 272,137 | 194,190 | — | 564,942 | |||||||||
Payable for collateral received on | ||||||||||||||||||
loaned securities | — | 510,998 | — | — | 7,769,020 | — | 312,188 | — | — | |||||||||
Payable for securities purchased | 4,228 | 2,084,924 | 665,489 | — | 673,970 | — | 5,293,079 | 28,753 | 1,407,477 | |||||||||
Payable for fund shares redeemed | 226,896 | 517,415 | 74,611 | — | 367,369 | 20,238 | 693,774 | 405,423 | 198,189 | |||||||||
Securities sold short^ | — | — | — | — | 14,287,200 | — | — | — | — | |||||||||
Other | 134,888 | 203,302 | 99,112 | 55,002 | 200,854 | 160,653 | 165,976 | 65,122 | 281,619 | |||||||||
Total liabilities | 462,015 | 3,411,253 | 1,013,861 | 61,448 | 23,755,766 | 453,028 | 6,659,479 | 500,438 | 2,452,227 | |||||||||
Net assets | 186,527,571 | 349,006,253 | 145,185,873 | 28,719,268 | 416,669,087 | 379,266,627 | 792,720,512 | 62,757,937 | 711,379,375 | |||||||||
Composition of net assets: | ||||||||||||||||||
Paid-in capital | 164,927,014 | 391,118,617 | 103,613,890 | 30,909,988 | 286,032,150 | 219,986,953 | 828,271,785 | 62,846,501 | 362,259,290 | |||||||||
Total distributable earnings | 21,600,557 | (42,112,364) | 41,571,983 | (2,190,720) | 130,636,937 | 159,279,674 | (35,551,273) | (88,564) | 349,120,085 | |||||||||
Net assets | 186,527,571 | 349,006,253 | 145,185,873 | 28,719,268 | 416,669,087 | 379,266,627 | 792,720,512 | 62,757,937 | 711,379,375 | |||||||||
Net assets(a): | ||||||||||||||||||
Investor Class | 54,680,385 | 49,900,733 | 145,185,873 | 28,719,268 | 7,079,149 | 163,094,095 | 77,645,043 | 465,426,072 | ||||||||||
Institutional Class | 131,847,186 | 299,105,520 | 409,589,938 | 216,172,532 | 715,075,469 | 62,757,937 | 245,953,303 | |||||||||||
Shares outstanding(a)(b): | ||||||||||||||||||
Investor Class | 3,697,548 | 5,232,549 | 3,677,758 | 3,109,070 | 665,997 | 6,365,949 | 6,690,486 | 10,507,899 | ||||||||||
Institutional Class | 8,903,303 | 31,352,518 | 35,853,918 | 8,234,272 | 61,477,374 | 6,286,776 | 5,434,173 | |||||||||||
Net asset value, offering and redemption price(a): | ||||||||||||||||||
Investor Class | 14.79 | 9.54 | 39.48 | 9.24 | 10.63 | 25.62 | 11.61 | 44.29 | ||||||||||
Institutional Class | 14.81 | 9.54 | 11.42 | 26.25 | 11.63 | 9.98 | 45.26 | |||||||||||
* Cost of investments in | ||||||||||||||||||
securities: | ||||||||||||||||||
Unaffiliated Issuers | 168,702,261 | 385,552,335 | 117,008,328 | 30,570,736 | 305,449,323 | 249,265,772 | 832,933,905 | 62,951,351 | 481,602,437 | |||||||||
Non-controlled affiliates | — | — | — | — | 898,876 | — | — | — | — | |||||||||
168,702,261 | 385,552,335 | 117,008,328 | 30,570,736 | 306,348,199 | 249,265,772 | 832,933,905 | 62,951,351 | 481,602,437 | ||||||||||
^ Proceeds from short sales | — | — | — | — | 8,412,580 | — | — | — | — |
# | Includes securities on loan as shown in the Schedule of Investments. |
(a) | Funds with a single share class are shown with the Investor Class, except for the Ultra Short Government Fund which has been designated Institutional Class. |
(b) | Indefinite number of no par value shares authorized. |
The accompanying notes form an integral part of these financial statements.
2022 Semi-Annual Report 57
STATEMENTS OF OPERATIONS
Period ended September 30, 2022 (Unaudited)
Nebraska | Short | ||||||||
Core Plus | Tax-Free | Partners III | Partners | Duration | Ultra Short | ||||
(In U.S. dollars) | Balanced | Income | Hickory | Income | Opportunity | Value | Income | Government | Value |
Investment Income: | |||||||||
Dividends | 651,469 | 225,003 | 461,289 | 8,444 | 1,724,438 | 992,055 | 191,783 | 46,454 | 2,599,057 |
Interest | 1,019,376 | 5,780,410 | 16,520 | 305,455 | 130,079 | 30,941 | 9,887,475 | 344,956 | 48,016 |
Income from securities lending | 15 | 13,628 | 37 | — | 9,842 | — | 10,793 | — | — |
Total investment income | 1,670,860 | 6,019,041 | 477,846 | 313,899 | 1,864,359 | 1,022,996 | 10,090,051 | 391,410 | 2,647,073 |
Fees and expenses*: | |||||||||
Investment advisory services | 601,152 | 721,162 | 734,692 | 60,680 | 2,559,244 | 1,653,691 | 1,550,415 | 94,725 | 3,130,794 |
Business administration services | 30,058 | 54,087 | 25,930 | 4,551 | 76,777 | 66,147 | 116,281 | 9,472 | 125,232 |
Administrative services: | |||||||||
Investor Class | 43,625 | 46,352 | 128,517 | 10,029 | 5,800 | 158,659 | 42,097 | 452,705 | |
Institutional Class | 20,609 | 92,608 | 65,955 | 28,638 | 229,568 | 2,050 | 29,533 | ||
Transfer agent services: | |||||||||
Investor Class | 14,084 | 11,144 | 19,975 | 8,920 | 8,652 | 16,256 | 7,368 | 36,585 | |
Institutional Class | 12,800 | 11,008 | 11,653 | 10,295 | 9,439 | 11,670 | 11,337 | ||
Registration: | |||||||||
Investor Class | 13,042 | 12,472 | 13,288 | 5,138 | 9,475 | 10,784 | 12,562 | 1,365 | |
Institutional Class | 19,104 | 29,047 | 686 | 9,755 | 4,869 | 16,498 | 17,723 | ||
Custody and fund accounting | 71,478 | 94,562 | 55,601 | 53,696 | 77,313 | 72,666 | 92,506 | 52,586 | 104,131 |
Auditing and legal | 48,398 | 75,227 | 36,995 | 20,322 | 67,502 | 64,281 | 82,675 | 24,346 | 108,555 |
Trustees | 23,451 | 44,177 | 17,976 | 3,199 | 45,405 | 41,251 | 59,216 | 6,589 | 79,698 |
Dividends on securities sold short | — | — | — | — | 126,931 | — | — | — | — |
Printing | 10,193 | 17,943 | 8,262 | 3,221 | 16,597 | 15,796 | 21,972 | 4,301 | 27,609 |
Other | 17,760 | 28,901 | 23,347 | 6,967 | 24,412 | 25,822 | 38,038 | 7,920 | 57,173 |
925,754 | 1,238,690 | 1,064,583 | 176,723 | 3,096,402 | 2,174,041 | 2,267,006 | 230,157 | 4,182,440 | |
Less expenses waived/reimbursed by investment | |||||||||
adviser | (179,810) | (490,904) | (141,799) | (108,159) | — | (53,745) | (384,687) | (180,875) | (69,065) |
Net expenses | 745,944 | 747,786 | 922,784 | 68,564 | 3,096,402 | 2,120,296 | 1,882,319 | 49,282 | 4,113,375 |
Net investment income (loss) | 924,916 | 5,271,255 | (444,938) | 245,335 | (1,232,043) | (1,097,300) | 8,207,732 | 342,128 | (1,466,302) |
Realized and unrealized gain (loss) on investments: | |||||||||
Net realized gain (loss): | |||||||||
Unaffiliated issuers | 1,289,559 | (2,078,012) | 4,756,063 | (19) | 9,736,685 | 4,556,664 | 60,456 | 62 | 25,774,928 |
Securities sold short | — | — | — | — | (22,868,659) | — | — | — | — |
Net realized gain (loss) | 1,289,559 | (2,078,012) | 4,756,063 | (19) (13,131,974) | 4,556,664 | 60,456 | 62 | 25,774,928 | |
Change in net unrealized appreciation | |||||||||
(depreciation): | |||||||||
Unaffiliated issuers | (25,423,547) | (30,710,618) | (43,521,906) | (1,580,884) | (142,168,327) | (102,054,532) | (24,931,286) | (43,162) (229,441,005) | |
Non-controlled affiliates | — | — | — | — | (3,470,776) | — | — | — | — |
Securities sold short | — | — | — | — | 36,137,057 | — | — | — | — |
Change in net unrealized appreciation | |||||||||
(depreciation) | (25,423,547) | (30,710,618) | (43,521,906) | (1,580,884) | (109,502,046) | (102,054,532) | (24,931,286) | (43,162) | (229,441,005) |
Net realized and unrealized gain (loss) on investments | (24,133,988) | (32,788,630) | (38,765,843) | (1,580,903) | (122,634,020) | (97,497,868) | (24,870,830) | (43,100) | (203,666,077) |
Net increase (decrease) in net assets resulting from | |||||||||
operations | (23,209,072) | (27,517,375) | (39,210,781) | (1,335,568) | (123,866,063) | (98,595,168) (16,663,098) | 299,028 | (205,132,379) |
* Additional information related to fees and expenses is included in the notes to the financial statements.
The accompanying notes form an integral part of these financial statements.
58 2022 Semi-Annual Report
STATEMENTS OF CHANGES IN NET ASSETS
Balanced | Core Plus Income | Hickory | Nebraska Tax-Free Income | |||||
Six months | Six months | Six months | Six months | |||||
ended | ended | ended | ended | |||||
Sept. 30, 2022 | Year ended | Sept. 30, 2022 | Year ended | Sept. 30, 2022 | Year ended | Sept. 30, 2022 | Year ended | |
(In U.S. dollars) | (Unaudited) | March 31, 2022 | (Unaudited) | March 31, 2022 | (Unaudited) | March 31, 2022 | (Unaudited) | March 31, 2022 |
Increase (decrease) in net assets: | ||||||||
From operations: | ||||||||
Net investment income (loss) | 924,916 | 896,217 | 5,271,255 | 6,008,215 | (444,938) | (1,298,260) | 245,335 | 493,620 |
Net realized gain (loss) | 1,289,559 | 11,608,385 | (2,078,012) | 1,032,129 | 4,756,063 | 18,110,917 | (19) | — |
Change in net unrealized appreciation | ||||||||
(depreciation) | (25,423,547) | (1,762,959) | (30,710,618) | (16,889,866) | (43,521,906) | (24,032,484) | (1,580,884) | (1,527,846) |
Net (decrease) increase in net assets | ||||||||
resulting from operations | (23,209,072) | 10,741,643 | (27,517,375) | (9,849,522) | (39,210,781) | (7,219,827) | (1,335,568) | (1,034,226) |
Distributions to shareholders(a): | ||||||||
Investor Class | (191,981) | (1,623,752) | (720,701) | (1,272,805) | (18,525,298) | (245,698) | (475,746) | |
Institutional Class | (485,319) | (4,428,337) | (4,299,640) | (5,258,102) | ||||
Total distributions | (677,300) | (6,052,089) | (5,020,341) | (6,530,907) | — | (18,525,298) | (245,698) | (475,746) |
Fund share transactions(a): | ||||||||
Investor Class | (2,857,277) | (1,387,426) | 441,425 | 2,329,621 | (8,789,892) | 6,156,327 | (2,579,495) | (1,248,038) |
Institutional Class | 2,704,621 | 1,251,435 | 33,497,679 | 197,408,290 | ||||
Net decrease (increase) from fund share | ||||||||
transactions | (152,656) | (135,991) | 33,939,104 | 199,737,911 | (8,789,892) | 6,156,327 | (2,579,495) | (1,248,038) |
Total decrease (increase) in net assets | (24,039,028) | 4,553,563 | 1,401,388 | 183,357,482 | (48,000,673) | (19,588,798) | (4,160,761) | (2,758,010) |
Net assets: | ||||||||
Beginning of period | 210,566,599 | 206,013,036 | 347,604,865 | 164,247,383 | 193,186,546 | 212,775,344 | 32,880,029 | 35,638,039 |
End of period | 186,527,571 | 210,566,599 | 349,006,253 | 347,604,865 | 145,185,873 | 193,186,546 | 28,719,268 | 32,880,029 |
(a) | Funds with a single share class are shown with the Investor Class, except for the Ultra Short Government Fund which has been designated Institutional Class. |
The accompanying notes form an integral part of these financial statements.
2022 Semi-Annual Report 59
Partners III Opportunity | Partners Value | Short Duration Income | Ultra Short Government | Value | |||||
Six months | Six months | Six months | Six months | Six months | |||||
ended | ended | ended | ended | ended | |||||
Sept. 30, 2022 | Year ended | Sept. 30, 2022 | Year ended | Sept. 30, 2022 | Year ended | Sept. 30, 2022 | Year ended | Sept. 30, 2022 | Year ended |
(Unaudited) | March 31, 2022 | (Unaudited) | March 31, 2022 | (Unaudited) | March 31, 2022 | (Unaudited) | March 31, 2022 | (Unaudited) | March 31, 2022 |
(1,232,043) | (5,098,263) | (1,097,300) | (3,600,447) | 8,207,732 | 12,033,522 | 342,128 | 51,115 | (1,466,302) | (4,804,522) |
(13,131,974) | 55,260,512 | 4,556,664 | 40,163,742 | 60,456 | 2,083,229 | 62 | 667 | 25,774,928 | 97,528,680 |
(109,502,046) | (52,199,570) | (102,054,532) | (13,015,753) | (24,931,286) | (25,453,053) | (43,162) | (84,838) | (229,441,005) | (10,595,896) |
(123,866,063) | (2,037,321) | (98,595,168) | 23,547,542 | (16,663,098) | (11,336,302) | 299,028 | (33,056) | (205,132,379) | 82,128,262 |
(1,669,312) | (15,385,870) | (689,875) | (712,242) | (25,521,469) | |||||
(65,020,686) | (19,337,527) | (7,206,268) | (12,443,558) | (324,989) | (75,091) | (12,474,077) | |||
— | (66,689,998) | — | (34,723,397) | (7,896,143) | (13,155,800) | (324,989) | (75,091) | — | (37,995,546) |
(4,541,102) | (7,191,989) | (9,226,968) | (12,084,272) | 19,779,071 | 24,514,927 | (32,131,086) | (12,162,742) | ||
(28,303,861) | 34,037,949 | (7,082,637) | 8,817,261 | 15,459,291 | 86,945,227 | 209,713 | (17,255,150) | (127,816) | (10,837,617) |
(32,844,963) | 26,845,960 | (16,309,605) | (3,267,011) | 35,238,362 | 111,460,154 | 209,713 | (17,255,150) | (32,258,902) | (23,000,359) |
(156,711,026) | (41,881,359) | (114,904,773) | (14,442,866) | 10,679,121 | 86,968,052 | 183,752 | (17,363,297) | (237,391,281) | 21,132,357 |
573,380,113 | 615,261,472 | 494,171,400 | 508,614,266 | 782,041,391 | 695,073,339 | 62,574,185 | 79,937,482 | 948,770,656 | 927,638,299 |
416,669,087 | 573,380,113 | 379,266,627 | 494,171,400 | 792,720,512 | 782,041,391 | 62,757,937 | 62,574,185 | 711,379,375 | 948,770,656 |
The accompanying notes form an integral part of these financial statements.
60 2022 Semi-Annual Report
FINANCIAL HIGHLIGHTS
The following financial information provides selected data, in U.S. dollars, for a share outstanding throughout the periods indicated.
Income (loss) from Investment Operations | Distributions | ||||||
Net gain (loss) | Dividends | ||||||
on securities | Total from | from net | Distributions | ||||
Years ended March 31, | Net asset value, | Net investment | (realized | investment | investment | from | Total |
unless otherwise noted | beginning of period | income (loss) | and unrealized) | operations | income | realized gains | distributions |
Balanced - Investor Class | |||||||
Six months ended 9/30/2022 (Unaudited) | 16.68 | 0.06 (d) | (1.90) | (1.84) | (0.05) | — | (0.05) |
2022 | 16.30 | 0.05 (d) | 0.78 | 0.83 | (0.04) | (0.41) | (0.45) |
2021 | 13.54 | 0.07 (d) | 2.86 | 2.93 | (0.08) | (0.09) | (0.17) |
2020 | 13.76 | 0.13 (d) | (0.07) | 0.06 | (0.15) | (0.13) | (0.28) |
2019 | 14.20 | 0.14 | 0.66 | 0.80 | (0.13) | (1.11) | (1.24) |
2018 | 13.63 | 0.08 | 0.87 | 0.95 | (0.05) | (0.33) | (0.38) |
Balanced - Institutional Class | |||||||
Six months ended 9/30/2022 (Unaudited) | 16.70 | 0.08 (d) | (1.92) | (1.84) | (0.05) | — | (0.05) |
2022 | 16.31 | 0.08 (d) | 0.77 | 0.85 | (0.05) | (0.41) | (0.46) |
2021 | 13.55 | 0.09 (d) | 2.87 | 2.96 | (0.11) | (0.09) | (0.20) |
2020(e) | 13.75 | 0.16 (d) | (0.08) | 0.08 | (0.15) | (0.13) | (0.28) |
Core Plus Income - Investor Class | |||||||
Six months ended 9/30/2022 (Unaudited) | 10.45 | 0.14 (d) | (0.91) | (0.77) | (0.14) | — | (0.14) |
2022 | 10.86 | 0.23 (d) | (0.40) | (0.17) | (0.21) | (0.03) | (0.24) |
2021 | 10.14 | 0.37 (d) | 0.91 | 1.28 | (0.37) | (0.19) | (0.56) |
2020 | 10.31 | 0.30 (d) | (0.16) | 0.14 | (0.29) | (0.02) | (0.31) |
2019 | 10.09 | 0.27 (d) | 0.21 | 0.48 | (0.26) | — | (0.26) |
2018 | 10.23 | 0.23 (d) | (0.12) | 0.11 | (0.22) | (0.03) | (0.25) |
Core Plus Income - Institutional Class | |||||||
Six months ended 9/30/2022 (Unaudited) | 10.45 | 0.15 (d) | (0.92) | (0.77) | (0.14) | — | (0.14) |
2022 | 10.87 | 0.24 (d) | (0.41) | (0.17) | (0.22) | (0.03) | (0.25) |
2021 | 10.15 | 0.38 (d) | 0.91 | 1.29 | (0.38) | (0.19) | (0.57) |
2020 | 10.32 | 0.32 (d) | (0.16) | 0.16 | (0.31) | (0.02) | (0.33) |
2019 | 10.10 | 0.29 (d) | 0.21 | 0.50 | (0.28) | — | (0.28) |
2018 | 10.23 | 0.25 (d) | (0.11) | 0.14 | (0.24) | (0.03) | (0.27) |
Hickory | |||||||
Six months ended 9/30/2022 (Unaudited) | 49.94 | (0.12)(d) | (10.34) | (10.46) | — | — | — |
2022 | 56.68 | (0.35)(d) | (1.28) | (1.63) | — | (5.11) | (5.11) |
2021 | 38.80 | (0.13) | 22.42 | 22.29 | — | (4.41) | (4.41) |
2020 | 46.86 | (0.28) | (6.82) | (7.10) | — | (0.96) | (0.96) |
2019 | 51.58 | (0.05) | 0.71 | 0.66 | — | (5.38) | (5.38) |
2018 | 53.11 | (0.37) | 1.55 | 1.18 | — | (2.71) | (2.71) |
Nebraska Tax-Free Income | |||||||
Six months ended 9/30/2022 (Unaudited) | 9.73 | 0.08 (d) | (0.49) | (0.41) | (0.08) | — | (0.08) |
2022 | 10.18 | 0.14 (d) | (0.45) | (0.31) | (0.14) | — | (0.14) |
2021 | 10.07 | 0.16 | 0.11 | 0.27 | (0.16) | — | (0.16) |
2020 | 9.95 | 0.13 | 0.12 | 0.25 | (0.13) | — | (0.13) |
2019 | 9.76 | 0.14 | 0.19 | 0.33 | (0.14) | — | (0.14) |
2018 | 9.90 | 0.14 | (0.15) | (0.01) | (0.13) | — | (0.13) |
Partners III Opportunity - Investor Class | |||||||
Six months ended 9/30/2022 (Unaudited) | 13.74 | (0.06)(d) | (3.05) | (3.11) | — | — | — |
2022 | 15.67 | (0.20)(d) | 0.11 | (0.09) | — | (1.84) | (1.84) |
2021 | 12.84 | (0.16)(d) | 4.92 | 4.76 | — | (1.93) | (1.93) |
2020 | 14.67 | (0.20)(d) | (0.59) | (0.79) | — | (1.04) | (1.04) |
2019 | 14.28 | (0.17)(d) | 1.58 | 1.41 | — | (1.02) | (1.02) |
2018 | 14.74 | (0.19)(d) | 0.40 | 0.21 | — | (0.67) | (0.67) |
Partners III Opportunity - Institutional Class | |||||||
Six months ended 9/30/2022 (Unaudited) | 14.74 | (0.03)(d) | (3.29) | (3.32) | — | — | — |
2022 | 16.60 | (0.13)(d) | 0.12 | (0.01) | — | (1.84) | (1.84) |
2021 | 13.43 | (0.07)(d) | 5.17 | 5.10 | — | (1.93) | (1.93) |
2020 | 15.21 | (0.11)(d) | (0.63) | (0.74) | — | (1.04) | (1.04) |
2019 | 14.69 | (0.09)(d) | 1.63 | 1.54 | — | (1.02) | (1.02) |
2018 | 15.07 | (0.12)(d) | 0.41 | 0.29 | — | (0.67) | (0.67) |
(a) | Not Annualized for periods less than one year. |
(b) | Annualized for periods less than one year. |
(c) | Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares. |
(d) | Per share net investment income (loss) has been calculated using the average daily shares method. |
The accompanying notes form an integral part of these financial statements.
2022 Semi-Annual Report 61
Ratios/Supplemental Data | ||||||
Ratio of expenses | ||||||
to average net assets | ||||||
Ratio of net | ||||||
investment income | Portfolio | |||||
Net asset value, | Net assets, end of | Prior to fee | Net of fee | (loss) to average | turnover | |
end of period | Total return (%)(a) | period ($000) | waivers (%)(b) | waivers (%)(b) | net assets (%)(b) | rate (%)(a)(c) |
14.79 | (11.04) | 54,680 | 1.04 | 0.85 | 0.81 | 12 |
16.68 | 4.98 | 64,732 | 1.01 | 0.85 | 0.31 | 26 |
16.30 | 21.74 | 64,736 | 1.14 | 0.85 | 0.44 | 29 |
13.54 | 0.35 | 47,591 | 1.20 | 0.85 | 0.94 | 32 |
13.76 | 6.18 | 124,431 | 1.00 | 0.88 | 0.98 | 33 |
14.20 | 7.06 | 122,069 | 1.05 | 1.00 | 0.55 | 40 |
14.81 | (11.00) | 131,847 | 0.87 | 0.70 | 0.97 | 12 |
16.70 | 5.15 | 145,835 | 0.82 | 0.70 | 0.46 | 26 |
16.31 | 21.93 | 141,277 | 0.89 | 0.70 | 0.58 | 29 |
13.55 | 0.45 | 84,682 | 1.00 | 0.70 | 1.09 | 32 |
9.54 | (7.44) | 49,901 | 0.83 | 0.50 | 2.83 | 15 |
10.45 | (1.67) | 54,279 | 0.89 | 0.50 | 2.07 | 46 |
10.86 | 12.79 | 53,944 | 1.09 | 0.50 | 3.42 | 38 |
10.14 | 1.38 | 25,921 | 1.18 | 0.57 | 2.85 | 51 |
10.31 | 4.78 | 18,840 | 1.42 | 0.60 | 2.76 | 33 |
10.09 | 1.20 | 7,274 | 1.65 | 0.60 | 2.26 | 43 |
9.54 | (7.40) | 299,106 | 0.66 | 0.40 | 2.94 | 15 |
10.45 | (1.67) | 293,326 | 0.62 | 0.40 | 2.16 | 46 |
10.87 | 12.88 | 110,303 | 0.80 | 0.40 | 3.54 | 38 |
10.15 | 1.56 | 78,128 | 0.80 | 0.40 | 3.02 | 51 |
10.32 | 5.07 | 59,687 | 0.96 | 0.40 | 2.93 | 33 |
10.10 | 1.40 | 31,895 | 1.09 | 0.40 | 2.47 | 43 |
39.48 | (20.95) | 145,186 | 1.23 | 1.07 | (0.52) | 5 |
49.94 | (3.87) | 193,187 | 1.12 | 1.09 | (0.60) | 15 |
56.68 | 59.17 | 212,775 | 1.20 | 1.09 | (0.23) | 16 |
38.80 | (15.67) | 170,968 | 1.28 | 1.23 | (0.53) | 30 |
46.86 | 2.30 | 210,744 | 1.27 | 1.27 | (0.10) | 28 |
51.58 | 2.15 | 242,608 | 1.24 | 1.24 | (0.65) | 20 |
9.24 | (4.26) | 28,719 | 1.16 | 0.45 | 1.61 | 2 |
9.73 | (3.08) | 32,880 | 1.02 | 0.45 | 1.42 | 9 |
10.18 | 2.67 | 35,638 | 1.09 | 0.45 | 1.54 | 13 |
10.07 | 2.55 | 31,465 | 1.10 | 0.94 | 1.29 | 7 |
9.95 | 3.46 | 38,048 | 0.89 | 0.89 | 1.39 | 9 |
9.76 | (0.07) | 58,604 | 0.84 | 0.84 | 1.41 | 24 |
10.63 | (22.63) | 7,079 | 1.63 | 1.63 | (0.94) | 12 |
13.74 | (1.02) | 14,147 | 1.86 | 1.86 | (1.25) | 26 |
15.67 | 39.25 | 22,791 | 2.09 | 2.09 | (1.08) | 23 |
12.84 | (6.40) | 19,287 | 2.04 | 2.04 | (1.29) | 32 |
14.67 | 10.63 | 21,881 | 2.13 | 2.13 | (1.23) | 38 |
14.28 | 1.49 | 24,808 | 2.14 | 2.14 | (1.30) | 31 |
11.42 | (22.52) | 409,590 | 1.20 | 1.20 | (0.47) | 12 |
14.74 | (0.53) | 559,234 | 1.43 | 1.43 | (0.81) | 26 |
16.60 | 40.11 | 592,471 | 1.46 | 1.46 | (0.46) | 23 |
13.43 | (5.83) | 541,433 | 1.44 | 1.44 | (0.69) | 32 |
15.21 | 11.25 | 616,621 | 1.56 | 1.56 | (0.66) | 38 |
14.69 | 2.01 | 629,034 | 1.63 | 1.63 | (0.79) | 31 |
(e) Initial offering of shares on March 29, 2019.
The accompanying notes form an integral part of these financial statements.
62 2022 Semi-Annual Report
FINANCIAL HIGHLIGHTS (CONTINUED)
The following financial information provides selected data, in U.S. dollars, for a share outstanding throughout the periods indicated.
Income (loss) from Investment Operations | Distributions | ||||||
Net gain (loss) | Dividends | ||||||
on securities | Total from | from net | Distributions | ||||
Years ended March 31, | Net asset value, | Net investment | (realized | investment | investment | from | Total |
unless otherwise noted | beginning of period | income (loss) | and unrealized) | operations | income | realized gains | distributions |
Partners Value - Investor Class | |||||||
Six months ended 9/30/2022 (Unaudited) | 32.18 | (0.09)(d) | (6.47) | (6.56) | — | — | — |
2022 | 33.01 | (0.27)(d) | 1.81 | 1.54 | — | (2.37) | (2.37) |
2021 | 23.32 | (0.28)(d) | 13.30 | 13.02 | — | (3.33) | (3.33) |
2020 | 29.45 | (0.09)(d) | (3.80) | (3.89) | — | (2.24) | (2.24) |
2019 | 31.31 | (0.12)(d) | 0.63 | 0.51 | — | (2.37) | (2.37) |
2018 | 30.72 | (0.15)(d) | 1.47 | 1.32 | — | (0.73) | (0.73) |
Partners Value - Institutional Class | |||||||
Six months ended 9/30/2022 (Unaudited) | 32.94 | (0.06)(d) | (6.63) | (6.69) | — | — | — |
2022 | 33.67 | (0.21)(d) | 1.85 | 1.64 | — | (2.37) | (2.37) |
2021 | 23.70 | (0.23)(d) | 13.53 | 13.30 | — | (3.33) | (3.33) |
2020 | 29.82 | (0.01)(d) | (3.87) | (3.88) | — | (2.24) | (2.24) |
2019 | 31.59 | (0.04)(d) | 0.64 | 0.60 | — | (2.37) | (2.37) |
2018 | 30.91 | (0.06)(d) | 1.47 | 1.41 | — | (0.73) | (0.73) |
Short Duration Income - Investor Class | |||||||
Six months ended 9/30/2022 (Unaudited) | 11.98 | 0.12 (d) | (0.37) | (0.25) | (0.12) | — | (0.12) |
2022 | 12.37 | 0.19 (d) | (0.37) | (0.18) | (0.19) | (0.02) | (0.21) |
2021 | 11.93 | 0.27 (d) | 0.48 | 0.75 | (0.29) | (0.02) | (0.31) |
2020 | 12.17 | 0.27 (d) | (0.23) | 0.04 | (0.28) | — | (0.28) |
2019 | 12.09 | 0.26 (d) | 0.09 | 0.35 | (0.27) | — | (0.27) |
2018 | 12.27 | 0.23 (d) | (0.18) | 0.05 | (0.23) | — | (0.23) |
Short Duration Income - Institutional Class | |||||||
Six months ended 9/30/2022 (Unaudited) | 12.00 | 0.13 (d) | (0.38) | (0.25) | (0.12) | — | (0.12) |
2022 | 12.39 | 0.20 (d) | (0.37) | (0.17) | (0.20) | (0.02) | (0.22) |
2021 | 11.95 | 0.28 (d) | 0.47 | 0.75 | (0.29) | (0.02) | (0.31) |
2020 | 12.19 | 0.29 (d) | (0.23) | 0.06 | (0.30) | — | (0.30) |
2019 | 12.11 | 0.29 (d) | 0.09 | 0.38 | (0.30) | — | (0.30) |
2018 | 12.29 | 0.26 (d) | (0.18) | 0.08 | (0.26) | — | (0.26) |
Ultra Short Government | |||||||
Six months ended 9/30/2022 (Unaudited) | 9.99 | 0.05 (d) | (0.01) | 0.04 | (0.05) | — | (0.05) |
2022 | 10.00 | 0.01 (d) | (0.01) | —# | (0.01) | — | (0.01) |
2021 | 10.03 | 0.06 | (0.03) | 0.03 | (0.06) | — | (0.06) |
2020 | 10.01 | 0.21 | 0.03 | 0.24 | (0.21) | (0.01) | (0.22) |
2019 | 10.00 | 0.20 | 0.01 | 0.21 | (0.20) | — | (0.20) |
2018 | 10.00 | 0.09 | — | 0.09 | (0.09) | — | (0.09) |
Value - Investor Class | |||||||
Six months ended 9/30/2022 (Unaudited) | 56.83 | (0.11)(d) | (12.43) | (12.54) | — | — | — |
2022 | 54.30 | (0.32)(d) | 5.18 | 4.86 | — | (2.33) | (2.33) |
2021 | 37.98 | (0.21)(d) | 21.14 | 20.93 | — | (4.61) | (4.61) |
2020 | 42.31 | (0.15)(d) | (1.98) | (2.13) | — | (2.20) | (2.20) |
2019 | 42.92 | (0.19)(d) | 3.60 | 3.41 | — | (4.02) | (4.02) |
2018 | 42.20 | (0.18)(d) | 3.96 | 3.78 | — | (3.06) | (3.06) |
Value - Institutional Class | |||||||
Six months ended 9/30/2022 (Unaudited) | 58.02 | (0.06)(d) | (12.70) | (12.76) | — | — | — |
2022 | 55.31 | (0.23)(d) | 5.27 | 5.04 | — | (2.33) | (2.33) |
2021 | 38.55 | (0.11)(d) | 21.48 | 21.37 | — | (4.61) | (4.61) |
2020 | 42.82 | (0.05)(d) | (2.02) | (2.07) | — | (2.20) | (2.20) |
2019 | 43.29 | (0.09)(d) | 3.64 | 3.55 | — | (4.02) | (4.02) |
2018 | 42.44 | (0.09)(d) | 4.00 | 3.91 | — | (3.06) | (3.06) |
# | Amount less than $0.01. |
(a) | Not Annualized for periods less than one year. |
(b) | Annualized for periods less than one year. |
(c) | Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares. |
(d) | Per share net investment income (loss) has been calculated using the average daily shares method. |
The accompanying notes form an integral part of these financial statements.
2022 Semi-Annual Report 63
Ratios/Supplemental Data | ||||||
Ratio of expenses | ||||||
to average net assets | ||||||
Ratio of net | ||||||
investment income | Portfolio | |||||
Net asset value, | Net assets, end of | Prior to fee | Net of fee | (loss) to average | turnover | |
end of period | Total return (%)(a) | period ($000) | waivers (%)(b) | waivers (%)(b) | net assets (%)(b) | rate (%)(a)(c) |
25.62 | (20.39) | 163,094 | 1.07 | 1.07 | (0.61) | 4 |
32.18 | 4.13 | 214,991 | 1.09 | 1.09 | (0.78) | 8 |
33.01 | 58.17 | 231,482 | 1.18 | 1.09 | (0.97) | 7 |
23.32 | (14.82) | 183,718 | 1.29 | 1.24 | (0.31) | 26 |
29.45 | 2.50 | 265,250 | 1.27 | 1.27 | (0.39) | 38 |
31.31 | 4.28 | 328,648 | 1.25 | 1.25 | (0.46) | 12 |
26.25 | (20.31) | 216,173 | 0.92 | 0.88 | (0.41) | 4 |
32.94 | 4.35 | 279,181 | 0.91 | 0.89 | (0.59) | 8 |
33.67 | 58.43 | 277,133 | 0.99 | 0.89 | (0.77) | 7 |
23.70 | (14.59) | 216,400 | 1.08 | 0.97 | (0.04) | 26 |
29.82 | 2.78 | 322,558 | 1.07 | 0.99 | (0.12) | 38 |
31.59 | 4.55 | 331,474 | 1.07 | 0.99 | (0.20) | 12 |
11.61 | (2.12) | 77,645 | 0.72 | 0.55 | 2.07 | 21 |
11.98 | (1.46) | 60,017 | 0.90 | 0.55 | 1.55 | 51 |
12.37 | 6.29 | 36,857 | 1.02 | 0.55 | 2.23 | 45 |
11.93 | 0.26 | 60,845 | 0.95 | 0.65 | 2.20 | 51 |
12.17 | 2.95 | 71,002 | 0.92 | 0.68 | 2.17 | 23 |
12.09 | 0.44 | 113,238 | 0.91 | 0.68 | 1.93 | 34 |
11.63 | (2.10) | 715,075 | 0.57 | 0.48 | 2.12 | 21 |
12.00 | (1.41) | 722,024 | 0.62 | 0.48 | 1.65 | 51 |
12.39 | 6.32 | 658,216 | 0.65 | 0.48 | 2.27 | 45 |
11.95 | 0.44 | 675,245 | 0.64 | 0.48 | 2.37 | 51 |
12.19 | 3.18 | 828,697 | 0.63 | 0.48 | 2.37 | 23 |
12.11 | 0.63 | 1,017,962 | 0.62 | 0.48 | 2.12 | 34 |
9.98 | 0.42 | 62,758 | 0.73 | 0.16 | 1.08 | 80 |
9.99 | 0.01 | 62,574 | 0.68 | 0.09 | 0.08 | 84 |
10.00 | 0.29 | 79,937 | 0.69 | 0.17 | 0.53 | 138 |
10.03 | 2.44 | 72,102 | 0.71 | 0.20 | 2.18 | 46 |
10.01 | 2.17 | 97,444 | 0.61 | 0.20 | 2.05 | 148 |
10.00 | 0.94 | 104,162 | 0.60 | 0.20 | 0.94 | 25 |
44.29 | (22.07) | 465,426 | 1.05 | 1.05 | (0.41) | 6 |
56.83 | 8.63 | 633,358 | 1.04 | 1.04 | (0.53) | 15 |
54.30 | 56.97 | 616,462 | 1.11 | 1.09 | (0.43) | 14 |
37.98 | (5.77) | 448,259 | 1.24 | 1.20 | (0.33) | 16 |
42.31 | 9.04 | 541,168 | 1.23 | 1.23 | (0.46) | 32 |
42.92 | 9.23 | 578,345 | 1.22 | 1.22 | (0.42) | 15 |
45.26 | (21.99) | 245,953 | 0.91 | 0.87 | (0.23) | 6 |
58.02 | 8.80 | 315,413 | 0.90 | 0.89 | (0.37) | 15 |
55.31 | 57.28 | 311,177 | 0.97 | 0.89 | (0.23) | 14 |
38.55 | (5.55) | 210,729 | 1.09 | 0.97 | (0.10) | 16 |
42.82 | 9.32 | 227,580 | 1.08 | 0.99 | (0.22) | 32 |
43.29 | 9.46 | 207,059 | 1.09 | 0.99 | (0.20) | 15 |
The accompanying notes form an integral part of these financial statements.
64 2022 Semi-Annual Report
NOTES TO FINANCIAL STATEMENTS
September 30, 2022 (Unaudited)
(1) Organization
The Weitz Funds (the “Trust”) is registered under the Investment Company Act of 1940 (the “’40 Act”) as an open-end management investment company issuing shares in series, each series representing a distinct portfolio with its own investment objectives and policies. At September 30, 2022, the Trust had nine series in operation: Balanced Fund, Core Plus Income Fund, Hickory Fund, Nebraska Tax-Free Income Fund, Partners III Opportunity Fund, Partners Value Fund, Short Duration Income Fund, Ultra Short Government Fund and Value Fund (individually, a “Fund”, collectively, the “Funds”).
On March 29, 2019, the Balanced Fund divided their outstanding shares whereby the shares held in accounts with balances exceeding $1.0 million were designated Institutional Class shares. All remaining shares, that were not designated as new Institutional Class shares, were renamed Investor Class shares.
Currently, the Balanced, Core Plus Income, Partners III Opportunity, Partners Value, Short Duration Income and Value Funds each offer two classes of shares: Institutional Class and Investor Class shares. Each class of shares has identical rights and privileges, except with respect to certain class specific expenses such as business administration and administrative servicing fees, voting rights on matters affecting a single class of shares and exchange privileges. All other Funds offer one class of shares.
The investment objective of the Hickory, Partners III Opportunity, Partners Value and Value Funds (the “Weitz Equity Funds”) is capital appreciation.
The investment objectives of the Balanced Fund are long-term capital appreciation, capital preservation and current income.
The investment objectives of the Core Plus Income Fund are current income and capital preservation.
The investment objective of the Nebraska Tax-Free Income Fund is current income that is exempt from both federal and Nebraska personal income taxes, consistent with the preservation of capital.
The investment objective of the Short Duration Income Fund is current income consistent with the preservation of capital.
The investment objective of the Ultra Short Government Fund is current income consistent with the preservation of capital and maintenance of liquidity.
Investment strategies and risk factors of each Fund are discussed in the Funds’ Prospectus.
(2) Significant Accounting Policies
The Funds are investment companies and apply the accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946 Financial Services – Investment Companies. The following accounting policies are in accordance with accounting principles generally accepted in the United States.
(a) Valuation of Investments
Investments are carried at fair value determined using the following valuation methods:
• | Securities traded on a national or regional securities exchange are valued at the last sales price; if there were no sales on that day, securities are valued at the mean between the latest available and representative bid and ask prices; securities listed on the NASDAQ exchange are valued using the NASDAQ Official Closing Price (“NOCP”). Generally, the NOCP will be the last sales price unless the reported trade for the security is outside the range of the bid/ask price. In such cases, the NOCP will be normalized to the nearer of the bid or ask price. |
• | Short sales traded on a national or regional securities exchange are valued at the last sales price; if there were no sales on that day, short sales are valued at the mean between the latest available and representative bid and ask prices. |
• | Securities not listed on an exchange are valued at the mean between the latest available and representative bid and ask prices, if available. |
• | The value of certain debt securities for which market quotations are not readily available may be based upon current market prices of securities that are comparable in coupon, rating and maturity or an appropriate matrix utilizing similar factors. |
• | The value of a traded option is the last sales price at which such option is traded or, in the absence of a sale on or about the close of the exchange, the mean of the closing bid and ask prices. |
• | Money market funds are valued at the quoted net asset value. |
• | The value of securities for which market quotations are not readily available or are deemed unreliable, including restricted and not readily marketable securities, is determined in good faith in accordance with procedures approved by the Trust’s Board of Trustees. Such valuation procedures and methods for valuing securities may include, but are not limited to: multiple of earnings, multiple of book value, discount from value of a similar freely-traded security, purchase price, private transaction in the security or related securities, the nature and duration of restrictions on disposition of the security and a combination of these and other factors. |
The Board of Trustees has adopted a Valuation Policy with regard to the Trust's valuation of portfolio investments. The Valuation Policy notes that the Board of Trustees has (i) designated Weitz Investment Management, Inc. (the "Adviser") as the valuation designee to perform fair valuation determinations for the Funds for all Fund investments and (ii) established a Valuation Committee (composed of Independent Trustees) to oversee the Adviser's activities as valuation designee. The Adviser has contracted with Citi Fund Services Ohio, Inc. to perform portfolio accounting services for the Funds, which services include valuation services for portfolio securities. The Adviser has established a Pricing Committee (composed of certain employees) to assist the Adviser, as valuation designee, with pricing and valuation matters. The Adviser has adopted Procedures for Valuation of Portfolio Securities to govern the Adviser and the Pricing Committee in carrying out their valuation responsibilities for the Funds.
(b) Option Transactions
The Funds, except for the Ultra Short Government Fund, may purchase put or call options. When a Fund purchases an option, an amount equal to the premium paid is recorded as an asset and is subsequently marked-to-market daily. Premiums paid for purchasing options that expire unexercised are recognized on the expiration date as realized losses. If an option is exercised, the premium paid is subtracted from the proceeds of the sale or added to the cost of the purchase to determine whether a Fund has realized a gain or loss on the related investment transaction. When a Fund enters into a closing transaction, a Fund realizes a gain or loss depending upon whether the amount from the closing transaction is greater or less than the premium paid.
The Funds, except for the Ultra Short Government Fund, may write put or call options. When a Fund writes an option, an amount equal to the premium received is recorded as a liability and is subsequently marked-to-market daily. Premiums received for writing options that expire unexercised are recognized on the expiration date as realized gains. If an option is exercised, the
2022 Semi-Annual Report 65
premium received is subtracted from the cost of the purchase or added to the proceeds of the sale to determine whether a Fund has realized a gain or loss on the related investment transaction. When a Fund enters into a closing transaction, a Fund realizes a gain or loss depending upon whether the amount from the closing transaction is greater or less than the premium received.
The Funds attempt to limit market risk and enhance their income by writing (selling) covered call options. The risk in writing a covered call option is that a Fund gives up the opportunity of profit if the market price of the financial instrument increases. A Fund also has the additional risk of not being able to enter into a closing transaction if a liquid secondary market does not exist. The risk in writing a put option is that a Fund is obligated to purchase the financial instrument underlying the option at prices which may be significantly different than the current market price.
(c) Securities Sold Short
The Funds, except for the Ultra Short Government Fund, may engage in selling securities short, which obligates a Fund to replace a security borrowed by purchasing the same security at the current market value. A Fund incurs a loss if the price of the security increases between the date of the short sale and the date on which the Fund replaces the borrowed security. A Fund realizes a gain if the price of the security declines between those dates.
(d) Securities Lending
For the purpose of generating income, the Funds, other than Ultra Short Government Fund, may lend portfolio securities, provided (1) the loan is secured continuously by collateral consisting of cash and/or U.S. Government securities maintained on a daily mark-to-market basis in an amount at least equal to the current market value of the securities loaned, (2) a Fund may at any time call the loan and obtain the return of securities loaned, (3) a Fund will receive any interest or dividends received on the loaned securities, and (4) the aggregate value of the securities loaned will not at any time exceed one-third of the total assets of the lending Fund. Gain or loss in the value of securities loaned that may occur during the term of the loan will be for the account of the Funds.
Cash collateral received in connection with securities lending is invested by Citibank, NA (the “Securities Lending Agent”) on behalf of the Funds in demand deposit accounts and money market funds. Such investments are subject to risk of payment delays or default on the part of the issuer or counterparty or otherwise may not generate sufficient interest to support the costs associated with securities lending. The Funds could also experience delays in recovering their securities and possible loss of income or value if the borrower fails to return the borrowed securities, although the Funds are indemnified from this risk by contract with the Securities Lending Agent. The Funds pay the Securities Lending Agent a portion of the investment income (net of rebates) on cash collateral delivered. Such fees are netted against “Income from securities lending” on the Statements of Operations. The Core Plus Income Fund, Partners III Opportunity Fund and Short Duration Income Fund had securities on loan of $499,364, $7,579,026 and $305,781, respectively, accounted for as secured borrowings with cash collateral of overnight and continuous maturities in the amounts of $510,998, $7,769,020 and $312,188, respectively, as of September 30, 2022.
(e) Federal Income Taxes
It is the policy of each Fund to comply with all sections of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income to shareholders; therefore, no provision for income or excise taxes is required.
Net investment income and net realized gains may differ for financial statement and tax purposes. The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains were recorded by the Funds.
The Funds have reviewed their tax positions taken on federal income tax returns, for each of the three open tax years and as of September 30, 2022, and have determined that no provisions for income taxes are required in the Funds’ financial statements.
(f) Securities Transactions
Securities transactions are accounted for on the date the securities are purchased or sold (trade date). Realized gains or losses are determined by specifically identifying the security sold.
Income dividends less foreign tax withholding (if any), dividends on short positions and distributions to shareholders are recorded on the ex-dividend date. Interest, including amortization of discount or premium, is accrued as earned.
(g) Dividend Policy
The Funds declare and distribute income dividends and capital gains distributions as may be required to qualify as a regulated investment company under the Internal Revenue Code.
Generally, the Core Plus Income, Nebraska Tax-Free Income and Short Duration Income Funds pay income dividends on a quarterly basis. The Ultra Short Government Fund declares dividends daily and pays dividends monthly. All dividends and distributions are reinvested automatically, unless the shareholder elects otherwise.
(h) Other
Expenses that are directly related to a Fund are charged directly to that Fund. Other operating expenses of the Trust are prorated to each Fund on the basis of relative net assets or another appropriate basis. Income, realized and unrealized gains and losses and expenses (other than class specific expenses) are allocated to each class of shares based on its relative net assets, except that each class separately bears expenses related specifically to that class, such as business administration, administrative servicing fees, transfer agent fees and registration fees.
(i) Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increase and decrease in net assets from operations during the period. Actual results could differ from those estimates.
66 2022 Semi-Annual Report
(j) In-Kind Redemptions
The Funds may meet redemption requests through an in-kind distribution of portfolio securities and cash. For financial reporting purposes, in-kind transactions are treated as a sale of securities. The resulting gains and losses are recognized based on the market value of the securities on the date of the redemption. For the period ended September 30, 2022, there was no in-kind redemption activity. The net realized gain (loss) from in-kind transactions, if any, can be found on the Statements of Operations. For tax purposes, no gains or losses were recognized.
(3) Fund Share Transactions
Six months ended September 30, 2022 | Year ended March 31, 2022 | ||||
Shares | $ Amount | Shares | $ Amount | ||
Balanced - Investor Class | |||||
Sales | 534,425 | 8,458,763 | 1,391,859 | 23,783,588 | |
Redemptions | (729,467) | (11,503,058) | (1,574,271) | (26,751,264) | |
Reinvestment of distributions | 12,231 | 187,018 | 91,734 | 1,580,250 | |
Net increase (decrease) | (182,811) | (2,857,277) | (90,678) | (1,387,426) | |
Balanced - Institutional Class | |||||
Sales | 531,778 | 8,426,209 | 1,584,912 | 27,189,209 | |
Redemptions | (394,132) | (6,205,962) | (1,770,022) | (30,366,110) | |
Reinvestment of distributions | 31,638 | 484,374 | 256,971 | 4,428,336 | |
Net increase (decrease) | 169,284 | 2,704,621 | 71,861 | 1,251,435 | |
Core Plus Income - Investor Class | |||||
Sales | 1,361,872 | 13,678,358 | 3,457,972 | 37,975,389 | |
Redemptions | (1,397,313) | (13,952,860) | (3,345,400) | (36,911,521) | |
Reinvestment of distributions | 73,084 | 715,927 | 116,107 | 1,265,753 | |
Net increase (decrease) | 37,643 | 441,425 | 228,679 | 2,329,621 | |
Core Plus Income - Institutional Class | |||||
Sales | 11,115,089 | 111,487,269 | 15,053,019 | 164,991,513 | |
Sales from merger | — | — | 7,478,409 | 83,160,265 | |
Redemptions | (8,144,193) | (81,072,687) | (4,981,892) | (54,728,351) | |
Reinvestment of distributions | 314,729 | 3,083,097 | 366,216 | 3,984,863 | |
Net increase (decrease) | 3,285,625 | 33,497,679 | 17,915,752 | 197,408,290 | |
Hickory | |||||
Sales | 31,252 | 1,448,969 | 122,982 | 6,873,358 | |
Redemptions | (221,931) | (10,238,861) | (313,688) | (17,864,409) | |
Reinvestment of distributions | — | — | 305,276 | 17,147,378 | |
Net increase (decrease) | (190,679) | (8,789,892) | 114,570 | 6,156,327 | |
Nebraska Tax-Free Income | |||||
Sales | 98,198 | 939,445 | 179,706 | 1,814,285 | |
Redemptions | (392,211) | (3,756,676) | (347,259) | (3,523,265) | |
Reinvestment of distributions | 25,105 | 237,736 | 45,892 | 460,942 | |
Net increase (decrease) | (268,908) | (2,579,495) | (121,661) | (1,248,038) | |
Partners III Opportunity - Investor Class | |||||
Sales | 41,540 | 513,643 | 377,282 | 5,791,590 | |
Redemptions | (405,078) | (5,054,745) | (918,180) | (14,642,432) | |
Reinvestment of distributions | — | — | 116,004 | 1,658,853 | |
Net increase (decrease) | (363,538) | (4,541,102) | (424,894) | (7,191,989) | |
Partners III Opportunity - Institutional Class | |||||
Sales | 1,478,508 | 19,495,885 | 2,630,454 | 43,331,400 | |
Redemptions | (3,576,212) | (47,799,746) | (3,995,385) | (64,854,274) | |
Reinvestment of distributions | — | — | 3,624,320 | 55,560,823 | |
Net increase (decrease) | (2,097,704) | (28,303,861) | 2,259,389 | 34,037,949 | |
Partners Value - Investor Class | |||||
Sales | 33,580 | 965,604 | 193,536 | 6,806,988 | |
Redemptions | (348,971) | (10,192,572) | (939,362) | (33,285,975) | |
Reinvestment of distributions | — | — | 414,117 | 14,394,715 | |
Net increase (decrease) | (315,391) | (9,226,968) | (331,709) | (12,084,272) | |
Partners Value - Institutional Class | |||||
Sales | 43,384 | 1,332,827 | 242,503 | 8,881,462 | |
Redemptions | (284,645) | (8,415,464) | (370,318) | (13,353,619) | |
Reinvestment of distributions | — | — | 373,718 | 13,289,418 | |
Net increase (decrease) | (241,261) | (7,082,637) | 245,903 | 8,817,261 |
2022 Semi-Annual Report 67
Six months ended September 30, 2022 | Year ended March 31, 2022 | |||
Shares | $ Amount | Shares | $ Amount | |
Short Duration Income - Investor Class | ||||
Sales | 2,131,907 | 25,137,810 | 3,502,010 | 42,618,825 |
Redemptions | (511,039) | (6,044,889) | (1,528,181) | (18,809,604) |
Reinvestment of distributions | 58,590 | 686,150 | 57,834 | 705,706 |
Net increase (decrease) | 1,679,458 | 19,779,071 | 2,031,663 | 24,514,927 |
Short Duration Income - Institutional Class | ||||
Sales | 13,879,867 | 164,312,946 | 20,273,774 | 249,823,438 |
Redemptions | (13,160,319) | (155,882,225) | (14,199,264) | (174,893,978) |
Reinvestment of distributions | 598,802 | 7,028,570 | 979,811 | 12,015,767 |
Net increase (decrease) | 1,318,350 | 15,459,291 | 7,054,321 | 86,945,227 |
Ultra Short Government | ||||
Sales | 1,516,760 | 15,144,844 | 3,341,139 | 33,392,430 |
Redemptions | (1,526,627) | (15,242,541) | (5,073,603) | (50,720,590) |
Reinvestment of distributions | 30,782 | 307,410 | 7,304 | 73,010 |
Net increase (decrease) | 20,915 | 209,713 | (1,725,160) | (17,255,150) |
Value - Investor Class | ||||
Sales | 122,645 | 6,279,605 | 432,863 | 25,649,566 |
Redemptions | (759,077) | (38,410,691) | (1,041,767) | (62,319,086) |
Reinvestment of distributions | — | — | 399,589 | 24,506,778 |
Net increase (decrease) | (636,432) | (32,131,086) | (209,315) | (12,162,742) |
Value - Institutional Class | ||||
Sales | 238,270 | 12,570,471 | 326,905 | 20,318,947 |
Redemptions | (240,170) | (12,698,287) | (706,274) | (42,987,464) |
Reinvestment of distributions | — | — | 189,052 | 11,830,900 |
Net increase (decrease) | (1,900) | (127,816) | (190,317) | (10,837,617) |
(4) Related Party Transactions
Each Fund has retained Weitz Investment Management, Inc. as its investment adviser. In addition, the Trust has an agreement with Weitz Securities, Inc. (the “Distributor”), a company under common control with the Adviser, to act as distributor for shares of the Trust. Certain officers of the Trust are also officers and directors of the Adviser and the Distributor.
Under the terms of management and investment advisory agreements, the Adviser is paid a monthly fee based on average daily net assets. The annual investment advisory fee schedule for each of the Funds is as follows:
Greater Than ($) | Less Than or Equal To ($) | Rate (%) | |
Balanced | 0 | 0.60 | |
Core Plus Income | 0 | 0.40 | |
Hickory | 0 | 5,000,000,000 | 0.85 |
5,000,000,000 | 0.80 | ||
Nebraska Tax-Free Income | 0 | 0.40 | |
Partners III Opportunity | 0 | 1,000,000,000 | 1.00 |
1,000,000,000 | 2,000,000,000 | 0.95 | |
2,000,000,000 | 3,000,000,000 | 0.90 | |
3,000,000,000 | 5,000,000,000 | 0.85 | |
5,000,000,000 | 0.80 | ||
Partners Value | 0 | 5,000,000,000 | 0.75 |
5,000,000,000 | 0.70 | ||
Short Duration Income | 0 | 0.40 | |
Ultra Short Government | 0 | 0.30 | |
Value | 0 | 5,000,000,000 | 0.75 |
5,000,000,000 | 0.70 |
Business administration services: The Trust has a business administration agreement with the Adviser under which the Trust compensates the Adviser for providing business administration services for all share classes of the Funds. Services encompass supervising all aspects of the management and operations of the Trust, including monitoring the Trust’s relationships with third-party service providers that may be retained from time to time by the Trust.
Administrative services: The Trust has administrative services plans under which the Trust compensates the Adviser for administrative services provided to all share classes of the Funds. Administrative services are provided by the Adviser or by certain financial intermediaries with respect to non-distribution services to fund shareholders. These services include, but are not limited to, providing shareholder statements, assisting with shareholder communications and sub-accounting services in connection with omnibus accounts.
Under the terms of a services agreement between the Adviser and Citi Fund Services Ohio, Inc. (“CFSO”), CFSO provides certain accounting and administrative services to the Funds. These services include, among other things, arranging for the payment of direct operating expenses of the Funds from the accounts of the Funds.
68 2022 Semi-Annual Report
Through July 31, 2023, the Adviser has agreed in writing to reimburse or to pay directly a portion of the Funds’ expenses to limit the net annual operating expense ratio (excluding taxes, interest, brokerage costs, acquired fund fees and expenses and extraordinary expenses). The amount listed under “Due to Adviser” is net of any expenses waived/reimbursed by the Adviser. The current expense caps and dollar amount of expenses reimbursed during the six months ended September 30, 2022, are as follows:
Annual Operating Expense Ratio Cap* | ||||||||
Nebraska | Short | |||||||
Core Plus | Tax-Free | Partners | Duration | Ultra Short | ||||
Balanced | Income | Hickory | Income | Value | Income | Government† | Value | |
Annual Operating Expense Cap: | ||||||||
Investor Class | 0.85% | 0.50% | 1.09% | 0.45% | 1.09% | 0.55% | 1.09% | |
Institutional Class | 0.70 | 0.40 | 0.89 | 0.48 | 0.20% | 0.89 | ||
Expenses Reimbursed by the Adviser: | ||||||||
Investor Class | $57,509 | $88,329 | $141,799 | $108,159 | — | $53,162 | — | |
Institutional Class | 122,301 | 402,575 | 53,745 | 331,525 | $180,875 | 69,065 |
* | Funds with a single share class are shown with the Investor Class, except for the Ultra Short Government Fund which has been designated Institutional Class. |
† | Effective January 24, 2022 through May 24, 2022, the Adviser voluntarily lowered the Ultra Short Government's expense cap to 0.05% |
As of September 30, 2022, the controlling shareholder of the Adviser held shares totaling approximately 29%, 9%, 27%, 57%, 43%, 8%, 13% and 5% of the Balanced, Core Plus Income, Hickory, Nebraska Tax-Free Income, Partners III Opportunity, Partners Value, Ultra Short Government and Value Funds, respectively.
(5) Distributions to Shareholders and Distributable Earnings
The tax character of distributions paid by the Funds for the past two tax years are summarized as follows (in U.S. dollars):
Balanced | Core Plus Income | Hickory | Nebraska Tax-Free Income | |||||
Year Ended March 31, | Year Ended March 31, | Year Ended March 31, | Year Ended March 31, | |||||
Distributions paid from: | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 |
Ordinary income | 936,116 | 1,476,000 | 6,081,897 | 5,556,107 | – | – | 852 | 59 |
Tax-exempt income | – | – | – | – | – | – | 474,894 | 532,550 |
Long-term capital gains | 5,115,973 | 730,378 | 449,010 | 916,700 | 18,525,298 | 16,261,119 | – | – |
Total distributions | 6,052,089 | 2,206,378 | 6,530,907 | 6,472,807 | 18,525,298 | 16,261,119 | 475,746 | 532,609 |
Partners III Opportunity | Partners Value | Short Duration Income | Ultra Short Government | |||||
Year Ended March 31, | Year Ended March 31, | Year Ended March 31, | Year Ended March 31, | |||||
Distributions paid from: | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 |
Ordinary income | – | – | – | – | 12,055,029 | 17,637,543 | 75,091 | 460,852 |
Long-term capital gains | 66,689,998 | 71,393,801 | 34,723,397 | 51,017,913 | 1,100,771 | 613,577 | – | 480 |
Total distributions | 66,689,998 | 71,393,801 | 34,723,397 | 51,017,913 | 13,155,800 | 18,251,120 | 75,091 | 461,332 |
Value | ||
Year Ended March 31, | ||
Distributions paid from: | 2022 | 2021 |
Ordinary income | 393,177 | – |
Long-term capital gains | 37,602,369 | 75,552,305 |
Total distributions | 37,995,546 | 75,552,305 |
As of the tax year ended March 31, 2022, the components of net assets on a tax basis were as follows (in U.S. dollars):
Nebraska Tax- | Partners III | ||||
Balanced | Core Plus Income | Hickory | Free Income | Opportunity | |
Cost of investments | 167,071,289 | 345,139,763 | 119,496,508 | 31,513,774 | 253,005,149 |
Gross unrealized appreciation | 47,507,817 | 2,014,662 | 79,334,654 | 122,006 | 277,693,241 |
Gross unrealized depreciation | (4,375,819) | (12,544,589) | (6,665,224) | (635,453) | (55,068,516) |
Net unrealized appreciation (depreciation) | 43,131,998 | (10,529,927) | 72,669,430 | (513,447) | 222,624,725 |
Undistributed ordinary income | 390,415 | 490,325 | — | — | — |
Qualified late year ordinary loss deferral | — | — | — | — | (1,220,591) |
Undistributed tax-exempt income | — | — | — | 31,039 | — |
Undistributed long-term gains | 1,964,516 | 464,954 | 8,113,334 | — | 33,098,866 |
Capital loss carryforwards | — | — | — | (127,046) | — |
Paid-in capital | 165,079,670 | 357,179,513 | 112,403,782 | 33,489,483 | 318,877,113 |
Net assets | 210,566,599 | 347,604,865 | 193,186,546 | 32,880,029 | 573,380,113 |
2022 Semi-Annual Report 69
Short Duration | Ultra Short | |||
Partners Value | Income | Government | Value | |
Cost of investments | 259,140,095 | 764,200,452 | 55,163,492 | 485,564,068 |
Gross unrealized appreciation | 249,354,837 | 2,108,525 | 201 | 473,576,775 |
Gross unrealized depreciation | (16,917,351) | (14,547,360) | (45,348) | (12,048,451) |
Net unrealized appreciation (depreciation) | 232,437,486 | (12,438,835) | (45,147) | 461,528,324 |
Undistributed ordinary income | — | 874,359 | 2,635 | — |
Qualified late year ordinary loss deferral | (795,701) | — | — | (498,850) |
Undistributed long-term gains | 26,233,057 | 572,444 | — | 93,222,990 |
Capital loss carryforwards | — | — | (14,147) | — |
Dividend payable | — | — | (5,944) | — |
Paid-in capital | 236,296,558 | 793,033,423 | 62,636,788 | 394,518,192 |
Net assets | 494,171,400 | 782,041,391 | 62,574,185 | 948,770,656 |
The Partners III Opportunity, Partners Value and Value Funds elected to defer ordinary losses arising after December 31, 2021. Such losses are treated for tax purposes as arising on April 1, 2022.
Capital loss carryforwards represent tax basis capital losses that may be carried over to offset future realized capital gains, if any. To the extent that carryforwards are used, no capital gains distributions will be made. During the tax year ended March 31, 2022, the Funds utilized capital loss carryforwards to offset realized capital gains. The character and utilization of the carryforwards are as follows (in U.S. Dollars):
Nebraska Tax-Free | Ultra Short | ||
Core Plus Income | Income | Government | |
Short term (no expirations) | — | — | 10,894 |
Long term (no expirations) | — | 127,046 | 3,253 |
Capital loss carryforwards utilized | 24,293 | — | — |
(6) Securities Transactions
Purchases and proceeds from maturities or sales of investment securities of the Funds for the six months ended September 30, 2022, excluding fund merger transactions, in-kind transactions, short-term securities and U.S. government obligations, are summarized as follows (in U.S. dollars):
Core Plus | Nebraska Tax- | Partners III | Short Duration | Ultra Short | |||||
Balanced | Income | Hickory | Free Income | Opportunity | Partners Value | Income | Government | Value | |
Purchases | 35,148,237 | 93,750,545 | 7,990,997 | 449,968 | 55,082,979 | 16,454,654 | 199,335,093 | 3,151,840 | 49,636,148 |
Proceeds | 21,413,228 | 50,989,058 | 15,172,743 | 3,295,000 | 72,235,771 | 23,151,146 | 155,037,200 | 3,835,694 | 85,526,571 |
(7) Affiliated Issuers
Affiliated issuers, as defined under the Investment Company Act of 1940, are those in which a Fund’s holdings of an issuer represent 5% or more of the outstanding voting securities of the issuer. A summary of each Fund’s holdings in the securities of such issuers is set forth below:
Net Change | ||||||||
in Unrealized | ||||||||
Value | Purchases at | Proceeds from | Net Realized | Appreciation/ | Shares as of | Dividend | ||
3/31/2022 | Cost | Sales | Gain(Loss) | Depreciation | Value 9/30/2022 | 9/30/2022 | Income | |
Partners III Opportunity | ||||||||
CoreCard Corp. | $16,714,000 | $471,876 | $ - | $ - | $(3,470,776) | $13,715,100 | 630,000 | $ - |
(8) Contingencies
Each Fund indemnifies the Trust’s officers and trustees for certain liabilities that might arise from their performance of their duties to each of the Funds. Additionally, in the normal course of business the Funds enter into contracts that contain a variety of representations and warranties and which provide general indemnifications. The Funds’ maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Funds that have not yet occurred. However, based on experience, the Funds expect the risk of loss to be remote.
(9) Financial Instruments With Off-Balance Sheet Risks
Option contracts written and securities sold short result in off-balance sheet risk as the Funds’ ultimate obligation to satisfy the terms of the contract or the sale of securities sold short may exceed the amount recognized in the Statements of Assets and Liabilities.
The Funds are required to maintain collateral in a segregated account to provide adequate margin as determined by the broker.
(10) Margin Borrowing Agreement
The Partners III Opportunity Fund has a margin account with its prime broker, Bank of America Merrill Lynch, under which the Fund may borrow against the value of its securities, subject to regulatory limitations. Interest accrues at the federal funds rate plus 0.625% (3.705% at September 30, 2022). Interest is accrued daily and paid monthly. The Partners III Opportunity Fund held a cash balance of $14,976,645 with the broker at September 30, 2022.
The Partners III Opportunity Fund is exposed to credit risk from its prime broker who effects transactions and extends credit pursuant to a prime brokerage agreement. The Adviser attempts to minimize the credit risk by monitoring credit exposure and the creditworthiness of the prime broker.
(11) Concentration of Credit Risk
Approximately 84.1% of the Nebraska Tax-Free Income Funds’ net assets are in obligations of political subdivisions of the State of Nebraska, which are subject to the credit risk associated with the non-performance of such issuers.
70 2022 Semi-Annual Report
(12) Fair Value Measurements
Various inputs are used in determining the value of the Fund’s investments. These inputs are used in determining the value of the Funds’ investments and are summarized in the following fair value hierarchy:
• | Level 1 – quoted prices in active markets for identical securities; |
• | Level 2 – other significant observable inputs (including quoted prices for similar securities); |
• | Level 3 – significant unobservable inputs (including the Funds’ own assumptions in determining the fair value of investments). |
The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.
A description of the valuation techniques applied to the Funds’ major categories of assets and liabilities measured at fair value on a recurring basis follows.
• | Equity securities and Exchange-traded funds. Securities traded on a national securities exchange (or reported on the NASDAQ national market) are stated at the last reported sales price on the day of valuation. To the extent these securities are actively traded and valuation adjustments are not applied, they are categorized in Level 1 of the fair value hierarchy. Preferred stock and other equities traded on inactive markets or valued by reference to similar instruments are categorized in Level 2. |
• | Corporate and Municipal bonds. The fair values of corporate and municipal bonds are estimated using various techniques, which may consider recently executed transactions in securities of the issuer or comparable issuers, market price quotations (where observable), bond spreads and fundamental data relating to the issuer. Although most corporate and municipal bonds are categorized in Level 2 of the fair value hierarchy, in instances where lower relative weight is placed on transaction prices, quotations, or similar observable inputs, they are categorized in Level 3. |
• | Asset-backed securities. The fair values of asset-backed securities (including non-government agency mortgage-backed securities and interest-only securities) are generally estimated based on models that consider the estimated cash flows of each tranche of the entity, a benchmark yield and an estimated tranche specific spread to the benchmark yield based on the unique attributes of the tranche. Certain securities are valued principally using dealer quotations. To the extent the inputs are observable and timely, the values are categorized in Level 2 of the fair value hierarchy; otherwise they are categorized as Level 3. |
• | U.S. Government securities. U.S. Government securities are normally valued using a model that incorporates market observable data such as reported sales of similar securities, broker quotes, yields, bids, offers and reference data. Certain securities are valued principally using dealer quotations. U.S. Government securities are categorized in Level 1 or Level 2 of the fair value hierarchy depending on the inputs used and market activity levels for specific securities. |
• | U.S. agency securities. U.S. agency securities are comprised of two main categories consisting of agency issued debt and mortgage-backed securities. Agency issued debt securities are generally valued in a manner similar to U.S. Government securities. Mortgage-backed securities include collateralized mortgage obligations, to-be-announced (TBA) securities and mortgage pass-through certificates. Mortgage-backed securities are generally valued using dealer quotations. Depending on market activity levels and whether quotations or other data are used, these securities are typically categorized in Level 2 of the fair value hierarchy. |
• | Restricted and/or illiquid securities. Restricted and/or illiquid securities for which quotations are not readily available are valued in accordance with procedures approved by the Trust’s Board of Trustees. Restricted securities issued by publicly traded companies are generally valued at a discount to similar publicly traded securities. Restricted or illiquid securities issued by nonpublic entities are valued by reference to comparable public entities or fundamental data relating to the issuer or both. Depending on the relative significance of valuation inputs, these instruments are classified in either Level 2 or Level 3 of the fair value hierarchy. |
• | Derivative instruments. Listed derivatives, such as the Funds’ equity option contracts and warrants, that are valued based on closing prices from the exchange or the mean of the closing bid and ask prices are generally categorized in Level 1 or Level 2 of the fair value hierarchy depending on the market activity levels. |
The following is a summary of inputs used, in U.S. dollars, as of September 30, 2022, in valuing the Funds’ assets and liabilities carried at fair value. The Schedule of Investments for each Fund provides a detailed breakdown of each category. For the six months ended September 30, 2022, there were no transfers into or out of Level 3.
Balanced | ||||
Level 1 | Level 2 | Level 3 | Total | |
Assets: | ||||
Investments in Securities: | ||||
Common Stocks | 75,819,932 | — | — | 75,819,932 |
Non-Convertible Preferred Stocks | 1,593,900 | — | — | 1,593,900 |
Corporate Bonds | — | 2,151,128 | — | 2,151,128 |
Corporate Convertible Bonds | — | 1,814,931 | — | 1,814,931 |
Asset-Backed Securities | — | 17,311,380 | — | 17,311,380 |
Commercial Mortgage-Backed | ||||
Securities | — | 4,677,291 | — | 4,677,291 |
Mortgage-Backed Securities | — | 4,800,353 | — | 4,800,353 |
U.S. Treasuries | — | 73,761,116 | — | 73,761,116 |
Cash Equivalents | 1,483,975 | 2,996,842 | — | 4,480,817 |
Total Investments in Securities | 78,897,807 | 107,513,041 | — | 186,410,848 |
Core Plus Income | ||||
Level 1 | Level 2 | Level 3 | Total | |
Assets: | ||||
Investments in Securities: | ||||
Corporate Bonds | — | 75,058,834 | — | 75,058,834 |
Corporate Convertible Bonds | — | 1,904,350 | — | 1,904,350 |
Asset-Backed Securities | — | 103,301,944 | — | 103,301,944 |
Commercial Mortgage-Backed | ||||
Securities | — | 35,156,945 | — | 35,156,945 |
Mortgage-Backed Securities | — | 5,140,295 | — | 5,140,295 |
Municipal Bonds | — | 969,723 | — | 969,723 |
U.S. Treasuries | — | 120,573,123 | — | 120,573,123 |
Non-Convertible Preferred Stocks | 1,266,012 | — | — | 1,266,012 |
Cash Equivalents | 456,311 | — | — | 456,311 |
Short-Term Securities Held as | ||||
Collateral for Securities on | ||||
Loan | 510,998 | — | — | 510,998 |
Total Investments in Securities | 2,233,321 | 342,105,214 | — | 344,338,535 |
2022 Semi-Annual Report 71
Hickory | ||||
Level 1 | Level 2 | Level 3 | Total | |
Assets: | ||||
Investments in Securities: | ||||
Common Stocks | 129,370,757 | 9,232,200 | — | 138,602,957 |
Non-Convertible Preferred Stocks | 1,593,900 | — | — | 1,593,900 |
Warrants | — | — | —# | — |
Cash Equivalents | 2,961,628 | 2,997,367 | — | 5,958,995 |
Total Investments in Securities | 133,926,285 | 12,229,567 | — | 146,155,852 |
Nebraska Tax-Free Income | ||||
Level 1 | Level 2 | Level 3 | Total | |
Assets: | ||||
Investments in Securities: | ||||
Municipal Bonds | — | 26,359,062 | — | 26,359,062 |
Cash Equivalents | 2,117,343 | — | — | 2,117,343 |
Total Investments in Securities | 2,117,343 | 26,359,062 | — | 28,476,405 |
Partners III Opportunity | ||||
Level 1 | Level 2 | Level 3 | Total | |
Assets: | ||||
Investments in Securities: | ||||
Common Stocks | 383,730,850 | — | — | 383,730,850 |
Non-Convertible Preferred Stocks | 9,108,000 | — | — | 9,108,000 |
Warrants | — | — | —# | — |
Cash Equivalents | 14,753,089 | 9,984,539 | — | 24,737,628 |
Short-Term Securities Held as | ||||
Collateral for Securities on | ||||
Loan | 7,769,020 | — | — | 7,769,020 |
Total Investments in Securities | 415,360,959 | 9,984,539 | — | 425,345,498 |
Liabilities: | ||||
Securities Sold Short | (14,287,200) | — | — | (14,287,200) |
Partners Value | ||||
Level 1 | Level 2 | Level 3 | Total | |
Assets: | ||||
Investments in Securities: | ||||
Common Stocks | 372,353,055 | — | — | 372,353,055 |
Cash Equivalents | 4,297,299 | 2,998,370 | — | 7,295,669 |
Total Investments in Securities | 376,650,354 | 2,998,370 | — | 379,648,724 |
Short Duration Income | ||||
Level 1 | Level 2 | Level 3 | Total | |
Assets: | ||||
Investments in Securities: | ||||
Corporate Bonds | — | 99,398,776 | — | 99,398,776 |
Corporate Convertible Bonds | — | 18,170,517 | — | 18,170,517 |
Asset-Backed Securities | — | 289,033,648 | — | 289,033,648 |
Commercial Mortgage-Backed | ||||
Securities | — | 84,197,916 | — | 84,197,916 |
Mortgage-Backed Securities | — | 78,758,407 | — | 78,758,407 |
U.S. Treasuries | — | 200,619,751 | — | 200,619,751 |
Cash Equivalents | 25,078,411 | — | — | 25,078,411 |
Short-Term Securities Held as | ||||
Collateral for Securities on | ||||
Loan | 312,188 | — | — | 312,188 |
Total Investments in Securities | 25,390,599 | 770,179,015 | — | 795,569,614 |
Ultra Short Government | ||||
Level 1 | Level 2 | Level 3 | Total | |
Assets: | ||||
Investments in Securities: | ||||
Asset-Backed Securities | — | 3,269,347 | — | 3,269,347 |
U.S. Treasuries | — | 51,391,939 | — | 51,391,939 |
Cash Equivalents | 8,201,757 | — | — | 8,201,757 |
Total Investments in Securities | 8,201,757 | 54,661,286 | — | 62,863,043 |
Value | ||||
Level 1 | Level 2 | Level 3 | Total | |
Assets: | ||||
Investments in Securities: | ||||
Common Stocks | 690,547,575 | — | — | 690,547,575 |
Cash Equivalents | 11,158,729 | 11,983,452 | — | 23,142,181 |
Total Investments in Securities | 701,706,304 | 11,983,452 | — | 713,689,756 |
# Represents securities that were deemed to have a value of zero at September 30, 2022.
(13) Subsequent Events
Effective October 19, 2022, the Partners III Opportunity Fund may concentrate its investments in securities of relatively few issuers and will be considered a “non-diversified” fund. Management has evaluated the impact of all other subsequent events on the Funds through the date the financial statements were issued and has determined that there were no additional subsequent events requiring recognition or disclosure in the financial statements.
(14) Recent Accounting Pronouncements
In March 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848). The amendments in this update provide optional guidance to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting and are effective for all entities as of March 12, 2020 through December 31, 2022. In addition, in January 2021, the FASB issued ASU 2021-01 Reference Rate Reform (Topic 848). This ASU made some clarifications regarding derivative instruments that are affected by changes to the interest rates used for discounting, margining or contract price alignment due to the reference rate reform falling within the scope of Topic 848. The ASU is effective upon issuance and can be implemented through December 31, 2022. The transition away from certain reference rates could result in increased volatility and uncertainty in markets. The elimination of specific reference rates may adversely affect the market for, or value of, specific securities or payments linked to those reference rates. To the extent that the Funds’ investments have maturities which extend beyond 2023, the applicable interest rates might be subject to change if there is a transition in the reference rate.
72 2022 Semi-Annual Report
ACTUAL AND HYPOTHETICAL EXPENSES FOR
COMPARISON PURPOSES
(Unaudited)
Example
As a shareholder of one or more of the Funds, you incur two types of costs: (1) transaction costs, including any transaction fees that you may be charged if you purchase or redeem your Fund shares through certain financial institutions; and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from April 1, 2022 through September 30, 2022.
Actual Expenses
The first line for each Fund in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an account value of $8,600 divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid from 4/01/22 – 9/30/22” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line for each Fund in the table below provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each Fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of the Fund. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in a specific Weitz Fund to other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs charged by certain financial institutions. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if you incurred transactional fees, your costs would have been higher. Actual and hypothetical expenses for each Fund are provided in this table.
Beginning Account | Ending Account | Annualized | Expenses Paid from | ||
Value 4/01/22 | Value 9/30/22 | Expense Ratio | 4/01/22-9/30/22(1) | ||
Balanced - Investor Class | Actual | $1,000.00 | $889.60 | 0.85% | $4.03 |
Hypothetical(2) | 1,000.00 | 1,020.81 | 0.85 | 4.31 | |
Balanced - Institutional Class | Actual | 1,000.00 | 890.00 | 0.70 | 3.32 |
Hypothetical(2) | 1,000.00 | 1,021.56 | 0.70 | 3.55 | |
Core Plus Income - Investor Class | Actual | 1,000.00 | 925.60 | 0.50 | 2.41 |
Hypothetical(2) | 1,000.00 | 1,022.56 | 0.50 | 2.54 | |
Core Plus Income - Institutional Class | Actual | 1,000.00 | 926.00 | 0.40 | 1.93 |
Hypothetical(2) | 1,000.00 | 1,023.06 | 0.40 | 2.03 | |
Hickory | Actual | 1,000.00 | 790.50 | 1.07 | 4.80 |
Hypothetical(2) | 1,000.00 | 1,019.70 | 1.07 | 5.42 | |
Nebraska Tax-Free Income | Actual | 1,000.00 | 957.40 | 0.45 | 2.21 |
Hypothetical(2) | 1,000.00 | 1,022.81 | 0.45 | 2.28 | |
Partners III Opportunity - Investor Class | Actual | 1,000.00 | 773.70 | 1.63 | 7.25 |
Hypothetical(2) | 1,000.00 | 1,016.90 | 1.63 | 8.24 | |
Partners III Opportunity - Institutional Class | Actual | 1,000.00 | 774.80 | 1.20 | 5.34 |
Hypothetical(2) | 1,000.00 | 1,019.05 | 1.20 | 6.07 | |
Partners Value - Investor Class | Actual | 1,000.00 | 796.10 | 1.07 | 4.82 |
Hypothetical(2) | 1,000.00 | 1,019.70 | 1.07 | 5.42 | |
Partners Value - Institutional Class | Actual | 1,000.00 | 796.90 | 0.88 | 3.96 |
Hypothetical(2) | 1,000.00 | 1,020.66 | 0.88 | 4.46 | |
Short Duration Income - Investor Class | Actual | 1,000.00 | 978.80 | 0.55 | 2.73 |
Hypothetical(2) | 1,000.00 | 1,022.31 | 0.55 | 2.79 | |
Short Duration Income - Institutional Class | Actual | 1,000.00 | 979.00 | 0.48 | 2.38 |
Hypothetical(2) | 1,000.00 | 1,022.66 | 0.48 | 2.43 | |
Ultra Short Government | Actual | 1,000.00 | 1,004.20 | 0.16 | 0.80 |
Hypothetical(2) | 1,000.00 | 1,024.27 | 0.16 | 0.81 | |
Value - Investor Class | Actual | 1,000.00 | 779.30 | 1.05 | 4.68 |
Hypothetical(2) | 1,000.00 | 1,019.80 | 1.05 | 5.32 | |
Value - Institutional Class | Actual | 1,000.00 | 780.10 | 0.87 | 3.88 |
Hypothetical(2) | 1,000.00 | 1,020.71 | 0.87 | 4.41 |
(1) | Expenses are equal to the annualized expense ratio for the Fund, multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half year (183/365). |
(2) | Assumes 5% total return before expenses. |
2022 Semi-Annual Report 73
OTHER INFORMATION
Proxy Voting Policy
A description of the Funds’ proxy voting policies and procedures is available without charge, upon request by (i) calling 888-859-0698, (ii) on the Funds’ website at weitzinvestments.com; and (iii) on the SEC’s website at sec.gov.
Information on how each of the Funds voted proxies relating to portfolio securities during each twelve month period ended June 30 is available: (i) on the Funds’ website at weitzinvestments.com and (ii) on the SEC’s website at sec.gov.
Form N-PORT
The Funds file complete schedules of investments with the Securities and Exchange Commission as of June 30 and December 31 of each year on Form N-PORT. The Funds’ Form N-PORT can be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. or on the SEC’s website at sec.gov.
Factors Considered by the Board of Trustees in Connection with: (1) the Approval of the Continuation of the Currently Effective Management and Investment Advisory Agreements with Weitz Investment Management, Inc. for each of the Funds and (2) the Approval of Proposed New Management and Investment Advisory Agreements with Weitz Investment Management, Inc. for each of the Funds as a Result of a Proposed Change in Control Transaction Involving Weitz Investment Management, Inc.
1. Factors Considered by the Board of Trustees in Approving the Continuation of the Currently Effective Management and Investment Advisory Agreements with Weitz Investment Management, Inc. for each of the Funds
In accordance with the Investment Company Act of 1940, as amended (the “1940 Act”), the Board of Trustees (the “Trustees” or “Board”) of the Funds is required, on an annual basis, to consider the continuation of the Management and Investment Advisory Agreements (the “Agreements”) between the Funds and Weitz Investment Management, Inc. (“Weitz Inc.” or the “Adviser”), and this must take place at an in-person meeting of the Board. The relevant provisions of the 1940 Act specifically provide that it is the duty of the Board to request and evaluate such information as the Board determines is necessary to allow them to properly consider the continuation of the Agreements, and it is the duty of Weitz Inc. to furnish the Trustees with such information that is responsive to their request. Accordingly, in determining whether to approve the continuation of the Agreements between the Funds and Weitz Inc., the Board requested, and Weitz Inc. provided, information and data relevant to the Board’s consideration. This included materials prepared by Weitz Inc. and materials prepared by an independent informational services firm that produced materials specifically for the Board that provided the Board with information regarding the investment performance of the Funds and information regarding the fees and expenses of the Funds, as compared to other similar mutual funds. As part of its deliberations, the Board also considered and relied upon information about the Funds and Weitz Inc. that they had received during the past year in connection with their regular Board meetings at which they engage in the ongoing oversight of the Funds and their operations.
The Board most recently considered the continuation of the Agreements for each of the Funds at an in-person meeting held on May 26, 2022. At this meeting the Board engaged in a thorough review process in connection with determining whether to continue the Agreements. During the meeting the Board discussed the Agreements with representatives of Weitz Inc. and they reviewed various factors with them concerning the proposed continuation of the Agreements. As discussed more fully below, among the factors considered by the Board were: (1) the nature, extent and quality of the advisory services provided, including the investment performance of the Funds; (2) the cost of advisory services provided and the expected level of profitability, which included comparative information on fees and expenses borne by other similar mutual funds; (3) the extent to which economies of scale may be realized as the Funds grow and whether the advisory fees reflect possible economies of scale; (4) benefits to Weitz Inc. from its relationship with the Funds (and any corresponding benefits to the Funds); and (5) such other considerations deemed appropriate by the Board in making an informed business decision regarding the continuation of the Agreements.
With respect to the equity funds managed by Weitz Inc., consisting of Value Fund, Partners Value Fund, Partners III Opportunity Fund and Hickory Fund (the “Equity Funds”), the Board noted the applicable investment objectives, strategies and fee arrangements for each Equity Fund and also noted Weitz Inc.’s investment expertise and the investment strategies utilized by the firm with respect to each Equity Fund. Among the factors the Board considered for each Equity Fund was the overall performance of each Fund relative to other similar mutual funds on a long-term basis and over shorter time periods. The Board discussed with the representatives of management the fact that Weitz Inc. maintains a particular focus on long-term investment performance results and they reviewed the reasons why this may, from time to time, cause the longer-term performance results and the shorter-term performance results to compare differently when compared to similar funds for similar time periods. In connection with this, the Board took note of management’s stated position that achieving favorable long-term investment results is a primary objective of the firm and that as a result of this emphasis on longer-term results, shorter-term results which lag their peers and their relative indexes are likely to occur from time to time over various investment cycles. With respect to the Trustees’ review of the performance results of the Equity Funds over various time periods, it was noted by the Adviser representatives that the Adviser seeks risk adjusted returns and that depending on the view of the markets at any particular time, the Adviser may take a more conservative investment approach. The Board also took note of management’s position that during the bull market in the equity markets that has been ongoing over the past few years, the value style of investing adhered to by Weitz Inc. has generally been out of favor, which has negatively impacted the performance of the Equity Funds. The Trustees took into consideration the improving performance of certain Funds and the fact that the Adviser has continued to invest in a manner that is fully consistent with the Prospectus disclosure for the Equity Funds and the Adviser’s public statements referring to its investment strategies, and the Board acknowledged that Weitz Inc. has, in fact, consistently maintained its adherence to value-oriented investment strategies and has not attempted to deviate from this style of investing in response to developments in the equity markets. The Adviser representatives informed the Trustees that they intend to continue to seek investment opportunities that are intended to help enhance the investment performance results for the Equity Funds. The Board also considered the Adviser’s acknowledgment of each Fund’s relative performance against its peers and the Adviser’s commitment to improving the performance of the Funds.
In addition, the Board compared expenses of each Equity Fund to the expenses of its peer group, noting that (i) the net expenses for the Institutional Class shares of Value Fund (after
74 2022 Semi-Annual Report
fee waivers) are above industry averages for operating expenses of other funds of similar size and investment objective, (ii) the net expenses for the Institutional Class shares of Partners Value Fund (after fee waivers) are above industry averages for operating expenses of other funds of similar size and investment objective while the contractual management fee is below the median of its peer group, (iii) the total expenses for the Institutional Class shares of Partners III Fund (exclusive of the dividend and interest expense incurred by the Fund) are below industry averages for total operating expenses of other funds of similar size and investment objective, and (iv) the net expenses for the Hickory Fund are below industry averages for total operating expenses of other funds of similar size and investment objective. In considering the investment advisory fees applicable to each Equity Fund, the Board discussed with representatives of Weitz Inc. their reasons for assessing the applicable fees in connection with each Equity Fund. The Board then considered and discussed the fees charged by similar funds in each respective investment category. The Board also considered the fact that the investment advisory fees for each Equity Fund are subject to breakpoints which result in reduced investment advisory fees as assets increase, and the Board agreed that this type of fee structure is reasonable and fair to shareholders. The members of the Board also reviewed matters with respect to the terms of the Expense Limitation Agreements that are in effect between the Value Fund, the Partners Value Fund and the Hickory Fund and Weitz Inc., and it was noted that Weitz Inc. was proposing to extend the term of the Expense Limitation Agreements for another year.
The Board also reviewed matters with respect to the proposed continuation of the Management and Investment Advisory Agreement for the Balanced Fund. Management reviewed with the Board the fact that the Balanced Fund utilizes an investment style that combines equity investments and fixed income investments. The Board reviewed the investment advisory fee for the Balanced Fund, as well as performance information for the Balanced Fund. The Board discussed with the representatives of Weitz Inc. the currently effective investment advisory fee for the Balanced Fund, including the terms of the Expense limitation Agreement currently in effect, and it was noted that Weitz Inc. was proposing to extend the term of the Expense Limitation Agreement for another year. It was also noted that the Balanced Fund is not currently subject to breakpoints on its advisory fee. Management indicated that they would be willing to consider the introduction of breakpoints for the Balanced Fund in the event that assets in the Fund were to become more substantial and economies of scale were able to be realized. The Board also considered expenses of the Balanced Fund as compared to the expenses of its peer group, noting that the net expenses for the Institutional Class of shares of the Balanced Fund (after fee waivers) are below industry averages for total operating expenses of other funds of similar size and investment objective.
The members of the Board further considered various matters with respect to each of the income funds managed by Weitz Inc. consisting of the Core Plus Income Fund, the Short Duration Income Fund, the Ultra Short Government Fund and the Nebraska Tax-Free Income Fund (the “Income Funds”), noting the applicable investment objectives, strategies and fee arrangements for each Income Fund, and noting Weitz Inc.’s investment expertise and the investment strategies utilized by the firm with respect to each of the Income Funds. Among the factors the Board considered was the overall performance of each Income Fund relative to its peer group on a long-term basis and over shorter time periods, taking into consideration the facts that (i) Core Plus commenced operations on July 31, 2014 and (ii) Ultra Short had operated as a “government money market fund” until December 16, 2016. The Board also took into consideration the strong long- and short-term performance of Core Plus Income Fund as well as the strong long-term performance of the Short Duration Income Fund. In addition, the Board compared expenses of each Income Fund to the expenses of its peer group, noting that the expenses (after fee waivers) of Core Plus Income Fund, Ultra Short Government Fund and Nebraska Tax- Free Income Fund each are below industry averages for other funds of similar size and investment objective, while Short Duration Income Fund compares favorably to industry averages for other funds of similar size and investment objective. In considering the investment advisory fees applicable to each Income Fund, the Board discussed with the Adviser representatives their reasons for assessing the applicable fees in connection with each Income Fund, and the Board considered and discussed the fees charged by similar funds in each respective investment category. The members of the Board also reviewed matters with respect to the terms of the Expense Limitation Agreements that are in effect between each of the Income Funds and Weitz Inc. and it was noted that Weitz Inc. was proposing to extend the term of the Expense Limitation Agreements for another year.
The Board also reviewed with representatives of Weitz Inc. various other factors relating to the management of the Funds. The Board took note of the long-term relationship between Weitz Inc. and the Funds and the efforts that have been undertaken by Weitz Inc. to foster the growth and development of the Funds since the inception of each Fund. The Board also noted the range of investment advisory, shareholder servicing and business administrative services provided by Weitz Inc. to the Funds and the level and quality of these services, and in particular, they noted the quality of the personnel providing these services and determined that the quality of the services was very high. The Board also took note of the facts that: (a) Weitz Inc. has undertaken to pay from its own resources the distribution expenses of the Funds, including those third-party intermediary expenses that are deemed to be distribution related and (b) the increased marketing efforts that Weitz Inc. has continued to undertake for the Funds and which it has continued to finance from its own resources.
The Board also reviewed financial information concerning Weitz Inc. relating to its operation of the Funds, noting the overall profitability of the relationship with the Funds to Weitz Inc. and the financial soundness of Weitz Inc. as demonstrated by the financial information provided, and reached a finding that the level of profitability was consistent with relevant industry averages and not excessive. In reviewing the profitability of Weitz Inc. relating to its management of the Funds, the Board reviewed the level of profitability including the various marketing and distribution expenses that are incurred by Weitz Inc. from its own resources and they also considered the level of profitability without taking into consideration the impact of these marketing and distribution costs. The Board also considered that Weitz Inc. had agreed to fee breakpoints and to contractual fee waivers with respect to certain of the Funds in order to limit their overall operating expenses.
The Board further reviewed Weitz Inc.’s brokerage practices, including its soft dollar practices and best-execution procedures, and noted that these were reasonable and consistent with standard industry practice. The Board took note of the current portfolio managers for each of the Funds and their overall management of each of the Funds. The Board also considered information regarding the fees that Weitz Inc. charges other clients for investment advisory services that are similar to the advisory services provided to the Funds, including certain institutional accounts, and it was noted that the fees were comparable based on the relevant circumstances of the types of accounts involved.
In considering information regarding the investment management fees payable by the Funds to Weitz Inc. under the Agreements, the Board also took note of the business administration fees
2022 Semi-Annual Report 75
that are payable by the Funds to Weitz Inc. under the terms of the Business Administration Agreement that is applicable to the Funds. In considering the approval of the Business Administration Agreement and in determining the reasonableness of the total fees paid by the Funds to Weitz Inc. for the overall level of services that Weitz Inc. provides to the Funds and their shareholders, the Board members considered and discussed various factors related to the business administration services that are provided to the Funds by Weitz Inc., including the nature and extent of these fees and the services provided by Weitz Inc. In connection with their review of these matters, the Trustees took into consideration the third party service provider arrangements in place on behalf of the Funds to provide certain of the administration services for the Funds, and the Trustees further considered the nature of the fee arrangements in place with these third-party firms to provide services to the Funds, as well as the supervision that is required of these third-party service providers. In considering the nature and extent of these non-advisory administrative services provided to the Funds by Weitz Inc., the Board took into consideration: (i) whether the Business Administration Agreement is in the best interest of the Funds and their shareholders; (ii) whether the services performed under the Business Administration Agreement is required for the operation of the Funds; (iii) whether the services provided are of a nature and quality at least equal to the same or similar services provided by independent third parties; and (iv) whether the fees for the services are fair and reasonable in light of the usual and customary charges made by others for services of the same nature and quality.
The Board also took into consideration the fact that an affiliate of Weitz Inc., Weitz Securities, Inc., provides underwriting and distribution services to the Funds. The Board took into consideration that Weitz Securities, Inc. does not charge the Funds any fees for its services as distributor and that Weitz Securities, Inc. incurs various costs and expenses in order to provide for the distribution and sales of the shares of the Funds which in turn are incurred by Weitz Inc. from its own financial resources. The members of the Board also took note of the fact that Weitz Inc. pays for all of the marketing and distribution efforts related to the offer and sale of the Funds. The Board also considered and discussed the level and quality of the distribution services performed by Weitz Securities, Inc. In addition, the members of the Board considered the nature and extent of the revenue sharing payments that Weitz Inc. makes to those third party intermediaries that provide various types of distribution related services to the Funds, noting these payments are made entirely from Weitz Inc.’s own financial resources and are not paid by the Funds.
In connection with these matters, the Board also took into consideration the Administrative Services Plans that are applicable to the Funds and they took note of the level and amount of the fees payable pursuant to the Administrative Services Plans, including those amounts payable to Weitz Inc. for providing the types of non-distribution shareholder administrative services that are eligible to be compensated under the terms of the Administrative Services Plans. The Board also took into consideration the types of services that may be compensated pursuant to the Administration Services Plans.
In reaching their conclusion with respect to the continuation of the Agreements for each Fund and the level of investment advisory fees payable under the Management and Investment Advisory Agreement for each Fund, the Trustees did not identify any one single factor as being controlling. Rather, the Board took note of a combination of factors that influenced their decision making process. The Board did, however, identify the overall performance results of the Funds, the commitment of the Adviser and its affiliates to the successful operation of the Funds, and the level of expenses of the Funds, as being important elements of their consideration. They noted that (i) the Adviser has been willing to maintain breakpoints for the Equity Funds, and contractual expense limitation agreements for eight of the Funds in order to limit the overall operating expenses of the Funds, as applicable. They also noted the overall level and quality of investment advisory, shareholder servicing and business administration services provided by the Adviser to the Funds, as well as the distribution services provided by the Distributor, including the increased marketing efforts on behalf of the Funds, and they found that these services continued to benefit the shareholders of the Funds and reflected the firm’s overall commitment to the continued successful growth and development of the Funds. The Trustees also took into consideration the effectiveness of the compliance program maintained with respect to the Funds and the Adviser and the compliance oversight process. The Trustees also took into consideration their discussions with the Adviser’s representatives regarding the factors that have impacted the performance of the Funds on a short-term basis and over longer time periods and the Adviser’s commitment to improving the performance for certain of the Funds.
The Trustees also considered the business, regulatory and entrepreneurial risks undertaken by the Adviser in managing and sponsoring the Funds and the increasingly competitive business environment in the mutual fund industry as well as the efforts that have been undertaken by smaller fund groups to remain competitive in the face of increasing consolidation within the investment management industry.
Based upon their review and consideration of these factors and other matters deemed relevant by the Board in reaching an informed business judgment, a majority of the Board of Trustees, including a majority of the Independent Trustees, concluded that the terms of the Management and Investment Advisory Agreements are fair and reasonable and the Board voted to renew the Agreements for an additional one-year period.
In reaching these conclusions, the members of the Board, including all of the Independent Trustees, took into consideration the following factors:
The nature, extent and quality of the advisory services provided. The Trustees concluded that the Adviser is capable of providing high quality services to the Funds, as indicated by the nature, extent and quality of the services provided in the past by the Adviser to each of the Funds, the Adviser’s management capabilities demonstrated with respect to the Funds, the professional qualifications and experience of each of the portfolio managers of the Funds, and the Adviser’s investment management and compliance oversight processes. On the basis of the Trustees’ assessment of the nature, extent and quality of the advisory services provided by the Adviser, the Trustees concluded that the Adviser is capable of generating a level of long-term investment performance that is appropriate in light of the Funds’ investment objectives, policies and strategies.
The investment performance of the Funds. The Board received and reviewed performance information for each of the Funds separately, including total return performance information, for applicable one-, three-, five- and ten-year periods ended March 31, 2022, and for shorter periods as applicable, with respect to the Funds’ shares. The Board also reviewed with the representatives of the Adviser other information and data, including each Fund’s performance against its primary comparative index, and against each Fund’s peer group, as follows:
1. Balanced. The Board noted that the Investor and Institutional Class Shares of the Fund had outperformed its primary comparative index, the Morningstar Moderately Conservative Target Risk Index, for the one- five- and ten-year periods ended March 31, 2022. The Board also noted that the Institutional Class
76 2022 Semi-Annual Report
shares of the Fund had outperformed its peer group median for the one-year period ended March 31, 2022, underperformed its peer group median for the two-year period ended March 31, 2022 and matched its peer group median for the three-year period ended March 31, 2022.
2. Core Plus Income. The Board noted that the Investor and Institutional Class shares of the Fund, which commenced operations July 31, 2014, had outperformed its primary comparative index, the Bloomberg U.S. Aggregate Bond Index, for the one-, five-year and since inception periods ended March 31, 2022. The Board also noted that the Institutional Class Shares of the Fund had outperformed its peer group median for the one-, two-, three-, four- and five-year periods ended March 31, 2022.
3. Hickory. The Board noted that the Fund had underperformed its primary comparative index, the Russell Midcap Index, for the one-, five- and ten-year periods ended March 31, 2022. The Board also noted that the Fund had underperformed its peer group median for the one-, two-, three-, four-, five- and ten-year periods ended March 31, 2022. The Trustees also took into consideration their discussions with the Adviser’s representatives regarding the factors that have impacted the performance of the Fund on a short-term basis and over longer time periods, including the Fund’s underperformance, as well as the Adviser’s focus and commitment on improving performance.
4. Nebraska Tax Free Income. The Board noted that the Fund had outperformed its primary comparative index, the Bloomberg 5-Year Municipal Bond Index, for the one-year period ended March 31, 2022, but had underperformed the Index for the five-and ten-year periods ended March 31, 2022. The Board also noted that the Fund had outperformed its peer group median for the one and two-year periods ended March 31, 2022, and had underperformed its peer group median for the three-, four-, five and ten-year periods ended March 31, 2022. The Trustees also took into consideration their discussions with the Adviser’s representatives regarding the factors that have impacted the performance of the Fund on a short-term basis and over longer time periods.
5. Partners III Opportunity. The Board noted that the Institutional and Investors Class shares of the Fund had underperformed its primary comparative index, the S&P 500 Index, for the one-, five- and ten-year periods ended March 31, 2022. The Board also noted that the Institutional Class shares of the Fund had underperformed it peer group median for the one- and two-year periods ended March 31, 2022, and had outperformed its peer group median for the three-, four-, five- and ten-year periods ended March 31, 2022. The Trustees also took into consideration their discussions with the Adviser’s representatives regarding the factors that have impacted the performance of the Fund on a short-term basis and over longer time periods.
6. Partners Value. The Board noted that the Institutional and Investors Class shares of the Fund had underperformed its primary comparative index, the S&P 500 Index, for the one-, five- and ten-year periods ended March 31 2022. The Board also noted that the Institutional Class shares of the Fund had underperformed its peer group median for the one-, two-, three-, four- and five-year periods ended March 31, 2022. The Trustees also took into consideration their discussions with the Adviser’s representatives regarding the factors that have impacted the performance of the Fund on a short-term basis and over longer time periods. including the Fund’s underperformance, as well as the Adviser’s focus and commitment on improving performance.
7. Short Duration Income. The noted that Institutional and Investor Class shares of the Fund had outperformed its primary comparative index, the Bloomberg U.S. Aggregate 1-3 Year Index, for the one-, five- and ten-year periods ended March 31, 2022. The Board noted that Institutional Class shares of the Fund had outperformed its peer group median for the one-, two-, three-, four- and five-year periods ended March 31, 2022 and matched its peer group median for the ten-year period ended March 31, 2022. The Trustees also took into consideration their discussions with the Adviser’s representatives regarding the factors that have impacted the performance of the Fund on a short-term basis and over longer time periods.
8. Ultra Short Government. The Board noted that the Fund had outperformed its primary comparative index, the ICE Bank of America Merrill Lynch U.S. 6-Month Treasury Bill Index, for the one-year period ended March 31, 2022, but had underperformed its primary comparative index for the five- and ten-year periods ended March 31, 2022. The Board also noted that the Fund had outperformed its peer group median for the one-year period ended March 31, 2022, but had underperformed its peer group median for the two-, three-, four- five- and ten-year periods ended March 31, 2022. In connection with the Board’s review of the performance results presented for the Ultra Short Fund, the Trustees took into consideration the fact that, prior to December 16, 2016, the Ultra Short Fund had been operated as a government money market fund and, as a result, the performance returns for periods prior to that date were achieved while the Fund was operated as a government money market fund with investment objectives and strategies different from the investment objectives and strategies that the Fund implemented effective December 16, 2016. The Trustees also took into consideration their discussions with the Adviser’s representatives regarding the factors that have impacted the performance of the Fund on a short-term basis and over longer time periods.
9. Value. The Board noted that the Institutional and Investor Class shares of the Fund had underperformed its primary comparative index, the S&P 500 Index, for the one-, five- and ten-year periods ended March 31, 2022. The Board also noted that the Institutional Class shares of the Fund had underperformed its peer group median for the one-, two-, three, four- and five-year periods ended March 31, 2022. The Trustees also took into consideration their discussions with the Adviser’s representatives regarding the factors that have impacted the performance of the Fund on a short-term basis and over longer time periods, including the Fund’s underperformance, as well as the Adviser’s focus and commitment on improving performance.
The cost of advisory services provided and the expected level of profitability. The Board considered the advisory fees and overall expenses of the Funds (including Institutional Class shares and Investor Class shares of the dual-class Funds), based upon the relevant information presented, as compared to the advisory fees and overall expenses of each Fund’s peer group as follows:
1. Balanced. The Board noted that the Advisory Agreement provided for an investment advisory fee for the Fund would be at a rate of 0.60% on the Fund’s assets, and this rate was below median compared to its peer funds. The Board also noted that the net expense ratio of the Fund’s Institutional Class shares was 0.70%, which was lower than the median net expense ratio of its peer funds.
2. Core Plus Income. The Board noted that the Advisory Agreement provided for an investment advisory fee for the Fund at a rate of 0.40% on the Fund’s assets, which was equal to the median compared to its peer funds. The Board also noted that the net expense ratio of the Fund’s Institutional Class shares was 0.40%, which is lower than the median net expense ratio of its peer funds.
3. Hickory. The Board noted that the Advisory Agreement provided for an investment advisory fee for the Fund at a rate of 0.85% on the Fund’s assets that are less than or equal to $5 billion, with a breakpoint in the investment advisory fee on assets in the Fund in excess of $5 billion, and this rate of 0.85% was
2022 Semi-Annual Report 77
above the median compared to its peer funds. The Board also noted that the net expense ratio of the Fund was 1.09%, which is below the median net expense ratio of its peer funds.
4. Nebraska Tax-Free Income. The Board noted that the Advisory Agreement provided for an investment advisory fee for the Fund at a rate of 0.40% on the Fund’s assets, which was below median compared to its peer funds. The Board also noted that the net expense ratio of the Fund was 0.45%, which is below the median net expense ratio of its peer funds.
5. Partners III Opportunity. The Board noted that the Advisory Agreement provided for an investment advisory fee for the Fund at a rate of 1.00% on the Fund’s assets that are less than or equal to $1 billion, with breakpoints in the investment advisory fee on differing levels of assets in the Fund in excess of $1 billion, which is lower than the median compared to its peer funds. The Board also noted that the net expense ratio of the Fund’s Institutional Class shares (exclusive of the dividend and interest expense incurred by the Fund during the fiscal year) was 1.15%, which is lower than the median net expense ratio of its peer funds.
6. Partners Value. The Board noted that the Advisory Agreement provided for an investment advisory fee for the Fund at a rate of 0.75% on the Fund’s assets that are less than or equal to $5 billion, with a breakpoint in the investment advisory fee on assets in the Fund in excess of $5 billion, and this rate of 0.75% was above the median compared to its peer funds. The Board also noted that the net expense ratio of the Fund’s Institutional Class shares was 0.89%, which is above than the median net expense ratio of its peer funds.
7. Short Duration Income. The Board noted that the Advisory Agreement provided for an investment advisory fee for the Fund at a rate of 0.40% on the Fund’s assets, which was below the median compared to its peer funds. The Board also noted that the net expense ratio of the Fund’s Institutional Class shares was 0.48%, which is equal to the median net expense ratio of its peer funds.
8. Ultra Short Government. The Board noted that the Advisory Agreement provided for an investment advisory fee for the Fund at a rate of 0.30% on the Fund’s assets, which is below the median compared to its peer funds. The Board also noted that the net expense ratio of the Fund’s Institutional Class shares was 0.20%, which is lower than the median net expense ratio of its peer funds.
9. Value. The Board noted that the Advisory Agreement provided for an investment advisory fee for the Fund at a rate of 0.75% on the Fund’s assets that are less than or equal to $5 billion, with a breakpoint in the investment advisory fee on assets in the Fund in excess of $5 billion, and this rate of 0.75% was above median compared to its peer funds. The Board also noted that the net expense ratio of the Fund’s Institutional Class shares was 0.89%, which is above the median net expense ratio of its peer funds.
On the basis of the fee and expense information provided, the Board determined that the investment management fees payable by the Funds to Weitz Inc. are reasonable and that Weitz Inc.’s level of profitability from its management of each of the Funds is reasonable and not excessive.
The extent to which economies of scale may be realized as the Funds grow and whether the advisory fees reflect possible economies of scale. The Trustees took into consideration that each of the Equity Funds are currently operated pursuant to investment management fees that are subject to breakpoints on the fees as assets in the Equity Funds increase over various established levels of assets. In addition, while it was noted that the investment advisory fees for the Income Funds and for Balanced will not decrease as the Funds’ assets grow because they are not subject to investment advisory fee breakpoints, the Trustees concluded that these Funds’ investment advisory fees are appropriate in light of the size of the Funds, and appropriately reflect the current economic environment for the Adviser and the competitive nature of the mutual fund marketplace. The Trustees then noted that they will have the opportunity to periodically reexamine whether any of these Funds have achieved economies of scale, and the appropriateness of the investment advisory fees payable to the Adviser with respect to the Income Funds and the Balanced Fund, in the future at which time the implementation of fee breakpoints on these particular Funds could be further considered.
Benefits to Weitz Inc. from its relationship with the Funds (and any corresponding benefits to the Funds). The Trustees concluded that other benefits that may be derived by the Adviser from its relationship with the Funds, including “soft dollar” benefits in connection with Fund brokerage transactions and use of the Funds’ performance track record in advertising materials, are reasonable and fair, and consistent with industry practice and the best interests of the Funds and their shareholders. In addition, the Trustees determined that the Funds benefit from their relationship with the Adviser by virtue of the Adviser’s provision of business administration and shareholder services, in addition to investment advisory services, at a cost to the Funds that is generally comparable to the costs of an outside service provider, which the Trustees have previously determined to be reasonable, fair and in the best interests of the shareholders of the Funds in light of the nature and quality of the services provided and the necessity of the services for the Funds’ operations.
Other Considerations. In approving the continuation of the Management and Investment Advisory Agreements, the Trustees determined that the Adviser has made a substantial commitment to the recruitment and retention of high quality personnel, and maintains the financial, compliance and operational resources reasonably necessary to manage the Funds in a professional manner that is consistent with the best interests of the Funds and their shareholders. The Board also acknowledged the experience and expertise of members of the Adviser’s management team and the focus these individuals have on ensuring that the Funds operate successfully. The Trustees also concluded that the Adviser has made a significant entrepreneurial commitment to the management and success of the Funds, which entails a substantial financial and professional commitment, including the efforts to market and distribute the Funds, as well as the Expense Limitation Agreements under which the Adviser has undertaken to waive a portion of its fees and to reimburse expenses of eight of the Funds to the benefit of Fund shareholders to the extent necessary in accordance with the terms of the Expense Limitation Agreements. The Board also considered matters with respect to the brokerage practices of the Adviser, including its soft dollar arrangements and its best-execution procedures, and noted that these were reasonable and consistent with standard industry practice. The Board also took into consideration the investments made by the Adviser into the Funds to enhance services and improve efficiencies.
2. Factors Considered by the Board of Trustees in Approving Proposed New Management and Investment Advisory Agreements with Weitz Investment Management, Inc. for each of the Funds as a Result of a Proposed Change in Control Transaction Involving Weitz Investment Management, Inc.
In connection with a proposed change in control transaction involving the Adviser pursuant to which Wallace R. Weitz, the owner of all of the voting stock of the Adviser, will be exchanging his voting stock for non-voting stock held by his son, Andrew (Drew) Weitz (the “Transaction”), the Board of Trustees of the Funds, in accordance with relevant provisions of the 1940 Act, was required to consider the initial approval of proposed new Management and Investment Advisory Agreements between the Funds and Weitz Inc. (the “New Advisory Agreements”) as a result
78 2022 Semi-Annual Report
of the Transaction. The New Advisory Agreements are intended to replace and supersede the currently effective Management and Investment Advisory Agreements between the Funds and the Adviser (the “Current Advisory Agreements”) upon the closing of the Transaction because the 1940 Act provides that the Current Advisory Agreements will be terminated at the time of the closing of the Transaction.
These relevant provisions of the 1940 Act with respect to the Board’s approval of the New Advisory Agreements specifically provide that it is the duty of the Board to request and evaluate such information as the Board determines is necessary to allow them to properly consider the approval of the adoption of the New Advisory Agreements, and it is the duty of Weitz Inc., as the investment adviser to the Funds, to furnish the Trustees with such information that is responsive to their request. Accordingly, in determining whether to approve the adoption of the New Advisory Agreements, the Board of Trustees requested, and the Adviser provided, information relevant to the Board’s consideration. This included information requested by the Board regarding Weitz Inc.’s plans for their management and operation of the firm and the management and operation of the Funds following the conclusion of the Transaction.
The Board met at an in-person meeting on May 26, 2022 in order to consider the proposed approval of the New Advisory Agreements. As part of its deliberations, the Board also considered and relied upon information about the Funds and Weitz Inc. that they had received during the past year in connection with their regular Board meetings at which they engage in the ongoing oversight of the Funds and their operations. In conjunction with this meeting, the Board also held a meeting during which it engaged in the annual consideration of the renewal of each of the Current Advisory Agreements, and the Board took into consideration the information and materials that they had been provided with respect to their consideration of the renewal of the Current Advisory Agreements in connection with their deliberations relating to the proposed approval of the New Advisory Agreements. At this meeting the Board engaged in a thorough review process for purposes of determining whether to adopt the New Advisory Agreements. During the meeting, the Board discussed the New Advisory Agreements with representatives of Weitz Inc. and they reviewed various factors with them concerning the Transaction and the proposed adoption of the New Advisory Agreements.
Among the factors considered by the Board with respect to their consideration of the proposed approval of the New Advisory Agreements were: (1) the nature, extent and quality of the advisory services expected to be provided by Weitz Inc. following the completion of the Transaction, including the expected investment performance of the Funds; (2) the proposed cost of advisory services to be provided and the expected level of profitability following the completion of the Transaction; (3) the extent to which economies of scale may be expected to be realized from the operation of the Funds and whether the proposed advisory fee arrangements reflect possible economies of scale following the completion of the Transaction; (4) benefits to Weitz Inc. from its relationship with the Funds (and any corresponding benefits to the Funds) that may result following the closing of the Transaction; and (5) such other considerations deemed appropriate by the Board in making an informed business decision regarding the proposed approval of the New Advisory Agreements.
The Board reviewed with representatives of Weitz Inc. various other factors relating to their current management of the Funds, and their proposed continued management of the Funds following the completion of the Transaction. Among other factors, the Board took note of the long-term relationship between Weitz Inc. and the Funds and the efforts that have been undertaken by Weitz Inc. in the past to foster the growth and development of the Funds since the inception of each Fund. The Board also noted the range of investment advisory, shareholder servicing and administrative services that have previously been provided by Weitz Inc. to the Funds and the level and quality of these services, and in particular, they noted the quality of the personnel providing these services and determined that the quality of the services was very high, and they considered that the personnel currently servicing the Funds are not expected to change following the completion of the Transaction. The Board also took note of the fact that Weitz Inc. has undertaken to continue to pay from its own resources following the completion of the Transaction the distribution expenses of the Funds, including those third-party intermediary expenses that are deemed to be distribution related.
The Board also reviewed financial information concerning Weitz Inc. relating to its operation of the Funds, noting the overall profitability of the relationship with the Funds to Weitz Inc. and the financial soundness of Weitz Inc. as demonstrated by the financial information provided, and reached a finding that the level of profitability was consistent with relevant industry averages and not excessive. In reviewing the profitability of Weitz Inc. relating to its management of the Funds, the Board reviewed the level of profitability including the various marketing and distribution expenses that are proposed to be incurred by Weitz Inc. from its own resources and they also considered the level of profitability without taking into consideration the impact of these marketing and distribution costs. The Board also considered that Weitz Inc. had agreed to the continuation of fee breakpoints and contractual fee waivers with respect to certain of the Funds in order to limit their overall operating expenses following the completion of the Transaction.
The Board further reviewed Weitz Inc.’s brokerage practices, including its soft dollar practices and best-execution procedures, and noted that these were reasonable and consistent with standard industry practice. The Board took note of the current portfolio managers for each of the Funds and their overall management of each of the Funds, and they were informed by the representatives of Weitz Inc. that the portfolio management arrangements for the Funds will not be changing as a result of the Transaction.
At its meeting held on May 26, 2022, the Board also approved a proposed new Business Administration Agreement between the Trust, on behalf of each of the Funds, and Weitz Inc. (the “New Business Administration Agreement”). The Board was informed that the New Business Administration Agreement was not materially different from the Business Administration Agreement in effect with respect to each of the Funds (the “Prior Business Administration Agreement”), and the Board took into consideration that the fees payable to Weitz Inc. under the terms of the New Business Administration Agreement were the same as the fees that were payable under the Prior Business Administration Agreement, and the Board further considered that the level and quality of the business administration services provided to the Funds by Weitz Inc. was not expected to change following the completion of the Transaction. In considering information regarding the investment management fees proposed to be paid by the Funds to Weitz Inc. under the New Advisory Agreements, the Board also took note of the proposed business administration fees that would be payable by the Funds to Weitz Inc. under the terms of the New Business Administration Agreement that would be applicable to the Funds. In considering the approval of the New Business Administration Agreement and in determining the reasonableness of the total fees to be paid by the Funds to Weitz Inc. for the overall level of services that Weitz Inc. provides to the Funds and their shareholders following the Transaction, the Board members considered and discussed various factors related to the business administration services to be provided to the Funds by Weitz Inc., including the nature
2022 Semi-Annual Report 79
and extent of these fees and the services to be provided by Weitz Inc. In connection with their review of these matters, the Trustees took into consideration the third party service provider arrangements in place on behalf of the Funds to provide certain of the administration services for the Funds, and the Trustees further considered the nature of the fee arrangements in place with these third-party firms to provide services to the Funds, as well as the supervision that is required of these third-party service providers, which Weitz Inc. will be providing under the terms of the New Business Administration Agreement.
In considering the nature and extent of these non-advisory administrative services that are to continue to be provided to the Funds by Weitz Inc., the Board took into consideration: (i) whether the New Business Administration Agreement is in the best interest of the Funds and their shareholders; (ii) whether the services performed under the New Business Administration Agreement is required for the operation of the Funds; (iii) whether the services to be provided under the New Business Administration Agreement are of a nature and quality at least equal to the same or similar services provided by independent third parties; and (iv) whether the fees for the services to be provided under the New Business Administration Agreement are fair and reasonable in light of the usual and customary charges made by others for services of the same nature and quality.
The Board also took into consideration the fact that an affiliate of Weitz Inc., Weitz Securities, Inc., will continue to provide underwriting and distribution services to the Funds. The Board took into consideration that Weitz Securities, Inc. does not charge the Funds any fees for its services as distributor and that Weitz Securities, Inc. incurs various costs and expenses in order to provide for the distribution and sales of the shares of the Funds which in turn are incurred by Weitz Inc. from its own financial resources. The members of the Board also took note of the fact that Weitz Inc. has agreed to continue to pay for all of the marketing and distribution efforts related to the offer and sale of the Funds following the completion of the Transaction. The Board also considered and discussed the level and quality of the distribution services performed by Weitz Securities, Inc. in the past. In addition, the members of the Board considered the nature and extent of the revenue sharing payments that Weitz Inc. makes to those third party intermediaries that provide various types of distribution related services to the Funds, noting these payments are made entirely from Weitz Inc.’s own financial resources and are not paid by the Funds, and the Board took into consideration that the Adviser has agreed to continue making these payments following the completion of the Transaction.
In connection with these matters, the Board also took into consideration the Administrative Services Plans that are applicable to the Funds and they took note of the level and amount of the fees payable pursuant to the Administrative Services Plans, including those amounts payable to Weitz Inc. for providing the types of non-distribution shareholder administrative services that are eligible to be compensated under the terms of the Administrative Services Plans. The Board also took into consideration the types of services that may be compensated pursuant to the Administration Services Plans.
In reaching their conclusion with respect to the approval of the New Advisory Agreements for each Fund and the level of investment advisory fees to be paid under the New Advisory Agreements for each Fund, the Trustees did not identify any one single factor as being controlling. Rather, the Board took note of a combination of factors that influenced their decision making process. The Board did, however, identify the overall prior performance results of the Funds, the commitment of the Adviser and its affiliates to the successful operation of the Funds, and the level of expenses of the Funds, as being important elements of their consideration. They noted that the Adviser has agreed to continue to maintain breakpoints for certain of the Funds, and to continue to maintain the current contractual expense limitation agreements for eight of the Funds in order to limit the overall operating expenses of the Funds, as applicable. They also noted the overall level and quality of investment advisory, shareholder servicing and business administration services previously provided by the Adviser to the Funds, as well as the distribution services provided by the Distributor, and they found that these services are expected to continue to benefit the shareholders of the Funds and reflected the firm’s overall continuing commitment to the successful growth and development of the Funds, following the completion of the Transaction. The Trustees also took into consideration the effectiveness of the compliance program maintained with respect to the Funds and the Adviser and the compliance oversight process, and the Adviser’s representation that there are no proposed changes to the compliance program following the Transaction.
The Trustees also considered the business, regulatory and entrepreneurial risks undertaken by the Adviser in managing and sponsoring the Funds and the increasingly competitive business environment in the mutual fund industry as well as the efforts that have been undertaken by smaller fund groups to remain competitive in the face of increasing consolidation within the investment management industry.
Based upon their review and consideration of these factors and other matters deemed relevant by the Board in reaching an informed business judgment, a majority of the Board of Trustees, including a majority of the Independent Trustees, concluded that the terms of the New Advisory Agreements are fair and reasonable and the Board voted to approve the adoption of the New Advisory Agreements with respect to each of the Funds.
In reaching these conclusions, the members of the Board, including all of the Independent Trustees, took into consideration the following factors:
The nature, extent and quality of the advisory services expected to be provided. The Trustees concluded that, following the completion of the Transaction, the Adviser will continue to be capable of providing high quality services to the Funds, as indicated by the nature, extent and quality of the services provided in the past by the Adviser to each of the Funds, the Adviser’s management capabilities demonstrated with respect to the Funds, the professional qualifications and experience of each of the portfolio managers of the Funds, and the Adviser’s investment management and compliance oversight processes. On the basis of the Trustees’ assessment of the nature, extent and quality of the advisory services expected to be provided by the Adviser following the completion of the Transaction, the Trustees concluded that the Adviser will continue to be capable of generating a level of long-term investment performance that is appropriate in light of the Funds’ investment objectives, policies and strategies.
The expected investment performance of the Funds. With respect to each Fund, the Trustees concluded on the basis of information derived from the performance data that had been provided to the Board that Weitz Inc. had achieved investment performance that was competitive relative to comparable funds over various trailing time periods, including over longer-term trailing time periods, and the Trustees took into consideration the fact that the Adviser has focused on long-term performance results with respect to their management of the Funds.. The Trustees also took into consideration that all of the current portfolio managers of the Funds will continue to be working at the Adviser following the completion of the Transaction.
The cost of advisory services to be provided and the expected level of profitability. On the basis of comparative information derived from the expense data that has been previously provided to the Board, the Trustees determined that the overall expense ratio of each Fund, on a net basis following the continued
80 2022 Semi-Annual Report
fee waivers and reimbursements following the Transaction, is expected to be competitive with industry averages, particularly with respect to mutual funds of comparable asset size. The Board also considered the Adviser’s expected level of profitability with respect to its proposed continued management of the Funds, and noted that Weitz Inc.’s anticipated level of profitability was acceptable and not excessive and consistent with applicable industry averages. The Trustees also took into consideration the nature and extent of the distribution-related expenses that Weitz Inc. has undertaken to continue paying directly from its own financial resources in order to help to market and promote the Funds. Accordingly, on the basis of the Board’s review of the fees proposed to be charged by Weitz Inc. for investment advisory services, the investment advisory and other services proposed to be provided to the Funds by Weitz Inc., and the estimated profitability of Weitz Inc.’s relationship with each Fund, the Board concluded that the level of investment advisory fees and Weitz Inc.’s anticipated level of profitability were appropriate in light of the investment advisory fees, overall expense ratios and investment performance of comparable investment companies and the historical profitability of the relationship between each Fund and Weitz Inc. The Trustees considered the anticipated level of profitability of Weitz Inc. both before and after the impact of the marketing related expenses that Weitz Inc. has undertaken to pay out of its own resources in connection with its management of the Funds following the completion of the Transaction. On the basis of the information provided, the Board determined that the investment management fees payable by the Funds to Weitz Inc. are reasonable and that Weitz Inc.’s level of profitability from its management of each of the Funds is reasonable and not excessive.
The extent to which economies of scale may be realized following the completion of the Transaction as the Funds grow and whether the advisory fees reflect possible economies of scale. The Trustees took into consideration that each of the Equity Funds are currently operated pursuant to investment management fees that are subject to breakpoints on the fees as assets in the Equity Funds increase over various established levels of assets. In addition, while it was noted that the investment advisory fees for the Income Funds and for Balanced will not decrease as the Funds’ assets grow because they are not subject to investment advisory fee breakpoints, the Trustees concluded that these Funds’ investment advisory fees are appropriate in light of the size of the Funds, and appropriately reflect the current economic environment for the Adviser and the competitive nature of the mutual fund marketplace. The Trustees then noted that they will have the opportunity to periodically re-examine whether any of these Funds have achieved economies of scale in the future following the completion of the Transaction, and the appropriateness of the investment advisory fees payable to the Adviser with respect to the Income Funds and Balanced, in the future at which time the implementation of fee breakpoints on these particular Funds could be further considered.
Benefits to Weitz Inc. from its relationship with the Funds (and any corresponding benefits to the Funds). The Trustees concluded that other benefits that may continue to be derived by the Adviser from its relationship with the Funds following the completion of the Transaction, including “soft dollar” benefits in connection with Fund brokerage transactions and use of the Funds’ performance track record in advertising materials, are reasonable and fair, and consistent with industry practice and the best interests of the Funds and their shareholders. In addition, the Trustees determined that the Funds may be reasonably expected to continue to benefit from their relationship with the Adviser following the completion of the Transaction by virtue of the Adviser’s provision of business administration and shareholder services, in addition to investment advisory services, at a cost to the Funds that is generally comparable to the costs of an outside service provider, which the Trustees have previously determined to be reasonable, fair and in the best interests of the shareholders of the Funds in light of the nature and quality of the services provided and the necessity of these services for the Funds’ operations.
Other Considerations. In approving the adoption of the New Advisory Agreements, the Trustees determined that the Adviser has previously made a substantial commitment to the recruitment and retention of high quality personnel, and the Trustees took into consideration that they anticipate that the Adviser will continue to maintain, following the completion of the Transaction, the financial, compliance and operational resources reasonably necessary to manage the Funds in a professional manner that is consistent with the best interests of the Funds and their shareholders. The Board also acknowledged the experience and expertise of members of the Adviser’s management team and the focus these individuals have on ensuring that the Funds operate successfully, and the Board took note of the fact that all of these individuals will be remaining with the Adviser following the completion of the Transaction. The Trustees also concluded that the Adviser has in the past made a significant entrepreneurial commitment to the management and success of the Funds, which entails a substantial financial and professional commitment, including the efforts to market and distribute the Funds, as well as the Expense Limitation Agreements under which the Adviser has undertaken to waive a portion of its fees and to reimburse expenses of eight of the Funds to the benefit of Fund shareholders to the extent necessary in accordance with the terms of the Expense Limitation Agreements, and the Board noted that it expects the Adviser to continue to undertake such entrepreneurial efforts with respect to the management and operation of the Funds following the closing of the Transaction. The Board also considered matters with respect to the current brokerage practices of the Adviser, including its soft dollar arrangements and its best-execution procedures, and noted that these were reasonable and consistent with standard industry practice, and that they are expected to continue unchanged following the completion of the Transaction. The Board also took into consideration the previous investments that have been made by the Adviser into the Funds to enhance services and improve efficiencies, and the Board was informed by representatives of the Adviser that such investments are expected to continue following the completion of the Transaction.
2022 Semi-Annual Report 81
INDEX DESCRIPTIONS
Index performance is hypothetical and is shown for illustrative purposes only. You cannot invest directly in an index.
Bloomberg1-3 Year U.S. Aggregate Index | The Bloomberg 1-3 Year U.S. Aggregate Index is generally representative of the market for investment grade, U.S. dollar denominated, fixed-rate taxable bonds with maturities from one to three years. |
Bloomberg 5-Year Municipal Bond Index | The Bloomberg 5-Year Municipal Bond Index is a capitalization weighted bond index generally representative of major municipal bonds of all quality ratings with an average maturity of approximately five years. |
Bloomberg U.S. Aggregate Bond Index | The Bloomberg U.S. Aggregate Bond Index is a broad-based benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market. |
ICE BofA U.S. 6-Month Treasury Bill Index | The ICE BofA U.S. 6-Month Treasury Bill Index is generally representative of the market for U.S. Treasury Bills. |
Morningstar Moderately Conservative Target Risk Index | The Morningstar Moderately Conservative Target Risk Index is an asset allocation index comprised of constituent Morningstar indices and reflects global equity market exposure of 40% based on an asset allocation methodology derived by Ibbotson Associates, a Morningstar company. |
Russell 1000® Index | The Russell 1000 Index measures the performance of the large-cap segment of the U.S. equity universe. It is a subset of the Russell 3000 Index and includes approximately 1,000 of the largest securities based on a combination of their market cap and current index membership. |
Russell3000® Index | The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market. |
Russell Midcap® Index | The Russell Midcap Index tracks the performance of the 800 next-largest U.S. companies, after the 1,000 largest U.S. companies. |
S & P 500® Index | The S&P 500 Index is an unmanaged index consisting of 500 companies generally representative of the market for the stocks of large-size U.S. companies. |
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GLOSSARY OF TERMS
30-Day SEC Yield | 30-Day SEC Yield represents net investment income earned by a fund over a 30-day period, expressed as an annual percentage rate based on the Fund’s share price at the end of the 30-day period. Subsidized yield reflects fee waivers and/ or expense reimbursements during the period. Without such fee waivers and/ or expense reimbursements, if any; yields would have been lower. Unsubsidized yield does not adjust for any fee waivers and/or expense reimbursement in effect. |
Average Coupon | Average coupon is the weighted average coupon rate of each bond in the portfolio. |
Average Effective Duration | Average effective duration provides a measure of a fund's interest-rate sensitivity. The longer a fund's duration, the more sensitive the fund is to shifts in interest rates. |
Average Effective Maturity | Average effective maturity is the weighted average of the maturities of a fund’s underlying bonds. |
Commercial Real Estate Collateralized Loan Obligations | CRE CLOs are a type of asset-backed security backed by a pool of commercial loans. |
Effective Long | Effective Long is the sum of the portfolio’s long positions (such as common stocks, or derivatives where the price increases when an index or position rises). |
Effective Short | Effective Short is the sum of the portfolio’s short positions (such as, derivatives where the price increases when an index or position falls). |
EffectiveNet | Effective Net is the Effective Long minus the Effective Short. |
Gross Expense Ratio | The gross expense ratio reflects the total annual operating expenses of a mutual fund, before any fee waivers or reimbursements. |
Net Expense Ratio | The net expense ratio reflects the total annual operating expenses of a mutual fund after taking into account any fee waiver and/or expense reimbursement. The net expense ratio represents what investors are ultimately charged to be invested in a mutual fund. |
Investment Grade Bonds | Investment Grade Bonds are those securities rated at least BBB- by one or more credit ratings agencies. |
Non-Investment Grade | Non-Investment Grade Bonds are those securities (commonly referred to as Bonds “high yield” or “junk” bonds) rated BB+ and below by one or more credit ratings agencies. |
Market Capitalization | The market capitalization of a company represents the current stock-market value of a company's equity. It is calculated as the current share price times the number of shares outstanding as of the most recent quarter. |
Middle Market CLOs | Middle Market CLOs refer to collateralized loan obligations backed by loans made to smaller companies, which companies generally have earnings before interest, taxes, and amortization of less than $75 million. |
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Portfolio Turnover | Portfolio turnover is a measure of how much buying and selling of securities a portfolio does during a particular period. A turnover of 100 percent means the portfolio has sold the equivalent of every security in its portfolio and replaced it with something else over a set period. |
Yieldto Maturity (YTM) | Yield to Maturity (YTM) is the total return anticipated on a bond portfolio if the bonds are held to maturity. |
Yield to Worst (YTW) | Yield to Worst (YTW) is the lowest potential yield that can be received on a bond portfolio without the issuers actually defaulting. |
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2022 Semi-Annual Report 87
Board of Trustees
Lorraine Chang
John W. Hancock
Dana E. Washington
Wallace R. Weitz
Justin B. Wender
Investment Adviser
Weitz Investment Management, Inc.
1125 South 103rd Street, Suite 200
Omaha, NE 68124-1071
(800) 304-9745
Custodian
Citibank, N.A.
Officers
Wallace R. Weitz, President
Shar M. Bennett, Vice President & Assistant Treasurer
James J. Boyne, Vice President & Treasurer
Thomas D. Carney, Vice President
John R. Detisch, Vice President, Secretary & Chief Compliance Officer
Bradley P. Hinton, Vice President Andrew S. Weitz, Vice President
Distributor
Weitz Securities, Inc.
Transfer Agent and Dividend Paying Agent
Ultimus Fund Solutions, LLC
NASDAQ symbols:
Balanced Fund
Investor Class - WBALX
Institutional Class - WBAIX
Core Plus Income Fund
Investor Class - WCPNX
Institutional Class - WCPBX Hickory Fund - WEHIX
Nebraska Tax-Free Income Fund - WNTFX
Partners III Opportunity Fund
Investor Class - WPOIX
Institutional Class - WPOPX
Partners Value Fund
Investor Class - WPVLX
Institutional Class - WPVIX
Short Duration Income Fund
Investor Class - WSHNX
Institutional Class - WEFIX
Ultra Short Government Fund - SAFEX
Value Fund
Investor Class - WVALX
Institutional Class - WVAIX
Investors should consider carefully the investment objectives, risks, and charges and expenses of a fund before investing. This and other important information is contained in the prospectus and summary prospectus, which may be obtained at weitzinvestments.com or from a financial advisor. Please read the prospectus carefully before investing.
11/28/2022
SAR 9.30.22
Item 2. Code of Ethics.
Not applicable – only for annual reports.
Item 3. Audit Committee Financial Expert.
Not applicable – only for annual reports.
Item 4. Principal Accountant Fees and Services.
Not applicable – only for annual reports.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Schedule of Investments.
(a) Included as part of report to stockholders under Item 1.
(b) Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 11. Controls and Procedures.
(a) | The Registrant’s principal executive officer and principal financial officer have concluded, based on their evaluation of the Registrant’s disclosure controls and procedures as conducted within 90 days of the filing date of this report, that those disclosure controls and procedures provide reasonable assurance that material information required to be disclosed by the Registrant on this report is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. |
(b) | There were no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Act (17CFR 270.30a-3(d)) that occurred during the period covered by this report that have materially affected or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting. |
Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
Not applicable.
Item 13. Exhibits.
(a)(1) Not applicable - only for annual reports.
(a)(2) Certifications pursuant to Rule 30a-2(a) are attached hereto.
(a)(3) Not applicable.
(a)(4) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant)__Weitz Funds_______________________________
By (Signature and Title) _/s/ Wallace R. Weitz_________________________________________
Wallace R. Weitz, Principle Executive Officer
Date November 21, 2022________
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By (Signature and Title) __/s/ Wallace R. Weitz ________________________________________
Wallace R. Weitz, Principle Executive Officer
Date November 21, 2022_ ______
By (Signature and Title) _/s/ James J. Boyne___________________________________________
James J. Boyne, Principle Financial Officer
Date November 21, 2022__ _____